FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
This FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated
as of October 20, 1997 is entered into by and among THE TODD-AO
CORPORATION, a Delaware corporation ("Borrower"), each bank whose name is
set forth on the signature pages of this Agreement and each lender which may
hereafter become a party to this Agreement (collectively, the "Banks" and
individually, a "Bank") and Bank of America National Trust and Savings
Association, as Administrative Agent and Issuing Bank.
In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
DEFINITIONS AND ACCOUNTING TERMS
1.1 Terms. The following terms used in this Agreement and in any
exhibits annexed hereto shall have the following meanings unless the context
otherwise requires.
"Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person or any business or
division of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person (other
than a Person that is a Subsidiary) provided that Borrower or one of its
Subsidiaries is the surviving entity.
"Administrative Agent" means Bank of America National Trust and Savings
Association, when acting in its capacity as the Administrative Agent under
any of the Loan Documents, or any successor Administrative Agent.
"Administrative Agent's Office" means the Administrative Agent's address
and, as appropriate, account as set forth on Schedule 10.6, or such other
address or account as the Administrative Agent hereafter may designate
by written notice to Borrower and the Banks.
"Administrative Agent-Related Persons" means the Administrative Agent
(including any successor agent), together with their respective Affiliates,
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and the
correlative terms, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise); provided that, in any event, any Person that owns, directly or
indirectly, 10% or more of the securities having ordinary voting power for
the election of directors or other governing body of a corporation that has
more than 100 record holders of such securities, or 10% or more of the
partnership or other ownership interests of any other Person that has more
than 100 record holders of such interests, will be deemed to control such
corporation, partnership or other Person.
"Agreement" means this Agreement, either as originally executed
or as it may from time to time be supplemented, modified, amended,
restated or extended.
"Applicable Amount" means, for any Pricing Period, the per annum
amounts set forth below under Applicable Amount opposite the applicable
Leverage Ratio as calculated from the most recently delivered Compliance
Certificate delivered pursuant to Section 6.2(a); provided, however, that
until the Administrative Agent's receives the first such Compliance
Certificate after the Closing Date, the Applicable Amount shall be based on
the Leverage Ratio as set forth in the certificate delivered pursuant to
Section 4.1(i), which Leverage Ratio shall be based on Borrower's unaudited
financial statements for the Fiscal Year ended August 31, 1997; provided,
further, that if the Leverage Ratio calculated from the audited financial
statements dated for the Fiscal Year ended August 31, 1997, as set forth in
the Compliance Certificate delivered in respect of such date pursuant to
Section 6.2(a), results in a different Applicable Amount from that
calculated from the Leverage Ratio set forth in the certificate delivered
pursuant to Section 4.1(i), the Applicable Amount shall be adjusted
retroactively to the Closing Date to be based upon such revised Leverage
Ratio:
Leverage Ratio Applicable Amount
on first day of
Pricing Period (1)
Commitment Letters of CD Alternate
Fee Credit Rate + Base
Offshore Rate +
Rate +
> = 2.50:1 0.500% 2.00% 2.125% 1.00%
> = 2.00:1 0.375% 1.50% 1.625% 0.500%
but < 2.50:1
> = 1.50:1
but < 2.00:1 0.300% 1.25% 1.375% 0.125%
> = 1.00:1 0.250% 1.00% 1.125% 0
but < 1.50:1 < 1.00:1 0.200% 0.75% 0.875% 0
(1) For purposes of determining the Applicable Amount,
the Convertible Subordinated Notes shall not be included in calculating
the Leverage Ratio.
"Pricing Level Change Date" means with respect to any
change in the Leverage Ratio which results in a change in the Applicable
Amount, the earlier of (a) the date upon which Borrower delivers a
Compliance Certificate to the Administrative Agent reflecting such changed
Leverage Ratio and (b) the date upon which Borrower is required by
Section 6.2(a) to deliver such Compliance Certificate; provided, however,
that if the Compliance Certificate is not delivered by the date required by
the above Section, then, subject to the other provisions of this Agreement,
commencing on the date such Compliance Certificate was required until
such Compliance Certificate is delivered, the Applicable Amount shall be
based on highest level set forth above, and from and after the date such
Compliance Certificate is thereafter received, the Applicable Amount shall
be as determined from such Compliance Certificate.
"Pricing Period" means (a) the period commencing on the
Closing Date and ending on the first Pricing Level Change Date to occur
thereafter and (b) each subsequent period commencing on each Pricing
Level Change Date and ending the day prior to the next Pricing Level
Change Date.
"Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel and the allocated cost of internal
legal services and all disbursements of internal counsel.
"Bank" means each lender from time to time party hereto.
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate.)
"Base Rate Loan" means a Dollar-denominated Loan made
hereunder and specified to be an Base Rate Loan in accordance with Section
2.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"BofA Tranche Loan" means the Offshore Rate Loan made by
BofA to Borrower under the Existing Credit Agreement and continued
hereunder under Section 2.1A.
"BofA Tranche Termination Date" means the earlier of (a) March
18, 1998 and (b) the date Borrower prepays the BofA Tranche Loan in full.
"Borrower" has the meaning given such term in the introduction
hereof.
"Borrowing" and "Borrow" each mean, a borrowing hereunder
consisting of Loans of the same type made on the same day and, other than
in the case of Base Rate Loans, having the same Interest Period.
"Borrowing Date" means the date that a Loan is made by the
Banks, which shall be a Business Day.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close; if the applicable Business Day
relates to any Offshore Rate Loan, means any such day on which dealings
are carried on in the London offshore Dollar interbank market; and if the
applicable Business Day relates to any Offshore Currency Loan, means any
such day on which dealings in such Offshore Currency deposits are carried
on in the London offshore interbank market.
"Capital Lease Obligations" means all monetary obligations of a
Person under any leasing or similar arrangement which, in accordance with
Generally Accepted Accounting Principles, is classified as a capital lease.
"CD Rate" means, for any Interest Period with respect to CD Rate
Loans comprising part of the same Borrowing, the per annum rate of
interest (rounded upward to the next 1/100th of 1%) determined by the
Administrative Agent (whose determination shall be conclusive in the
absence of manifest error) as follows:
CD Rate = Certificate of Deposit Rate + Assessment Rate
1 - Reserve Percentage
Where
"Assessment Rate" means, for any day of such Interest
Period, the rate determined by the Administrative Agent as equal to the
annual assessment rate in effect on such day payable to the FDIC by a
member of the Bank Insurance Fund that is classified as adequately
capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification within the meaning of 12 C.F.R.
327.3) for insuring time deposits at offices of such member in the United
States; or, in the event that the FDIC shall at any time hereafter cease to
assess time deposits based upon such classifications or successor
classifications, equal to the maximum annual assessment rate in effect on
such day that is payable to the FDIC by commercial banks (whether or not
applicable to any particular Bank) for insuring time deposits at offices of
such banks in the United States.
"Certificate of Deposit Rate" means the rate of interest per
annum determined by the Administrative Agent to be the arithmetic average
(rounded upward to the next 1/100th of 1%) of the rates notified to BofA as
the rates of interest bid by two or more certificate of deposit dealers of
recognized standing selected by the Administrative Agent for the purchase
at face value of dollar certificates of deposit issued by major United
States banks, for a maturity comparable to such Interest Period and in the
approximate amount of the CD Rate Loans to be made, at the time selected
by the Administrative Agent on the first day of such Interest Period.
"Reserve Percentage" means, for any day of such Interest
Period, the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%), as determined by the Administrative
Agent, in effect on such day (including any ordinary, marginal, emergency,
supplemental, special and other reserve percentages), prescribed by the
FRB for determining the maximum reserves to be maintained by member
banks of the Federal Reserve System with deposits exceeding
$1,000,000,000 for new non-personal time deposits for a period comparable
to such Interest Period and in an amount of $100,000 or more.
The CD Rate shall be adjusted, as to all CD Rate Loans then
outstanding, automatically as of the effective date of any change in the
Assessment Rate or the Reserve Percentage.
"CD Rate Loan" means a Dollar-denominated Loan which bears
interest at a rate based upon the CD Rate.
"Closing Date" means the date all conditions set forth in Section
4.1 are satisfied or waived by the Administrative Agent and the Banks.
"Code" means the Internal Revenue Code of 1986, as amended, as
time to time in effect.
"Collateral" means all of the collateral covered by the Collateral
Documents.
"Collateral Documents" means, collectively, the Pledge Agreement
and any other security agreement, or supplement thereto, from time to time
executed and delivered by Borrower or the Subsidiaries to secure the
Obligations.
"Commitment" means, for each Bank, the amount set forth as such
opposite such Bank's name on Schedule 2.1, as such amount may be
reduced, adjusted or increased pursuant to the terms of this Agreement
(collectively, the combined Commitments). The respective Pro Rata Shares
of the Banks are set forth in Schedule 2.1.
"Compliance Certificate" means a certificate in the form of Exhibit
B, properly completed and signed by a Responsible Officer.
"Continuation" and "Continue" each mean, with respect to any
Loan other than a Base Rate Loan, the continuation of such Loan as the
same type of Loan in the same principal amount, but with a new Interest
Period and an interest rate determined as of the first day of such new
Interest Period. Continuations must occur on the last day of the Interest
Period for such Loan.
"Conversion" and "Convert" each mean, with respect to any Loan,
the conversion of one type of Loan into another type of Loan. With respect
to Loans other than Base Rate Loans, Conversions must occur on the last
day of the Interest Period for such Loan.
"Convertible Subordinated Notes" means convertible subordinated
notes issued by Borrower in connection with the Hollywood Digital
Acquisition and having terms and conditions and otherwise in form and
substance satisfactory to the Requisite Bank, and any extension, renewal,
refunding and refinancing thereof in form and substance satisfactory to the
Requisite Banks; provided that after giving effect to such extension,
renewal, refunding or refinancing the principal amount thereof is not
increased. Prior to the exchange of such notes as contemplated by Section
6.11, the aggregate principal amount of such notes shall not exceed
$9,239,071. From and after the exchange of such notes as contemplated by
Section 6.11, the aggregate principal amount of such notes shall not exceed
$8,400,000.
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with Borrower within the
meaning of Section 414(c) of the Code.
"Debtor Relief Laws" means the Bankruptcy Code of the United
States of America, as amended from time to time, and all other applicable
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws from time to time in effect
affecting the rights of creditors generally.
"Default" means any event or circumstance which, with the passing
of time, giving of notice, or both would become an Event of Default.
"Default Rate" means a fluctuating rate per annum equal to the
Base Rate plus the Applicable Amount, if any, plus 2%.
"Designated Deposit Account" means a deposit account to be
maintained by Borrower with BofA, as from time to time designated by
Borrower by written notification to the Administrative Agent.
"Distribution" means, with respect to any shares of capital stock or
any warrant or option to purchase an equity security or other equity
security issued by a Person, (a) the retirement, redemption, purchase, or
other acquisition for Cash or for Property by such Person of any such
security, (b) the declaration or (without duplication) payment by such
Person of any dividend in Cash or in Property on or with respect to any
such security, (c) any Investment by such Person in the holder of 5% or
more of any such security if a purpose of such Investment is to avoid
characterization of the transaction as a Distribution and (d) any other
payment in cash or Property by such Person constituting a distribution
under applicable laws with respect to such security.
"Dollar Equivalent" means, as of any date, (a) as to any amount
denominated in Dollars, the amount thereof at such time, and (b) as to any
amount denominated in an Offshore Currency, the equivalent amount in
Dollars based upon the Spot Rate for the purchase of Dollars with such
Offshore Currency on such date.
"Dollars" and the sign "$" means dollars in lawful currency of the
United States of America.
"EBITDA" means, as of any date of determination, or
Borrower and its Significant Subsidiaries on a consolidated basis,
determined in accordance with Generally Accepted Accounting Principles,
an amount equal to the sum of, without duplication, for the preceding four
- -quarter period ending on the date of determination (a) such Person's net
income (or net loss), (b) less the net income attributable to joint ventures
and Subsidiaries less than 100% owned, plus, without duplication, (c) cash
actually received by Borrower or its Significant Subsidiaries from joint
ventures and Subsidiaries less than 100% owned which is not a return on
capital or results from an extraordinary gain plus (d) all depreciation
expense, lease expense (excluding operating leases but including Capital
Lease and Synthetic Lease expense), interest expense, and amortization
expense of intangibles of any kind to the extent included in the
determination of such net income (or loss), plus (e) provisions for income
taxes as set forth in Borrower's consolidated income statement, plus (f)
noncash compensation in the form of stock award grants; provided,
however, that net income (or loss) shall be computed for these purposes
without giving effect to extraordinary losses or extraordinary gains. The
EBITDA of any Significant Subsidiary acquired by Borrower during the
prior four fiscal quarters may be included.
"Eligible Assignee" means (a) a financial institution organized
under the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (b) a commercial
bank organized under the laws of any other country which is a member of
the Organization for Economic Cooperation and Development (the
"OECD"), or a political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000, provided that such
bank is acting through a branch or agency located in the United States; (c) a
Person that is primarily engaged in the business of commercial banking and
that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary and
(d) another Bank.
"Employee Benefit Plan" means "employee benefit plan" as that
term is defined in Section 3(3) of ERISA.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time in effect.
"Event of Default" has the meaning provided for in Section 8.1.
"Existing Credit Agreement" means that certain Credit Agreement
dated as of December 2, 1994, as amended, between Borrower and Bank of
America National Trust and Savings Association.
"Extension of Credit" means (a) the Borrowing of any Loans, (b)
the Conversion or Continuation of any Loans or (c) the issuance, renewal,
increase continuation, amendment or other credit action with respect to any
Letter of Credit, including the Banks acquiring a participation in such
Letters of Credit (collectively, the "Extensions of Credit").
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Administrative
Agent of the rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that day by each of
three leading brokers of Federal funds transactions in New York City
selected by the Administrative Agent.
"Fixed Charge Coverage Ratio means, for Borrower and its
Subsidiaries on a consolidated basis, determined in accordance with
Generally Accepted Accounting Principles, the ratio of (a) Free Available
Cash Flow for the four immediately preceding fiscal quarters to (b) Interest
Expense for the four immediately preceding fiscal quarters plus the current
portion of Funded Indebtedness (including without limitation the current
portion of Capital Leases and Synthetic Leases) excluding the Convertible
Subordinated Note plus all pro forma Distributions for the immediately
following four fiscal quarters.
"FRB" means the Board of Governors of the Federal Reserve
System or any governmental authority succeeding to its functions.
"Free Available Cash Flow" means, as of any date of determination,
for Borrower and its Significant Subsidiaries on a consolidated basis,
determined in accordance with Generally Accepted Accounting Principles,
the sum of, without duplication, for the preceding four quarter period
ending on the date of determination (a) EBITDA, less (b) cash income
taxes payable and less (c) maintenance capital expenditures (which shall
exclude capital expenditures relating to any Property made within 12
months of the acquisition of such Property or the Person owning such
Property). The Free Available Cash Flow of any Significant Subsidiary
acquired by Borrower during the prior four fiscal quarters may be included.
"Funded Indebtedness" means, for any period, for Borrower and its
Subsidiaries on a consolidated basis, determined in accordance with
Generally Accepted Accounting Principles, an amount equal to the sum of,
without duplication:
(a) all Indebtedness for borrowed money
(excluding Indebtedness of Non-Recourse Joint Ventures) plus
(b) the principal portion of all Capital Leases and
Synthetic Leases plus
(c) indebtedness arising under acceptance
facilities and the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn
thereunder plus
(d) all Guaranty Obligations less
(e) amounts held as cash, cash equivalents and
marketable securities determined in accordance in Generally Accepted
Accounting Principles less $3,500,000.
"FX Trading Office" means the Foreign Exchange Trading Center
#5752, Los Angeles, California, of BofA, or such other of BofA's offices as
BofA may designate from time to time.
"Generally Accepted Accounting Principles" means generally
accepted accounting principles as in effect from time to time, including,
without limitation, applicable statements, bulletins and interpretations
issued by the Financial Accounting Standards Board and bulletins, opinions,
interpretations and statements issued by the American Institute of Certified
Public Accountants or its committees.
"Governmental Authority" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, central bank
or comparable authority, authority, board, bureau, commission, department,
instrumentality or public body, or (c) any court or administrative tribunal
of competent jurisdiction.
"Guarantors" means each Subsidiary of Borrower (individually a
"Guarantor") that is a guarantor under the Guaranty or becomes a guarantor
thereunder pursuant to Section 6.8.
"Guaranty" means the Subsidiary Continuing Guaranty
substantially in the form of Exhibit D hereto, either as originally executed
or as the same may from time to time be supplemented, modified, amended,
renewed, extended or supplanted.
"Guaranty Obligation" means, as to any Person, any (a) guarantee
by that Person of Indebtedness of, or other obligation performable by, any
other Person or (b) assurance, agreement, letter of responsibility, letter
of awareness, undertaking or arrangement given by that Person to an
obligee of any other Person with respect to the performance of an
obligation by, or the financial condition of, such other Person, whether
direct, indirect or contingent, including any purchase or repurchase
agreement covering such obligation or any collateral security therefor, any
agreement to provide funds (by means of loans, capital contributions or
otherwise) to such other Person, any agreement to support the solvency or
level of any balance sheet item of such other Person or any "keep-well" or
other arrangement of whatever nature given for the purpose of assuring or
holding harmless such obligee against loss with respect to any obligation of
such other Person; provided, however, that the term Guaranty Obligation
shall not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Guaranty Obligation
shall be deemed to be an amount equal to the stated or determinable amount
of the related primary obligation, or portion thereof, covered by such
Guaranty Obligation or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
Person in good faith.
"Hollywood Digital Acquisition" means the acquisition of certain
assets and the assumption of certain liabilities of Hollywood Digital Limited
Partnership, a Delaware limited partnership, by Todd-AO HD, Inc., a
California corporation.
"Indebtedness" means, as to any Person, at a particular time, all
items which would, in conformity with Generally Accepted Accounting
Principles, be classified as liabilities on a balance sheet of such Person
as at such time (excluding deferred compensation, deferred taxes, trade
accounts, programming liabilities and other accounts payable incurred in
the ordinary course of business in accordance with past practice), but in any
event including, without duplication, (a) indebtedness arising under
acceptance facilities and the face amount of all letters of credit issued
for the account of such Person and, without duplication, all drafts drawn
thereunder, (b) all liabilities secured by any Lien on any property owned
by such Person even though it has not assumed or otherwise become liable
for the payment thereof, (c) any withdrawal liability incurred under ERISA
by such Person (or, if such Person is Borrower, a Commonly Controlled
Entity) to a Multiemployer Plan, (d) all obligations of such Person as
lessee under leases which have been or should be, in accordance with
Generally Accepted Accounting Principles, recorded as Capital Lease
Obligations, (e) indebtedness relating to Synthetic Leases; and (f) all
Guaranty Obligations of such Person in respect of any of the foregoing.
"Interest Expense" means interest expense as determined in
accordance with Generally Accepted Accounting Principles.
"Interest Payment Date" means, (a) with respect to any Base Rate
Loan, the last Business day of each calendar quarter and the Maturity Date,
and (b) with respect to any other type of Loan, (i) any date that such Loan
is prepaid in whole or in part, (ii) the Maturity Date, and (iii) the last
day of each Interest Period applicable to, or the maturity of, such Loan;
provided, however, that if any Interest Period or the maturity of any such
Loan exceeds three months or 90 days, interest shall also be paid on the
date(s) that fall, as applicable, three, six or nine months, or 90, 180
or 270 days, respectively, after the beginning of such Interest Period shall
also be Interest Payment Dates.
"Interest Period" means, with respect to any Borrowing of an
Offshore Rate Loan or a CD Rate Loan, a period commencing on the
Borrowing Date thereof (or the date of the expiration of the then current
Interest Period with respect to any outstanding Offshore Rate Loans or CD
Rate Loans) to (1) with respect to a Borrowing of Offshore Rate Loans, a
date 1, 2, 3, 6 or 9 months (and, until the BofA Tranche Termination Date,
other periods of time up to 9 months, subject to such other periods being
available to each Bank in its sole discretion), in each case only to the
extent Dollar deposits or deposits in the applicable Offshore Currency of
such duration are generally available in the applicable offshore interbank
market, and (2) with respect to a Borrowing of CD Rate Loans, a date 30,
60, 90, 180 or 270 days thereafter (or such other day as may be agreed upon
by Borrower and the Administrative Agent and the Banks), subject in all
cases to the following:
(a) (i) If any Interest Period with respect to
CD Rate Loans would otherwise end on a day which is not a Business Day,
that Interest Period shall be extended to the next succeeding Business Day;
and (ii) If any Interest Period with respect to Offshore Rate Loans would
otherwise end on a day which is not an Offshore Rate Business Day, that
Interest Period shall be extended to the next succeeding Offshore Rate
Business Day, unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(b) no Interest Period for Loans shall extend
beyond any Reduction Date if the effect of establishing such an Interest
Period would be that the aggregate unpaid principal amount of all Loans
having Interest Periods ending after such Reduction Date would exceed the
amount permitted to be outstanding after such Amortization Date;
(c) no Interest Period for a Loan shall extend
beyond the Maturity Date;
(d) each Interest Period with respect to CD Rate
Loans shall be selected and conducted, and may vary in regard to the length
of period in accordance with the practices and customs of banking
institutions in connection with certificates of deposit purchased in New
York, New York by dealers in certificates of deposit was from time to time
in effect;
(e) each Interest Period with respect to Offshore
Rate Loans shall be interpreted, and may vary in regard to the length of
period, in accordance with the customs and practices of the international
inter-bank markets;
(f) the first Interest Period for any CD Rate Loans or for any
Offshore Rate Loans shall commence on the date of such Borrowing, and each
succeeding Interest Period (if any) for such Loans shall commence on the last
day of the preceding Interest Period; and
(g) No Interest Period commencing prior to
the BofA Tranche Termination Date may end after the BofA Tranche
Termination Date.
"Investment" means, when used in connection with any Person, any
investment by or of that Person, resulting in less than 100% of the
ownership of such Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means
of a loan, advance creating a debt, capital contribution, guaranty or other
debt or equity participation or interest in any other Person, including any
partnership and joint venture interests of such Person. The amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
"Investments" shall not include Acquisitions.
"Issuing Bank" means Bank of America National Trust and Savings
Association.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office"
or "Offshore Lending Office", as the case may be, on Schedule 10.6, or
such other office or offices as such Bank may from time to time notify
Borrower and the Administrative Agent.
"Letter of Credit" means any standby or commercial letter of credit
issued by the Issuing Bank under Section 2.3.
"Letter of Credit Application" means an application for issuances
of, or amendments to, letters of credit as shall at any time be in use at the
Issuing Bank.
"Letter of Credit Usage" means, as at any date of determination, the
undrawn face amount of outstanding Letters of Credit plus the aggregate
amount of all drawings under the Letters of Credit honored by the Issuing
Bank and not theretofore reimbursed by Borrower or converted into Loans.
"Leverage Ratio" means the ratio of Funded Indebtedness to
EBITDA; provided, however, that for purposes of determining the
Applicable Amount only, the Convertible Subordinated Notes shall not be
included in Funded Indebtedness; provided, further, that for purposes of
determining compliance with Section 7.6 in connection with any
Acquisition, not more than 80% of the EBITDA of (a) any Person being so
acquired (provided such EBITDA may be included only if such Person will
be a Significant Subsidiary immediately following such Acquisition) and (b)
any Significant Subsidiary acquired by Borrower less than two fiscal
quarters prior to the date of such Acquisition, may be included for purposes
of calculating the Leverage Ratio.
"Lien" means any mortgage, pledge, lien, security interest,
conditional sale or other title retention agreement or other similar
encumbrance.
"Loan" means (a) a Loan of any type made to Borrower by any
Bank in accordance with its Pro Rata Share pursuant to Section 2.1 or (b)
the Offshore Rate Loan continued by BofA pursuant to Section 2.1A.
"Loan Documents" means, collectively, this Agreement, the Notes,
the Guaranty, the Collateral Documents, any Request for Extension of
Credit, any Letter of Credit Application, any Compliance Certificate and
any other agreements of any type or nature hereafter executed and delivered
by Borrower or any of its Subsidiaries or Affiliates to the Administrative
Agent, the Issuing Bank or to any Bank in any way relating to or in
furtherance of this Agreement, in each case either as originally executed or
as the same may from time to time be supplemented, modified, amended,
restated, extended or supplanted.
"Maturity Date" means December 31, 2002 as such date may be
extended from time to time pursuant to Section 2.12.
"Minimum Amount" means, with respect to each of the following
actions, the following amounts set forth opposite such action (a reference to
"Minimum Amount" shall also be deemed a reference to the multiples in
excess thereof set forth below):
Minimum
Multiples
Minimum in excess of
Type of Action Amount Minimum Amount
Borrowing of,
prepayment of
or Conversion into,
Base Rate Loans $ 250,000 $ 100,000
Borrowing of,
prepayment of
or Continuation of,
Offshore Rate Loans
and CD Rate Loans $1,000,000 $ 500,000
Reduction in $1,000,000 $1,000,000
Commitments
Assignments $5,000,000
"Multiemployer Plan" means a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Worth" means net worth as determined in accordance with
Generally Accepted Accounting Principles.
