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EXHIBIT 10.5
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MTS, INCORPORATED
TOWER RECORDS KABUSHIKI KAISHA
US$98,412,639 AND YEN15,596,828,718
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
April 27, 2001
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
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JPMORGAN,
AS LEAD ARRANGER AND BOOKRUNNER
[CHASE LOGO]
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TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.01. Defined Terms..................................................1
SECTION 1.02. Classification of Loans and Borrowings........................26
SECTION 1.03. Terms Generally...............................................26
SECTION 1.04. Accounting Terms; GAAP........................................26
ARTICLE II
The Credits
SECTION 2.01. Commitments...................................................27
SECTION 2.02. Loans and Borrowings..........................................27
SECTION 2.03. Requests for Borrowings.......................................28
SECTION 2.04. Funding of Borrowings.........................................29
SECTION 2.05. Interest Elections............................................30
SECTION 2.06. Optional Termination and Reduction of
Commitments.............................................31
SECTION 2.07. Repayment of Loans; Evidence of Debt..........................32
SECTION 2.08. Optional Prepayment of Loans..................................33
SECTION 2.09. Mandatory Commitment Reductions and
Prepayments.............................................33
SECTION 2.10. Fees..........................................................34
SECTION 2.11. Interest......................................................35
SECTION 2.12. Alternate Rate of Interest....................................36
SECTION 2.13. Increased Costs...............................................37
SECTION 2.14. Break Funding Payments........................................38
SECTION 2.15. Taxes.........................................................39
SECTION 2.16. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs.....................................40
SECTION 2.17. Mitigation Obligations; Replacement of
Lenders.................................................42
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers..........................................43
SECTION 3.02. Authorization; Enforceability.................................43
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SECTION 3.03. Governmental Approvals; No Conflicts..........................43
SECTION 3.04. Financial Condition; No Material Adverse
Change..................................................43
SECTION 3.05. Properties....................................................44
SECTION 3.06. Litigation and Environmental Matters..........................44
SECTION 3.07. Compliance with Laws and Agreements;
Margin Regulations......................................45
SECTION 3.08. Investment and Holding Company Status.........................45
SECTION 3.09. Taxes.........................................................45
SECTION 3.10. ERISA.........................................................45
SECTION 3.11. Disclosure....................................................46
SECTION 3.12. Security Documents............................................46
SECTION 3.13. Subsidiaries..................................................47
ARTICLE IV
Conditions
SECTION 4.01. Effective Date................................................47
SECTION 4.02. Each Credit Event.............................................49
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other
Information.............................................50
SECTION 5.02. Notices of Material Events....................................52
SECTION 5.03. Existence; Conduct of Business................................53
SECTION 5.04. Payment of Obligations........................................53
SECTION 5.05. Maintenance of Properties; Insurance..........................53
SECTION 5.06. Books and Records; Inspection Rights..........................54
SECTION 5.07. Compliance with Laws..........................................54
SECTION 5.08. Use of Proceeds...............................................54
SECTION 5.09. Lien Searches; Guarantee Requirement;
Collateral Requirement; Further
Assurances..............................................54
SECTION 5.10. Continued Engagement of FTI/PM................................55
SECTION 5.11. Cash Management Arrangements..................................55
SECTION 5.12. Chief Restructuring Officer...................................56
Section 5.13. Post-Closing Undertakings.....................................57
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness..................................................58
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SECTION 6.02. Liens.........................................................59
SECTION 6.03. Sale-Leaseback Transactions...................................59
SECTION 6.04. Fundamental Changes...........................................60
SECTION 6.05. Investments, Loans, Advances, Guarantees
and Acquisitions; New Retail Locations..................61
SECTION 6.06. Asset Sales...................................................62
SECTION 6.07. Capital Expenditures..........................................62
SECTION 6.08. Restricted Payments; Certain Payments of
Indebtedness............................................63
SECTION 6.09. Transactions with Affiliates..................................64
SECTION 6.10. Restrictive Agreements........................................64
SECTION 6.11. Amendment of Material Documents...............................65
SECTION 6.12. Balance Sheet Coverage Ratio..................................65
SECTION 6.13. EBITDA........................................................65
SECTION 6.14. Leverage Ratio................................................65
SECTION 6.15. Fiscal Year...................................................66
ARTICLE VII
Events of Default; CAM
SECTION 7.01. Events of Default.............................................66
SECTION 7.02. Implementation of CAM.........................................69
ARTICLE VIII
The Agents
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices.......................................................71
SECTION 9.02. Waivers; Amendments...........................................72
SECTION 9.03. Expenses; Indemnity; Damage Waiver............................73
SECTION 9.04. Successors and Assigns........................................75
SECTION 9.05. Survival......................................................78
SECTION 9.06. Counterparts; Integration; Effectiveness......................78
SECTION 9.07. Severability..................................................79
SECTION 9.08. Right of Set-off; Certain Agreements
With Respect to Deposit Accounts........................79
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process......................................80
SECTION 9.10. WAIVER OF JURY TRIAL..........................................80
SECTION 9.11. Headings......................................................81
SECTION 9.12. Confidentiality...............................................81
SECTION 9.13. Interest Rate Limitation......................................81
SECTION 9.14. Conversion of Currencies......................................82
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SECTION 9.15. Releases of Collateral........................................82
SECTION 9.16. Agreement on Bank Transactions................................83
SECTION 9.17. No Novation...................................................83
SCHEDULES:
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Schedule 2.01 -- Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 3.13 -- Subsidiaries
Schedule 5.09 -- Mortgaged Properties
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.05 -- Existing Investments and Loans
Schedule 6.05(b) -- Existing Location Commitments
Schedule 6.06 -- Contemplated Asset Sales
Schedule 6.10 -- Existing Restrictions
EXHIBITS :
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Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Opinion of Wilson, Sonsini, Xxxxxxxx &
Xxxxxx, US counsel to the Borrowers
Exhibit B-2 -- Opinion of Xxxx Xxxxx & Company,
Solicitors, English counsel to the
Borrowers
Exhibit B-3 -- Opinion of Haruki, Sawai & Inoue, Japanese
counsel to the Borrowers
Exhibit B-4 -- Opinion of XxXxxx Xxxxxxxxxx, Irish counsel
to the Lenders
Exhibit B-5 -- Opinion of Xxxxxx Xxxxxx & Spens, Scottish
counsel to the Lenders
Exhibit C -- Amended Guarantee Agreement
Exhibit D -- Amended Pledge Agreement
Exhibit E-1 -- Amended US Security Agreement
Exhibit E-2 -- Amended Japanese Security Agreement
Exhibit E-3 -- Amended UK Security Agreement
Exhibit E-4 -- Amended Irish Security Agreement
Exhibit F -- Indemnity, Subrogation and Contribution Agreement
Exhibit G -- Perfection Certificate
Exhibit H -- Borrowing Base Certificate
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of
April 27, 2001 (the "Agreement"), among MTS, INCORPORATED, a
California corporation; TOWER RECORDS KABUSHIKI KAISHA, a
Japanese corporation; the LENDERS party hereto; and THE
CHASE MANHATTAN BANK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Accounts Receivable" has the meaning assigned to such term in
the Security Agreements.