"Non-Recourse Joint Venture" means a joint venture which is less
than 100% owned by Borrower or any Subsidiary having only Indebtedness
which is non recourse to Borrower and its Subsidiaries, other than such
joint venture. For purposes of this definition, Indebtedness shall be
deemed non recourse only if the creditor thereon has no direct or indirect
recourse to Borrower, any of its Subsidiaries (other than such joint
venture) or their respective assets (other than by reasons of a Guaranty
Obligation entered into in connection therewith and otherwise permitted by
Section 7.1(g)), whether by means of a judicial foreclosure or otherwise,
except for customary exceptions for fraud, misrepresentation,
misappropriation of funds, waste, criminal liability and environmental
liability.
"Note" means the promissory note made by Borrower to a Bank
evidencing the Loans made by such Bank, substantially in the form of
Exhibit C, either as originally executed or as the same may from time to
time be supplemented, modified, amended, renewed, extended or
supplanted (collectively, the "Notes").
"Notice of Assignment and Acceptance" means a Notice of
Assignment and Acceptance substantially in the form of Exhibit F.
"Obligations" means all present and future obligations of every
kind or nature of Borrower or any Subsidiary at any time and from time to
time owed to the Administrative Agent, any Bank, any Person entitled to
indemnification, or any one or more of them, under any one or more of the
Loan Documents, whether due or to become due, matured or unmatured,
liquidated or unliquidated, or contingent or noncontingent, including
obligations of performance as well as obligations of payment, and including
interest that accrues after the commencement of any proceeding under any
Debtor Relief Law by or against Borrower or any Subsidiary or Affiliate of
Borrower.
"Offshore Currency" means English Pounds Sterling, French
Francs or Deutsche Marks.
"Offshore Currency Commitment" means, for each Bank, such
Bank's undertaking to make Loans to Borrower or to participate in Letter of
Credit Usage denominated in Offshore Currencies in an aggregate principal
amount not exceeding 50% of the Dollar Equivalent of such Bank's
Commitment, as the same may be reduced pursuant to the terms of this
Agreement (collectively, the "Offshore Currency Commitments"). The
Offshore Currency Commitments are part of, and not in addition to, the
combined Commitments.
"Offshore Currency Loan" means an Offshore Rate Loan
denominated in an Offshore Currency.
"Offshore Rate" means, for any Interest Period, with respect to Offshore
Rate Loans comprising part of the same Borrowing, the per annum rate of
interest (rounded upward to the next 1/16th of 1%) determined by the
Administrative Agent as follows:
Offshore Rate = (LIBOR)/(1.00 - Eurodollar Reserve Percentage)
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest Period
the maximum reserve percentage (expressed as a decimal, rounded upward
to the next 1/100th of 1%) in effect on such day (whether or not applicable
to any Bank) under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency liabilities");
and
"LIBOR" means for each Interest Period the rate of interest per annum
determined by the Administrative Agent to be the arithmetic mean (rounded
upward to the next 1/16th of 1%) of the rates of interest per annum notified
to the Administrative Agent by BofA as the rate of interest at which dollar
deposits in the approximate amount of the amount of the Loan to be made
or Continued as, or Converted into, an Offshore Rate Loan by BofA and
having a maturity comparable to such Interest Period would be offered to
major banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period. The determination of the Eurodollar
Reserve Percentage and the Offshore Base Rate by the Administrative
Agent shall be conclusive in the absence of manifest error.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate, and may be an Offshore Rate Loan denominated in
Dollars or in an Offshore Currency.
"Overnight Rate" means, for any day, (a) in the case of amounts
denominated in Dollars, the Federal Funds rate and (b) for any amount
denominated in an Offshore Currency, the rate of interest per annum at
which overnight deposits in such Offshore Currency, in an amount
approximately equal to the amount with respect to which such rate is being
determined, would be offered for such day by Bank of America's principal
office in London to major banks in the London or other applicable offshore
interbank market.
"PBGC" means the Pension Benefit Guaranty Corporation created
by Section 4002(a) of ERISA, or any Governmental Authority succeeding
to the functions thereof.
"Person" means an individual, a partnership, a corporation
(including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture or any other entity of any type
whatsoever, or any government or any agency or political subdivision
thereof.
"Plan" means (a) with respect to Borrower, any plan described in
Section 4021(a) of ERISA and not excluded pursuant to Section 4021(b)
thereof, under which Borrower or any Commonly Controlled Entity has
contributed, and (b) with respect to any other Person, any employee benefit
plan or other plan established or maintained by such Person for the benefit
of such Person's employees and to which Title IV of ERISA applies.
"Plan Administrator" has the meaning assigned to the term
"administrator" in Section 3(16)(a) of ERISA.
"Plan Sponsor" has the meaning assigned to the term "plan
sponsor" in Section 3(16)(B) of ERISA.
"Pledge Agreement" means the Pledge Agreement, given by
Borrower in favor of the Administrative Agent substantially in the form of
Exhibit E hereto, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or
supplanted.
"Principal Stockholders" means Marshall Naify, Robert Naify and
Salah Hassanein.
"Prohibited Transaction" has the respective meanings assigned to
that term in Section 4975 of the Code and in Section 406 of ERISA.
"Property" means all types of real, personal, tangible, intangible or
mixed property.
"Pro Rata Share" means, with respect to each Bank, the percentage
of the combined Commitments set forth opposite the name of that Bank
under "Pro Rata Share" on Schedule 2.1.
"Quarterly Payment Date" means each February 28, May 31,
August 31 and November 30.
"Reduction Amount" means, with respect to any Reduction Date,
the amount necessary to reduce the then applicable combined Commitments
to the level set forth below opposite that Reduction Date, expressed as a
percentage of the combined Commitments in effect on the initial Reduction
Date:
Maximum Percent
of Combined
Commitments
Reduction Date(2) Remaining
November 30, 2000 93.75%
February 28, 2001 87.50%
May 31, 2001 81.25%August 31, 2001 75.00%
November 30, 2001 68.75%February 28, 2002 62.50%
May 31, 2002 56.25%
August 31, 2002 50.00%
December 31, 2002 0%
"Reduction Date" means each of the dates set forth under
"Reduction Date" in the definition of "Reduction Amount;" provided,
however, that if the Maturity Date has been extended pursuant to Section
2.12, each Reduction date shall be concurrently extended for the same
period of time.
"Reportable Event" means a "reportable event" described in
Section 4043(b) of ERISA as to which the 30 day notice period has not
been waived.
"Request for Extension of Credit" means a written request
substantially in the form of Exhibit A duly completed and signed by a
Responsible Officer, or a telephonic request followed by such a written
request, in each case delivered to the Administrative Agent by Requisite
Notice.
"Requisite Banks" means (a) as of any date of determination if the
Commitments are then in effect, Banks having in the aggregate 51% or
more of the combined Voting Pro Rata Share then in effect and (b) as of
any date of determination if the Commitments have then been terminated
and there are Loans or Letters of Credit outstanding, Banks holding Loans
and Letter of Credit Usage (giving effect to the risk participations set
forth in Section 2.1A(b)) aggregating 51% or more of the aggregate
outstanding principal amount of the Loans and Letter of Credit Usage.
"Requisite Notice" means, unless otherwise provided herein, (a)
irrevocable written notice to the intended recipient or (b) irrevocable
telephonic notice to the intended recipient, promptly followed by a written
notice to such recipient. Such notices shall be (i) delivered or made to
such Person at the address, telephone number or facsimile number set forth
on Schedule 10.6 or as otherwise designated by such Person by Requisite
Notice to the Administrative Agent and (ii) if made by Borrower, given or
made by a Responsible Officer. Any written notice shall be in the form, if
any, prescribed in the applicable section herein and may be given by
facsimile provided such facsimile is promptly confirmed by a telephone call
to such recipient.
"Requisite Time" means, with respect to any of the actions listed
below, the time set forth opposite such action (all times are California
time):
Action Time Date
Borrowing of, 8:00 a.m. Relevant Date
prepayment of
or Conversion into,
Base Rate Loans
Borrowing of, 10:00 a.m. 3 Business Days
Continuation of, prior to
prepayment of or relevant date
Conversion into
Offshore Rate Loans
Borrowing of, 10:00 a.m. 2 Business Days
Continuation of, prior to
prepayment of or relevant date
Conversion into
CD Rate Loans
Letter of Credit 10:00 a.m. 5 Business Days
Action prior to
action
Voluntary 10:00 a.m. 2 Business Days
Reduction prior to
of Commitments reduction date
Funds made 11:00 a.m. Relevant date
available by Banks or Borrower to
Administrative Agent
"Responsible Officer" means the President, Chief Financial Officer
or Controller of Borrower.
"Significant Subsidiary" means any Subsidiary of Borrower (a)
having at any time now or hereafter a net book value in accordance with
Generally Accepted Accounting Principles or, if greater, fair market value
(as reasonably determined by Borrower) exceeding 5% of the consolidated
assets of Borrower and its Subsidiaries or (b) that Borrower wishes to
include in calculating the covenants in Sections 7.11 and 7.12.
"Spot Rate" for a currency means the rate quoted by BofA as the
spot rate for the purchase by BofA of such currency with another currency
through its FX Trading Office at approximately 8:00 a.m. (San Francisco
time) on the date two Business Days prior to the date as of which the
foreign exchange computation is made.
"Subsidiary" means any Person (whether now existing or hereafter
organized or acquired) of which Borrower owns, directly or indirectly, more
than fifty (50%) of the securities or other equity interests or which
Borrower otherwise controls (collectively "Subsidiaries").
"Synthetic Lease" means, with respect to any Person, (a) a so-
called synthetic lease, or (b) an agreement for the use or possession of
property creating obligations which do not appear on the balance sheet of
such Person but which, upon the insolvency or bankruptcy of such Person,
may be characterized as the Indebtedness of such Person (without regard to
accounting treatment).
"Tangible Net Worth" means the gross book value, on a
consolidated basis, of Borrower's assets (exclusive of goodwill, patents,
trademarks, trade names, copyrights, deferred charges and other like
intangibles) less all liabilities (including accrued and deferred income
taxes and subordinated indebtedness).
"type" of Loan means (a) a Base Rate Loan, (b) an Offshore Rate
Loan with an Interest Period of one, two, three, six or nine months
thereafter, or (c) a CD Rate Loan with an Interest Period of 30, 60, 90, 180
or 270 days thereafter, in each case as selected by Borrower in the Request
for Extension of Credit relating thereto.
"Voting Pro Rata Share" means, with respect to each Bank, the
percentage of the combined Commitments set forth opposite the name of
that Bank under "Voting Pro Rata Share" on Schedule 2.1.
1.2 Currency Equivalents Generally. For all purposes of this
Agreement (but not for purposes of the preparation of any financial
statements delivered pursuant hereto), the equivalent in any Offshore
Currency or other currency of an amount in Dollars, and the equivalent in
Dollars of an amount in any Offshore Currency or other currency, shall be
determined at the Spot Rate from time to time as of any date for which the
Administrative Agent determines the Dollar Equivalent of Offshore
Currency Loans, including, without limitation (a) any date on which a
Borrowing of an Offshore Currency Loan is requested and made, (b) on the
date a Letter of Credit in an Offshore Currency is requested and Issued, (c)
the last Business Day of each month, and (d) any other date selected by the
Administrative Agent from time to time in its sole discretion.
1.3. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with Generally Accepted
Accounting Principles. When used herein, the term "financial statements"
shall include the notes and schedules thereto, but need not include such
notes or schedules when used in reference to such statements of any Person
as of any date other than the end of a fiscal year of such Person.
1.4 Rounding. Any financial ratios required to be maintained
by Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one
place more than the number of places by which such ratio is expressed in
this Agreement and rounding the result up or down to the nearest number
(with a round-up if there is no nearest number) to the number of places by
which such ratio is expressed in this Agreement.
1.5. Exhibits and Schedules. All Exhibits and Schedules to this
Agreement, either as originally existing or as the same may from time to
time be supplemented, modified or amended, are incorporated herein by
this reference. A matter disclosed on any Schedule shall be deemed
disclosed on all Schedules.
1.6 Miscellaneous Terms. The term "or" is disjunctive; the
term "and" is conjunctive. The term "shall" is mandatory; the term "may"
is permissive. The term "including" is by way of example and not limitation.
Section 2 COMMITMENTS; INTEREST, FEES, PAYMENT
PROCEDURES
2.1 The Commitments.
(a) Subject to the terms and conditions set forth in this
Agreement, each Bank severally agrees, to make, Convert and Continue
Loans on a revolving basis from time to time from the date hereof until the
Maturity Date as Borrower may request; provided, however, that (i) the
aggregate unpaid principal amount of each Bank's Loans and Letter of
Credit Usage at any one time outstanding shall not exceed such Bank's
Commitment, (ii) the aggregate unpaid principal amount of all Loans and
Letter of Credit Usage at any one time outstanding shall not exceed the
combined Commitments, and (iii) the aggregate unpaid principal amount of
all Offshore Currency Loans and Letter of Credit Usage denominated in
Offshore Currencies at any one time outstanding shall not exceed the
combined Offshore Currency Commitments. Subject to the foregoing and
other terms and conditions hereof, Borrower may borrow, Convert,
Continue, prepay and reborrow Loans as set forth herein without premium
or penalty. Offshore Currency Loans may be requested only as Offshore
Rate Loans.
(b) Loans made by each Bank shall be evidenced by one or
more loan accounts or records maintained by such Bank in the ordinary
course of business. Upon the request of any Bank made through the
Administrative Agent, such Bank's Loans may be evidenced by one or more
Notes, instead of or in addition to loan accounts. (Each such Bank may
endorse on the schedules, if any, annexed to its Note(s) the date, amount
and maturity of its Loans and payments with respect thereto.) Such loan
accounts, records or Notes shall be conclusive absent manifest error of the
amount of such Loans and payments thereon. Any failure so to record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of Borrower to pay any amount owing with respect to the Loans.
2.1A BofA Tranche Loan; Risk Participations.
(a) Subject to the terms and conditions set forth in this Agreement,
BofA shall continue to solely fund the $6,000,000 Offshore Rate Loan
outstanding under the Existing Credit Agreement as the BofA Tranche
Loan hereunder until the BofA Tranche Termination Date, on which date
the BofA Tranche Loan shall mature. The BofA Tranche Loan may not be
Continued or Converted after the Closing Date. Except as aforesaid, the
BofA Tranche Loan shall be deemed an Offshore Rate Loan for all
purposes hereunder. Except for the BofA Tranche Loan, all Extensions of
Credit shall be made in accordance with each Bank's Pro Rata Share as set
forth in Schedule 2.1(a) until the BofA Tranche Termination Date.
(b) On the Closing Date, and simultaneously with each Extension of
Credit thereafter, each Bank shall be deemed to have purchased a risk
participation in each other Bank's outstanding Loans (including the BofA
Tranche Loan) and Letter of Credit Usage such that, after giving effect
thereto, each Bank's share of all outstanding Loans and Letter of Credit
Usage shall equal its Pro Rata Share as set forth in Schedule 2.1(b). Upon
and during the continuation of any Event of Default, any Bank may demand
that each other Bank promptly provide its purchase price for the risk
participation it has purchased hereunder. The obligation of each Bank to so
provide its purchase price to BofA shall be absolute and unconditional and
shall not be affected by the occurrence of an Event of Default or any other
occurrence or event. Subject to Section 2.1A(c), on the BofA Tranche
Termination Date, such participations shall terminate.
(c) On the BofA Tranche Termination Date, concurrently with
Borrower paying the BofA Tranche Loan in full, the Commitments shall,
provided no Default or Event of Default exists, be adjusted as set forth in
Schedule 2.1(b) hereto.
2.2 Borrowings, Conversions and Continuations of Loans.
(a) Borrower may irrevocably request a Borrowing, Conversion
or Continuation of Loans in a Minimum Amount therefor by
delivering a duly completed Request for Extension of Credit therefor by
Requisite Notice to the Administrative Agent not later than the Requisite
Time therefor. All Borrowings, Conversions or Continuations shall
constitute Base Rate Loans unless properly and timely otherwise designated
as set forth in the prior sentence. Loans may only be Converted into or
Continued as Loans denominated in the same currency as originally
borrowed.
(b) Promptly following receipt of a Request for Extension of
Credit, the Administrative Agent shall notify each Bank of its Pro Rata
Share thereof by Requisite Notice. If any Bank is unable, in its sole
discretion and for any reason, to fund an Offshore Currency Loan in a
requested Offshore Currency, such Request for Extension of Credit shall be
deemed withdrawn. In the case of a Borrowing, Borrower may thereupon
request Loans in another currency. In the case of a Conversion or
Continuation, the affected Loans shall become due and payable at the end
of the Interest Period therefor. In the case of a Borrowing of Loans, each
Bank shall make the funds for its Loan in the currency of such Loans
available to the Administrative Agent at the Administrative Agent's Office
not later than the Requisite Time therefor on the Business Day specified in
such Request for Extension of Credit. Upon satisfaction or waiver of the
applicable conditions set forth in Section 4, all funds so received shall be
made available to Borrower in like funds received.
(c) The Administrative Agent shall promptly notify Borrower
and the Banks of the Offshore Rate applicable to any Offshore Rate Loan
upon determination of same.
(d) Unless the Administrative Agent and the Requisite Banks
otherwise consent, Loans with no more than six different Interest Rate
Periods shall be outstanding at any one time.
(e) No Loans other than Base Rate Loans may be requested or
continued during the existence of a Default or Event of Default. During the
existence of a Default or Event of Default, the Requisite Banks may
determine that any or all of the then outstanding Loans other than Base
Rate Loans shall be Converted to Base Rate Loans. Such Conversion shall
be effective upon notice to Borrower from the Administrative Agent and
shall continue so long as such Default or Event of Default continues to
exist.
(f) If a Loan is to be made on the same date that another Loan
in the same currency is due and payable, Borrower or the Banks, as the case
may be, shall make available to the Administrative Agent the net amount of
funds giving effect to both such Loans and the effect for purposes of this
Agreement shall be the same as if separate transfers of funds had been
made with respect to each such Loan.
(g) The failure of any Bank to make any Loan on any date
shall not relieve any other Bank of any obligation to make a Loan on such
date, but no Bank shall be responsible for the failure of any other Bank to
so make its Loan.
2.3 Letters of Credit. Subject to the terms and conditions hereof, at any
time and from time to time from the Closing Date through the Maturity Date,
the Issuing Bank shall issue, supplement, modify, amend, renew, or extend
such Letters of Credit denominated in Dollars or Offshore Currencies under
the Commitments as Borrower may request; provided, however, that (i) the
aggregate outstanding Letter of Credit Usage shall not exceed $2,500,000 at
any time, (ii) the aggregate unpaid principal amount of all Loans and Letter
of Credit Usage at any one time outstanding shall not exceed the combined
Commitments, and (iii) the aggregate unpaid principal amount of all
Offshore Currency Loans and Letter of Credit Usage denominated in
Offshore Currencies at any one time outstanding shall not exceed the
combined Offshore Currency Commitments. Each Letter of Credit shall be
in a form reasonably acceptable to the Issuing Bank. Unless all the Banks
otherwise consent in a writing delivered to the Administrative Agent, the
term of any Letter of Credit shall not exceed the Maturity Date.
Borrower may irrevocably request the issuance, supplement,
modification, amendment, renewal, or extension of a Letter of Credit by
delivering a duly completed Letter of Credit Application therefor to the
Issuing Bank, with a copy to the Administrative Agent, by Requisite Notice
not later than the Requisite Time therefor. The Administrative Agent shall
promptly notify the Issuing Bank whether such Letter of Credit Application,
and the action requested pursuant thereto, conforms to the requirements of
this Agreement. Upon the issuance, supplement, modification, amendment,
renewal, or extension of a Letter of Credit, the Issuing Bank shall promptly
notify the Administrative Agent, and the Administrative Agent shall
promptly notify the Banks, of such action and the amount and terms
thereof. Letters of Credit may have automatic extension or renewal
provisions ("evergreen" Letters of Credit) so long as the Issuing Bank has
the right to terminate such evergreen Letters of Credit no less frequently
than annually within a notice period to be agreed upon at the time each such
Letter of Credit is issued. This Agreement shall control in the event of any
conflict with any Letter of Credit Application.
Upon the issuance of a Letter of Credit, each Bank shall be deemed
to have purchased a pro rata participation in such Letter of Credit, as from
time to time supplemented, amended, renewed, or extended, from the
Issuing Bank in an amount equal to that Bank's Pro Rata Share. Without
limiting the scope and nature of each Bank's participation in any Letter of
Credit, to the extent that the Issuing Bank has not been reimbursed by
Borrower for any payment required to be made by the Issuing Bank under
any Letter of Credit, each Bank shall, pro rata according to its Pro Rata
Share, reimburse the Issuing Bank through the Administrative Agent
promptly upon demand for the amount of such payment. The obligation of
each Bank to so reimburse the Issuing Bank shall be absolute and
unconditional and shall not be affected by the occurrence of an Event of
Default or any other occurrence or event. Any such reimbursement shall
not relieve or otherwise impair the obligation of Borrower to reimburse the
Issuing Bank for the amount of any payment made by the Issuing Bank
under any Letter of Credit together with interest as hereinafter provided.
Borrower agrees to pay to the Issuing Bank through the
Administrative Agent an amount equal to any payment made by the Issuing
Bank with respect to each Letter of Credit within one Business Day after
demand made by the Issuing Bank therefor, together with interest on such
amount from the date of any payment made by the Issuing Bank at the
Default Rate. The principal amount of any such payment shall be used to
reimburse the Issuing Bank for the payment made by it under the Letter of
Credit. Each Bank that has reimbursed the Issuing Bank for its Pro Rata
Share of any payment made by the Issuing Bank under a Letter of Credit
shall thereupon acquire a pro rata participation, to the extent of such
reimbursement, in the claim of the Issuing Bank against Borrower under
this Section and shall share, in accordance with that pro-rata
participation, in any payment made by Borrower with respect to such claim.
If Borrower fails to make the payment required by subsection (d)
above within the time period therein set forth, in lieu of the reimbursement
to the Issuing Bank under such subsection, the Issuing Bank may (but is not
required to), without notice to or the consent of Borrower, instruct the
Administrative Agent to cause Loans to be made by the Banks in an
aggregate amount equal to the amount paid by the Issuing Bank with
respect to that Letter of Credit and, for this purpose, the conditions
precedent set forth in Section 4 shall not apply. The proceeds of such
Loans shall be paid to the Issuing Bank to reimburse it for the payment
made by it under the Letter of Credit. Such Loans shall be payable upon
demand and shall bear interest at the Default Rate.
Once an evergreen Letter of Credit is issued, Borrower shall not be
required to annually request that the Issuing Bank permit the renewal
thereof. The Borrower Parties, the Agent and the Banks authorize (but may
not require) the Issuing Bank to, in its sole discretion, permit the renewal
such evergreen Letter of Credit if such Letter of Credit could be issued in
the first instance at such time.
The obligations of Borrower under this Agreement with respect to
any Letter of Credit shall be absolute, unconditional and irrevocable and
shall be performed strictly in accordance with the terms of this Agreement
and of any application for Letter of Credit, including without limitation,
the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, this Agreement, any application for Letter of Credit or any other
agreement or instrument relating to any of the foregoing;
(ii) the existence of any claim, setoff, defense or other
rights that Borrower may have at any time against any beneficiary or
transferee of the Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement or any unrelated
transaction;
(iii) any breach of contract or other dispute between
Borrower and any beneficiary or transferee of the Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be
acting), the Issuing Bank or any other Person;
(iv) any demand, statement, tested telex or any other
document presented under a Letter of Credit which on its face appears to
conform with the terms and conditions of the Letter of Credit but proves to
have been invalid or insufficient for its intended business purpose or to
have been forged or fraudulent in any respect or to contain any statement
therein which is untrue or inaccurate in any respect whatsoever; or
(v) any delay, extension of time, renewal, waiver,
compromise or other indulgence or modification granted or agreed to by the
Issuing Bank, with or without notice to or approval by Borrower, in respect
to any Letter of Credit.
Neither the Issuing Bank nor any of its officers or directors shall be
liable or responsible for:
(i) the use that may be made of the Letters of Credit
or for any acts or omissions of the beneficiary or any transferee of the
Letters of Credit in connection therewith;
(ii) the validity, sufficiency for their intended business
purpose or genuineness of documents, or of any endorsements thereon
which on their face appear to conform to the terms and conditions of the
Letter of Credit, even if such documents should prove to be in any or all
respects invalid, insufficient for their intended business purpose,
fraudulent or forged; or
(iii) acceptance of documents that appear on their face to
conform to the terms and conditions of the Letter of Credit, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
The Issuing Bank shall be entitled to the same protections accorded
to the Administrative Agent pursuant to Section 9.7.
The Uniform Customs and Practice for Documentary Credits, as
published in its most current version by the International Chamber of
Commerce, shall be deemed a part of this Section and shall apply to all
Letters of Credit to the extent not inconsistent with applicable law.