"Adjusted LIBO Rate" means, with respect to any Eurocurrency
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Agents" means the Administrative Agent and the Japanese Agent.
"Agreement on Bank Transactions" means any agreement (Ginko
Torihiki Yakujosho) between a Japanese bank (or a Japanese
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branch of a non-Japanese bank) and a customer thereof, substantially in a
standard form from time to time prescribed by the Federation of Bankers
Associations of Japan, providing for general terms and conditions applicable to
all loans by such bank to such customer.
"Alternate Base Rate" means, for any day, a rate per annum equal
to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Agent" means (a) with respect to a Loan or Borrowing
in US Dollars, the Administrative Agent or (b) with respect to a Loan or
Borrowing in Yen, the Japanese Agent.
"Applicable Borrower" means (a) with respect to Facility A, MTS
or (b) with respect to Facility B, TRKK.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Assessment Rate" means, for any day, the annual assessment rate
in effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in US Dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Applicable Agent, in
the form of Exhibit A or any other form approved by the Administrative Agent.
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"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Balance Sheet Coverage Ratio" means, for MTS and the
Subsidiaries on a consolidated basis at any date, the ratio of (a) the sum of
inventory (including video product) and accounts receivable (in each case
defined and valued in accordance with GAAP), in each case in respect of which
the Lenders have on such date a first priority perfected security interest under
the Security Documents securing the Obligations or a significant portion thereof
(less the amount of applicable reserves in accordance with GAAP) to (b) the
aggregate principal amount of Indebtedness outstanding on such date under the
Loan Documents. For purposes of calculating this ratio, the Exchange Rates used
shall be those used in preparing the financial statements delivered pursuant to
Section 5.01 as of the most recent month end.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrowers" means (a) with respect to Facility A, MTS and (b)
with respect to Facility B, TRKK.
"Borrowers' Agent" means MTS, in its capacity as agent for the
Borrowers.
"Borrowing" means Loans of the same Type made, converted or
continued on the same date and, in the case of Eurocurrency Loans, as to which a
single Interest Period is in effect.
"Borrowing Request" means a request by the Applicable Borrower
for a Borrowing in accordance with Section 2.03.
"Business Day" means (a) when used in connection with Borrowings
in US Dollars, any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City or Los Angeles, California are authorized or
required by law to remain closed (or, in the case of a Eurocurrency Borrowing,
on which banks are not open for dealings in US Dollars in the London interbank
market), and (b) when used in connection with Borrowings in Yen, any day that is
not a day on which banks are authorized or required by law to remain closed with
respect to dealings in Yen deposits in the Tokyo interbank market.
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"Business Plan" means MTS management's projected business plan
delivered to the Lenders in January 2001, as amended and redelivered to the
Lenders on April 4, 2001.
"CAM" means "Collection Allocation Mechanism", which is the
mechanism for the allocation and exchange of interests in the Credit Facilities
and collections thereunder established under Section 7.02.
"CAM Exchange" means the exchange of the Lenders' interests
provided for in Section 7.02.
"CAM Exchange Date" means the fifth Business Day after the CAM
Trigger Date.
"CAM Percentage" means, as to each Lender, a fraction, expressed
as a decimal, of which (a) the numerator shall be the aggregate US Dollar
Equivalent of the Designated Obligations owed to such Lender and (b) the
denominator shall be the aggregate US Dollar Equivalent of the Designated
Obligations owed to all the Lenders, in each case immediately prior to such CAM
Exchange Date. Notwithstanding any other provision of this Agreement, for
purposes of determining the Lenders' CAM Percentages, the Exchange Rates
employed to determine the US Dollar Equivalents of the Designated Obligations
shall be those in effect on the CAM Exchange Date.
CAM Trigger Date" means the first date on which any event
referred to in paragraph (h) or (i) of Section 7.01 shall occur in respect of
MTS or TRKK.
"Capital Expenditures" means, in respect of any Person for any
period, the aggregate of all expenditures by such Person during such period
that, in accordance with GAAP, are or should be included in "additions to
property, plant or equipment" or similar items reflected in the statement of
cash flows of such Person, and shall include all expenditures for property,
plant or equipment by way of Capital Lease Obligations; provided, that "Capital
Expenditures" shall in any event exclude (a) acquisitions of video products, (b)
expenditures of casualty insurance proceeds and amounts attributable to
self-insurance maintained by such Person under its self insurance programs in
respect of lost, destroyed or damaged property, (c) expenditures pursuant to
obligations under a lease of real property and (d) landlord relocation credits
to the extent receivable within 120 days following the opening of the retail
location to which the applicable expenditure relates.
"Capital Lease Obligations" of any Person means the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) property, or a combination thereof,
which obligations are
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required to be classified and accounted for as capital leases on a balance sheet
of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP; provided, that in
no event shall obligations under a lease of a store location be deemed to be
Capital Lease Obligations.
"Cash Receipts" has the meaning given to such term in Section
5.11(a).
"Cash Sweep Account" means a depositary account of MTS or a
Subsidiary (a) in the case of a deposit of Cash Receipts derived from a retail
store location within the United States or from account debtors located in, or
making payments in or to, United States locations (i) as to which MTS or such
Subsidiary has given irrevocable instructions to the depositary bank maintaining
such account requiring the proceeds of such Cash Receipts to be transferred on
each Business Day to a Concentration Account, (ii) which, if reasonably
convenient, is maintained at a branch of a Lender and (iii) as to which the
Collateral Agent has signature authority and (b) in the case of a deposit of
Cash Receipts derived from a retail store location outside the United States or
from account debtors located outside, and making payments in or to locations
outside, the United States, as to which MTS or such Subsidiary has implemented
such cash management arrangements as may be reasonably requested by the
Collateral Agent or the Required Lenders in accordance with Section 5.11(b).
A "Change in Control" shall occur if (a) Xxxxxxx Xxxxxxx, Xxxxx
Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxxx and the Trusts (for the benefit of the
beneficiaries named therein on the date hereof), individually or together, shall
not own, directly or indirectly, all the issued and outstanding capital stock of
the Parent; (b) the Parent shall not directly own all the issued and outstanding
capital stock of MTS; (c) MTS shall not directly own all the issued and
outstanding capital stock of TRKK; provided, however, that any sale by MTS of
capital stock of TRKK made pursuant to and in accordance with the requirements
of Section 5.13 will not be deemed to result in a "Change of Control" if the Net
Cash Proceeds of such sale shall have been applied to prepay Loans and to reduce
the Commitments pursuant to Section 2.09.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law)
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of any Governmental Authority made or issued after the date of this Agreement.
"Chief Restructuring Officer" means FTI/PM or another Person
selected by MTS and satisfactory to the Lenders.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" has the meaning assigned to such term in the
Security Documents.
"Collateral Agent" means The Chase Manhattan Bank, in its
capacity as Collateral Agent for the Lenders under the Security Documents.
"Collateral Requirement" means at any date that, except as
permitted by Section 4.01(j), (a) the Pledge Agreements create in favor of the
Collateral Agent, for the benefit of the Secured Parties, first priority
perfected pledges of and security interests in all capital stock or other equity
interests and all Indebtedness (including all capital stock or other equity
interests in each Subsidiary and all intercompany loans or advances among MTS
and the Subsidiaries, including the TRKK Loan) owned by MTS or any Subsidiary
(and all intercompany loans or advances among MTS and the Subsidiaries in
amounts greater than US$1,000,000, excluding the TRKK Loan, shall be evidenced
by one or more promissory notes satisfactory in form to the Administrative Agent
that shall have been pledged and delivered to the Collateral Agent under a
Pledge Agreements), (b) the Security Agreements create in favor of the
Collateral Agent, for the benefit of the Lenders, first priority perfected
security interests in the Collateral of MTS and each Subsidiary, in each case as
security for the Obligations, (c) the Mortgages create in favor of the
Collateral Agent, for the benefit of the Lenders, first priority perfected Liens
on each of the Mortgaged Properties (other than the Designated Mortgaged
Properties, which shall be subjected to a Mortgage only if any consent required
under the terms of the existing first mortgage or ground lease, as the case may,
in respect of such property shall have been obtained, and as to which, with
respect to the Designated Mortgaged Property located at 000 Xxxxxxxxx Xxxxxxx,
Xxxx Xxxxxxxxxx, Xxxxxxxxxx, the applicable Mortgage shall create a second
priority perfected lien) as security for the Obligations (or, in the case of any
Mortgaged Property, such amount of the Obligations as shall be specified
opposite such Mortgaged Property in Schedule 5.09 hereto), and (d) the
Administrative Agent shall have received either (i) a counterpart of each of the
Security Documents, duly executed and delivered on behalf of all Loan Parties
party thereto, or (ii) in the case of any Person that becomes a Loan Party after
the Effective Date, a supplement to each Security Document, in the form
specified therein, duly
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executed and delivered on behalf of such Loan Party; provided that (i) the
requirements set forth in clauses (c) and, to the extent it relates to the
Mortgages, (d) above will not be required to be satisfied for a period of 10
Business Days after the date of this Agreement and (ii) the Collateral Agent (A)
may agree that any capital stock or assets of any Non-US Subsidiary will not
secure Obligations of MTS if it shall determine and shall notify the Lenders
(and, if any Lender shall object in writing, the Required Lenders shall also
determine), based on information provided by MTS which is, in the judgment of
the Collateral Agent and, if applicable, the Required Lenders, sufficient to
make the determination in question, that such action is necessary to avoid
significant adverse tax consequences to MTS and the Subsidiaries and (B) may
agree that the Liens of the Security Documents will not be perfected with
respect to specified assets if it shall determine and shall notify the Lenders
(and, if any Lender shall object in writing, the Required Lenders shall also
determine), based on information provided by MTS which is, in the judgment of
the Collateral Agent and, if applicable, the Required Lenders, sufficient to
make the determination in question, that the expense or difficulty of perfecting
such Liens with respect to such assets would be excessive in view of the benefit
to the Lenders that would result therefrom.
"Commitment" means, with respect to any Lender, such Lender's
Facility A Commitment and Facility B Commitment.
"Concentration Account" means a depositary account of MTS or a
Subsidiary (a) which is maintained at (i) a branch of U.S. Bank National
Association, located in the State of California or another State of the United
States, or (ii) if U.S. Bank National Association ceases to be a Lender, a
branch of a Lender, located in the State of California or another State of the
United States, but only if under the Uniform Commercial Code as in effect in
such State, the Security Interest (as defined in the US Security Agreement)
created by the US Security Agreement attaches to such depositary account and
constitutes a perfected first priority Lien upon such depositary account, and
(b) as to which the Collateral Agent has signature authority.
"Consolidated Net Income" means, for any period, the net income
or loss of MTS and the Subsidiaries determined on a consolidated basis for such
period; provided that there shall be excluded (a) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with a Borrower or any of the Subsidiaries or the date that
Person's assets are acquired by a Borrower or any of the Subsidiaries and (b)
the net income of any Subsidiary to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by operation of the terms of its charter or any agreement,
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instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Credit Facility" means Facility A or Facility B.
"Default" means any event or condition which constitutes an Event
of Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Designated Mortgaged Properties" means the Mortgaged Properties
located at (i) 000 Xxxxxxxxx Xxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxxxxx, (ii)
1900-1920 X. Xxxxxx Avenue, Campbell, California and (iii) 0000 Xxxxxx Xxxxx
Xxxxxxxxx (Xxx 0), Xxx Xxxxx, Xxxxxxxxxx.
"Designated Obligations" means all Obligations of the Loan
Parties in respect of (a) principal of and interest on the Loans and (b) fees,
whether or not the same shall at the time of any determination be due and
payable under the terms of the Loan Documents.
"Disclosed Matters" means the actions, suits and proceedings and
the environmental matters disclosed in Schedule 3.06.
"EBITDA" means, for any period, Consolidated Net Income for such
period plus, without duplication and to the extent deducted in determining such
Consolidated Net Income, the sum of income tax expense, depreciation expense,
amortization expense, Interest Expense, non-cash charges and extraordinary
charges, including cash restructuring charges incurred after the date hereof not
to exceed US$10,500,000 in the aggregate related to the Restructuring Plan,
minus, without duplication and to the extent added in determining such
Consolidated Net Income, non-cash income and extraordinary income, all as
determined in accordance with GAAP on a consolidated basis for MTS and the
Subsidiaries.