Concurrently with the issuance of each Letter of Credit, Borrower
shall pay a letter of credit issuance fee to the Issuing Bank, for the sole
account of the Issuing Bank, in an amount set forth in a letter agreement
between Borrower and the Issuing Bank. Borrower shall also concurrently
pay to the Administrative Agent, for the ratable account of the Banks in
accordance with their Pro Rata Share, a standby letter of credit fee in an
amount equal to the Applicable Amount times the face amount of such
Letter of Credit through the termination or expiration of such Letter of
Credit. The letter of credit issuance fee and the standby letter of credit fee
are nonrefundable.
On or before the Maturity Date, Borrower shall, if any Letter of
Credit remains outstanding and partially or wholly undrawn, immediately
deliver to the Issuing Bank an irrevocable letter of credit from an issuer
acceptable to the Issuing Bank in its sole discretion, in form and substance
satisfactory to the Issuing Bank, in a stated amount not less than the Letter
of Credit Usage. The Issuing Bank shall hold such letter of credit as
collateral for Borrower's obligations to reimburse the Issuing Bank for any
drawings under such Letter of Credit. The Issuing Bank shall return such
letter of credit to Borrower upon all of such Letter(s) of Credit having
expired, becoming void or otherwise become unavailable for further
drawing, or the face amount thereof being reduced, or after the Maturity
Date, to the extent any cash collateral has not been applied to such
drawings, and the Issuing Bank having no further obligation thereunder, as
the case may be. The commissions payable with respect to Letters of
Credit will continue to accrue during any period that collateral is being
held.
2.4 Prepayments.
(a) Upon Requisite Notice to the Administrative Agent not
later than the Requisite Time therefor, Borrower may at any time and from
time to time voluntarily prepay Loans in the Minimum Amount therefor.
The Administrative Agent will promptly notify each Bank thereof and of
such Bank's Pro Rata Share of such prepayment. Borrower may non ratably
prepay the BofA Tranche Loan in whole or in part prior to the BofA
Tranche Termination Date.
(b) If, at any time (i) Letter of Credit Usage plus the
outstanding aggregate principal amount of Loans made exceeds the
combined Commitments, or (ii) the outstanding aggregate principal amount
of Offshore Currency Loans plus Letter of Credit Usage denominated in
Offshore Currencies exceed the combined Offshore Currency
Commitments, in each case whether by reason of the termination or any
reduction of the Commitments, because of a recalculation of the Dollar
Equivalent of outstanding Offshore Currency Loans pursuant to Section 1.3
or otherwise, Borrower shall immediately prepay the Loans and/or deposit
cash to be held by the Administrative Agent Bank in an interest-bearing
cash collateral account as collateral for Letter of Credit Usage hereunder in
an aggregate amount equal to such excess.
(c) Any prepayment of a Loan other than a Base Rate Loan
shall be accompanied by all accrued interest thereon, together with the costs
set forth in Section 3.6.
2.5 Voluntary Reduction or Termination of Commitments.
Upon Requisite Notice to the Administrative Agent not later than the
Requisite Time therefor, Borrower shall have the right, at any time and
from time to time, without penalty or charge, upon giving Requisite Notice
not later than the Requisite Time therefor, to reduce, permanently and
irrevocably, reduce the Commitments in the Minimum Amount therefor, or
terminate, the then unused portion of the Commitments, provided that any
such reduction or termination shall be accompanied by payment of all
accrued and unpaid commitment fees with respect to the portion of the
Commitments being reduced or terminated. The Administrative Agent shall
promptly notify the Banks of any request for reduction or termination of the
Commitments under this Section. Each Bank's Commitment shall be
reduced by an amount equal to such Bank's Pro Rata Share times the
amount of such reduction. Any voluntary reduction in the combined
Commitments shall become effective on the date requested by Borrower
and shall be applied against future Reduction Amounts as selected by
Borrower at time of such reduction.
2.6 Mandatory Reductions in Commitments.
(a) The combined Commitments shall automatically and
ratably be reduced on each Reduction Date by the applicable Reduction
Amount. (b) All accrued commitment fees to, but not including the
effective date of each reduction shall be paid on the effective date thereof
such reduction.
2.7 Principal and Interest.
(a) If not sooner paid, Borrower shall pay, and promises to
pay, the outstanding principal amount of each Loan on the Maturity Date in
the currency of the Loan.
(b) Subject to the subsection (c), Borrower shall pay interest
on the unpaid principal amount of the Loans in the currency of such Loans
(before and after default, before and after maturity, before and after
judgment, and before and after the commencement of any proceeding under
any Debtor Relief Law) from the date borrowed until paid in full (whether
by acceleration or otherwise) on each Interest Payment Date for each type
of Loan at a rate per annum equal to the applicable interest rate determined
in accordance with the definition thereof, plus, if applicable, any
Applicable Amount.
(c) If any amount payable by Borrower under any Loan
Document is not paid when due (without regard to any applicable grace
periods), it shall thereafter bear interest at a fluctuating interest rate
per annum at all times equal to the Default Rate. Accrued and unpaid
interest on past due amounts (including, without limitation, interest on past
due interest) shall be compounded monthly, on the last day of each calendar
month, to the fullest extent permitted by applicable laws and payable upon
demand.
2.8 Fees.
(a) Commitment Fee. Borrower shall pay to the Administrative
Agent, for the ratable accounts of the Banks pro rata according to their Pro
Rata Share, a commitment fee equal to the Applicable Amount times the
average daily amount by which the combined Commitments exceed the sum
of the aggregate unpaid principal Dollar Equivalent amount of each Bank's
Loans (excluding the BofA Tranche Loan) and Letter of Credit Usage. The
commitment fee shall accrue from the Closing Date until the Maturity Date
and shall be payable quarterly in arrears on each Quarterly Payment Date
and on the Maturity Date. The commitment fee shall be calculated
quarterly in arrears; if there is any change in the Applicable Amount during
any quarter, the average daily amount shall be computed and multiplied by
the Applicable Amount separately for each period that such Applicable
Amount was in effect during such quarter.
(b) Agency Fees. Borrower shall pay to the Administrative
Agent an agency fee in such amounts and at such times as heretofore agreed
upon by letter agreement between Borrower and the Administrative Agent.
The agency fee is for the services to be performed by the Administrative
Agent in acting as Administrative Agent and is fully earned on the date
paid. The agency fee paid to the Administrative Agent is solely for its own
account and is nonrefundable.
(c) Upfront Fee. Borrower shall pay to the Administrative
Agent on the Closing Date for the account of each Bank (other than BofA)
an upfront fee equal to 10 basis points of each Bank's Commitment
hereunder. In addition, upon any Bank agreeing to increase its
Commitment pursuant to Section 2.13, Borrower shall pay to the
Administrative Agent for the account of such Bank (other than BofA)an
upfront fee equal to 10 basis points of such Bank's increased Commitment.
(d) Arrangement Fee. Borrower shall pay to the
Administrative Agent on the Closing Date for the account of the Arranger an
arrangement fee as heretofore agreed upon by letter agreement between
Borrower and the Arranger.
2.9 Computation of Interest and Fees. Computation of
interest on Offshore Rate Loans and CD Rate Loans shall be calculated on
the basis of a year of 360 days and the actual number of days elapsed,
which results in a higher yield to the Banks than a method based on a year
of 365 or 366 days, as the case may be, and the actual number of days
elapsed. Computation of interest on all other types of Loans and all fees
under this Agreement shall be calculated on the basis of a year of 365 or
366 days, as the case may be, and the actual number of days elapsed.
Interest shall accrue on each Loan for the day on which the Loan is made;
interest shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid. Any Loan that is repaid on the
same day on which it is made shall bear interest for one day.
Notwithstanding anything in this Agreement to the contrary, interest in
excess of the maximum amount permitted by applicable laws shall not
accrue or be payable hereunder, and any amount paid as interest hereunder
which would otherwise be in excess of such maximum permitted amount
shall instead be treated as a payment of principal.
2.10 Manner and Treatment of Payments among the Banks,
Borrower and the Administrative Agent.
(a) Unless otherwise provided herein, all payments by
Borrower or any Bank hereunder shall be made to the Administrative Agent
at the Administrative Agent's Office not later than the Requisite Time for
such type of payment. All payments received after such Requisite Time
shall be deemed received on the next succeeding Business Day. All
payments shall be made in immediately available funds in lawful money of
the United States of America provided, that payments with respect to
Offshore Currency Loans shall be made in the applicable Offshore
Currency.
(b) Upon satisfaction of any applicable terms and conditions
set forth herein, the Administrative Agent shall promptly make any amounts
received in accordance with the prior subsection available in like funds
received as follows: (i) if payable to Borrower, by crediting the Designated
Deposit Account, and (ii) if payable to any Bank, by wire transfer to such
Bank at the address specified in Schedule 10.6. The Administrative Agent's
determination, or any Bank's determination not contradictory thereto, of any
amount payable hereunder shall be conclusive in the absence of manifest
error.
(c) Subject to the definition of "Interest Period," if any
payment to be made by Borrower or any Guarantor shall come due on a day
other than a Business Day, payment shall instead be considered due on the
next succeeding Business Day and the extension of time shall be reflected
in computing interest and fees.
(d) Unless Borrower or any Bank has notified the
Administrative Agent prior to the date any payment to be made by it is due,
that it does not intend to remit such payment, the Administrative Agent
may, in its discretion, assume that Borrower or the Bank, as the case may
be, has timely remitted such payment and may, in its discretion and in
reliance thereon, make available such payment to the Person entitled
thereto. If such payment was not in fact remitted to the Administrative
Agent, then:
(i) if Borrower failed to make such payment, each
Bank shall forthwith on demand repay to the Administrative Agent the
amount of such assumed payment made available to such Bank, together
with interest thereon in respect of each day from and including the date
such amount was made available by the Administrative Agent to such Bank
to the date such amount is repaid to the Administrative Agent at the
Overnight Rate; and
(ii) if any Bank failed to make such payment, such
Bank shall on the Business Day following such Borrowing Date make pay to
the Administrative Agent the amount of such assumed payment made
available to Borrower, together with interest thereon in respect of each day
from and including the date such amount was made available by the
Administrative Agent to Borrower to the date such amount is paid to the
Administrative Agent at the Overnight Rate. Nothing herein shall be
deemed to relieve any Bank from its obligation to fulfill its Commitment
or to prejudice any rights which the Administrative Agent or Borrower may
have against any Bank as a result of any default by such Bank hereunder.
2.11 Funding Sources. Nothing in this Agreement shall be
deemed to obligate any Bank to obtain the funds for any Loan in any
particular place or manner or to constitute a representation by any Bank
that it has obtained or will obtain the funds for any Loan in any particular
place or manner.
2.12 Extension of Maturity Date and Reduction Dates. At the
request of Borrower and with the written consent of all of the Banks (which
may be given or withheld in the sole and absolute discretion of each Bank)
the Maturity Date and each Reduction Date may be extended for one-year
periods pursuant to this Section, provided no Default or Event of Default
has occurred and is continuing at the time of such request or at the time of
such extension. Not earlier than 45 days prior to the each anniversary of
the Closing Date occurring prior to the initial Reduction Date, nor later
than any such anniversary date, Borrower may request by Requisite Notice
made to the Administrative Agent (who shall promptly notify the Banks) a
one year extension of the Maturity Date and corresponding one year
extension of each Reduction Date. Such request shall include a certificate
signed by a Responsible Officer stating that (a) the representations and
warranties contained in Section 5 (except with respect to any representation
or warranty which specifically refers to an earlier date) are true and
correct on and as of the date of such certificate and (b) no Default or
Event of Default has occurred and is continuing. Each Bank shall, within
15 Business days of the Administrative Agent delivering such notice to such
Bank, notify in writing the Administrative Agent whether it consents to or
declines such request. If a Bank fails to respond, it shall be deemed to
have declined such request. The Administrative Agent shall, after
receiving the notifications from all of the Banks or the expiration of such
period, whichever is earlier, notify Borrower and the Banks of the results
thereof. If all of the Banks have consented, and no Default or Event of
Default has occurred and is continuing, then the Maturity Date and each
Reduction Date shall be extended for one year.
If the Requisite Banks consent to the request for extension, but one
or more Banks declines or is deemed to have declined such request for such
extension, and the conditions for such an extension could have been
satisfied but for such Bank(s) declining, Borrower may cause such Bank(s)
to be removed as a Bank(s) under this Agreement or the Commitments of
such Banks to be terminated pursuant to Section 10.23, whereupon the
Maturity Date and each Reduction Date shall be extended for one year upon
satisfaction of the conditions set forth above.
2.13 Increase in Commitments. (a) Borrower may from time to
time request an increase in the combined Commitments up to an aggregate
$60,000,000 upon Requisite Notice to the Administrative Agent,
accompanied by such documents evidencing corporate approval thereof as
the Administrative Agent may reasonably request. The Administrative
Agent shall promptly notify each Bank of such request. Each Bank shall
have 30 days to respond whether, in its sole discretion, (i) it agrees to
increase its Commitment by an amount equal to its Pro Rata Share of such
requested increase, (ii) it agrees to increase its Commitment by an amount
less than its Pro Rata Share of such requested increase or (iii) it does not
agree to increase its Commitment. Any Bank that has not responded within
the above time period shall be deemed not to have elected not to increase its
Commitment.
(b) To the extent that any Bank declines, or is
deemed to have declined, to participate in any such increase to the full
extent of its Pro Rata Share (a "Declining Bank"), the Borrower may
request, through the Administrative Agent, that one or more other Banks, in
their sole discretion, further increase their Commitment(s) by the amount of
the increase declined by the Declining Bank(s). Borrower shall execute and
deliver amended Notes, as necessary, and the Administrative Agent shall
distribute an amended Schedule 2.01 (which shall thereafter be
incorporated into this Agreement), to reflect any increase in the
Commitments and each Bank's Pro Rata Share thereof.
(c) In order to make all Bank's interests in any
outstanding Loans ratable in accordance with any revised Pro Rata Shares
after giving effect to any increase in the Commitments, Borrower shall pay
or prepay, if necessary, on the effective date of any such increase, all
outstanding Loans and pay, to the extent applicable, any amounts due under
Section 3.6. Borrower may then reborrow, if it desires to do so, such Loans
from the Banks in accordance with their revised Pro Rata Shares. The
Bank's Pro Rata Shares of Letter of Credit Usage shall also be deemed
adjusted, on the effective of any such increase, so that each Bank's pro rata
share thereof is equal to its revised Pro Rata Share.
2.14 Collateral and Guaranties. All Obligations shall be
secured by the Collateral and guarantied by the Guaranty.
3.1 Taxes. Each payment of any amount payable by Borrower
or any Guarantor under this Agreement or any other Loan Document shall
be made free and clear of, and without reduction by reason of, any
Applicable Taxes. To the extent that Borrower or any Guarantor is
obligated by applicable laws to make any deduction or withholding on
account of Applicable Taxes from any amount payable to any Bank or the
Issuing Bank under this Agreement, Borrower or such Guarantor promptly
notify the Administrative Agent of such fact and shall (a) make such
deduction or withholding and pay the same to the relevant Governmental
Authority and (b) pay such additional amount directly to that Bank or the
Issuing Bank as is necessary to result in that Bank's receiving a net after-
Applicable Tax amount equal to the amount to which that Bank would have
been entitled under this Agreement absent such deduction or withholding.
3.2 Increased Cost. If any Bank or the Issuing Bank
determines that any laws have the effect of increasing its cost of agreeing
to make or making, funding or participating in, funding or maintaining any
Loans or Letters of Credit, then Borrower shall, upon demand by such Bank
or the Issuing Bank (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Bank or the
Issuing Bank additional amounts sufficient to compensate such Bank for
the amount of such increased cost reasonably allocable to Borrower's
obligations under this Agreement. If Borrower so notifies the
Administrative Agent within five Business Days after any Bank or the
Issuing Bank notifies Borrower of any demand for compensation, Borrower
may Convert any relevant outstanding Dollar-denominated Loans of such
Bank into Base Rate Loans.
3.3 Capital Adequacy. If any Bank or the Issuing Bank
determines that any law regarding capital adequacy, or compliance by such
Bank or the Issuing Bank (or its Lending Office) or any corporation
controlling the Bank or the Issuing Bank, with any request, guideline or
directive regarding capital adequacy (whether or not having the force of
law) of any Governmental Authority not imposed as a result of such Bank's,
the Issuing Bank's or such corporation's failure to comply with any other
laws, affects or would affect the amount of capital required or expected to
be maintained by such Bank, the Issuing Bank, or any corporation
controlling such Bank or the Issuing Bank and (taking into consideration
such Bank's, the Issuing Bank's or such corporation's policies with respect
to capital adequacy and such Bank's or the Issuing Bank's desired return on
capital) determines in good faith that the amount of such capital is
increased, or the rate of return on capital is reduced, as a consequence
of its obligations under this Agreement, then upon demand of such Bank or
the Issuing Bank (with a copy to the Administrative Agent), Borrower shall
pay to such Bank or the Issuing Bank, from time to time as specified in
good faith by such Bank or the Issuing Bank, additional amounts sufficient
to compensate such Bank or the Issuing Bank in light of such
circumstances, to the extent reasonably allocable to such obligations under
this Agreement.
3.4 Illegality. If any Bank determines that any law has made it
unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Bank or its applicable Lending Office to make, maintain
or fund Offshore Rate Loans, or materially restricts the authority of such
Bank to purchase or sell, or to take deposits of, Dollars or the applicable
Offshore Currency in the applicable offshore interbank market, or to
determine or charge interest rates based upon the Offshore Rate, then, on
notice thereof by the Bank to Borrower through the Administrative Agent,
any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Administrative Agent and Borrower
that the circumstances giving rise to such determination no longer exist.
Upon receipt of such notice, Borrower shall, upon demand from such Bank
(with a copy to the Administrative Agent), prepay or Convert all Dollar
- -denominated Offshore Rate Loans of that Bank, either on the last day of the
Interest Period thereof, if the Bank may lawfully continue to maintain such
Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. Each Bank agrees
to designate a different Lending Office if such designation will avoid the
need for such notice and will not, in the good faith judgment of such Bank,
otherwise be materially disadvantageous to such Bank.
3.5 Inability to Determine Rates. If, in connection with an
Request for Extension of Credit, the Administrative Agent determines that
(a) deposits in Dollars or the applicable Offshore Currency are not being
offered to Banks in the applicable offshore interbank market for the
applicable amount and Interest Period of the requested Loan, (b) adequate
and reasonable means do not exist for determining the underlying interest
rate (other than the Base Rate) for the Loans requested therein, or (c) such
underlying interest rates do not adequately and fairly reflect the cost to
the Banks of funding such Loan, the Administrative Agent will promptly so
notify Borrower and each Bank. Thereafter, the obligation of the Banks to
make or maintain Loans based upon such affected interest rate shall be
suspended until the Administrative Agent revokes such notice. Upon
receipt of such notice, Borrower may revoke any pending Request for
Extension of Credit for such type of Loan or, failing that, be deemed to
have converted any such Request for Extension of Credit Dollar
- -denominated Loans into a request for Base Rate Loans in the amount
specified in therein.
3.6 Breakfunding Costs. Upon Continuation, Conversion,
payment or prepayment of any Loan other than a Base Rate Loan on a day
other than the last day in the applicable Interest Period (whether voluntary,
mandatory, automatic, by reason of acceleration, or otherwise and including
any such action required under this Section 3), or upon the failure of
Borrower (for a reason other than the failure of a Bank to make an Loan) to
borrow, Continue or Convert any Loan other than a Base Rate Loan on the
date or in the amount specified in any Request for Extension of Credit, then
Borrower shall, upon demand made by any Bank (with a copy to the
Administrative Agent), reimburse each Bank and hold each Bank harmless
from any loss or expense which the Bank may sustain or incur as a
consequence thereof, including any such loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan
or from fees payable to terminate the deposits from which such funds were
obtained.
3.7 Matters Applicable to all Requests for Compensation.
(a) The Administrative Agent and any Bank, shall provide
reasonable detail to Borrower regarding the manner in which the amount of
any payment to the Administrative Agent or that Bank, under this Section 3
has been determined, concurrently with demand for such payment. The
Administrative Agent's or any Bank's determination of any amount payable
under this Section 3 shall be conclusive in the absence of manifest error.
(b) For purposes of calculating amounts payable under this
Section 3 any Loans shall be deemed to have been funded at the applicable
interest rate set forth in the definition thereof whether or not such Loan
was, in fact, so funded.
(c) All of Borrower's obligations under this Section 3 shall
survive termination of the Commitments and payment in full of all
Obligations.
Section 4. CONDITIONS
4.1 Initial Loans, Etc. The obligation of each Bank to make the
initial Loan to be made by it, or the obligation of the Issuing Bank to
issue the initial Letter of Credit (as applicable), is subject to delivery
to the Administrative Agent of the following, in form and substance
satisfactory to the Administrative Agent (unless all of the Banks, in their
sole and absolute discretion, shall agree otherwise):
(a) This Agreement duly executed by Borrower, the Banks
and the Administrative Agent.
(b) The Guaranty duly executed by each Guarantor.
(c) The Pledge Agreement duly executed by Borrower and the
Administrative Agent, together with, within 20 days after the Closing Date,
all stock certificates representing any Pledged Securities (as defined in
the Pledge Agreement) not already in the possession of the Administrative
Agent, and signed and undated stock powers for each such certificate.
(d) The signed certificate of the President, a Senior Vice
President, or a Vice President and the Secretary or an Assistant Secretary
of Borrower and each Guarantor, dated as of the Closing Date, certifying as
to (i) a true and correct copy of resolutions adopted by the Board of
Directors of Borrower and such Guarantor authorizing the execution,
delivery and performance by Borrower and such Guarantor of this
Agreement and all other Loan Documents to which it is a party and (ii) the
incumbency and specimen signatures of officers of Borrower and each
Guarantor executing and delivering a Loan Document.
(e) Notes executed by Borrower in favor of each Bank
requesting a Note, each in a principal amount equal to that Bank's Pro Rata
Share.
(f) Written opinions, dated the Closing Date, of Dan R.
Malstrom, counsel for Borrower and each Guarantor and Greenberg &
Glusker, special counsel to Borrower and each Guarantor, or of other
counsel designated by Borrower (which counsel must be satisfactory to the
Banks).
(g) To the extent not previously delivered to BofA or to the
extent there has been any change therein since being so delivered, (i) a
true and correct copy of the by-laws of Borrower and such Guarantor as in
effect on such date and (ii) a photocopy of the Certificate of Incorporation
of Borrower and each Guarantor and each amendment, if any, thereto,
certified by the Secretary of Borrower or such Guarantor as being the
complete copy of such document as in effect on the date hereof.
(h) A certificate signed by a Responsible Officer (i) certifying
that all representations and warranties of Borrower contained in Section 5
are true and correct, (ii) certifying that Borrower and each Guarantor are
in compliance with all the terms and provisions of the Loan Documents to
which each is a party, (iii) certifying that, after giving effect to the
initial Loan (or initial Letter of Credit, as applicable), no Default or Event
of Default exists, and ( iv) setting forth the Leverage Ratio as of the last
day of the most recently ended fiscal quarter of Borrower based on the
preliminary, unaudited balance shee and income statement of Borrower as
of August 31, 1997 for the Fiscal Year then ended.
(i) Payment to the Administrative Agent such fees as are
required to be paid on or prior to the Closing Date pursuant to Section 2.8.
(j) Payment of Attorney Costs of BofA to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of Attorney
Costs as shall constitute BofA's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided
that such estimate shall not thereafter preclude final settling of accounts
between Borrower and BofA).
(k) Such other evidence as the Administrative Agent or the
Banks may reasonably request to establish the consummation of the
transactions contemplated hereby, the taking of all proceedings in
connection herewith and compliance with the conditions set forth in this
Agreement.
Any document required or requested pursuant to this Section 4.1
may be furnished by facsimile transmission provided that original
documents (where applicable) are furnished within 5 business days after the
facsimile transmission.
4.2 Conditions of Lending -- All Loans and all Letters of
Credit. The obligations of each Bank to make any Extension of Credit are
subject to the fulfillment of the following conditions precedent:
(a) On each Borrowing Date, and after giving effect to the
Loans to be made or Letters of Credit to be issued on each such Borrowing
Date, except, in the case where the aggregate principal amount of the Loans
being made or Letters of Credit being issued on such Borrowing Date
equals or is less than the aggregate principal amount of the Loans maturing
or Letters of Credit expiring on such Borrowing Date, (i) there shall exist
no Default or Event of Default and (ii) the representations and warranties
contained in this Agreement shall be true, correct and complete in all
material respects on and as of such date to the extent as though made on
and as of such date, except with respect to any representation or warranty
which specifically refers to an earlier date;
(b) All documents required by the provisions of this
Agreement to be executed or delivered to the Administrative Agent on or
before the applicable Borrowing Date shall have been executed and shall
have been delivered to the Administrative Agent on or before such
Borrowing Date;
(c) the Administrative Agent shall have timely received a duly
completed Request for Extension of Credit or Letter of Credit Application,
as applicable, by Requisite Notice by the Requisite Time therefor; and
(d) the Administrative Agent shall have received, in form and
substance satisfactory to the Administrative Agent, such other assurances,
certificates, documents or consents related to the foregoing as the
Administrative Agent or Requisite Banks reasonably may require.