"Effective Date" means the date on which the conditions specified
in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or
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entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Material or to health and safety
matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of MTS or any Subsidiary directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with MTS, is treated as a single employer under
Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of
ERISA and Section 412 of the Code, is treated as a single employer under Section
414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by MTS or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by MTS or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by MTS
or any of its ERISA Affiliates of any liability with respect to the withdrawal
or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by
MTS or any ERISA Affiliate of any notice, or the receipt by any Multiemployer
Plan from MTS or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
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"Eurocurrency", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to (a) in the case of such Loan or
Borrowing denominated in US Dollars, the Adjusted LIBO Rate and (b) in the case
of such Loan or Borrowing denominated in Yen, the TIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Exchange Rate" means, on any day, (a) with respect to Yen, the
rate at which such currency may be exchanged into US Dollars at 11:00 a.m., New
York time based on the most recent fixing by the Federal Reserve Bank of New
York, and (b) with respect to US Dollars, the rate at which US Dollars may be
exchanged into Yen at 11:00 a.m., Tokyo time based on the most recent fixing by
the Bank of Japan. In the event that such rate cannot be determined pursuant to
the preceding sentence, the Exchange Rate shall be the arithmetic average of the
spot rates of exchange of the Administrative Agent in the market where its
foreign currency exchange operations in respect of such currency are then being
conducted, at or about the applicable time set forth above, on such date for the
purchase of US Dollars or Yen, as the case may be, with the applicable currency
for delivery two Business Days later; provided, that if at the time of any such
determination, for any reason, no such spot rate is being quoted, the
Administrative Agent may use any reasonable method it deems appropriate to
determine such rate, and such determination shall be conclusive absent manifest
error.
"Excluded Taxes" means, with respect to the Agents, any Lender or
any other recipient of any payment to be made by or on account of any obligation
of a Borrower hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending office
is located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which such Borrower is
located and (c) in the case of a Foreign Lender (other than with respect to any
Loan or interest in a Loan acquired by such Foreign Lender through an assignment
pursuant to a request by a Borrower under Section 2.17(b) or through an exchange
of interests pursuant to Section 7.02), any withholding tax that is imposed on
amounts payable to such Foreign Lender by the jurisdiction in which the Borrower
paying such amounts is organized or has its principal office at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Foreign Lender's failure to comply with
Section 2.15(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at
16
the time of designation of a new lending office (or assignment), to receive
additional amounts from any Borrower with respect to such withholding tax
pursuant to Section 2.15(a) and has satisfied any applicable mitigation
obligations under Section 2.17(a).
"Existing Credit Agreement" means the US$125,000,000 and
Yen19,810,600,000 Credit Agreement dated as of April 23, 1998, as amended by the
Amendment dated as of April 23, 0000, xxxxx XXX, XXXX, the lenders party thereto
and The Chase Manhattan Bank, as administrative agent. The Existing Credit
Agreement is being amended and restated by this Agreement.
"Facility A" means the credit facility contemplated by the
Facility A Commitments and, when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are made by
a Facility A Lender pursuant to its Facility A Commitment.
"Facility A Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Facility A Loans hereunder as set
forth in Part A of Schedule 2.01, as the same may be reduced from time to time
pursuant to Section 2.06 or Section 2.09. The initial aggregate amount of the
Lenders' Facility A Commitments is US$98,412,639.
"Facility A Lender" means a Lender that has a Facility A
Commitment.
"Facility A Exposure" means, with respect to any Facility A
Lender at any time, the aggregate outstanding principal amount of such Lender's
Facility A Loans at such time.
"Facility B" means the credit facility contemplated by the
Facility B Commitments and, when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are made by
a Facility B Lender pursuant to its Facility B Commitment.
"Facility B Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make Facility B Loans hereunder as set
forth in Part B of Schedule 2.01, as the same may be increased or reduced from
time to time pursuant to Section 2.06 or Section 2.09. The initial aggregate
amount of the Lenders' Facility B Commitments will be Yen15,596,828,718.
"Facility B Lender" means a Lender that has a Facility B
Commitment.
"Facility B Exposure" means, with respect to any Facility B
Lender at any time, the aggregate outstanding principal amount of such Lender's
Facility B Loans at such time.
17
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Applicable Borrower.
"Foreign Lender" means, with respect to either Credit Facility,
any Lender that is organized under the laws of a jurisdiction other than that in
which the Borrower under such Credit Facility is located. For purposes of this
definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.
"FTI/PM" means FTI/Xxxxxxxx & Xxxxx.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, Japan, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Grantor" means each Borrower and each Subsidiary that is, or is
required by Section 5.09 to be, a party to a Pledge Agreement or a Security
Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Indebtedness of the payment thereof or to protect
18
such obligee against loss in respect thereof (in whole or in part), provided
that the term Guarantee shall not include (a) endorsements for collection or
deposit in the ordinary course of business or (b) agreements entered into in the
ordinary course of business to purchase inventory or retail store fixtures of
another Person at a price not greater than the market value thereof. The term
"Guarantee" used as a verb has a corresponding meaning.
"Guarantee Agreement" means a Guarantee Agreement in
substantially the form of Exhibit C hereto among the Guarantors and the
Administrative Agent acting on behalf of the Lenders, as the same may be
amended, modified or supplemented from time to time in accordance with the
provisions hereof.
"Guarantee Requirement" means at any date that the Parent, MTS
and each Subsidiary is a Guarantor, in accordance with the terms of the
Guarantee Agreement; provided that the Collateral Agent may agree that any
Non-US Subsidiary will not guarantee the Obligations of MTS or any other class
of Obligations if it shall determine and shall notify the Lenders (and, if any
Lender shall object in writing, the Required Lenders shall also determine),
based on information provided by MTS which is, in the judgment of the Collateral
Agent and, if applicable, the Required Lenders, sufficient to make the
determination in question, that such guarantee would violate applicable law or
would result in significant adverse tax consequences to MTS and the
Subsidiaries.
"Guarantors" means the Parent, MTS and the Subsidiaries that
become parties to the Guarantee Agreement pursuant to Section 4.01(h) or (j),
Section 5.09 or otherwise.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all
19
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding accounts payable on normal payment terms and accruals in the ordinary
course of business), (f) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" means an
Indemnity, Subrogation and Contribution Agreement in substantially the form of
Exhibit F hereto among the Guarantors and the Collateral Agent acting on behalf
of the Secured Parties, as the same may be amended, modified or supplemented
from time to time in accordance with the provisions hereof.
"Interest Election Request" means a request by the Applicable
Borrower to convert or continue a Borrowing in accordance with Section 2.06.
"Interest Expense" means, for any period, the gross interest
expense of MTS and the Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan,
the last day of each calendar month, and (b) with respect to any Eurocurrency
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part.
"Interest Period" means, with respect to any Eurocurrency
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month next following the month in
which the date of such Borrowing shall have occurred; provided, that (a) if any
Interest Period would end on a day other than a Business Day, such
20
Interest Period shall be extended to the next succeeding Business Day unless, in
the case of a Eurocurrency Borrowing only, such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day, and (b) any Interest Period pertaining
to a Eurocurrency Borrowing that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month in which such Interest Period is to end) shall end on the
last Business Day of the calendar month in which such Interest Period is to end.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and thereafter shall be the effective date of the
most recent conversion or continuation of such Borrowing.
"Inventory" has the meaning assigned to such term in the Security
Agreements.
"Irish Security Agreement" means the Amended Security Agreement
substantially in the form of Exhibit X-0 xxxxxx xxxxxxx XXX, Xxxxxxx T.R.,
Incorporated and the Collateral Agent on behalf of the Secured Parties, as the
same may be amended, modified or supplemented from time to time in accordance
with the provisions hereof.
"Japanese Agent" means The Chase Manhattan Bank Tokyo Branch.
--------------
"Japanese Security Agreement" means the Amended Security
Agreement substantially in the form of Exhibit E-2 hereto between TRKK and the
Collateral Agent acting on behalf of the Secured Parties, as the same may be
amended, modified or supplemented from time to time in accordance with the
provisions hereof.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Lender Affiliate" means (a) with respect to any Lender, (i) an
Affiliate of such Lender or (ii) any entity (whether a corporation, partnership,
trust or otherwise) that is engaged in making, purchasing, holding or otherwise
investing in bank loans and similar extensions of credit in the ordinary course
of its business and is administered or managed by a Lender or an Affiliate of
such Lender and (b) with respect to any Lender that is a fund which invests in
bank loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
21
advisor as such Lender or by an Affiliate of such investment advisor.
"Leverage Ratio" means, for MTS and the Subsidiaries on a
consolidated basis at any date, the ratio of (a) Indebtedness as of such date to
(b) four times EBITDA for the three months ended on such date (or, if such date
is not the last day of a month, ended on the last day of the month most recently
ended prior to such date).
"LIBO Rate" means, with respect to any Eurocurrency Borrowing in
US Dollars for any Interest Period, the interest rate per annum for deposits for
a maturity most nearly comparable to such Interest Period in the currency in
which such Borrowing is denominated appearing on Page 3740 or 3750, as
applicable, of Dow Xxxxx Markets (or on any successor or substitute page of such
service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service,
as determined by the Applicable Agent from time to time for purposes of
providing quotations of interest rates in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurocurrency Borrowing for such Interest Period shall be the rate at which
deposits for a maturity most nearly comparable to such Interest Period in the
currency in which such Borrowing is denominated are offered by the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, the Guarantee Agreement
and the Security Documents and any promissory note evidencing the Loans under
this Agreement.
"Loan Parties" means the Parent, the Borrowers and the Subsidiary
Loan Parties.
"Loans" means the loans made by the Lenders to any Borrower
pursuant to this Agreement.
22
"Local Time" means (a) with respect to a Borrowing Request or any
other notice under this Agreement, (i) Tokyo time for any such request or notice
for Yen or (ii) New York City time for any such request or notice for US
Dollars, or (b) with respect to funding of a Borrowing, local time determined by
reference to the location of the account established or designated by the
Applicable Agent for such purpose.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or condition, financial or
otherwise, of MTS and the Subsidiaries taken as a whole, (b) the ability of any
Borrower to perform any of its obligations under the Loan Documents or (c) the
rights of or benefits available to the Lenders under the Loan Documents.
"Material Indebtedness" means Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of MTS and
the Subsidiaries in an aggregate principal amount exceeding US$5,500,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of MTS or any Subsidiary in respect of any Hedging Agreement at any
time shall be the maximum aggregate net amount that MTS or such Subsidiary would
be required to pay if such Hedging Agreement were terminated at such time.
"Material Subsidiary" means at any time any Subsidiary other than
a Subsidiary with no assets or operations of significant value or importance.
"Maturity Date" means April 23, 2002.
"Mortgage" shall mean one or more mortgages or deeds of trust, in
form and substance satisfactory to the Borrowers' Agent and the Collateral
Agent.
"Mortgaged Property" shall mean each parcel of real property
owned by MTS or any US Subsidiary and listed on Schedule 5.09.
"MTS" means MTS, Incorporated, a California corporation.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any event, (a) the
cash proceeds received in respect of such event, including (i) any cash received
in respect of any non-cash proceeds, but only as and when received, (ii) in the
case of a casualty or other insured event, insurance proceeds, and (iii) in the
case of a condemnation or similar event, condemnation awards
23
and similar payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid by the Parent, MTS or any Subsidiary to third
parties (other than Affiliates) in connection with such event, (ii) in the case
of a sale, transfer or other disposition of an asset (including pursuant to a
casualty or a condemnation or similar proceeding), the amount of all payments
required to be made by the Parent, MTS or any Subsidiary as a result of such
event to repay Indebtedness (other than Loans) secured by such asset or
otherwise subject to mandatory prepayment as a result of such event, (iii) the
amount of all sales or income taxes paid (or reasonably estimated by MTS to be
payable) by the Parent, MTS or any Subsidiary, and the amount of any reserves
established in good faith by the Parent, MTS or any Subsidiary to fund
contingent liabilities reasonably estimated to be payable, in each case during
the year that such event occurred or the next succeeding year and that are
directly attributable to such event (and MTS agrees to furnish to the Lenders
upon request an explanation in reasonable detail of any estimated amounts
referred to in this clause (iii)) and (iv) without duplication of amounts
referred to in the preceding clause (iii), the amount of any withholding taxes
paid on cash proceeds transferred to the Borrowers to enable them to make
prepayments due under Section 2.09(d) in connection with such event.
Notwithstanding the foregoing, in the case of any event described in clause (b)
of the definition of "Prepayment Event", if MTS shall deliver to the
Administrative Agent a request that MTS or the applicable Subsidiary be
permitted to apply any proceeds from such event to the repair or replacement of
the assets in respect of which such event shall have occurred, and if the
Administrative Agent (or, in the case of proceeds in excess of US$500,000 from
any event, the Required Lenders), taking into account the Lenders' collateral
position, the Borrowers' ability to perform their obligations hereunder and such
other factors as the Administrative Agent or the Required Lenders shall deem
relevant, shall approve such request, then such proceeds shall not constitute
Net Cash Proceeds except to the extent of any such proceeds (x) that have not
been so applied or (y) in respect of which MTS or the applicable Subsidiary
shall not have entered into valid and binding commitments in writing, copies of
which shall have been delivered to the Lenders, to so apply such proceeds, in
each case by the end of the 180-day period following the occurrence of such
event, or (z) that have been subject to commitments referred to in the preceding
clause (y) that have ceased to be in effect, in any of which cases a prepayment
shall be required under Section 2.09(d) in an amount equal to the amount of such
proceeds that have not been so applied or committed or as to which commitments
shall have ceased to be in effect.
"Non-US Subsidiary" means any Subsidiary that is not a US
Subsidiary.
24
"Obligations" means (a) the due and punctual payment of (i) the
principal of and interest (including interest accruing during the pendency of
any bankruptcy, insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, and (ii) all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under this Agreement, the Guarantee
Agreement and the other Loan Documents and (b) the due and punctual payment and
performance of all obligations of the Loan Parties, monetary or otherwise, under
each Hedging Agreement entered into to mitigate interest rate risks or exchange
rate risks with a counterparty that was a Lender or an Affiliate of a Lender at
the time such Hedging Agreement was entered into.