Section 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Administrative Agent and
the Banks that: 5.1 Due Incorporation; Good Standing. Borrower is a
Delaware corporation duly organized and existing under the laws of
Delaware, and, to the best of Borrower's knowledge, is properly licensed
and in good standing in, and where necessary to maintain Borrower's rights
and privileges has complied with the fictitious name statute of, every
jurisdiction in which Borrower is doing business. Each Guarantor is a duly
organized and existing corporation under the laws of the state of its
incorporation, and, to the best of Borrower's knowledge, is properly
licensed and in good standing in, and where necessary to maintain such
Guarantor's rights and privileges has complied with the fictitious name
statute of, every jurisdiction in which such Guarantor is doing business.
5.2 Corporate Power; Authorization. The execution, delivery
and performance of this Agreement and each other Loan Document to
which Borrower is a party are within Borrower's powers, have been duly
authorized, and are not in conflict with the terms of any charter, bylaw or
other organization papers of Borrower, or any instrument or agreement to
which Borrower is a party or by which Borrower is bound or affected. The
execution, delivery and performance of each Loan Document to which each
Guarantor is a party are within such Guarantor's powers, have been duly
authorized, and are not in conflict with the terms of any charter, bylaw or
other organization papers of such Guarantor, or any instrument or
agreement to which such Guarantor is a party or by which such Guarantor
is bound or affected.
5.3 Government Action. No approval, consent, exemption or
other action by, or notice to or filing with, any Governmental Authority is
necessary in connection with the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document to which
Borrower or a Guarantor is a party, except as may have been obtained and
certified copies of which have been delivered to the Administrative Agent.
5.4 No Legal Bar. There is no law, rule or regulation, nor is
there any judgment, decree or order of any court or governmental authority
binding on Borrower or any Guarantor, which would be contravened by the
execution, delivery, performance or enforcement of this Agreement or any
other Loan Document to which Borrower or a Guarantor is a party.
5.5 Enforceable Obligation. This Agreement and each other
Loan Document to which Borrower or a Guarantor is a party is a legal, valid
and binding agreement of Borrower and each Guarantor, enforceable
against Borrower and each Guarantor in accordance with its terms, and
Loan Document, when executed and delivered, will be similarly legal, valid,
binding and enforceable.
5.6 Ownership of Property; Liens. Borrower and each
Subsidiary of Borrower has good and marketable title to its properties and
assets free and clear of all Liens, except for:
(a) taxes which have resulted in a Lien but are not yet
delinquent; and
(b) Liens permitted under Section 7.2;
and the execution, delivery or performance of this Agreement and each
other Loan Document to which Borrower or a Guarantor is a party will not
result in the creation of any such Lien other than in favor of the
Administrative Agent and the Banks.
Litigation. There are no suits, proceedings, claims or disputes
pending or, to the knowledge of Borrower or any Subsidiary of Borrower,
threatened against or affecting Borrower or any Subsidiary or its respective
properties, the adverse determination of which could affect Borrower's or a
Guarantor's financial condition or operations, taken as a whole, or could
impair Borrower's or a Guarantor's ability to perform its obligations
hereunder or any other Loan Document to which Borrower or a Guarantor
is a party.
5.8 No Default. No event has occurred and is continuing or
would result from the incurring of obligations by Borrower or any
Guarantor under this Agreement or any other Loan Document to which
Borrower or a Guarantor is a party which is a Default, or is, or with the
passing of time or giving of notice or both would be, an Event of Default.
5.9 Significant Subsidiaries. Borrower has only the
Significant Subsidiaries listed on Schedule 5.9, as amended from time to
time pursuant to Section 6.9.
5.10 Ownership of Stock. The Principal Stockholders own
directly or as trustees under trusts established for the benefit of
themselves and/or members of their immediate families, in the aggregate at
least 20% of the capital stock of Borrower and control at least 50% of the
total voting rights accruing under the capital stock of Borrower; provided,
that, for purposes of determining compliance with this covenant, each of the
Principal Stockholders shall be deemed to own shares registered in his
name (unless he has delegated or otherwise transferred or assigned voting
rights in such shares) notwithstanding that an existing spouse may be
deemed to have rights in such shares under applicable community property
laws.
5.11 No Conflicting Agreements. Neither Borrower nor any
Subsidiary is in default under any agreement to which it is a party or by
which it or any of its Property is bound the effect of which could have a
material adverse effect on the business or operations of Borrower and its
Subsidiaries, taken as a whole, or could impair Borrower's or a Guarantor's
ability to perform its obligations hereunder or under any Loan Document to
which Borrower or any Guarantor is a party. No provision of (i) the articles
of incorporation, charter, bylaws, preferred stock or any shareholder
agreement of Borrower or any Subsidiary, (ii) any existing mortgage or
indenture, (iii) any other contract or agreement (which is, individually
or in the aggregate, material to the consolidated financial condition,
business or operations of Borrower and its Subsidiaries), (iv) any statute
(including, without limitation, any applicable usury or similar law), rule
or regulation, and (v) any judgment, decree or order (which is, individually
or in the aggregate, material to the consolidated financial condition,
business or operations of Borrower and its Subsidiaries), in either case
binding on Borrower or any Subsidiary or affecting the Property of
Borrower or any Subsidiary; conflicts with, or requires any consent under,
or would in any way prevent the execution, delivery or carrying out of the
terms of this Agreement or any other Loan Document, and the taking of any
such action will not constitute a default under, or result in the creation
or imposition of, or obligation to create, any Lien upon the Property of
Borrower or any Subsidiary pursuant to the terms of any such mortgage,
indenture, contract or agreement (other than any right to setoff or banker's
lien or attachment that the Banks may have under applicable law).
5.12 Taxes. Borrower and each Subsidiary has filed or caused
to be filed all tax returns required to be filed, and has paid, or has made
adequate provision for the payment of, all taxes shown to be due and
payable on said returns or in any assessments made against it, and no tax
liens have been filed and no claims are being asserted with respect to such
taxes which are required by Generally Accepted Accounting Principles to
be reflected in the financial statements of Borrower and are not so
reflected therein. The charges, accruals and reserves on the books of
Borrower and each Subsidiary with respect to all federal, state, local and
other taxes are considered by the management of Borrower to be adequate,
and Borrower knows of no unpaid assessment which is due and payable
against Borrower or any Subsidiary, except (a) those not yet delinquent, (b)
those not substantial in aggregate amount, (c) such thereof as are being
contested in good faith and by appropriate proceedings diligently
conducted, or (d) those involving foreign taxes and assessments which are
involved in a good faith dispute with respect to tax or other matters.
5.13 Financial Statements. Borrower has heretofore delivered
to the Administrative Agent copies of (a) the preliminary unaudited balance
sheet and income statement of Borrower as of August 31, 1997 for the
Fiscal Year then ended and (b) the unaudited consolidated balance sheet of
Borrower as of May 31, 1997 for the three Fiscal Quarters then ended, and
the related consolidated statements of operations, shareholder's equity and
changes in cash flows for periods covered thereby (such statements being
sometimes referred to herein as the "Financial Statements"). Both Financial
Statements fairly present the consolidated financial condition and the
consolidated results of operations of Borrower as of the date and for the
periods indicated therein, and the Financial Statements have been prepared
in conformity with Generally Accepted Accounting Principles (except as
disclosed in the notes thereto). As of the Closing Date, except (i) as
reflected in the Financial Statements or in the footnotes thereto, or
(ii) as otherwise disclosed in writing to the Administrative Agent and the
Banks prior to the date hereof, neither Borrower nor any Subsidiary has any
obligation or liability of any kind (whether fixed, accrued, contingent,
unmatured or otherwise) which is material to Borrower and the Subsidiaries
on a consolidated basis and which, in accordance with Generally Accepted
Accounting Principles consistently applied, should have been recorded or
disclosed in such Financial Statements and were not, other than those
incurred in the ordinary course of their respective businesses since the date
of such Financial Statements. Since May 31, 1997 Borrower and each
Subsidiary has conducted its business only in the ordinary course, and there
has been no adverse change in the financial condition of Borrower and its
Subsidiaries taken as a whole which is material to Borrower and its
Subsidiaries on a consolidated basis, except in each case as disclosed in
writing to the Administrative Agent prior to the Closing Date.
5.14 Compliance with Applicable Laws. Neither Borrower nor
any Subsidiary is in default with respect to any judgment, order, writ,
injunction, decree or decision of any Governmental Authority which default
could have a material adverse effect on the financial condition, operations
or Property of Borrower and its Subsidiaries, taken as a whole, or could
impair Borrower's or a Guarantor's ability to perform its obligations
hereunder or under any other Loan Document to which Borrower or any
Guarantor is a party. Borrower and each Subsidiary is complying in all
material respects with all applicable statutes and regulations, including
ERISA and applicable occupational, safety and health and other labor laws,
of all Governmental Bodies, a violation of which could have a material
adverse effect on the financial condition, operations or Property of
Borrower and its Subsidiaries, taken as a whole, or could impair Borrower's
or a Guarantor's ability to perform its obligations hereunder or any other
Loan Document to which Borrower or any Guarantor is a party.
5.15 Governmental Regulations. Neither Borrower nor any
Subsidiary is subject to any statute or regulation which regulates the
incurring by Borrower of indebtedness for borrowed money, except for
applicable usury laws.
5.16 Property. Borrower and each Subsidiary has good and
valid title to, or good and valid leasehold interests in, all of its
Property, title to (or leasehold interest in) which is material to Borrower
and its Subsidiaries taken as a whole, subject to no Liens, except such
thereof as are not prohibited by the terms of this Agreement.
5.17 Federal Reserve Regulations. Borrower is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended. No part of the proceeds of the Loans
will be used, directly or indirectly, for a purpose which violates any law,
rule or regulation of any Governmental Authority, including, without
limitation, the provisions of Regulations G, T, U, or X of said Board, as
amended.
5.18 No Misrepresentation. No representation or warranty
contained herein or in any document to be executed and delivered in
connection herewith and no certificate or report furnished or to be
furnished by Borrower or any Subsidiary in connection with the
transactions contemplated hereby, contains or will contain a misstatement
of material fact, or omits or will omit to state a material fact required
to be stated in order to make the statements herein or therein contained
(taken as a whole) not misleading in the light of the circumstances under
which made.
5.19 Plans. From and after the Closing Date, each Plan
established, maintained or participated in by Borrower and each Subsidiary
shall be in material compliance with the applicable provisions of ERISA
and the Code, and Borrower and each Subsidiary shall file all material
reports required to be filed by ERISA and the Code with respect to any
Plan. Borrower and each Subsidiary shall meet all material requirements
imposed by ERISA and the Code with respect to the funding of all Plans.
Since the effective date of ERISA, there have not been, nor are there now
existing, any events or conditions which would permit any Plan to be
terminated by the PBGC under circumstances which would cause Borrower
to incur a material liability under Title IV of ERISA. Since the effective
date of ERISA, no Reportable Event has occurred with respect to any Plan
and no Plan has been terminated in whole or in part, other than the Plan
established by Todd-AO Studios East, Inc. and its predecessor,
Trans/Audio, Inc., that was terminated at the time of acquisition of such
company by Borrower. No withdrawals from any Plans have occurred
which could subject Borrower or any of its Subsidiaries to any material
liability.
5.20 Investment Company Act. Borrower is not an "investment
company" or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended.
5.21 Public Utility Holding Company Act. Borrower is not a
"holding company," or a "subsidiary company" of a "holding company," or
an "affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
5.22 Security Interests. Upon the execution and delivery of the
Pledge Agreement, the Pledge Agreement will create a valid first priority
security interest in the Pledged Collateral and upon delivery of the Pledged
Collateral to the Administrative Agent (or its designee) all action
necessary to perfect the security interest so created has been taken and
completed.
Section 6 AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as the Commitments
shall remain available, and until the full and final payment of all
indebtedness incurred hereunder, it will, and will cause each of its
Subsidiaries to, unless the Requisite Banks waive compliance in writing:
6.1 Financial and Other Information. Deliver to the
Administrative Agent:
(a) As soon as available but no later than 60 days after the end
of each of the first three fiscal quarters of Borrower the unaudited
consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such fiscal quarter, and the unaudited consolidated statement of income and
retained earnings and of changes in cash flow of Borrower and its
Subsidiaries for such fiscal quarter and that portion of the fiscal year
ending with such quarter, certified by a Responsible Officer of Borrower as
being prepared in accordance with Generally Accepted Accounting
Principles and complete and correct and fairly presenting the financial
condition and results of operations of Borrower and its Subsidiaries;
(b) as soon as available but no later than 120 days after the
end of each of its fiscal years, a complete copy of an audit report of
Borrower and its Subsidiaries which shall include at least the consolidated
balance sheet of Borrower and its Subsidiaries as of the close of such year,
and the consolidated statement of income and retained earnings and of
changes in cash flows of Borrower for such year, prepared in accordance
with Generally Accepted Accounting Principles and fairly presenting
Borrower's financial position and results of operations, certified by
Deloitte-Touche, or other independent public accounting firm of recognized
national standing selected by Borrower and satisfactory to the
Administrative Agent and the Requisite Banks. Such certificate shall not be
qualified or limited because of restricted or limited examination by such
accountant of any material portion of Borrower's records;
6.2 Certificates, Notices and Other Information. Deliver to the
Administrative Agent in form and detail satisfactory to the Agent and the
Requisite Banks, with sufficient copies for each Bank:
(a) Concurrently with the financial statements required
pursuant to Sections 6.1(a) and 6.1(b), a Compliance Certificate signed by a
Responsible Officer; and
(b) such other statements, lists of property and accounts,
budgets, forecasts or reports as the Administrative Agent may reasonably
request.
6.3 Prompt Notice. Immediately give written notice to the
Administrative Agent of:
(a) all litigation affecting Borrower or any of its Subsidiaries
as a defendant and where the amount claimed in a single litigation action is
in excess of $500,000 or when the aggregate amount claimed in all
litigation actions is in excess of $1,000,000;
(b) any substantial dispute which may exist between Borrower
and any Governmental Authority;
(c) any proposal by any public authority to acquire the assets
or business of Borrower or to compete with Borrower;
(d) any Event of Default or Default; and
(e) any other matter which has resulted or might result in a
material adverse change in Borrower's financial condition or operations or
impairment in Borrower's or a Guarantor's ability to perform its obligations
hereunder or any other Loan Document to which Borrower or any
Guarantor is a party.
6.4 Maintain Existence. Except as permitted by Section 7.3,
maintain and preserve its existence and all rights, privileges and
franchises now enjoyed, and keep all its properties in good working order
and condition.
6.5 Payment of Obligations. Pay all obligations, including tax claims,
when due, except such as may be contested in good faith by appropriate
proceedings and Borrower has established reserves on its books which are
reasonable and adequate.
6.6 Compliance With Legal Requirements. At all times
comply with all laws, rules, regulations, orders and directions of any
Governmental Authority having jurisdiction over it or its business.
6.7 Insurance. Maintain and keep in force on all of its
property such insurance as is normal for the industry in which Borrower
conducts its business and is satisfactory to the Requisite Banks as to
amount, nature and carrier covering fire damage (including use and
occupancy), public liability, product liability, property damage and
workers' compensation, and deliver to the Administrative Agent upon
request a schedule certified to be correct by a Responsible Officer of
Borrower setting forth all insurance in force as of the date of such schedule.
6.8 Books and Records. Maintain adequate books, accounts
and records in accordance with Generally Accepted Accounting Principles,
and permit employees or agents of the Administrative Agent at any
reasonable time and as often as may reasonably be desired to inspect its
properties, and to examine or audit its books, accounts and records and
make copies and memoranda thereof and to discuss the business,
operations, properties and financial and other conditions of Borrower and
its Subsidiaries with officers of Borrower.
6.9 Future Significant Subsidiaries; Pledges of Stock. Cause
any of present or future Significant Subsidiaries (other than Non-Recourse
Joint Ventures) (as soon as any such future Significant Subsidiary becomes
a Significant Subsidiary of Borrower) that is not a Guarantor to (a) execute
and deliver to the Administrative Agent a continuing guaranty in form and
substance satisfactory to the Administrative Agent, together with
documentation of the type set forth in Sections 4.1(d), 4.3(g) and 4.3(h) as
to such Significant Subsidiary, or (b) if pre-existing Indebtedness of any
new Significant Subsidiary prohibits such a guaranty, such a guaranty given
by a foreign Significant Subsidiary would be taxable, Borrower will instead
pledge all its equity interests in such new Significant Subsidiary (or as
much as it can without such pledge being taxable) pursuant to the Pledge
Agreement or a supplement thereto, together with delivery of the Pledged
Collateral accompanied by appropriate stock powers endorsed in blank.
Borrower shall notify the Administrative Agent of the creation or
acquisition of any new Significant Subsidiary, and Schedule 5.9 shall be
deemed amended by the addition of such new Subsidiary (whether or the
Administrative Agent distributes a reviewed Schedule 5.9).
6.10 Use of Proceeds. Use the proceeds of the Loans for
general working capital and general corporate purposes and acquisitions.
6.11 Exchange of Convertible Subordinated Notes. Not later
than November 20, 1997, Borrower shall cause the holders of the
Convertible Subordinated Notes having an aggregate principal amount not
exceeding $9,239,071 to be exchanged for Convertible Subordinated Notes
having an aggregate principal amount not exceeding $8,400,000.
Section 7 NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as the Commitments
shall remain available, and until full and final payment of all indebtedness
incurred hereunder, without the prior written consent of the Requisite
Banks, it will not, and will not permit any Subsidiary to:
7.1 Limitation On Indebtedness. Incur or suffer to exist any
indebtedness for borrowed money, or become liable as a surety, guarantor,
accommodation endorser, or otherwise for or upon the obligation of any
other person, firm or corporation; except for:
(a) the acquisition of goods, supplies or merchandise on
normal trade credit;
(b) Indebtedness incurred on or before the Closing Date listed
on Schedule 7.1 and any extension, renewal, refunding and refinancing
thereof; provided that after giving effect to such extension, renewal,
refunding or refinancing the principal amount thereof is not increased;
(c) Indebtedness of Non-Recourse Joint Ventures not exceeding,
together with Investments permitted under Section 7.5(b), $50,000,000 in
the aggregate at any time outstanding;
(d) Indebtedness consisting of Capital Leases and related to
Synthetic Leases not exceeding $25,000,000 in the aggregate outstanding at
any time;
(e) intercompany obligations of Borrower or any Guarantor
otherwise permitted hereunder;
(f) the Convertible Subordinated Notes; and
(g) other Indebtedness, including purchase-money financing,
not exceeding $10,000,000 in the aggregate outstanding at any time.
7.2 Limitation On Liens. Create, assume or suffer to exist any
Lien on or of any of its property, real or personal, whether now owned or
hereafter acquired, except for:
(a) Liens for current taxes, assessments or other governmental
charges which are not delinquent or remain payable without any penalty or
the validity of which is contested in good faith by appropriate proceedings
upon stay of execution of the enforcement thereof;
(b) Liens securing Indebtedness permitted by Section 7.1(c);
provided such Liens are on and limited to the assets of the joint venture
incurring such Indebtedness;
(c) Liens securing Indebtedness permitted by Section 7.1(g);
provided such Liens are on and limited to the capital assets acquired,
constructed or financed with the proceeds of such Indebtedness;
(d) Liens in connection with Capital Leases permitted by Section
7.1(d); provided such Liens are on and limited to the assets of the subject
of such Capital Leases; and
(e) Liens in connection with equipment leases not exceeding
$250,000 in the aggregate at any time which were assumed in connection
with the Hollywood Digital Acquisition, and any extension, renewal,
refunding and refinancing thereof; provided that after giving effect to such
extension, renewal, refunding or refinancing the principal amount thereof is
not increased.
7.3 Liquidation, Merger, etc. Liquidate or dissolve, or enter
into any consolidation, merger, partnership, joint venture or other
combination, or sell, lease or dispose of its business or assets as a whole or
such as in the opinion of the Requisite Banks constitute a substantial
portion thereof except:
(a) mergers and consolidations of a Subsidiary of Borrower
into Borrower or a Subsidiary (with Borrower or its Subsidiary as the
surviving entity) or of Borrower or Subsidiaries of Borrower with each
other, provided that Borrower and each of such Subsidiaries have executed
such amendments to the Loan Documents as the Administrative Agent may
reasonably determine are appropriate as a result of such merger; and
(b) a merger or consolidation of Borrower or any Subsidiary
with any other Person, provided that (i) either (A) Borrower or its
Subsidiary is the surviving entity, or (B) the surviving entity is a
corporation organized under the laws of a State of the United States of
America or the District of Columbia and, as of the date of such merger or
consolidation, expressly assumes, by an appropriate instrument, the
Obligations of Borrower or its Subsidiary, as the case may be, and (ii)
giving effect thereto on a pro-forma basis, no Default or Event of Default
exists or would result therefrom.
7.4 Disposition of Assets. Dispose, nor permit any of its
Subsidiaries to dispose, of any of its assets or enter into any sale and
leaseback agreement covering any of its fixed or capital assets; except that
Borrower and its Subsidiaries may dispose of assets no longer used or
useful in the business of Borrower or such Subsidiary, if the net book value
of such asset is not in excess of $2,000,000.
7.5 Limitation on Investments. Make any Investments,
except: (a) Investments in cash, cash equivalents and marketable
securities (as defined in accordance with Generally Accepted Accounting
Principles); provided that the aggregate value of all marketable securities
not rated at least investment grade by a rating agency of national standing
shall not at any time exceed one-third of the total value of all such cash,
cash equivalents and marketable securities;
(b) Investments in foreign joint ventures located in the United
Kingdom, Spain, France or Germany engaged in businesses providing post
production services for film, television, transmission and related media,
provided, that Borrower's and its Subsidiaries' share of such investments,
together with Indebtedness permitted under Section 7.1(c), shall not exceed
$50,000,000 in the aggregate at any time outstanding valued at cost;
(c) Investments in other Persons not exceeding $10,000,000
in the aggregate at any time outstanding;
(d) Investments in or loans to Guarantors that are 100%
owned directly or indirectly by Borrower; and
(e) loans to officers of Borrower not exceeding $150,000 in
the aggregate outstanding at any time;
provided that in all cases (i) no Default or Event of Default has occurred
under this Agreement or will occur after giving effect to any such
acquisition, (ii) any rights to repayment of any loans are pledged to the
Administrative Agent and the Banks on terms and conditions satisfactory to
Administrative Agent and the Banks, and (iii) Borrower shall not cause,
permit or suffer any restrictions on dividends, distributions or other
upstreaming of money to Borrower by any Subsidiary now owned or
hereafter acquired by Borrower.
7.6 Limitation on Acquisitions. Make any Acquisition unless
(a) prior to completing such Acquisition, Borrower delivers to the
Administrative Agent a Compliance Certificate demonstrating that, after
giving effect to such Acquisition, Borrower would be in compliance with
Sections 7.10, 7.11 and 7.12 on a pro forma basis and (b) no Default or
Event of Default has occurring or is continuing or would result from such
Acquisition.
7.7 Contracts. Enter into, or permit any of its Subsidiaries to
enter into, any contracts, leases, indentures, or other agreements except in
the ordinary course of its business as presently conducted, except for
Acquisitions and Investments permitted by Section 7.5(c).
7.8 Business Activities. Engage in, or permit any of its
Subsidiaries to engage in, any business activities or operations
substantially different from or unrelated to businesses providing post
production and transmission services for film, television and related media,
except for Investments permitted by Section 7.5(c).
7.9 Compliance with ERISA. (a) Terminate, within the
meaning of Title IV of ERISA, any Plan so as to result in any material
liability to the PBGC, (b) engage in any "prohibited transaction" (as
defined in Section 4975 of the Internal Revenue Code of 1986, as amended)
involving any Plan that would result in material liability for an excise
tax or civil penalty in connection therewith, (c) incur or suffer to exist
any material "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, involving any Plan, or (d) allow or
suffer to exist any event or condition, which could have a material adverse
effect on Borrower and its Subsidiaries, taken as a whole, or could impair
Borrower's or a Guarantor's ability to perform its obligations hereunder or
any other Loan Document to which Borrower or any Guarantor is a party.
7.10 Minimum Tangible Net Worth. Permit Tangible Net
Worth at any time to be less than the sum of (a) $25,000,000 plus (b) 50%
of Borrower's consolidated net income for each fiscal quarter (without
deduction for any net loss) commencing with the Fiscal Quarter ending
subsequent to May 31, 1997, plus (c) 100% of the net proceeds received by
Borrower or any of its Subsidiaries from the issuance of equity by Borrower
or any Subsidiary.
7.11 Fixed Charge Coverage Ratio. Permit at any time the
Fixed Charge Coverage Ratio to be less than 1.25 to 1.00.
7.12 Leverage Ratio. Permit at any time the Leverage Ratio to
exceed 3.00 to 1.00.