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"Parent" means Tower Records Incorporated, a Delaware
corporation.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the forms of
Exhibit G hereto or any other form or forms approved by the Collateral Agent.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
(b) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by,
any State of the United States having, at the date of acquisition
thereof, a rating of at least AA by
25
S&P or Aa2 by Xxxxx'x, in each case maturing within one year from such
date of acquisition;
(c) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Xxxxx'x;
(d) investments in certificates of deposit, banker's acceptances
and time and other deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any commercial bank
organized under the laws of the United States of America or any State
thereof or any nation in which any Borrower or Subsidiary is doing
business which has a combined capital and surplus and undivided profits
of not less than US$450,000,000 or the equivalent thereof in any other
currency;
(e) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in paragraph (a) above and
entered into with a financial institution satisfying the criteria
described in paragraph (c) above;
(f) money market funds organized under the laws of the United
States or any state thereof that invest solely in the foregoing
investments permitted under paragraphs (a), (b), (c), (d) and (e) above;
and
(g) investments consisting of prepaid expenses and negotiable
instruments held for collection.
"Permitted Liens" means:
(a) Liens for Taxes not yet due or which are being contested in
good faith;
(b) other Liens (including statutory landlords' liens) incidental
to the conduct of the businesses of MTS and the Subsidiaries or the
ownership of their property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit, and which do not in the aggregate materially detract from the
value of their properties or assets or materially impair the use thereof
in the operation of their businesses;
(c) Liens on property or assets of MTS or a Subsidiary to secure
obligations of MTS or such Subsidiary to MTS or to another Loan Party;
26
(d) Liens required by the Loan Documents;
(e) any Lien on property of MTS or a Subsidiary in existence on
the date hereof, and set forth on Schedule 6.02 hereto, securing
Indebtedness outstanding on the date hereof;
(f) any Lien existing on any property or asset prior to the
acquisition thereof by MTS or a Subsidiary or existing on any property
or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other property or assets of MTS or
any Subsidiary and (iii) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such Person
becomes a Subsidiary, as the case may be;
(g) Liens on fixed or capital assets acquired, constructed or
improved by MTS or any Subsidiary; provided that (i) such security
interests secure Indebtedness permitted by paragraph (d) of Section
6.01, (ii) such security interests and the Indebtedness secured thereby
are incurred prior to or within 120 days after such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness
secured thereby does not exceed the cost of acquiring, constructing or
improving such fixed or capital assets and (iv) such security interests
shall not apply to any other property or assets of MTS or any
Subsidiary;
(h) any Lien renewing, extending or refunding any Lien permitted
by paragraphs (e), (f) or (g) above; provided that (A) the principal
amount secured is not increased and (B) the Lien is not extended to
other property;
(i) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business and securing obligations that are not due and payable
or which are being contested in good faith;
(j) pledges and deposits made in the ordinary course of business
in compliance with workmen's compensation, unemployment insurance and
other social security laws or regulations;
(k) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease
Obligations), statutory obligations, surety
27
and appeal bonds, letters of credit, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(l) Liens consisting of interests of lessors under Capital Lease
Obligations permitted by Section 6.01;
(m) zoning restrictions, easements, rights-of-way, restrictions
on use of real property and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not substantial
in amount and do not materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business
of MTS or any Subsidiary;
(n) Liens on cash collateral not to exceed US$5,000,000 in the
aggregate securing foreign currency exchange rate hedging arrangements
as may be required by Section 5.13;
(o) Liens that are deemed to be a part of ordinary course
franchise agreements to which MTS or any Subsidiary, as a franchisor, is
party;
(p) Liens on Indebtedness incurred pursuant to Section 6.01(i),
to the extent such Liens are permitted by Section 5.13; and
(q) other Liens securing obligations in an amount not in excess
of $1,000,000 in the aggregate for all such obligations.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which MTS or any
ERISA Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreements" means (a) the Amended Pledge Agreement
substantially in the form of Exhibit D hereto among MTS, the applicable
Subsidiaries and the Collateral Agent acting on behalf of the Secured Parties,
as the same may be amended, modified or supplemented from time to time in
accordance with the provisions hereof and (b) in connection with the pledge of
any equity interests in any Non-US Subsidiary, any other pledge agreement that
the Collateral Agent shall deem necessary or
28
advisable to create Liens on such equity interests to secure the Obligations or
any of them.
"Prepayment Event" means:
(a) any sale, transfer or other disposition of any property or
asset of the Parent, MTS or any Subsidiary, other than (i) sales of
inventory in the ordinary course of business, (ii) sales or transfers
among MTS and the Subsidiaries in the ordinary course of business and
(iii) any sale or series of related sales resulting in net proceeds not
greater than US$100,000;
(b) any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Parent, MTS or any Subsidiary;
(c) any other receipt of insurance proceeds by the Parent, MTS or
any Subsidiary, and any monetization of the cash surrender value of any
life insurance policy owned or held by or benefitting the Parent, MTS or
any Subsidiary, whether through the termination of such policy or any
borrowing against such cash surrender value or by any other means;
(d) the issuance by the Parent, MTS or any Subsidiary of any
capital stock or other equity interests, other than any such issuance of
equity interests to MTS or any Subsidiary; or
(e) the incurrence by the Parent, MTS or any Subsidiary of any
Indebtedness, other than Indebtedness referred to in clauses (a) through
(h) and (j) of Section 6.01.
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Progress Report" means, for any month, a report setting forth,
at a minimum, (a) the results of operations of MTS and the Subsidiaries on a
consolidated basis for such month, and comparing such results to the projections
for such month contained in the Business Plan, (b) the status of progress on the
operational initiatives of MTS and its Subsidiaries and (c) the status of
progress on strategic alternatives described in Section 5.13.
29
"Register" has the meaning set forth in Section 9.04.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving
Credit Exposures and unused Commitments representing at least 662/3% of the sum
of the total Revolving Credit Exposures and unused Commitments at such time
(with Yen amounts being converted into US Dollar amounts for this purpose at the
Exchange Rate for Yen at such time).
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of MTS or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancelation or termination of any such shares of capital stock of MTS or any
Subsidiary or any option, warrant or other right to acquire any such shares of
capital stock of MTS or any Subsidiary.
"Restructuring Plan" means MTS management's plan of cost savings
and working capital projects and other initiatives as initially delivered to the
Lenders in January and February 2001, and the modification to such plan
delivered to the Lenders in April 2001.
"Revolving Credit Exposure" means, with respect to any Lender at
any time, the sum of its Facility A Exposure and its Facility B Exposure.
"Secured Parties" has the meaning assigned to such term in the
Security Documents.