7.13 No Restrictions on Upstreaming Cash from Significant
Subsidiaries. Permit any restrictions on any Significant Subsidiary directly
or indirectly upstreaming cash to Borrower.
Section 8 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
8.1 Events of Default. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
(a) Borrower or any Guarantor shall fail to pay, any principal
when due, whether at maturity, on demand, upon acceleration or otherwise;
or (b) Borrower or any Guarantor shall fail to pay, when due,
any amount of interest, fees, expenses, indemnity payments or any other
amount payable by Borrower or any Guarantor to the Administrative Agent
or any Bank under this Agreement within 10 days of the date when such
amounts are due, whether at maturity, on a specified date, on demand, upon
acceleration or otherwise; or
(c) Any representation or warranty hereunder or any other
Loan Document or in connection with any transaction contemplated hereby
or in any financial statement furnished to the Administrative Agent shall
prove to have been false or misleading in any material respect when made
or when deemed to have been made; or
(d) Borrower shall breach or default under Section 4.1(c),
6.11, 7.10, 7.11 or 7.12; or
(e) Borrower or any Guarantor shall breach, or default under,
any other term, condition, provision or covenant contained in this
Agreement or any other Loan Document and such breach or default is not
remedied to the Requisite Bank's satisfaction within 30 days after the
occurrence thereof; or
(f) Borrower or any of its Subsidiaries institutes or consents
to the institution of any proceeding under a Debtor Relief Law relating
to it or to all or any material part of its Property, or is unable or admits
in writing its inability to pay its debts as they mature, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part
of its Property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of that Person and the appointment continues
undischarged or unstayed for 60 calendar days; or any proceeding under a
Debtor Relief Law relating to any such Person or to all or any part of its
Property is instituted without the consent of that Person and continues
undismissed or unstayed for 60 calendar days; or
(g) All, or such as in the opinion of the Requisite Banks
constitutes substantially all, of the property of Borrower or any Guarantor
shall be condemned, seized or appropriated; or
(h) Any breach or default shall occur under any other
agreement or agreements involving the borrowing of money or the
extension of credit where the principal amount outstanding under such
agreement or agreements is in the amount of $100,000 or more, and under
which Borrower or any Subsidiary may be obligated as borrower or
guarantor, if such default consists of the failure to pay any indebtedness
when due or if such default permits or causes (or upon a lapse of time or
notice or both would permit or cause) the acceleration of any indebtedness
or the termination of any commitment to lend; or
(i) The Principal Stockholders shall cease to own, either
directly or as trustees under trusts established for the benefit of
themselves and/or members of their immediate families, in the aggregate at
least 20% of the capital stock of Borrower or the voting rights accruing
under the shares issued by Borrower shall cease to be 50% controlled by
the Principal Stockholders, either directly or as trustees under trusts
established for the benefit of themselves and/or members of their
immediate families; provided, that for purposes of determining whether an
Event of Default has occurred under this Section 8.1(i), each Principal
Stockholder shall be deemed to own shares registered in his name (unless
he has delegated or otherwise transferred or assigned voting rights in such
shares) notwithstanding that an existing spouse may be deemed to have
rights in such shares under applicable community property laws; provided,
further, that no Event of Default shall be deemed to have occurred by virtue
of the death of any Principal Stockholder; or
(j) The occurrence of (i) a Reportable Event with respect to,
or the institution of proceedings to have a trustee appointed to administer
or to terminate, any Plan, which Reportable Event or institution of
proceedings is likely to result in the termination of such Plan and such
termination could have a material adverse effect upon the business
operations, assets or financial condition of Borrower and its Subsidiaries,
taken as a whole, or could impair Borrower's or a Guarantor's ability to
perform its obligations hereunder or under any other Loan Document to
which Borrower or any Guarantor is a party, and the continuance of the
same unremedied for 30 Business Days after notice of such Reportable
Event pursuant to Section 4043 of ERISA is given or such proceedings are
instituted, as the case may be or (ii) provided, however, that such event
shall automatically be deemed to have a materially adverse effect upon
Borrower and its Subsidiaries, taken as a whole, or could impair Borrower's
or a Guarantor's ability to perform its obligations hereunder or under any
other Loan Document to which Borrower or any Guarantor is a party, if a
"prohibited transaction" described in Section 406 of ERISA or 4975(c) of
the Internal Revenue Code of 1986, as amended, or a notice of intention to
terminate a Plan under Section 4041 of ERISA shall have been filed; or a
notice shall be received by the plan administrator of a Plan that the PBGC
has instituted proceedings to terminate such Plan or appoint a trustee to
administer such Plan; or Borrower or any Subsidiary shall withdraw from a
Plan; or a trustee will be appointed by a United States District Court to
administer any Plan with vested unfunded liabilities; or
(k) The occurrence of any event which Requisite Banks
believes could have a material adverse effect upon Borrower and its
Subsidiaries, taken as a whole, or could impair Borrower's or a Guarantor's
ability to perform its obligations hereunder or under any other Loan
Document to which Borrower or any Guarantor is a party; or
(l) Borrower or any Guarantor defaults under any term, covenant
or agreement in the Guaranty or the Pledge Agreement; or the Guaranty or
the Pledge Agreement is for any reason partially (including with respect to
future advances) or wholly revoked or invalidated, or otherwise ceases to be
in full force and effect in accordance with its terms, or Borrower or any
Guarantor contests in any manner the validity or enforceability thereof or
denies that it has any further liability or obligation thereunder.
8.2 Remedies Upon Event of Default. Without limiting any
other rights or remedies of the Administrative Agent or the Banks provided
for elsewhere in this Agreement, or the other Loan Documents, or by
applicable law, or in equity, or otherwise:
(a) Upon the occurrence, and during the continuance, of any
Event of Default other than an Event of Default described in Section 8.1(f):
(i) the Commitments and all other obligations of the
Administrative Agent or the Banks and all rights of Borrower and any
Guarantor under the Loan Documents shall be suspended without notice to
or demand upon Borrower, which are expressly waived by Borrower,
except that all of the Banks or the Requisite Banks, as required hereunder,
may waive an Event of Default or, without waiving, determine, upon terms
and conditions satisfactory to the Banks or Requisite Banks, as the case
may be, to reinstate the Commitments and make further Extensions of
Credit, which waiver or determination shall apply equally to, and shall be
binding upon, all the Banks;
(ii) the Issuing Bank may, with the approval of the
Administrative Agent on behalf of the Requisite Banks, demand immediate
payment by Borrower of an amount equal to the aggregate amount of all
outstanding Letters of Credit to be held by the Issuing Bank in an interest
bearing cash collateral account as collateral hereunder; and
(iii) the Requisite Banks may request the
Administrative Agent to, and the Administrative Agent thereupon shall,
terminate the Commitments and/or declare all or any part of the unpaid
principal of all Loans, all interest accrued and unpaid thereon and all other
amounts payable under the Loan Documents to be forthwith due and
payable, whereupon the same shall become and be forthwith due and
payable, without protest, presentment, notice of dishonor, demand or
further notice of any kind, all of which are expressly waived by Borrower.
(b) Upon the occurrence of any Event of Default described in
Section 8.1(f):
(i) the Commitments and all other obligations of the
Administrative Agent or the Banks and all rights of Borrower and any
Guarantor under the Loan Documents shall terminate without notice to or
demand upon Borrower, which are expressly waived by Borrower, except
that all the Banks may waive the Event of Default or, without waiving,
determine, upon terms and conditions satisfactory to all the Banks, to
reinstate the Commitments and make further Extensions of Credit, which
determination shall apply equally to, and shall be binding upon, all the
Banks;
(ii) an amount equal to the aggregate amount of all
outstanding Letters of Credit shall be immediately due and payable to the
Issuing Bank without notice to or demand upon Borrower, which are
expressly waived by Borrower, to be held by the Issuing Bank in an
interest-bearing cash collateral account as collateral hereunder; and
(iii) the unpaid principal of all Loans, all interest
accrued and unpaid thereon and all other amounts payable under the Loan
Documents shall be forthwith due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any kind, all
of which are expressly waived by Borrower.
(c) Upon the occurrence of any Event of Default, the Banks
and the Administrative Agent, or any of them, without notice to (except as
expressly provided for in any Loan Document) or demand upon Borrower,
which are expressly waived by Borrower (except as to notices expressly
provided for in any Loan Document), may proceed (but only with the
consent of the Requisite Banks) to protect, exercise and enforce their
rights and remedies under the Loan Documents against Borrower and any
Guarantor and such other rights and remedies as are provided by law or
equity.
(d) The order and manner in which the Banks' rights and
remedies are to be exercised shall be determined by the Requisite Banks in
their sole discretion, and all payments received by the Administrative Agent
and the Banks, or any of them, shall be applied first to Attorney Costs
incurred by the Administrative Agent or any Bank, and thereafter paid pro
rata to the Banks in the same proportions that the aggregate Obligations
owed to each Bank under the Loan Documents bear to the aggregate
Obligations owed under the Loan Documents to all the Banks, without
priority or preference among the Banks. Regardless of how each Bank may
treat payments for the purpose of its own accounting, for the purpose of
computing Borrower's Obligations hereunder, payments shall be applied
first, to the costs and expenses of the Administrative Agent and the Banks,
as set forth above, second, to the payment of accrued and unpaid interest
due under any Loan Documents to and including the date of such
application (ratably, and without duplication, according to the accrued and
unpaid interest due under each of the Loan Documents), and third, to the
payment of all other amounts (including principal and fees) then owing to
the Administrative Agent or the Banks under the Loan Documents. No
application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the Loan
Documents, or prevent the exercise, or continued exercise, of rights or
remedies of the Banks hereunder or thereunder or at laws or in equity.
Section 9
THE ADMINISTRATIVE AGENT
9.1 Appointment and Authorization; Administrative Agent. (a)
Each Bank hereby irrevocably (subject to Section 9.9) appoints, designates
and authorizes the Administrative Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together
with such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Administrative Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship
with any Bank, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against the Administrative Agent.
Without limiting the generality of the foregoing sentence, the use of the
term "agent" in this Agreement with reference to the Administrative Agent
is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead,
such term is used merely as a matter of market custom, and is intended to
create or reflect only an administrative relationship between independent
contracting parties.
(b The Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Administrative
Agent may agree at the request of the Requisite Banks to act for such
Issuing Bank with respect thereto; provided, however, that the Issuing Bank
shall have all of the benefits and immunities (i) provided to the
Administrative Agent in this Section 9 with respect to any acts taken or
omissions suffered by the Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as
fully as if the term "Administrative Agent", as used in this Section 9
, included the Issuing Bank with respect to such acts or omissions, and (ii)
as additionally provided in this Agreement with respect to the Issuing Bank.
9.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
9.3 Liability of Administrative Agent. None of the Administrative
Agent-Related Persons shall (i) be liable for any action taken or omitted to
be taken by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), or (ii) be responsible in
any manner to any of the Banks for any recital, statement, representation or
warranty made by Borrower or any Subsidiary or Affiliate of Borrower, or
any officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document, or for any failure of
Borrower or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Administrative Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire
as to the observance or performance of any of the agreements contained in,
or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of Borrower or any of Borrower's
Subsidiaries or Affiliates.
9.4 Reliance by Administrative Agent. (a) The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying,
upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Requisite Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or
consent of the Requisite Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 4.1, each Bank that has executed this
Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter either sent by the
Administrative Agent to such Bank for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to the Bank.
9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent
for the account of the Banks, unless the Administrative Agent shall have
received written notice from a Bank or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". The Administrative Agent will notify
the Banks of its receipt of any such notice. The Administrative Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Requisite Banks in accordance with Section 8; provided,
however, that unless and until the Administrative Agent has received any
such request, the Administrative 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 deem advisable or in the best
interest of the Banks.
9.6 Credit Decision. Each Bank acknowledges that none of the
Administrative Agent-Related Persons has made any representation or
warranty to it, and that no act by the Administrative Agent hereinafter
taken, including any review of the affairs of Borrower and its Subsidiaries,
shall be deemed to constitute any representation or warranty by any
Administrative Agent-Related Person to any Bank. Each Bank represents
to the Administrative Agent that it has, independently and without reliance
upon any Administrative Agent-Related Person and based on such
documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower
and its Subsidiaries, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter
into this Agreement and to extend credit to Borrower hereunder. Each
Bank also represents that it will, independently and without reliance upon
any Administrative Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition
and creditworthiness of Borrower. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and
other condition or creditworthiness of Borrower which may come into the
possession of any of the Administrative Agent-Related Persons.
9.7 Indemnification of Administrative Agent. Whether or not the
transactions contemplated hereby are consummated, the Banks shall
indemnify upon demand the Administrative Agent-Related Persons (to the
extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), pro rata, from and against any and all
Indemnified Liabilities; provided, however, that no Bank shall be liable for
the payment to the Administrative Agent-Related Persons of any portion of
such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Bank shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Administrative 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 rights or responsibilities under, this
Agreement, any other Loan Document, or any document contemplated by
or referred to herein, to the extent that the Administrative Agent is not
reimbursed for such expenses by or on behalf of Borrower. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Administrative Agent.
9.8 Administrative Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other
business with Borrower and its Subsidiaries and Affiliates as though BofA
were not the Administrative Agent or the Issuing Bank hereunder and
without notice to or consent of the Banks. The Banks acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding Borrower or its Affiliates (including information that may be
subject to confidentiality obligations in favor of Borrower or such
Subsidiary) and acknowledge that the Administrative Agent shall be under
no obligation to provide such information to them. With respect to its
Loans, BofA shall have the same rights and powers under this Agreement
as any other Bank and may exercise the same as though it were not the
Administrative Agent or the Issuing Bank.
9.9 Successor Administrative Agent. The Administrative Agent
may, and at the request of the Requisite Banks shall, resign as
Administrative Agent upon 30 days' notice to the Banks. If the
Administrative Agent resigns under this Agreement, the Requisite Banks
shall appoint from among the Banks a successor administrative agent for
the Banks which successor administrative agent shall be approved by
Borrower. If no successor administrative agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Banks and
Borrower, a successor administrative agent from among the Banks. Upon
the acceptance of its appointment as successor administrative agent
hereunder, such successor administrative agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent and the term
"Administrative Agent" shall mean such successor administrative agent and
the retiring Administrative Agent's appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of
this Section 9 and Sections 10.3 and 10.11 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement. If no successor administrative agent has
accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon
become effective, the Administrative Agent shall continue to hold any
Collateral in its possession and the Banks shall perform all of the duties
of the Administrative Agent hereunder until such time, if any, as the
Requisite Banks appoint a successor agent as provided for above.
Notwithstanding the foregoing, however, BofA may not be removed as the
Administrative Agent at the request of the Requisite Banks unless BofA
shall also simultaneously be replaced as "Issuing Bank" hereunder pursuant
to documentation in form and substance reasonably satisfactory to BofA.
9.10 Proportionate Interest in any Collateral. The
Administrative Agent, on behalf of all the Banks, shall hold in accordance
with the Loan Documents all items of any collateral or interests therein
received or held by the Administrative Agent. Subject to the Administrative
Agent's and the Banks' rights to reimbursement for their costs and expenses
hereunder (including Attorney Costs incurred by the Administrative Agent
or a Bank) and subject to the application of payments in accordance with
Section 2), each Bank shall have an interest in the Banks' interest in the
Collateral or interests therein in the same proportions that the aggregate
Obligations owed such Bank under the Loan Documents bear to the
aggregate Obligations owed under the Loan Documents to all the Banks,
without priority or preference among the Banks.
9.11 Foreclosure on Collateral. In the event of foreclosure or
enforcement of the Lien created by any of the Collateral Documents, title to
the Collateral covered thereby shall be taken and held by the Administrative
Agent (or an Affiliate or designee thereof) pro rata for the benefit of the
Banks in accordance with their Pro Rata Share and shall be administered in
accordance with the standard form of collateral holding participation
agreement used by the Administrative Agent in comparable syndicated
credit facilities.
Section 10
MISCELLANEOUS
10.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of the Administrative Agent and the Banks
provided herein or other Loan Document are cumulative and not exclusive
of any right, power, privilege or remedy provided by laws or equity. No
failure or delay on the part of the Administrative Agent or any Bank in
exercising any right, power, privilege or remedy may be, or may be deemed
to be, a waiver thereof; nor may any single or partial exercise of any
right, power, privilege or remedy preclude any other or further exercise
of the same or any other right, power, privilege or remedy. The terms and
conditions of Section 9 are inserted for the sole benefit of the
Administrative Agent and the Banks; the same may be waived in whole or
in part, with or without terms or conditions, in respect of any Loan or
Letter of Credit without prejudicing the Administrative Agent's or the
Banks' rights to assert them in whole or in part in respect of any other Loan.
10.2 Amendments; Consents. No amendment, modification,
supplement, extension, termination or waiver of any provision of this
Agreement or any other Loan Document, no approval or consent
thereunder, and no consent to any departure by Borrower or any Guarantor
therefrom, may in any event be effective unless in writing signed by the
Requisite Banks (and, in the case of any amendment, modification or
supplement of or to any Loan Document to which Borrower is a party,
signed by Borrower and, in the case of any amendment, modification or
supplement to Section 9, signed by the Administrative Agent), and then
only in the specific instance and for the specific purpose given; and,
without the approval in writing of all the Banks, no amendment,
modification, supplement, termination, waiver or consent may be effective:
(a) To amend or modify the principal of, or the amount of
principal, principal prepayments or the rate of interest payable on, any
Loan, or the amount of the Commitment or the Pro Rata Share of any Bank
(except as contemplated by Section 2.13) or the amount of any commitment
fee payable to any Bank, or any other fee or amount payable to any Bank
under the Loan Documents or to waive an Event of Default consisting of
the failure of Borrower to pay when due principal, interest or any
commitment fee;
(b) To postpone any date fixed for any payment of principal
of, prepayment of principal of or any installment of interest on, any Loan
or any installment of any commitment fee, or to extend the term of the
Commitment, or to release the Guaranty;
(c) To amend the provisions of the definition of "Requisite
Banks", Sections 4 or 9 or this Section;
(d) To release any material portion of the Collateral (except as
otherwise expressly provided in any Loan Document); or
(e) To amend any provision of this Agreement that expressly
requires the consent or approval of all the Banks.
Any amendment, modification, supplement, termination, waiver or consent
pursuant to this Section shall apply equally to, and shall be binding upon, all
the Banks and the Administrative Agent.
10.3 Attorney Costs, Expenses and Taxes. Borrower shall pay
within five Business Days after demand, accompanied by an invoice
therefor, the reasonable costs and expenses of the Administrative Agent in
connection with the negotiation, preparation, syndication, execution and
delivery of the Loan Documents (subject to any limitations set forth in a
letter agreement between Borrower and the Arranger entered into prior to
the Closing Date) and any amendment thereto or waiver thereof. Borrower
shall also pay on demand, accompanied by an invoice therefor, the
reasonable costs and expenses of the Administrative Agent and the Banks
in connection with the refinancing, restructuring, reorganization (including
a bankruptcy reorganization) and enforcement or attempted enforcement of
the Loan Documents, and any matter related thereto. The foregoing costs
and expenses shall include filing fees, recording fees, title insurance
fees, appraisal fees, search fees, and other out-of-pocket expenses and
Attorney Costs incurred by the Agent or any Bank, and independent public
accountants and other outside experts retained by the Administrative Agent
or any Bank, whether or not such costs and expenses are incurred or
suffered by the Administrative Agent or any Bank in connection with or
during the course of any bankruptcy or insolvency proceedings of Borrower
or any Subsidiary thereof. Such costs and expenses shall also include the
administrative costs of the Administrative Agent reasonably attributable to
the administration of this Agreement and the other Loan Documents.
Borrower shall pay any and all Applicable Taxes and all costs, expenses,
fees and charges payable or determined to be payable in connection with
the filing or recording of this Agreement, any other Loan Document or any
other instrument or writing to be delivered hereunder or thereunder, or in
connection with any transaction pursuant hereto or thereto, and shall
reimburse, hold harmless and indemnify the Administrative Agent and the
Banks from and against any and all loss, liability or legal or other expense
with respect to or resulting from any delay in paying or failure to pay any
such tax, cost, expense, fee or charge or that any of them may suffer or
incur by reason of the failure of Borrower or any Guarantor to perform any
of its Obligations. Any amount payable to the Administrative Agent or any
Bank under this Section shall bear interest from the second Business Day
following the date of demand for payment at the Default Rate.
10.4 Nature of Banks' Obligations. The obligations of the
Banks hereunder are several and not joint or joint and several. Nothing
contained in this Agreement or any other Loan Document and no action
taken by the Administrative Agent or the Banks or any of them pursuant
hereto or thereto may, or may be deemed to, make the Banks a partnership,
an association, a joint venture or other entity, either among themselves or
with Borrower or any Affiliate of Borrower. Each Bank's obligation to
make any Loan pursuant hereto is several and not joint or joint and several,
and in the case of the initial Loan only is conditioned upon the performance
by all other Banks of their obligations to make initial Loans. A default by
any Bank will not increase the Pro Rata Share attributable to any other
Bank. Any Bank not in default may, if it desires, assume in such proportion
as the nondefaulting Banks agree the obligations of any Bank in default, but
is not obligated to do so. The Administrative Agent agrees that it will use
its best efforts either to induce the other Banks to assume the obligations
of a Bank in default or to obtain another Bank, reasonably satisfactory to
Borrower, to replace such a Bank in default.
10.5 Survival of Representations and Warranties. All
representations and warranties contained herein or in any other Loan
Document, or in any certificate or other writing delivered by or on behalf
of any one or more of the Borrower Parties to any Loan Document, will
survive the making of the Loans hereunder and the execution and delivery
of any Notes, and have been or will be relied upon by the Administrative
Agent and each Bank, notwithstanding any investigation made by the
Administrative Agent or any Bank or on their behalf.
10.6 Notices. Except as otherwise expressly provided in the
Loan Documents, all notices, requests, demands, directions and other
communications provided for therein shall be given by Requisite Notice and
shall be effective as follows:
Effective on earlier of
Mode of Delivery actual receipt and:
Courier On scheduled delivery date
Facsimile When transmission complete
Mail Fourth Business Day after
deposit in U.S. mail
Personal delivery When received
Telephone When answered
provided, however, that notice to the Administrative Agent pursuant to
Section 2 or 9 shall not be effective until actually received by the
Administrative Agent. The Administrative Agent and any Bank shall be
entitled to rely and act on any notice purportedly given by or on behalf of
Borrower or a Guarantor even if such notice (i) was not made in a manner
specified herein, (ii) was incomplete, (iii) was not preceded or followed by
any other notice specified herein, or (iv) the terms of such notice as
understood by the recipient varied from any subsequent related notice
provided for herein. Borrower shall indemnify the Administrative Agent
and any Bank from any loss, cost, expense or liability as a result of
relying on any notice permitted herein.
10.7 Execution of Loan Documents. Unless the Administrative
Agent otherwise specifies with respect to any Loan Document, (a) this
Agreement and any other Loan Document may be executed in any number
of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to
be an original and all of which counterparts of this Agreement or any other
Loan Document, as the case may be, when taken together will be deemed to
be but one and the same instrument and (b) execution of any such
counterpart may be evidenced by a telecopier transmission of the signature
of such party. The execution of this Agreement or any other Loan
Document by any party hereto or thereto will not become effective until
counterparts hereof or thereof, as the case may be, have been executed by
all the parties hereto or thereto.
10.8 Binding Effect; Assignment.
(a) This Agreement and the other Loan Documents to which
Borrower is a party will be binding upon and inure to the benefit of
Borrower, the Administrative Agent, each of the Banks, and their respective
successors and assigns, except that, Borrower may not assign its rights
hereunder or thereunder or any interest herein or therein without the prior
written consent of all the Banks. Each Bank represents that it is not
acquiring its Loans with a view to the distribution thereof within the
meaning of the Securities Act of 1933, as amended (subject to any
requirement that disposition of such Loans must be within the control of
such Bank). Any Bank may at any time pledge its Note or any other
instrument evidencing its rights as a Bank under this Agreement to a
Federal Reserve Bank, but no such pledge shall release that Bank from its
obligations hereunder or grant to such Federal Reserve Bank the rights of a
Bank hereunder absent foreclosure of such pledge.
(b) From time to time following the Closing Date, each Bank
may assign to one or more Eligible Assignees all or any portion of its Pro
Rata Share; provided that (i) such assignment, if not to a Bank or an
Affiliate of the assigning Bank, shall be consented to by Borrower at all
times other than during the existence of an Event of Default and the
Administrative Agent (which approval of Borrower shall not be
unreasonably withheld or delayed), (ii) a copy of a Notice of Assignment
and Acceptance shall be delivered to the Administrative Agent, (iii) except
in the case of an assignment to an Affiliate of the assigning Bank, to
another Bank or of the entire remaining Commitment of the assigning Bank,
the assignment shall not assign a Pro Rata Share equivalent to less than the
Minimum Amount therefor, and (iv) the effective date of any such
assignment shall be as specified in the Notice of Assignment and
Acceptance, but not earlier than the date which is five Business Days after
the date the Administrative Agent has received the Notice of Assignment
and Acceptance. Upon acceptance by the Administrative Agent of such
Notice Assignment and Acceptance, the Eligible Assignee named therein
shall be a Bank for all purposes of this Agreement, with the Pro Rata Share
therein set forth and, to the extent of such Pro Rata Share, the assigning
Bank shall be released from its further obligations under this Agreement.