"Security Agreements" means (a) the US Security Agreement, (b)
the Japanese Security Agreement, (c) the UK Security Agreement, (d) the Irish
Security Agreement and (e) in connection with the creation of security interests
in Collateral in any country other than the United States, Japan and the United
Kingdom, any other security agreement that the Collateral Agent shall deem
necessary or advisable.
"Security Documents" means the Security Agreements, the Pledge
Agreements, the Mortgages, the Indemnity, Subrogation and Contribution Agreement
and each other security agreement, mortgage or other instrument or document
executed and delivered pursuant to Section 4.01(f),(g), (i) or (j) or 5.09.
30
"Senior Subordinated Debt" means the senior subordinated notes
issued by MTS on April 23, 1998, in the aggregate principal amount of
US$110,000,000 and the Indebtedness represented thereby.
"Senior Subordinated Debt Documents" means the indenture under
which the Senior Subordinated Debt is issued and all other instruments,
agreements and other documents evidencing or governing the Senior Subordinated
Debt or providing for any Guarantee or other right in respect thereof.
"Statutory Reserve Rate" means, with respect to any currency, a
fraction (expressed as a decimal), the numerator of which is the number one and
the denominator of which is the number one minus the aggregate of the maximum
reserve, liquid asset or similar percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by any
Governmental Authority of the United States or of the jurisdiction of such
currency or in which any subject Loans in such currency are made to which banks
in such jurisdiction are subject for any category of deposits or liabilities
customarily used to fund loans in such currency or by reference to which
interest rates applicable to Loans in such currency are determined. Such
reserve, liquid asset or similar percentages shall, in the case of US Dollars,
include those imposed pursuant to Regulation D (and for purposes of Regulation
D, Eurocurrency Loans shall be deemed to constitute "Eurocurrency Liabilities").
Loans shall be deemed to be subject to such reserve requirements without benefit
of or credit for proration, exemptions or offsets that may be available from
time to time to any Lender under Regulation D or any other applicable law, rule
or regulation. The Statutory Reserve Rate shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at
any date, any corporation, limited liability company, partnership, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held.
"Subsidiary" means any subsidiary of MTS.
"Subsidiary Loan Party" means any Subsidiary that is a party to
the Guarantee Agreement or any Security Document.
31
"Tangible Net Worth" means, as of any date, Total Assets minus
Total Liabilities; provided, however, that there shall be excluded from Total
Assets the following: (a) all assets which would be classified as intangible
assets in accordance with GAAP, including goodwill, organizational expense,
research and development expense, patent applications, patents, trademarks,
trade names, brands, copyrights, trade secrets, customer lists, licenses,
franchises, covenants not to compete and any such other intangible assets
related to minority interests; (b) all unamortized debt discount and expense;
and (c) all treasury stock.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"TIBO Rate" means, with respect to any Eurocurrency Borrowing
denominated in Yen for any Interest Period, the interest rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) for deposits for a maturity most
nearly comparable to such Interest Period in Yen appearing on Reuters Screen
Page TIBM for the average of five banks (or on any successor or substitute page
of such service, providing rate quotations comparable to those currently
provided on such page of such service, as determined by the Japanese Agent from
time to time for purposes of providing quotations of interest rates in the Tokyo
interbank market) at approximately 11:00 a.m., Tokyo time, two Business Days
prior to the commencement of such Interest Period. In the event that such rate
is not available at such time for any reason, then the "TIBO Rate" with respect
to such Eurocurrency Borrowing denominated in Yen for such Interest Period shall
be the rate at which deposits for a maturity most nearly comparable to such
Interest Period in Yen are offered by the principal Tokyo office of the Japanese
Agent in immediately
32
available funds in the Tokyo interbank market at approximately 11:00 a.m., Tokyo
time, two Business Days prior to the commencement of such Interest Period.
"Total Assets" means, as of any date of determination, the total
assets of MTS and the Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Total Liabilities" means, as of any date, the total liabilities
of MTS and the Subsidiaries, determined on a consolidated basis in accordance
with GAAP (excluding from liabilities (a) an amount equal to those adjustments
arising from cumulative straight line adjustments under Financial Accounting
Standards Board No. 13 and non-cash translation adjustments made to the equity
section of MTS's balance sheet and (b) minority interests, to the extent
classified as liabilities under GAAP).
"Transactions" means the execution, delivery and performance by
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans and the use of the proceeds thereof, the creation of the
Liens purported to be created by the Security Documents and the transactions
contemplated by Section 5.13.
"TRKK" means Tower Records Kabushiki Kaisha, a Japanese
corporation.
"TRKK Loan" means intercompany loans made by MTS to TRKK in an
aggregate principal amount not exceeding US$33,300,000.
"Trusts" means The Xxxxxxx Xxxxxxx 1994 Trust, an irrevocable
trust organized under the laws of the state of California, The Xxxxx Xxxxxxx
1994 Trust, an irrevocable trust organized under the laws of the state of
California, which trusts are collectively known as the Xxxxxxx X. and Xxxxx X.
Xxxxxxx 1994 Children's Trust, The Xxxxxx X. Xxxxxxx Trust, an irrevocable trust
organized under the laws of the state of California, and The Xxxxx X. Xxxxxxx
Trust, an irrevocable trust organized under the laws of the state of California.
"Type", when used in reference to any Loan or Borrowing, refers
to whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate, the Alternate
Base Rate, the TIBO Rate or the Yen Base Rate.
"UK Security Agreement" means the Amended Security Agreement
substantially in the form of Exhibit E-3 hereto between MTS, TR Services,
Incorporated and the Collateral Agent acting on behalf of the Secured Parties,
as the same may be amended,
33
modified or supplemented from time to time in accordance with the provisions
hereof.
"US Dollars" or "US$" refers to lawful money of the United States
of America.
"US Dollar Equivalent" means, as to any amount denominated in
Yen, the equivalent thereof in US Dollars determined by the Administrative Agent
using the Exchange Rate at the time in effect.
"US Security Agreement" means the Amended Security Agreement
substantially in the form of Exhibit E-1 hereto among MTS and the Subsidiaries
(other than TRKK and its subsidiaries and any other Non-US Subsidiaries) and the
Collateral Agent acting on behalf of the Secured Parties, as the same may be
amended, modified or supplemented from time to time in accordance with the
provisions hereof.
"US Subsidiary" means any Subsidiary that is organized under the
laws of the United States or any state or other political subdivision, territory
or possession thereof.
"Withdrawal Liability" means liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Yen" or "Yen" refers to lawful money of Japan.
"Yen Base Rate" means the rate of interest per annum publicly
announced from time to time by the Japanese Agent as its prime rate in effect at
its principal office in Tokyo; each change in the Yen Base Rate shall be
effective from and including the date such change is publicly announced as being
effective.