Borrower agrees that they shall execute and deliver upon request (against
delivery by the assigning Bank to Borrower of any Note) to such assignee
Bank, one or more Notes evidencing that assignee Bank's Pro Rata Share,
and to the assigning Bank if requested, one or more Notes evidencing the
remaining balance Pro Rata Share retained by the assigning Bank.
(c) By executing and delivering a Notice of Assignment and
Acceptance, the Eligible Assignee thereunder acknowledges and agrees
that: (i) other than the representation and warranty that it is the legal
and beneficial owner of the Pro Rata Share being assigned thereby free and
clear of any adverse claim, the assigning Bank has made no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement
or the execution, legality, validity, enforceability, genuineness or
sufficiency of this Agreement or any other Loan Document; (ii) the
assigning Bank has made no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance by Borrower of the Obligations; (iii) it has received a copy of
this Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 6.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (iv) it will,
independently and without reliance upon the Administrative Agent or any
Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement; (v) it appoints and authorizes
the Administrative Agent to take such action and to exercise such powers
under this Agreement as are delegated to the Administrative Agent by this
Agreement; and (vi) it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be
performed by it as a Bank.
(d) After receipt of a completed Notice of Assignment and
Acceptance, and receipt of an assignment fee of $2,500 from such Eligible
Assignee, the Administrative Agent shall, promptly following the effective
date thereof, provide to Borrower and the Banks a revised Schedule 10.6
giving effect thereto.
(e) Each Bank may from time to time grant participations to
one or more banks or other financial institutions (including another Bank)
in a portion of its Pro Rata Share; provided, however, that (i) such Bank's
obligations under this Agreement shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
financial institutions shall not be a Bank hereunder for any purpose except,
if the participation agreement so provides, for the purposes of Section 3
(but only to the extent that the cost of such benefits to Borrower does not
exceed the cost which Borrower would have incurred in respect of such
Bank absent the participation) and Section 10.9 (subject to Section 10.10),
(iv) Borrower, the Administrative 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, (v) the participation shall not
restrict an increase in the Commitment or in the granting Bank's Pro Rata
Share, so long as the amount of the participation interest is not affected
thereby and (vi) the consent of the holder of such participation interest
shall not be required for amendments or waivers of provisions of the Loan
Documents other than those which (A) extend the Maturity Date as to such
participant or any other date upon which any payment of money is due to
such participant, (B) reduce the rate of interest owing to such participant,
any fee or any other monetary amount owing to such participant or (C)
reduce the amount of any installment of principal owing to such participant.
10.9 Right of Setoff. If an Event of Default has occurred and is
continuing, the Administrative Agent or any Bank but in each case only
with the consent of the Requisite Banks) may exercise its rights under
Section 9 of the Uniform Commercial Code and other applicable laws and,
to the extent permitted by applicable laws, apply any funds in any deposit
account maintained with it by Borrower and/or any Property of Borrower in
its possession against the Obligations.
10.10 Sharing of Setoffs. Each Bank severally agrees that if it,
through the exercise of any right of setoff, banker's lien or counterclaim
against Borrower, or otherwise, receives payment of the Obligations held by
it that is ratably more than any other Bank, through any means, receives in
payment of the Obligations held by that Bank, then, subject to applicable
laws: (a) the Bank exercising the right of setoff, banker's lien or
counterclaim or otherwise receiving such payment shall purchase, and shall
be deemed to have simultaneously purchased, from the other Bank a
participation in the Obligations held by the other Bank and shall pay to the
other Bank a purchase price in an amount so that the share of the
Obligations held by each Bank after the exercise of the right of setoff,
banker's lien or counterclaim or receipt of payment shall be in the same
proportion that existed prior to the exercise of the right of setoff,
banker's lien or counterclaim or receipt of payment; and (b) such other
adjustments and purchases of participations shall be made from time to
time as shall be equitable to ensure that all of the Banks share any payment
obtained in respect of the Obligations ratably in accordance with each
Bank's share of the Obligations immediately prior to, and without taking
into account, the payment; provided that, if all or any portion of a
disproportionate payment obtained as a result of the exercise of the right
of setoff, banker's lien, counterclaim or otherwise is thereafter
recovered from the purchasing Bank by Borrower or any Person claiming
through or succeeding to the rights of Borrower, the purchase of a
participation shall be rescinded and the purchase price thereof shall be
restored to the extent of the recovery, but without interest. Each Bank
that purchases a participation in the Obligations pursuant to this Section
shall from and after the purchase have the right to give all notices, requests,
demands, directions and other communications under this Agreement with
respect to the portion of the Obligations purchased to the same extent as
though the purchasing Bank were the original owner of the Obligations
purchased. Borrower expressly consent to the foregoing arrangements and
agree that any Bank holding a participation in an Obligation so purchased
may exercise any and all rights of setoff, banker's lien or counterclaim with
respect to the participation as fully as if the Bank were the original owner
of the Obligation purchased.
10.11 Indemnity by Borrower. Borrower agrees to indemnify, save
and hold harmless the Administrative Agent and each Bank and their
respective Affiliates, directors, officers, agents, attorneys and employees
(collectively the "Indemnitees") from and against: (a) any and all claims,
demands, actions or causes of action (except a claim, demand, action, or
cause of action for Bank Taxes) if the claim, demand, action or cause of
action arises out of or relates to any act or omission (or alleged act or
omission) of Borrower, its Affiliates or any of their officers, directors or
stockholders relating to the Commitment, the use or contemplated use of
proceeds of any Loan, or the relationship of Borrower and the Banks under
this Agreement; (b) any administrative or investigative proceeding by any
Governmental Authority arising out of or related to a claim, demand, action
or cause of action described in subsection (a) above; and (c) any and all
liabilities, losses, costs or expenses (including Attorney Costs) that any
Indemnitee suffers or incurs as a result of the assertion of any foregoing
claim, demand, action or cause of action; provided that no Indemnitee shall
be entitled to indemnification for any loss caused by its own gross
negligence or willful misconduct or for any loss asserted against it by
another Indemnitee.
10.12 Nonliability of the Banks. Borrower acknowledges and
agrees that:
(a) Any inspections of any Property of Borrower made by or
through the Administrative Agent or the Banks are for purposes of
administration of the Loan only and Borrower is not entitled to rely upon
the same (whether or not such inspections are at the expense of Borrower);
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to the Administrative Agent or the
Banks pursuant to the Loan Documents, neither the Administrative Agent
nor the Banks shall be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval
thereof shall not constitute a warranty or representation to anyone with
respect thereto by the Administrative Agent or the Banks;
(c) The relationship between Borrower and the Administrative
Agent and the Banks is, and shall at all times remain, solely that of
borrowers and lenders; neither the Administrative Agent nor the Banks
shall under any circumstance be construed to be partners or joint venturers
of Borrower or its Affiliates; neither the Administrative Agent nor the
Banks shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with Borrower or its
Affiliates, or to owe any fiduciary duty to Borrower or its Affiliates;
neither the Administrative Agent nor the Banks undertake or assume any
responsibility or duty to Borrower or its Affiliates to select, review,
inspect, supervise, pass judgment upon or inform Borrower or its Affiliates
of any matter in connection with their Property or the operations of
Borrower or its Affiliates; Borrower and its Affiliates shall rely entirely
upon their own judgment with respect to such matters; and any review,
inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by the Administrative Agent or the Banks in
connection with such matters is solely for the protection of the
Administrative Agent and the Banks and neither Borrower nor any other
Person is entitled to rely thereon; and
(d) The Administrative Agent and the Banks shall not be
responsible or liable to any Person for any loss, damage, liability or claim
of any kind relating to injury or death to Persons or damage to Property
caused by the actions, inaction or negligence of Borrower and/or its
Affiliates and Borrower hereby indemnify and hold the Administrative
Agent and the Banks harmless from any such loss, damage, liability or
claim.
10.13 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties
of Borrower, the Administrative Agent and the Banks in connection with
the Loans, and is made for the sole benefit of Borrower, the Administrative
Agent and the Banks, and the Administrative Agent's and the Banks'
successors and assigns. Except as provided in Sections 10.8 and 10.11, no
other Person shall have any rights of any nature hereunder or by reason
hereof.
10.14 Further Assurances. Borrower and its Subsidiaries shall, at
their expense and without expense to the Banks or the Administrative
Agent, do, execute and deliver such further acts and documents as any
Bank or the Administrative Agent from time to time reasonably requires for
the assuring and confirming unto the Banks or the Administrative Agent of
the rights hereby created or intended now or hereafter so to be, or for
carrying out the intention or facilitating the performance of the terms of
any Loan Document.
10.15 Integration. This Agreement, together with the other Loan
Documents and any letter agreements referred to herein, comprises the
complete and integrated agreement of the parties on the subject matter
hereof and supersedes all prior agreements, written or oral, on the subject
matter hereof. In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, the provisions of this
Agreement shall control and govern; provided that the inclusion of
supplemental rights or remedies in favor of the Administrative Agent or the
Banks in any other Loan Document shall not be deemed a conflict with this
Agreement. Each Loan Document was drafted with the joint participation
of the respective parties thereto and shall be construed neither against nor
in favor of any party, but rather in accordance with the fair meaning
thereof.
10.16 Failure to Charge Not Subsequent Waiver. Any decision by
the Administrative Agent or any Bank not to require payment of any
interest (including Default Interest), fee, cost or other amount payable
under any Loan Document, or to calculate any amount payable by a
particular method, on any occasion shall in no way limit or be deemed a
waiver of the Administrative Agent's or such Bank's right to require full
payment of any interest (including Default Interest), fee, cost or other
amount payable under any Loan Document, or to calculate an amount
payable by another method that is not inconsistent with this Agreement, on
any other or subsequent occasion.
10.17 Governing Law. Except to the extent otherwise provided
therein, each Loan Document shall be governed by, and construed and
enforced in accordance with, the local laws of California.
10.18 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining
provisions or the operation, enforceability or validity of that provision
as to any other party or in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
10.19 Headings. Section headings in this Agreement and the other
Loan Documents are included for convenience of reference only and are not
part of this Agreement or the other Loan Documents for any other purpose.
10.20 Time of the Essence. Time is of the essence of the Loan
Documents.
10.21 Foreign Banks and Participants. Each Bank, and each holder
of a participation interest herein, that is a "foreign corporation,
partnership or trust" within the meaning of the Code shall deliver to the
Administrative Agent, within 20 days after the Closing Date (or after
accepting an assignment or receiving a participation interest herein) two
duly signed completed copies of either Form 1001 (relating to such Person
and entitling it to a complete exemption from withholding on all payments
to be made to such Person by Borrower pursuant to this Agreement) or
Form 4224 (relating to all payments to be made to such Person by Borrower
pursuant to this Agreement) of the United States Internal Revenue Service
or such other evidence (including, if reasonably necessary, Form W-9)
satisfactory to Borrower and the Administrative Agent that no withholding
under the federal income tax laws is required with respect to such Person.
Thereafter and from time to time, each such Person shall (a) promptly
submit to the Administrative Agent such additional duly completed and
signed copies of one of such forms (or such successor forms as shall be
adopted from time to time by the relevant United States taxing authorities)
as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to Borrower and
the Administrative Agent of any available exemption from, United States
withholding taxes in respect of all payments to be made to such Person by
Borrower pursuant to this Agreement and (b) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Bank,
and as may be reasonably necessary (including the re-designation of its
Lending Office, if any) to avoid any requirement of applicable laws that
Borrower make any deduction or withholding for taxes from amounts
payable to such Person. If such Persons fails to deliver the above forms or
other documentation, then the Administrative Agent may withhold from any
interest payment to such Person an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code, without
reduction. If any Governmental Authority asserts that the Administrative
Agent did not properly withhold any tax or other amount from payments
made in respect of such Person, such Person shall indemnify the
Administrative Agent therefor, including all penalties and interest and
costs and expenses (including Attorney Costs) of the Administrative Agent.
The obligation of the Banks under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the
Administrative Agent.
10.22 Amendment and Restatement of Existing Credit
Agreement.
(a) This Agreement amends and restates the Existing Credit
Agreement. Loans and letters of credit outstanding under the Existing
Credit Agreement shall be deemed to continue as Loans and Letters of
Credit outstanding hereunder.
(b) BofA hereby sells, effective as of the Closing
Date, a portion of its Obligations outstanding under the Existing Agreement
(but excluding the BofA Tranche Loan) sufficient to result in all Banks
having outstanding Obligations equal to their Pro Rata Shares. Each other
Bank hereby purchases and assumes from BofA, without recourse, such
portion of BofA's Obligations. BofA represents and warrants to each New
Lender that it is the legal and beneficial owner of the Obligations sold
hereunder and that such obligations are free and clear of any adverse
claim. Other than as provided above, BofA does not make any
representation or warranty or assume any responsibility with respect to the
Existing Credit Agreement or any other instrument or document furnished
pursuant thereto, the financial condition of Borrower, or the performance or
observance by the Borrower thereunder or hereunder.
(c) In order to facilitate the foregoing assignments,
Borrower shall pay or prepay all Loans outstanding under the Existing
Credit Agreement on the Closing Date (except the BofA Tranche Loan) and
pay, to the extent applicable, any amounts due under Section 3.6. Borrower
shall concurrently reborrow, if it desires to do so, the amount so paid or
prepaid as Loans hereunder from the Banks in accordance with their Pro
Rata Shares.
10.23 Removal of a Bank; Reduction in Commitments. Under any
circumstances set forth in this Agreement providing that Borrower shall
have the right to remove a Bank as a party to this Agreement, such Bank
shall, upon notice from Borrower, execute and deliver a Notice of
Assignment and Acceptance covering that Bank's Pro Rata Share of the
Commitments in favor of such Eligible Assignee as Borrower may
designate, subject to (a) payment in full by such Eligible Assignee of all
principal, interest and fees owing to such Bank through the date of
assignment and (b) delivery by such Eligible Assignee of such appropriate
assurances and indemnities (which may include letters of credit) as such
Bank may reasonably require with respect to its participation interest in
any Letters of Credit then outstanding. Alternatively, Borrower may
reduce the Commitments (and, for this purpose, the Minimum Amounts for
Commitment reductions shall not apply) by an amount equal to that Bank's
Pro Rata Share of the Commitments, pay and provide to such Bank the
amounts, assurances and indemnities described in (a) and (b) above and
release such Bank from its Pro Rata Share of the Commitments.
10.24 Waiver of Right to Trial by Jury. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTY HERETO OR ANY OF THEM WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS
RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY
COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
10.25 Purported Oral Amendments. BORROWER EXPRESSLY
ACKNOWLEDGE THAT THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY ONLY BE AMENDED OR MODIFIED, OR THE
PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED,
BY AN INSTRUMENT IN WRITING THAT COMPLIES WITH
SECTION 10.2. BORROWER AGREES THAT THEY WILL NOT RELY
ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR
ORAL OR WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF
THE Administrative Agent OR ANY BANK THAT DOES NOT COMPLY
WITH SECTION 10.2 TO EFFECT AN AMENDMENT,
MODIFICATION, WAIVER OR SUPPLEMENT TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
THE TODD-AO CORPORATION,
a Delaware corporation
By:
W.R. Strickley
Senior Vice President and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Administrative Agent
By:
Janice Hammond
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Issuing Bank and a Bank
By:
Matthew Koenig
Vice President
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
SOCIETE GENERALE
By:
Name:
(Signatures continue) Title:
SANWA BANK CALIFORNIA
By:
Name:
Title:
EXHIBIT A
REQUEST FOR EXTENSION OF CREDIT
Date:
To: Bank of America National Trust and
Savings Association, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain First Amended and Restated
Credit Agreement dated as of October 20, 1997 among The Todd-AO
Corporation, a Delaware corporation (the "Borrower"), the banks from time
to time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent and Issuing Bank (as extended,
renewed, amended or restated from time to time, the "Agreement;" the
terms defined therein being used herein as therein defined).
The undersigned hereby requests (select one):
A Borrowing of Loans
A Conversion or Continuation of Loans
1. On ,
2. In the amount of .
[currency and amount of Loan
requested]
3. Comprised of .
[type of Loan requested]
4. If applicable: with an Interest Period of months/days.
The foregoing request complies with the requirements of Section
2.1 of the Agreement. If the aggregate principal amount of the Loans being
requested or Letters of Credit being requested to be issued is more than the
aggregate principal amount of the Loans maturing or Letters of Credit
expiring on the Borrowing Date, the undersigned hereby certifies that the
following statements are true on the date hereof, and will be true on the
above date, before and after giving effect and to the application of the
proceeds therefrom:
(a) no Default or Event of Default exists; and
(b the representations and warranties contained in this
Agreement are true, correct and complete in all material respects on and as
of such date to the extent as though made on and as of such date, except
with respect to any representation or warranty which specifically refers to
an earlier date.
THE TODD-AO CORPORATION
By:
Title:
EXHIBIT B
COMPLIANCE CERTIFICATE
Financial
Statement Date: ,
To: Bank of America National Trust and
Savings Association, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain First Amended and Restated
Credit Agreement dated as of October 20, 1997 among The Todd-AO
Corporation, a Delaware corporation (the "Borrower"), the banks from time
to time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent and Issuing Bank (as extended,
renewed, amended or restated from time to time, the "Agreement;" the
terms defined therein being used herein as therein defined).
Reference is made to that certain First Amended and Restated
Credit Agreement dated as of October 20, 1997 among The Todd-AO
Corporation, a Delaware corporation (the "Borrower"), the banks from time
to time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent and Issuing Bank (as extended,
renewed, amended or restated from time to time, the "Agreement;" the
terms defined therein being used herein as therein defined).
The undersigned Responsible Officer hereby certifies as of the date
hereof that he/she is the of Borrower, and that,
as such, he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of Borrower, and that:
1. Attached as Schedule 1 hereto are either (a) the financial
statements required under Section 6.1(a) of the Agreement as of the above
date, or (b) the financial statements required under Section 6.1(b) of the
Agreement as of the above date, with the required opinion of Deloitte
- -Touche, or other independent public accounting firm of recognized national
standing selected by Borrower and satisfactory to the Administrative Agent
and the Requisite Banks, which financial statements fairly present in
accordance with Generally Accepted Accounting Principles (subject to
ordinary, good faith year-end audit adjustments) the financial position and
the results of operations of Borrower and its Subsidiaries on a consolidated
basis.
2. The undersigned has reviewed and is familiar with the
terms of the Agreement and has made, or has caused to be made under
his/her supervision, a detailed review of the transactions and conditions
(financial or otherwise) of Borrower during the accounting period covered
by the attached financial statements.
3. To the best of the undersigned's knowledge, Borrower,
during such period, has observed, performed or satisfied all of its
covenants and other agreements, and satisfied every condition in the Credit
Agreement to be observed, performed or satisfied by Borrower, and the
undersigned has no knowledge of any Default or Event of Default.
4. Borrower has performed all its obligations hereunder and
under (a) any instrument or agreement to which Borrower is a party or
under which Borrower is obligated, under which the failure to perform
could materially impair the financial condition or operations of Borrower,
and (b) any judgment, decree or order of any court or governmental
authority binding on Borrower.
5. No significant change in senior management has occurred (or if
such change has occurred, attached is a description of what steps have been
taken to compensate therefore).
6. The following financial covenant analyses and information
set forth on Schedule 2 attached hereto are true and accurate on and as of
the date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of , .
THE TODD-AO CORPORATION
By:
Name:
Title:
Date: ,
For the fiscal quarter/year
ended ,
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
I. Section 7.5 - Limitation on Investments.
A. Investments in foreign joint ventures
the United Kingdom, Spain, France or
Germany engaged in related businesses: $
B. Indebtedness permitted under
Section 7.1(d): $
C. Total (Lines I.A. + I.B.): $
Line I.C not to exceed $50,000,000
D. Investments in other Persons: $
Line I.D not to exceed $10,000,000
II. Section 7.10 - Minimum Tangible Net Worth.
A. Tangible Net Worth:
1. Consolidated gross book Value
of assets: $
2. Goodwill, patents, trademarks,
trade names, copyrights, deferred
charges and other like intangibles: $
3. All liabilities (including accrued
and deferred income taxes and
subordinated indebtedness): $
B. Tangible Net Worth (Line II.A.1 -
Line II.A.2 - Line II.A.3): $
C. 50% of consolidated net income computed
on a cumulative basis for each of the
elapsed fiscal quarters ending after
May 31, 1997 (no deduction for
quarterly losses): $
D. 100% of net proceeds of any equity
issued after the Closing Date: $
E. Total (Lines II.C + II.D + $25,000,000: $
Minimum requirement: Line II.B to be greater than
Line II.E
III. Section 7.11 - Fixed Charge Coverage Ratio.
A. Free Available Cash Flow for the four immediately preceding
fiscal quarters ("Subject Period"):
1. EBITDA of Borrower and its Significant
Subsidiaries or Subject Period: (5)
a. Net income (and loss) for
Subject Period (excluding
extraordinary losses or
extraordinary gains: $
b. Net income attributable to joint ventures and Subsidiaries
less than 100% owned which is not a return on capital or results
from an extraordinary gain: $ without duplication:
c. Cash actually received by Borrower from joint ventures and
Subsidiaries less than 100% owned: $
d. Depreciation expense, lease expense
(excluding operating leases but including
Capital Lease and Synthetic Lease expense),
interest expense, and amortization
expense of intangibles of any kind
to the extent included in the
determination of such net income
(or loss): $
e. Provisions for income taxes as set
forth in Borrower's consolidated
income statement: $
f. Noncash compensation in the form
of stock award grants: $
g. EBITDA (Line 1a-1b+1c+1d+1e+1f): $
2. Cash income taxes payable: $
3. Maintenance capital expenditures: $
4. Total Free Available Cash Flow
(Lines A.1.g-A.2-A.3): $
B. Interest Expense for Subject Period: $
C. Current Portion of Funded Indebtedness
(including current portion of Capital
Leases and Synthetic Leases but excluding
Convertible Subordinated Note): $
D. Pro forma Distributions for following
four fiscal quarters: $
E. Total (Lines B+C+D): $
F. Fixed Charge Coverage Ratio (Line III.A4 (
Line III.E): to 1
Minimum required ratio: 1.25 to 1
IV. Section 7.12 - Leverage Ratio.
A. Funded Indebtedness:
1. Indebtedness for borrowed money
(excluding Non Recourse Joint
Venture Indebtedness): $
2. Principal portion of Capital Leases: $
3. Synthetic Leases: $
4. Acceptances and letters of credit: $
5. Guaranty Obligations: $
6 Total (Lines IV.A.1+2 3+4+5): $
7. Cash, cash equivalents and
marketable securities: $
a. Line 7 less $3,500,000 (>$0): $
8. Includable Funded Indebtedness
(Line A.6 less Line A.7.a): $
B. EBITDA (Line III.A.1.g): (5
C. Leverage Ratio (Line IV.8 ( Line IV.B): to 1
Maximum permitted ratio: 3.00 to 1
V. Leverage Ratio for Determining Applicable Amount.
A. Funded Indebtedness (Line IV.A.8)
(excluding Convertible Subordinated Debt):$
B. EBITDA (Line III.A.1.g): $
C. Leverage Ratio for Determining Applicable
Amount (Line V.A ( Line V.B): to 1
EXHIBIT C
FORM OF NOTE
October 20, 1997
FOR VALUE RECEIVED, the undersigned (the "Borrower"),
hereby promises to pay to the order of (the "Bank"),
on the Maturity Date (as defined in the Credit Agreement referred to
below) the principal amount of $ , or such lesser principal
amount of Loans (as defined in the Credit Agreement referred to below)
payable by Borrower to the Bank on the Maturity Date under that certain
First Amended and Restated Credit Agreement dated as of October 20,
1997 among The Todd-AO Corporation, a Delaware corporation
("Borrower"), the banks from time to time party thereto, and Bank of
America National Trust and Savings Association, as Administrative Agent
and Issuing Bank (as extended, renewed, amended or restated from time to
time, the "Agreement;" the terms defined therein being used herein as
therein defined).
Borrower promises to pay interest on the unpaid principal amount
of each Loan from the date of such Loan until such principal amount is paid
in full, at such interest rates, and payable at such times as are specified in
the Credit Agreement.
All payments of principal and interest shall be made to the
Administrative Agent for the account of the Bank in United States dollars in
immediately available funds at Administrative Agent's Payment office.
If any amount is not paid in full when due hereunder, such unpaid
amount shall bear interest, to be paid upon demand, from the due date
thereof until the date of actual payment (and before as well as after
judgment) computed at the per annum rate set forth in the Credit
Agreement.
This Note is one of the "Notes" referred to in the Credit
Agreement. Reference is hereby made to the Credit Agreement for rights
and obligations of payment and prepayment, events of default and the right
of the Bank to accelerate the maturity hereof upon the occurrence of such
events.
Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note.
Borrower agrees to pay all collection expenses, court costs and
Attorney Costs (whether or not litigation is commenced) of Bank which
may be incurred in connection with the collection or enforcement of this
Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.
THE TODD-AO CORPORATION
By:
Title:
EXHIBIT D
SUBSIDIARY CONTINUING GUARANTY
To: BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
(1) For valuable consideration, the undersigned corporation
and partnerships, and the corporations and partnerships becoming a party
hereto pursuant to Paragraph 16, (collectively, "Guarantors"), jointly and
severally unconditionally guarantees and promises to pay to BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent ("Administrative Agent"), or order, on demand, in
lawful money of the United States, any and all indebtedness of The Todd
AO Corporation ("Borrower") to the Administrative Agent and the Banks
party to that certain First Amended and Restated Credit Agreement dated as
of October 20, 1997 among Borrower, the banks from time to time party
thereto ("Banks;" together with the Administrative Agent, the "Guarantied
Parties"), and Administrative Agent and Issuing Bank (as extended,
renewed, amended or restated from time to time, the "Agreement;" the
terms defined therein being used herein as therein defined). The term
"indebtedness" is used herein in its most comprehensive sense and includes
any and all advances, debts, obligations and liabilities of Borrower under
the Loan Documents, heretofore, now, or hereafter made, incurred or
created, whether voluntary or involuntary and however arising, whether
direct or acquired by the Guarantied Parties by assignment or succession,
whether due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined, and whether Borrower may be liable
individually or jointly with others, or whether recovery upon such
indebtedness may be or hereafter become barred by any statute of
limitations, or whether such indebtedness may be or hereafter become
otherwise unenforceable.
(2) This is a continuing guaranty relating to any indebtedness,
including that arising under successive transactions which shall either
continue the indebtedness or from time to time renew it after it has been
satisfied. Any payment by a Guarantor shall not reduce such or any other
Guarantor's maximum obligation hereunder, unless written notice to that
effect be actually received by the Administrative Agent at or prior to the
time of such payment.
(3) The obligations hereunder are joint and several, and
independent of the obligations of Borrower, and a separate action or actions
may be brought and prosecuted against any Guarantor whether action is
brought against Borrower or any other Guarantor or whether Borrower or
any other Guarantor be joined in any such action or actions; and Guarantors
waive the benefit of any statute of limitations affecting their liability
hereunder.
(4) Guarantors authorize the Guarantied Parties, without notice or
demand and without affecting their liability hereunder, from time to time,
either before or after revocation hereof, to (a) renew, compromise, extend,
accelerate or otherwise change the time for payment of, or otherwise
change the terms of the indebtedness or any part thereof, including increase
or decrease of the rate of interest thereon; (b) receive and hold security
for the payment of this Guaranty or the indebtedness guaranteed, and
exchange, enforce, waive, release, fail to perfect, sell, or otherwise
dispose of any such security; (c) apply such security and direct the order
or manner of sale thereof as the Guarantied Parties in their discretion may
determine; and (d) release or substitute any one or more of the endorsers or
guarantors.
(5) Guarantors waive any right to require the Guarantied Parties to
(a) proceed against Borrower or any other Guarantor; (b) proceed against or
exhaust any security held from Borrower or any other Guarantor; or (c)
pursue any other remedy in the Guarantied Parties' power whatsoever.
Guarantors waive any defense arising by reason of any disability or other
defense of Borrower or any other Guarantor, or the cessation from any
cause whatsoever of the liability of Borrower or any other Guarantor, or
any claim that their obligations exceed or are more burdensome than those
of Borrower or any other Guarantor. Guarantors waive any right of
subrogation, reimbursement, indemnification and contribution (contractual,
statutory or otherwise), including without limitation, any claim or right of
subrogation under the Bankruptcy Code (Title 11 of the U.S. Code) or any
successor statute, arising from the existence or performance of this
Guaranty and Guarantors waive any right to enforce any remedy which the
Guarantied Parties now have or may hereafter have against Borrower, and
waive any benefit of and any right to participate in any security now or
hereafter held by the Guarantied Parties. Guarantors waive all
presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, and notices of acceptance
of this Guaranty and of the existence, creation, or incurring of new or
additional indebtedness. Without limiting the generality of the foregoing,
Guarantors hereby expressly waive any and all benefits of California Civil
Code Sections 2809, 2810, 2819, 2825, 2839 and 2845 through 2850.
(6) Guarantors acknowledge and agree that they shall have the sole
responsibility for obtaining from Borrower such information concerning
Borrower's financial conditions or business operations as they may require,
and that the Guarantied Parties have no duty at any time to disclose to
Guarantors any information relating to the business operations or financial
conditions of Borrower.
(7) To secure all of Guarantors' obligations hereunder, Guarantors
assign and grant to the Guarantied Parties a security interest in all
moneys, securities and other property of Guarantors now or hereafter in the
possession of the Guarantied Parties, and all deposit accounts of Guarantors
maintained with the Guarantied Parties, and all proceeds thereof. Upon
default or breach of any of Guarantors' obligations to the Guarantied
Parties, the Guarantied Parties may apply any deposit account to reduce the
indebtedness, and may foreclose any collateral as provided in the Uniform
Commercial Code and in any security agreements between the Guarantied
Parties and Guarantors.
(8) Any obligations of Borrower to Guarantors, now or hereafter
existing, including but not limited to any obligations to Guarantors as
subrogees of the Guarantied Parties or resulting from Guarantors'
performance under this Guaranty, are hereby subordinated to the
indebtedness. Such obligations of Borrower to Guarantors if the
Administrative Agent so requests shall be enforced and performance
received by Guarantors as trustees for the Guarantied Parties and the
proceeds thereof shall be paid over to the Administrative Agent on account
of the indebtedness of Borrower to the Guarantied Parties, but without
reducing or affecting in any manner the liability of Guarantors under the
other provisions of this Guaranty.
(9) This Guaranty may be revoked at any time by Guarantors in
respect to future transactions, unless there is a continuing consideration
as to such transactions which Guarantor does not renounce. Such
revocation shall be effective upon actual receipt by the Administrative
Agent at its address set forth in the Agreement of written notice of
revocation. Revocation shall not affect any of Guarantors' obligations or
the Guarantied Parties' rights with respect to transactions which precede
the Administrative Agent's receipt of such notice, regardless of whether or
not the indebtedness related to such transactions, before or after
revocation, has been renewed, compromised, extended, accelerated, or
otherwise changed as to any of its terms, including time for payment or
increase or decrease of the rate of interest thereon. Revocation by any
other guarantor of Borrower's indebtedness shall not affect any obligations
of Guarantors. If this Guaranty is revoked, returned, or canceled, and
subsequently any payment or transfer of any interest in property by
Borrower to the Guarantied Parties is rescinded or must be returned by the
Guarantied Parties to Borrower, this Guaranty shall be reinstated with
respect to any such payment or transfer, regardless of any such prior
revocation, return, or cancellation.
(10) Where Borrower is a corporation or partnership it is not
necessary for the Guarantied Parties to inquire into the powers of Borrower
or of the officers, directors, partners or agents acting or purporting to
act on Borrower's behalf, and any indebtedness made or created in reliance
upon the professed exercise of such powers shall be guaranteed hereunder.
(11) The Guarantied Parties may, without notice to Guarantors and
without affecting Guarantors' obligations hereunder, assign the
indebtedness and this Guaranty, in whole or in part. Guarantors agree that
the Guarantied Parties may disclose to any prospective purchaser and any
purchaser of all or part of the indebtedness any and all information in the
Guarantied Parties' possession concerning Guarantors, this Guaranty and
any security for this Guaranty.
(12) Guarantors agree to pay to the Administrative Agent, on
demand, all reasonable Attorney Costs incurred by the Guarantied Parties
prior to the commencement of any legal action in connection with the
enforcement of this Guaranty and any instrument or agreement required
under this Guaranty. In the event of a legal action, the prevailing party
shall be entitled to reasonable attorneys' fees (including allocated costs
for in-house legal services), costs and necessary disbursements incurred in
connection with such action or proceeding, as determined by the court.
(13) This Guaranty shall be governed by and construed according
to the laws of the State of California, to the jurisdiction of which the
parties hereto submit.
(14) Notwithstanding anything to the contrary contained
herein, each Guarantor's liability pursuant to this Guaranty shall be
limited to the greater of: (a) the 'reasonably equivalent value,' received
by such Guarantor or any of its subsidiaries arising out of the indebtedness
(including, without limitation, repayment of intercompany or third party
debt of, investments made in, and capital contributions, advances and loans
made to, such Guarantor or any of its subsidiaries, directly or indirectly,
by Borrower or any other subsidiary with, or as a direct or indirect result
of obtaining, the proceeds of any indebtedness) in exchange for or in
connection with such Guarantor's guaranty of the indebtedness, and (b)
95% of the excess of (i) a 'fair valuation' of the amount of the assets and
other property of such Guarantor and its subsidiaries taken as a whole as of
the applicable date of determination of the incurrence of such Guarantor's
obligations hereunder over (ii) a 'fair valuation' of such Guarantor's and
its subsidiaries' debts taken as a whole as of such date, but excluding
liabilities arising under this Guaranty and excluding all liabilities owing
by such Guarantor and its subsidiaries taken as a whole to Borrower or any
other Subsidiary or otherwise subordinated to such Guarantor's obligations
hereunder, it being understood that a portion of such indebtedness owing to
Borrower shall be discharged on a dollar-for-dollar basis in an amount
equal to the amount paid by such Guarantor hereunder. The meaning of the
terms 'reasonably equivalent value' and 'fair valuation,' and the
calculations of assets and other property and debts, shall be determined in
accordance with the applicable federal and California state laws in effect
on the date hereof governing the determination of the insolvency of a
debtor and to further the intent of all parties hereto to maximize the
amount payable by such Guarantor without rendering it insolvent or leaving
it with an unreasonably small amount of capital in relation to its business,
in either case, at the applicable date for the determination of the
incurrence of its obligations hereunder; provided, however, each Guarantor
agrees, to the maximum extent permitted by law, that 'fair valuation' of
such Guarantor's and its subsidiaries' assets and other properties means the
fair market sales price as would be obtained in an arms-length transaction
between competent, informed and willing parties under no compulsion to
sell or buy or collections thereof obtained in the ordinary course of
business and 'fair valuation' of its debts means the amount, in light of the
applicable circumstances, at the time, for which such Guarantor or its
subsidiaries is liable for matured known liquidated liabilities or would
reasonably be expected to become liable on contingent or unliquidated
liabilities as they mature and taking into consideration the nature of any
such contingency and the probability that liability would be imposed.
(15) Each Guarantor represents and warrants for and with respect
to itself that:
(a) Such Guarantor is a corporation duly organized and
existing under the laws of the state province or country of its
incorporation, and is properly licensed and in good standing in, and where
necessary to maintain its rights and privileges have complied with the
fictitious name statute of, every jurisdiction in which it is doing
business, except where the failure to be licensed or be in good standing or
comply with any such statute will not have a material adverse effect on the
ability of such Guarantor to perform its obligations hereunder or under any
instrument or agreement required hereunder;
(b) The execution, delivery and performance of this
Guaranty and any instrument or agreement required hereunder are within
the power of such Guarantor, have been duly authorized by, and are not in
conflict with the terms of any charter, by-law or other organization papers
of, such Guarantor;
(c) No approval, consent, exemption or other action by, or
notice to or filing with, any governmental authority is necessary in
connection with the execution, delivery, performance or enforcement of this
Guaranty or any instrument or agreement required hereunder;
(d) There is no law, rule or regulation, nor is there any
judgment, decree or order of any court or governmental authority binding
on such Guarantor, which would be contravened by the execution, delivery,
performance or enforcement of this Guaranty or any instrument or
agreement required hereunder;
(e) This Guaranty is a legal, valid and binding agreement
of such Guarantor, enforceable against such Guarantor in accordance with
its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and
enforceable, except where enforceability thereof may be limited by
applicable law relating to bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally or by the application of
general principles of equity;
(f) There is no action, suit or proceeding pending against,
or to the knowledge of such Guarantor, threatened against or affecting such
Guarantor, before any court or arbitrator or any governmental body, agency
or official which in any manner draws into question the validity or
enforceability of this Guaranty; and
(g) The execution, delivery and performance by such
Guarantor of this Guaranty does not constitute, to the best knowledge of
such Guarantor, a "fraudulent conveyance," "fraudulent obligation" or
"fraudulent transfer" within the meanings of the Uniform Fraudulent
Conveyances Act or Uniform Fraudulent Transfer Act, as enacted in any
jurisdiction.
(15) From time to time corporations and partnerships which
become Subsidiaries of Borrower may become a Guarantor by such Person
and the existing Guarantors executing and delivering a supplement hereto
substantially in the form of Exhibit A hereto. Upon the Administrative
Agent's receipt of a duly executed and delivered supplement, such Person
shall become a party hereto as though a signatory hereto, with no
amendment or further action required hereunder, and thereafter, all
references to Guarantor shall include such additional Person.
(16) In order to provide for just and equitable contribution
among the Guarantors, in connection with the execution of this Guaranty,
the Guarantors agree among themselves that, subject to the other provisions
of this Guaranty, in the event any Guarantor satisfies some or all of the
Obligations (a "Funding Guarantor"), the Funding Guarantor shall be
entitled to contribution from the other Guarantors that have positive net
worth at the time for all payments made by the Funding Guarantor in
satisfying the indebtedness, so that each Guarantor that remains obligated
under this Guaranty at the time that a Funding Guarantor makes a payment
hereunder (a "Remaining Guarantor") and has a positive net worth at such
time shall bear a portion of such payment equal to the percentage that such
Remaining Guarantor's net worth bears to the aggregate net worth of all
Remaining Guarantors that have positive net worth at the time, in each case
calculated as of the respective date of payment.
Executed as of October 20, 1997.
TODD-AO STUDIOS EAST INC.
TODD-AO VIDEO SERVICES
TODD-AO STUDIOS
TODD-AO STUDIOS WEST
TODD-AO HD, INC.
By:__________________________
J.R. DeLang
Vice President
EXHIBIT A TO SUBSIDIARY CONTINUING GUARANTY
ADDITIONAL GUARANTOR SUPPLEMENT
Dated: _____________, 199_
Reference is made to that certain Guaranty dated as of
October 20, 1997, as amended (the "Guaranty"), by and among the
Guarantors from time to time party thereto in favor of Bank of America
National Trust and Savings Association, as Administrative Agent for the
Guarantied Parties. Unless otherwise defined herein, capitalized terms used
herein have the respective meanings assigned to them in the Guaranty and
the Credit Agreement referred to therein.
____________________, a Subsidiary of
______________, ("Subsidiary") hereby elects to become a Guarantor under
the Guaranty, and agrees to be bound by all the terms and conditions
applicable to a Guarantor thereunder as of the date hereof.
The undersigned Subsidiary hereby represents and
warrants that the execution, delivery and performance of any Loan
Documents to which it is to be a party will not violate any law, decree or
judgment applicable to the undersigned, except as will not have a Material
Adverse Effect.
The undersigned existing Guarantors hereby consent to
Subsidiary becoming a party to the Guaranty.
This Certificate of Additional Guarantors is executed by
the parties hereto as of the date first written above.
"Subsidiary"
By:
Name:
Title:
THE GUARANTORS LISTED ON THE SIGNATURE PAGE TO
GUARANTY AND ON ANY PRIOR ADDITIONAL GUARANTORS
SUPPLEMENTS
By:
Name:
Title:
ACKNOWLEDGED:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:
Name:
Title:
EXHIBIT E
PLEDGE AGREEMENT
This PLEDGE AGREEMENT ("Agreement"), dated as of October
20, 1997, is made by THE TODD-AO CORPORATION, a Delaware
corporation (the "Borrower") in favor of BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative
Agent (the "Administrative Agent") for itself and the Banks party to that
certain First Amended and Restated Credit Agreement dated as of October
20, 1997 among The Todd-AO Corporation, a Delaware corporation (the
"Borrower"), the Banks from time to time party thereto, and the
Administrative Agent and Issuing Bank (as extended, renewed, amended or
restated from time to time, the "Credit Agreement").
RECITAL
Borrower is required to pledge the Pledged Collateral to the
Administrative Agent under the terms of the Credit Agreement, all under
the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce the Banks to extend credit
facilities to Borrower under the Credit Agreement, and for other good and
valuable consideration, the receipt and adequacy of which hereby is
acknowledged, Borrower hereby represents, warrants, covenants, agrees,
and pledges as follows:
1. Definitions. Terms defined in the Credit Agreement and
not otherwise defined in this Agreement shall have the meanings given
those terms in the Credit Agreement as though set forth herein in full. The
following terms shall have the meanings respectively set forth after each:
"Certificates" means all certificates, instruments or other
documents now or hereafter representing or evidencing any Pledged
Securities.
"Note" means each promissory note in favor of Borrower from a
Subsidiary evidencing intercompany obligations owing from such
Subsidiary to Borrower.
"Pledge Agreement Supplement" means a supplement in the form
of Exhibit B hereto.
"Pledged Collateral" means (i) any and all property of Borrower
now or hereafter pledged and delivered to the Administrative Agent for and
on behalf of the Bank, (ii) each Note together with any documentary
evidence of any collateral therefor and (iii) the Pledged Securities and the
Certificates representing or evidencing same, and any and all proceeds and
products of any of the foregoing, and any and all collections, dividends,
distributions, redemption payments or liquidation payments with respect to
any of the foregoing, except dividends or distributions actually paid to
Borrower as permitted under the terms of the Credit Agreement.
"Pledged Securities" means shares of the capital stock of each
Subsidiary listed on Exhibit A hereto, as amended or deemed amended
from time to time by delivery of Pledge Agreement Supplements, which
shares have the percentage of the voting power of all capital stock of each
Subsidiary indicated on Exhibit A or such Pledge Agreement Supplements,
any and all securities now or hereafter issued in substitution, exchange
or replacement therefor, or with respect thereto, any and all warrants,
options or other rights to subscribe to or acquire any additional capital
stock of Borrower (to the extent such additional capital stock,
together with that already pledged hereunder, would equal the percentage
indicated on Exhibit A or any Pledge Agreement Supplements of the
voting power of all such capital stock), and any and all additional
capital stock of such Subsidiary (to the extent such additional
capital stock, together with that already pledged hereunder, would
equal the indicated percentage of the voting power of all such capital
stock).
"Subsidiary" means each Subsidiary listed on Exhibit A, as amended
or deemed amended from time to time by Pledge Agreement Supplements.
2. Representations and Warranties. Borrower represents,
warrants and agrees that: (i) it has good title to the Pledged Collateral,
free from any liens, leases, encumbrances, defenses or other claims or
restrictions whatsoever; (ii) the security interest in the Pledged Collateral
created hereby constitutes a first, prior, and indefeasible security
interest with respect to such shares, and the possession by the
Administrative Agent of the Certificates representing the Pledged Securities
will perfect the Administrative Agent's interest therein; (iii) it has the
right to transfer the Pledged Collateral pursuant to this Agreement without
restriction, and such shares have been duly and validly pledged to the
Administrative Agent in accordance with law; (iv) the Pledged Securities
represent the percentage of ownership indicated on Exhibit A and any
Pledge Agreement Supplements of the voting power of all capital stock of
each Subsidiary, and (v) it shall provide such additional endorsements,
forms and writings and execute all documents and take such other action as
the Administrative Agent deems necessary to create and perfect a security
interest in the Pledged Collateral or as the Administrative Agent may at any
time reasonably request in connection with the administration or
enforcement of this Agreement or the administration of the Pledged
Collateral.
3. Creation of Security Interest.
(a) Pledge of Pledged Collateral. Borrower hereby
pledges to the Administrative Agent and grants to Administrative Agent for
the benefit of itself and the Banks a security interest in and to all
Pledged Collateral, together with all products, proceeds, dividends,
redemption payments, liquidation payments, cash, instruments and other
property, and any and all rights, titles, interests, privileges, benefits
and preferences appertaining or incidental to the Pledged Collateral. The
security interest and pledge created by this Section 3(a) shall continue in
effect so long as any Obligation is owed to the Administrative Agent and
the Banks.
(b) Delivery of Certain Pledged Collateral. Except as
permitted by Section 4.1(c) of the Credit Agreement, Borrower shall pledge
and deliver the Pledged Collateral to the Administrative Agent. After the
date hereof, additional Pledged Collateral may from time to time be
delivered to the Administrative Agent by agreement between the
Administrative Agent and Borrower and in accordance with Section 24. All
Pledged Collateral at any time delivered to the Administrative Agent shall
be in suitable form for transfer by delivery, or shall be accompanied by
duly executed stock powers or other instruments of transfer or assignment
undated in blank for each certificate, all in form and substance
satisfactory to the Administrative Agent. The Administrative Agent shall
hold all Pledged Collateral pledged hereunder on behalf of the Banks
pursuant to this Agreement.
3. Security for Obligations. This Agreement and the pledge
and security interests granted herein secure the prompt payment, in full in
cash, and full performance of, all Obligations, whether for principal,
interest, fees, expenses or otherwise, including, without limitation, all
Obligations of Borrower now or hereafter existing under this Agreement,
and all interest that accrues on all or any part of any of the Obligations
after the filing of any petition or pleading against Borrower, Borrower or
any other Person for a proceeding under any bankruptcy or debtor relief
law.
4. Further Assurances. Borrower agrees that at any time, and
from time to time, at its own expense Borrower will promptly execute,
deliver and file or record all further financing statements, instruments and
documents, and will take all further actions, including, without limitation,
causing Borrower to so execute, deliver, file or take other actions, that may
be necessary or desirable, or that the Administrative Agent reasonably may
request, in order to perfect and protect any pledge or security interest
granted hereby or to enable the Administrative Agent to exercise and
enforce the Administrative Agent's rights and remedies hereunder with
respect to any Pledged Collateral and to preserve, protect and maintain the
Pledged Collateral and the value thereof, including, without limitation,
payment of all taxes, assessments and other charges imposed on or relating
to the Pledged Collateral. Borrower hereby consents and agrees that the
issuers of, or obligors on, the Pledged Collateral, or any registrar or
transfer agent or trustee for any of the Pledged Collateral, shall be
entitled to accept the provisions of this Agreement as conclusive evidence
of the right of the Administrative Agent to effect any transfer or exercise
any right hereunder, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by Borrower or any other Person to
such issuers or such obligors or to any such registrar or transfer agent or
trustee.
5. Voting Rights; Dividends; etc. So long as no Event of
Default under the Credit Agreement occurs and remains continuing:
(a) Voting Rights. Borrower shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Pledged
Securities, or any part thereof, for any purpose not inconsistent with the
terms of this Agreement and the Credit Agreement; provided, however, that
Borrower shall exercise, or shall refrain from exercising, any such right
if it would result in a Default or an Event of Default.
(b) Dividend and Distribution Rights. Borrower shall be
entitled to receive and to retain and use only those dividends or
distributions paid to Borrower as permitted under the terms of the Credit
Agreement; provided, however, that any and all such dividends or
distributions received in the form of capital stock shall be, and the
Certificates representing such capital stock forthwith shall be, to the
extent required to make the representation in Section 2(b)(iv) true and
correct after giving effect to such dividend, delivered to the Administrative
Agent to hold as, Pledged Collateral and shall, if received by Borrower, be
received in trust for the benefit of the Administrative Agent, be segregated
from the other property of Borrower, and forthwith be delivered to the
Administrative Agent as Pledged Collateral in the same form as so received
(with any necessary endorsements).
6. Rights During Event of Default. When an Event of
Default has occurred and is continuing:
(a) Voting, Dividend, and Distribution Rights. At the
option of the Administrative Agent, all rights of Borrower to exercise the
voting and other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 5(a), and to receive the dividends and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 5(b), shall cease, and all such rights shall thereupon
become vested in the Administrative Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights and to receive
and to hold as Pledged Collateral such dividends and distributions. The
Administrative Agent shall give notice thereof to Borrower; provided,
however, that (i) neither the giving of such notice nor the receipt thereof
by Borrower shall be a condition to exercise of any rights of the
Administrative Agent hereunder, and (ii) the Administrative Agent shall
incur no liability for failing to give such notice.
(b) Dividends and Distributions Held in Trust. All
dividends and other distributions which are received by Borrower contrary
to the provisions of the Credit Agreement or this Agreement shall be
received in trust for the benefit of the Administrative Agent, shall be
segregated from other funds of Borrower, and forthwith shall be paid over
to the Administrative Agent as Pledged Collateral in the same form as so
received (with any necessary endorsements).
(c) Irrevocable Proxy. Borrower hereby revokes all
previous proxies with regard to the Pledged Securities and appoints the
Administrative Agent as its proxyholder to attend and vote at any and all
meetings of the shareholders of each Subsidiary, and any adjournments
thereof, held on or after the date of the giving of this proxy and prior to
the termination of this proxy and to execute any and all written consents of
shareholders of each Subsidiary on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
Borrower had personally attended the meetings or had personally voted its
shares or had personally signed the written consents; provided, however,
that the proxyholder shall have rights hereunder only upon the occurrence
and during the continuance of an Event of Default under the Credit
Agreement, and that the Administrative Agent shall have instructed the
proxyholder to exercise voting rights with respect to the Pledged Securities
or any of them. Borrower hereby authorizes the Administrative Agent to
substitute another person as the proxyholder and, upon the occurrence or
during the continuance of any Event of Default, hereby authorizes and
directs the proxyholder to file this proxy and the substitution instrument
with the secretary of the appropriate corporation. This proxy is coupled
with an interest and is irrevocable until such time as all Obligations have
been paid and performed in full.
7. Transfers and Other Liens. Borrower agrees that, except
as specifically permitted under the Credit Agreement, it will not (i) sell,
assign, exchange, transfer or otherwise dispose of, or contract to sell,
assign, exchange, transfer or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral, (ii) create or permit to exist
any lien upon or with respect to any of the Pledged Collateral, except for
liens in favor of the Administrative Agent, or (iii) take any action with
respect to the Pledged Collateral which is inconsistent with the provisions
or purposes of this Agreement or the Credit Agreement.
8. Administrative Agent Appointed Attorney-in-Fact.
Borrower hereby irrevocably appoints the Administrative Agent as
Borrower's attorney-in-fact, with full authority in the place and stead of
Borrower, and in the name of Borrower, or otherwise, from time to time, in
the Administrative Agent's sole and absolute discretion to do any of the
following acts or things: (a) to do all acts and things and to execute all
documents necessary or advisable to perfect and continue perfected the
security interests created by this Agreement and to preserve, maintain and
protect the Pledged Collateral; (b) to do any and every act which Borrower
is obligated to do under this Agreement; (c) to prepare, sign, file and
record, in Borrower's name, any financing statement covering the Pledged
Collateral; and (d) to endorse and transfer the Pledged Collateral upon
foreclosure by the Administrative Agent; provided, however, that the
Administrative Agent shall be under no obligation whatsoever to take any
of the foregoing actions, and the Administrative Agent shall have no
liability or responsibility for any act (other than the Administrative
Agent's own gross negligence or willful misconduct) or omission taken with
respect thereto. Borrower hereby agrees to repay immediately upon
demand all reasonable costs and expenses incurred or expended by the
Administrative Agent in exercising any right or taking any action under this
Agreement, together with interest as provided for in the Credit Agreement.
9. Administrative Agent May Perform Obligations. If
Borrower fails to perform any Obligation contained herein, the
Administrative Agent may, but without any obligation to do so and without
notice to or demand upon Borrower, perform the same and take such other
action as the Administrative Agent may deem necessary or desirable to
protect the Pledged Collateral or the Administrative Agent's security
interests therein, the Administrative Agent being hereby authorized
(without limiting the general nature of the authority hereinabove conferred)
to pay, purchase, contest and compromise any lien which in the reasonable
judgment of the Administrative Agent appears to be prior or superior to the
Administrative Agent's security interests, and in exercising any such powers
and authority to pay necessary expense, employ counsel and pay Attorney
Costs. Borrower hereby agrees to repay immediately upon demand all sum
so expended by the Administrative Agent, together with interest from the
date of expenditure at the rates provided for in the Credit Agreement. The
Administrative Agent shall be under no duty or obligation to (1) preserve,
maintain or protect the Pledged Collateral or any of Borrower's rights or
interest therein, (2) exercise any voting rights with respect to the Pledged
Collateral, whether or not an Event of Default has occurred or is
continuing, or (3) make or give any notices of default, presentments,
demands for performance, notices of nonperformance or dishonor, protests,
notices of protest or notice of any other nature whatsoever in connection
with the Pledged Collateral on behalf of Borrower or any other Person
having any interest therein; and the Administrative Agent does not assume
and shall not be obligated to perform the obligations of Borrower, if any,
with respect to the Pledged Collateral.
10. Reasonable Care. The Administrative Agent shall in all
events (and without restriction on the limitations on liability of the
Administrative Agent contained herein) be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in
its possession if the Pledged Collateral is accorded treatment substantially
similar to that which the Administrative Agent accords its own property, it
being understood that the Administrative Agent shall not have any
responsibility for (1) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Administrative Agent has or is
deemed to have knowledge of such matters, or (2) taking any necessary
steps to preserve rights against any Person with respect to any Pledged
Collateral.
11. Events of Default and Remedies.
(a) Rights Upon Event of Default. Upon the occurrence
and during the continuance of an Event of Default under the Credit
Agreement, Borrower shall be in default hereunder and the Administrative
Agent shall have in any jurisdiction where enforcement is sought, in
addition to all other rights and remedies that the Administrative Agent may
have under this Agreement and under applicable law or in equity, all rights
and remedies of a secured party under the Uniform Commercial Code as
enacted in any such jurisdiction, and in addition the following rights and
remedies, all of which may be exercised with or without further notice to
Borrower:
(i) to notify each Subsidiary that the Pledge
Securities have been pledged to the Administrative Agent and that all
dividends and other payments thereon are to be made directly and
exclusively to the Administrative Agent; to renew, extend, modify, amend,
accelerate, accept partial payments on, make allowances and adjustments
and issue credits with respect to, release, settle, compromise, compound,
collect or otherwise liquidate, on terms acceptable to the Administrative
Agent, in whole or in part, the Pledged Collateral and any amounts owing
thereon or any guaranty or security therefor; to enter into any other
agreement relating to or affecting the Pledged Collateral; and to give all
consents, waivers and ratification with respect to the Pledged Collateral
and exercise all other rights (including voting rights), powers and remedies
and otherwise act with respect thereto as if the Administrative Agent were
the owner thereof;
(ii) to enforce payment and prosecute any action
or proceeding with respect to any and all of the Pledged Collateral and take
or bring, in the Administrative Agent's name or in the name of Borrower, all
steps, actions, suits or proceedings deemed by the Administrative Agent
necessary or desirable to effect collection of or to realize upon the Pledged
Collateral;
(iii) in accordance with applicable law, to take
possession of and operate or control the Pledged Collateral with or without
judicial process;
(iv) to endorse, in the name of Borrower, all
checks, notes, drafts, money orders, instruments and other evidences of
payment relating to the Pledged Collateral;
(v) to transfer any or all of the Pledged
Collateral into the name of the Administrative Agent or its nominee or
nominees; and
(vi) in accordance with applicable law, to
foreclose the liens and security interests created under this Agreement or
under any other agreement relating to the Pledged Collateral by any
available judicial procedure or without judicial process, and to sell,
assign or otherwise dispose of the Pledged Collateral or any part thereof,
either at public or private sale or at any broker's board or securities
exchange, in lots or in bulk, for cash, on credit or on future delivery, or
otherwise, with or without representations or warranties, and upon such
terms as shall be acceptable to the Administrative Agent;
all at the sole option of and in the sole discretion of the Administrative
Agent.
(b) Appointment of a Receiver. Upon the occurrence and
during the continuance of an Event of Default, the Administrative Agent
also shall have the right, without notice or demand, either in person, by
agent or by a receiver to be appointed by a court (and Borrower hereby
expressly consents upon the occurrence and during the continuance of an
Event of Default to the appointment of such a receiver), and without regard
to the adequacy of any security for the Obligations, to take possession of
the Pledged Collateral or any part thereof and to exercise the proxy granted
to the Administrative Agent under Section 6(c). Taking possession of the
Pledged Collateral shall not cure or waive any Event of Default or notice
thereof or invalidate any act done pursuant to such notice. The rights,
remedies and powers of any receiver appointed by a court shall be
as ordered by said court.
(c) Notice of Sale. The Administrative Agent shall give
Borrower at least five (5) days' written notice of sale of all or any part of
the Pledged Collateral. Any sale of the Pledged Collateral shall be held at
such time or times and at such place or places as the Administrative Agent
may determine in the exercise of its sole and absolute discretion. The
Administrative Agent may bid (which bid may be, in whole or in part, in the
form of cancellation of Obligations) for and purchase for the account of the
Administrative Agent or any nominee of the Administrative Agent the
whole or any part of the Pledged Collateral. The Administrative Agent
shall not be obligated to make any sale of the Pledged Collateral if they
shall determine not to do so regardless of the fact that notice of sale of
the Pledged Collateral may have been given. The Administrative Agent
may, without notice or publication, adjourn the sale from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was
so adjourned.
(d) Private Sales. Whether or not any of the Pledged
Collateral has been effectively registered under the Securities Act of 1933
or other applicable laws, the Administrative Agent may, in its sole and
absolute discretion, sell all or any part of the Pledged Collateral at
private sale in such manner and under such circumstances as the
Administrative Agent may deem necessary or advisable. Without limiting
the foregoing, the Administrative Agent may (i) approach and negotiate
with a limited number of potential purchasers, and (ii) restrict the
prospective bidders or purchasers to persons who will represent and agree
that they are purchasing the Pledged Collateral for their own account for
investment and not with a view to the distribution or resale thereof. In
the event that any of the Pledged Collateral is sold at private sale,
Borrower agrees that if the Pledged Collateral is sold for a price which the
Administrative Agent in good faith believe to be reasonable, then (A) the
sale shall be deemed to be commercially reasonable in all respects, (B)
Borrower shall not be entitled to a credit against the Obligations in an
amount in excess of the purchase price, and (C) the Administrative Agent
shall not incur any liability or responsibility to Borrower in connection
therewith, notwithstanding the possibility that a substantially higher price
might have been realized at a public sale. Borrower recognizes that a ready
market may not exist for Pledged Collateral which is not regularly traded on
a recognized securities exchange, and that a sale by the Administrative
Agent of any such Pledged Collateral for an amount substantially less than
a pro rata share of the fair market value of the issuer's assets minus
liabilities may be commercially reasonable in view of the difficulties that
may be encountered in attempting to sell a large amount of Pledged
Collateral or Pledged Collateral that is privately traded.
(e) Title of Purchasers. Upon consummation of any sale
of Pledged Collateral pursuant to this Section 11, the Administrative Agent
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Pledged Collateral so sold. Each such purchaser at
any such sale shall hold the Pledged Collateral sold absolutely free from
any claim or right on the part of Borrower, and Borrower hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay and
appraisal which it now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted. If the sale of all
or any part of the Pledged Collateral is made on credit or for future
delivery, the Administrative Agent shall not be required to apply any
portion of the sale price to the Obligations until such amount actually is
received by the Administrative Agent, and any Pledged Collateral so sold
may be retained by the Administrative Agent until the sale price is paid in
full by the purchaser or purchasers thereof. The Administrative Agent shall
not incur any liability in case any such purchaser or purchasers shall fail
to pay for the Pledged Collateral so sold, and, in case of any such failure,
the Pledged Collateral may be sold again upon like notice.
(f) Disposition of Proceeds of Sale. The net cash
proceeds resulting from the collection, liquidation, sale or other
disposition of the Pledged Collateral shall be applied, first, to the
reasonable costs and expenses (including Attorney Costs) of retaking,
holding, storing, processing and preparing for sale, selling, collecting and
liquidating the Pledged Collateral, and the like; second, to the satisfaction
of all Obligations in any order that the Administrative Agent may select in
its sole discretion; and, third, to all other indebtedness secured hereby in
such order and manner as the Administrative Agent in its sole and absolute
discretion may determine.
12. Other Agreements. Nothing herein shall in any way
modify or limit the effect of terms or conditions set forth in any other
security or other agreement in connection with the Obligations, whether or
not executed by Borrower, but each and every term and condition hereof
shall be in addition thereto.
13. Covenant Not to Issue Uncertificated Securities.
Borrower represents and warrants that all of the capital stock of each
Subsidiary is in certificated form (as contemplated by Division 8 of the
California Commercial Code), and covenants to the Administrative Agent
that it will not cause or permit each Subsidiary to issue any capital stock
in uncertificated form or seek to convert all or any part of its existing
capital stock into uncertificated form (as contemplated by Division 8 of the
California Commercial Code).
14. Covenant Not to Make Advances not Evidenced by a
Note. Borrower represents, warrants and covenants to the Administrative
Agent that it will not make any advances, investments, loans or other
transfers of money to a Subsidiary which are not evidenced by a Note, and
Borrower covenants that it will first deliver any such Note to the
Administrative Agent as Pledged Collateral hereunder.
15. Covenant Not to Dilute Interests of the Administrative
Agent and the Banks in Pledged Securities. Borrower represents, warrants
and covenants that it will not at any time cause or permit Borrower (or any
corporation whose securities constitute Pledged Collateral) to issue any
additional capital stock, or any warrants, options or other rights to
acquire any additional capital stock.
16. Failure or Delay Not a Waiver. No delay or omission by
the Administrative Agent to exercise any right under this Agreement shall
impair any such right, nor shall it be construed to be a waiver thereof. No
waiver of any single breach or default under this Agreement shall be
deemed a waiver of any other breach or default.
17. Notices. Any communications between the parties hereto
or notices or requests provided herein to be given may be given by mailing
the same, postage prepaid, or by telex or telecopier, to each party at its
address set forth on the signature pages to the Credit Agreement, or to such
other addresses as each party may in writing hereafter indicate. Any
notice, request or demand to or upon the Administrative Agent shall not be
effective until received.
18. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that Borrower shall not assign this
Agreement or any of the rights of Borrower hereunder without the prior
written consent of the Administrative Agent.
19. Entire Agreement. This Agreement and any agreement,
document or instrument attached hereto or referred to herein integrate all
the terms and conditions mentioned herein or incidental hereto, and
supersede all oral negotiations and prior writings in respect to the subject
matter hereof. In the event of any conflict or inconsistency between the
terms, conditions and provisions of this Agreement and any such
agreement, document or instrument required hereunder, the terms,
conditions and provisions of this Agreement shall prevail.
20. Governing Law. This Agreement, and any instrument or
agreement required hereunder, shall be governed by and construed under
the laws of the State of California.
21. Severability of Provisions. The illegality or enforceability
of any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
22. Counterparts. This Agreement and any amendments,
waivers, consents or supplements may be executed in as many counterparts
as may be deemed necessary or convenient, and by the different parties
hereto on separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute but one and
the same agreement. This Agreement shall become effective as of the date
first written above upon the execution of a counterpart by the
Administrative Agent and Borrower and by delivery thereof, or notice of
such execution, to Borrower and the Administrative Agent.
23. Amendment or Waiver of Agreement. No amendment or
waiver of any provision of this Agreement, and no consent with respect to
any departure by Borrower shall be effective unless the same shall be in
writing and signed or acknowledged by the Administrative Agent, and then
any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
24. Additional Pledged Securities. The Borrower shall from
time to time (a) upon obtaining any additional shares of any Issuer or any
other securities constituting Pledged Securities or (b) when required to
pledge additional collateral pursuant to Section 6.9 of the Credit
Agreement, promptly deliver to the Administrative Agent a duly executed
Pledge Agreement Supplement identifying the additional shares which are
being pledged, accompanied by duly executed stock powers or other
instruments of transfer or assignment undated in blank for each certificate,
all in form and substance satisfactory to the Administrative Agent. The
Borrower hereby authorizes the Administrative Agent to attach each Pledge
Agreement Supplement to this Agreement and agrees that all shares listed
on any Pledge Agreement Supplement delivered to the Administrative
Agent shall for all purposes hereunder constitute Pledged Securities.
IN WITNESS WHEREOF, Borrower has caused this Agreement to
be duly executed as of the date first above written.
"Borrower"
THE TODD-AO CORPORATION,
a Delaware corporation
By:____________________________
Title:_________________________
EXHIBIT A
PLEDGED SECURITIES
Class of
Stock and
Issuer and state or Stock Certificate Number of Percentage of
country of incorporation No(s). Shares
Ownership
Todd-AO Europe Holdings, Ltd. 66%
EXHIBIT B
PLEDGE AGREEMENT SUPPLEMENT
This Pledge Agreement Supplement, dated as of
________________, is delivered pursuant to Section 24 of the Pledge
Agreement referred to below. The undersigned hereby agrees that this
Pledge Agreement Supplement may be attached to the Pledge Agreement,
dated as of October 20, 1997 (the "Pledge Agreement", the terms defined
therein and not otherwise defined herein being used as therein defined),
made by the undersigned to Bank of America National Trust and Savings
Association as Administrative Agent for the benefit of itself and the Banks
and that the shares listed on this Pledge Agreement Supplement shall be and
become part of the Pledged Securities referred to in the Pledge Agreement
and shall secure all Obligations. The attached schedule shall be deemed to
amend Exhibit A to the Pledge Agreement.
The undersigned agree that the securities listed below shall for all
purposes constitute Pledged Securities and shall be subject to the security
interest created by the Pledge Agreement.
The undersigned hereby certifies that the representations and
warranties set forth in Section 2 of the Pledge Agreement are true and
correct as to the Pledged Securities listed herein on and as of the date
hereof.
THE TODD-AO CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
ACKNOWLEDGED:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:__________________________
Vice President
Class of
Stock and
Issuer and state or Stock Certificate Number of Percentage of
country of incorporation No(s). Shares
Ownership
EXHIBIT F
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
, 19
TO: Bank of America National Trust and
Savings Association, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain First Amended and Restated
Credit Agreement dated as of October 20, 1997 among The Todd-AO
Corporation, a Delaware corporation (the "Borrower"), the banks from time
to time party thereto, and Bank of America National Trust and Savings
Association, as Administrative Agent and Issuing Bank (as extended,
renewed, amended or restated from time to time, the "Agreement;" the
terms defined therein being used herein as therein defined).
1. We hereby give you notice of, and request your consent to,
the assignment by (the "Assignor") to (the "Assignee") of %
of the right, title and interest of the Assignor in and to the Loan
Documents, including without limitation the right, title and interest of the
Assignor in and to the Commitment of the Assignor, and all outstanding
Loans made by it and Letter of Credit Usage assignment:
(a) the aggregate amount of the Assignor's Commitment is $ ;
(b) the Dollar Equivalent of its outstanding Loans is $ ,
comprised of Loans in the following currencies:
$ DM
PS ( ; and
(c) the Dollar Equivalent of its Letter of Credit Usage
is $ , comprised of Letter of Credit Usage in
the following currencies:
$ DM
PS .
2. The Assignee hereby represents and warrants that it has
complied with the requirements of Section 10.3 of the Credit Agreement in
connection with this assignment.
3. The Assignee agrees that, upon receiving your
consent to such assignment and from and after , the
Assignee will be bound by the terms of the Loan Documents, with respect
to the interest in the Loan Documents assigned to it as specified above, as
fully and to the same extent as if the Assignee were the Bank originally
holding such interest in the Loan Documents.
4. The following administrative details apply to the Assignee:
(a) Offshore Lending Office:
Assignee name:
Address:
Attention:
Telephone: ( )
Telecopier: ( )
Telex (Answerback):
(b) Domestic Lending Office:
Assignee name:
Address:
Attention:
Telephone: ( )
Telecopier: ( )
Telex (Answerback):
(c) Notice Address:
Assignee name:
Address:
Attention:
Telephone: ( )
Telecopier: ( )
Telex (Answerback):
(d) Payment Instructions:
Account No.:
Attention:
Reference:
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[Name of Assignor]
By:
Title:
[Name of Assignee]
By:
Title:
We hereby consent to the
foregoing assignment.
THE TODD-AO CORPORATION
By:
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:
Vice President
SCHEDULE 2.1
COMMITMENTS
AND PRO RATA SHARES
Schedule 2.1(a)
Prior to BofA Tranche Termination Date
Commitments (excluding BofA Tranche Loan)
Pro Pro
Rata Rata
Bank Commitment Share Share
Bank of America
National Trust
and Savings
Association $19,000,000 43.15% 50.00%
Union Bank of
California, N.A. 10,000,000 22.73 20.00
Sanwa Bank California 10,000,000 22.73 20.00
Societe Generale 5,000,000 11.36 10.00
TOTAL $44,000,000 100.00% 100.00%
BofA Tranche Loan
Pro Rata
Bank BofA Tranche Loan Share
Bank of America National
Trust and Savings
Association $6,000,000 100%
Schedule 2.1(b)
Commencing on the BofA Tranche Termination Date
Pro Rata
Bank Commitment Share
Bank of America
NationalTrust and
SavingsAssociation $25,000,000 50.00%
Union Bank of California, N.A. 10,000,000 20.00
Sanwa Bank California 10,000,000 20.00
Societe Generale 5,000,000 10.00
TOTAL $50,000,000 100.00%
SCHEDULE 5.9 SIGNIFICANT SUBSIDIARIES
TODD-AO STUDIOS EAST INC.
TODD-AO VIDEO SERVICES
TODD-AO STUDIOS
TODD-AO STUDIOS WEST
TODD-AO HD, INC.
TODD-AO FILMATICS
TODD-AO EUROPE HOLDINGS, LTD.
TODD-AO UK, LTD
SCHEDULE 7.1
EXISTING INDEBTEDNESS
SCHEDULE 10.6
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
BORROWER
THE TODD-AO CORPORATION
900 North Seward Avenue
Hollywood, California 90038
Attention: W.R. Strickley
Senior Vice President and
Chief Financial Officer
Telephone: (213) 962-4050
Telecopier: (213) 466-2327
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
Bank of America National Trust
and Savings Association
555 South Flower Street, 11th Floor
Los Angeles, California 90071
Attention: Janice Hammond
Vice President
Agency Management-Los Angeles #20529
Telephone: (213) 228-9861
Facsimile: (213) 228-2299
ADMINISTRATIVE AGENT'S PAYMENT OFFICE:
1850 Gateway Boulevard
Concord, California 94520
Attention: Rosiland Meshack
Telephone: (510) 675-8448
Facsimile: (510) 675-8500
Account No.:
Ref: The Todd-AO Corporation
Att: Agency Management Services #5596
ABA No. 1210-0035-8
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
Domestic and Offshore Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Attention: Nona Merritt
Telephone: (510) 675-7052
Facsimile: (510) 675-7531
Notices (other than Borrowing notices and Notices of
Conversion/Continuation) :
Bank of America National Trust and
Savings Association
555 South Flower Street
Los Angeles, California 90071
Attention: Matthew Koenig
Vice President
Credit Products
Telephone: (213) 228-6375
Facsimile: (213) 228-2641
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Issuing Bank
Address for Notices:
International Trade
Banking Division #5655
333 S. Beaudry Ave., 19th Floor
Los Angeles, CA 90017
UNION BANK OF CALIFORNIA, N.A.
Domestic and Offshore Lending Office:
445 South Figueroa Street, G15-075
Los Angeles, CA 90071
Attention: Aurora Layug
Account Administrator
Telephone: (213) 236-5015
Facsimile: (213) 236-5276
Notices (other than Borrowing notices and Notices of
Conversion/Continuation) :
Union Bank of California, N.A.
445 South Figueroa Street, G15-075
Los Angeles, CA 90071
Attention: Lena Bryant
Assistant Vice President
Telephone: (213) 236-7535
Facsimile: (213) 236-5747
with a copy to:
Union Bank of California, N.A.
445 South Figueroa Street, G15-075
Los Angeles, CA 90071
Attention: Joseph W. Woolf
Vice President and Manager
Telephone: (213) 236-7512
Facsimile: (213) 236-5747
SOCIETE GENERALE
Domestic and Offshore Lending Office:
2029 Century Park East, Suite 2900
Los Angeles, CA 90067
Attention: Doris Yun
Corporate Assistant
Telephone: (310) 788-7116
Facsimile: (310) 203-0539
Notices (other than Borrowing notices and Notices of
Conversion/Continuation) :
Societe Generale, Los Angeles Branch
2029 Century Park East, Suite 2900
Los Angeles, CA 90067
Attention: Maureen Kelly
Vice President
Telephone: (310) 788-7110
Facsimile: (310) 551-1537
SANWA BANK CALIFORNIA
Domestic and Offshore Lending Office:
15165 Ventura Blvd., Suite 445
Sherman Oaks, CA 91403
Attention: Christina Eberhard
Commercial Banking Assistant
Telephone: (818) 905-0910
Facsimile: (818) 905-1002
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Sanwa Bank California
15165 Ventura Blvd., Suite 445
Sherman Oaks, CA 91403
Attention: Kent Mustari
Vice President
Telephone: (818) 905-0910
Facsimile: (818) 905-1002
Notes:
(1) For purposes of determining the Applicable Amount, the Convertible
Subordinated Notes shall not be included in calculating the Leverage Ratio.
(2) An existing Pound sterling-denominated Loan in the principal amount of
500,000 pounds sterling may be Continued or Converted notwithstanding this
Minimum Amount.
(3) See definition of "Reduction Date" for possible extension of Reduction
Dates.
(4) EBITDA of any Significant Subsidiary acquired by Borrower during the
prior four fiscal quarters may be included.
(5) For purposes of determining the Leverage Ratio when determining
compliance with Section 7.6 of the Agreement in connection with any
Acquisition, not more than 80% of the EBITDA of (a) any Person being so
acquired (provided such EBITDA may be included only if such Person will
be a Significant Subsidiary immediately following such Acquisition) and (b)
any Significant Subsidiary acquired by Borrower less than two fiscal
quarters prior to the date of such Acquisition, may be included for purposes
of calculating the Leverage Ratio.
(6) Subject to Section 2.1A(c).