SECTION 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans and Borrowings may be classified and referred
to by Type (e.g., a "Eurocurrency Loan" or a "Eurocurrency Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as
34
from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to the "date hereof" or the "date of this Agreement"
shall be construed as referring to April 27, 2001; provided that all interest,
fees and other obligations of the Borrowers accrued under the Existing Credit
Agreement but not paid shall continue to be obligations of the Borrowers under
this Agreement, (c) any reference herein to any Person shall be construed to
include such Person's successors and assigns, (d) the words "herein", "hereof"
and "hereunder", and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (e)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement, (f) the words "asset" and "property" shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights,
(g) unless otherwise specified herein, any reference to a statute or regulation
shall be construed to include such statute or regulation as it may be amended or
superseded and (h) any reference herein to a report, statement, review,
analysis, discussion or other communication expressly required under the terms
of this Agreement to be furnished by or on behalf of any Loan Party or any
advisor shall, unless otherwise specified, be deemed to refer to a report,
statement, review, analysis, discussion or communication in writing. For
purposes of Articles V and VI and Section 7.01, all amounts expressed in US
Dollars shall be deemed to refer to US Dollars and/or equivalent amounts in
other currencies, determined (A) in the case of any amount appearing on the
financial statements delivered pursuant to Section 5.01, on the basis of the
exchange rates used in preparing such financial statements and (B) in the case
of any other amount, on the basis of the applicable exchange rate in effect at
the time such amount is required to be determined.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect on the date hereof.
ARTICLE II
The Credits
SECTION 2.01. Commitments. (a) Subject to the terms and
conditions set forth herein, each Facility A Lender agrees to make Loans in US
Dollars from time to time during the Availability Period to MTS in an aggregate
principal amount that will not result in (i) such Lender's Facility A Exposure
35
exceeding such Lender's Facility A Commitment or (ii) the sum of the total
Facility A Exposures exceeding the total Facility A Commitments.
(b) Subject to the terms and conditions set forth herein, each
Facility B Lender agrees to make Loans from time to time during the Availability
Period to TRKK in Yen, in an aggregate principal amount that will not result in
such Lender's Facility B Exposure exceeding such Lender's Facility B Commitment
or the sum of the total Facility B Exposures exceeding the total Facility B
Commitments.
(c) Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Loans.
(d) In the event that any Facility B Lenders have not made Loans
under the Existing Credit Agreement to repay Facility B Swingline Loans (as
defined under the Existing Credit Agreement) outstanding on the Effective Date,
such Facility B Lenders will make Loans under Facility B in an amount equal to
such outstanding Facility B Swingline Loans, the proceeds of which shall be
applied to repay the Facility B Swingline Loans. The application of such
proceeds shall be deemed to satisfy the obligations of such Facility B Lenders
under Sections 2.05B(c) and 9.03(c) of the Existing Credit Agreement, which
obligations shall continue in effect until such time as the Facility B Swingline
Loans have been paid in full.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made
as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Facility A or Facility B Commitments, as the
case may be. The failure of any Lender to make any Loan required to be made by
it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.12, (i) each Borrowing denominated in US
Dollars shall be comprised entirely of ABR Loans or Eurocurrency Loans as MTS
may request in accordance herewith, and (ii) each Borrowing denominated in Yen
shall be comprised entirely of Yen Base Rate Loans or Eurocurrency Loans as TRKK
may request in accordance herewith. Each Lender at its option may make any
Eurocurrency Loan by causing any domestic or foreign branch or a Lending
Affiliate to make such Loan; provided that (x) any exercise of such option shall
not affect the obligation of the Applicable Borrower to repay such Loan in
accordance with the terms of this Agreement and (y) any such branch or Lending
Affiliate of a Facility B Lender shall be a resident of (or have its applicable
lending office in), and will
36
book its Facility B Loans in, a jurisdiction such that under applicable law on
the date hereof no interest withholding tax will be payable on Facility B
Borrowings from such branch or Lending Affiliate if payments thereunder are made
by TRKK from a location in Japan.
(c) At the commencement of each Interest Period for any
Eurocurrency Borrowing, such Borrowing shall be in an aggregate amount that is
an integral multiple of US$100,000 and not less than US$5,000,000 (for such
Borrowing denominated in US Dollars) or an integral multiple of Yen10,000,000
and not less than Yen500,000,000 (for such Borrowing denominated in Yen). At the
time that each ABR Borrowing or Yen Base Rate Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of US$100,000 and
not less than US$1,000,000 (for such Borrowing denominated in US Dollars) or an
integral multiple of Yen10,000,000 and not less than Yen100,000,000 (for such
Borrowing denominated in Yen); provided that an ABR Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the Facility A
Commitments if such balance is less then US$1,000,000 and a Yen Base Rate
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the Facility B Commitments if such balance is less then
Yen100,000,000. Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of five
Eurocurrency Borrowings outstanding under each of Facility A and Facility B.
(d) Notwithstanding any other provision of this Agreement, a
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Borrowings. To request a Borrowing,
the Applicable Borrower shall notify the Applicable Agent of such request by
telephone (a) in the case of a Facility A Eurocurrency Borrowing, not later than
1:30 p.m., Local Time, three Business Days before the date of the proposed
Borrowing, (b) in the case of a Facility B Eurocurrency Borrowing, not later
than 11:00 a.m., Local Time, three Business Days before the date of the proposed
Borrowing, (c) in the case of an ABR Borrowing, not later than 1:30 p.m., Local
Time, one Business Day before the date of the proposed Borrowing and (d) in the
case of a Yen Base Rate Borrowing, not later than 11:00 a.m., Local Time, two
Business Days before the date of the proposed Borrowing; provided that the
initial Borrowing under Facility B may be requested at such time, not later than
one Business Day prior to such Borrowing, as the Applicable Borrower and the
Applicable Agent may agree upon (and such request, if the Applicable Agent shall
so agree, may be submitted prior to the Effective Date). Each such telephonic
Borrowing Request shall be irrevocable and shall
37
be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a
written Borrowing Request in a form approved by the Applicable Agent and signed
by the Applicable Borrower. Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) if such Borrowing is a Facility A Borrowing, whether such
Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing, and if
such Borrowing is a Facility B Borrowing, whether such Borrowing is to
be a Yen Base Rate Borrowing or a Eurocurrency Borrowing; and
(iv) the location and number of the Applicable Borrower's account
to which funds are to be disbursed, which shall comply with the
requirements of Section 2.04.
If no election as to the Type of a Facility A Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no election as to the Type of
a Facility B Borrowing is specified, then the requested Borrowing shall be a Yen
Base Rate Borrowing. If no Interest Period is specified with respect to any
Eurocurrency Borrowing requested or deemed to have been requested, then the
Applicable Borrower shall be deemed to have selected an Interest Period of one
month's duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Applicable Agent shall advise each Facility A
or Facility B Lender, as the case may be, of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by (a) in the case of a Facility A
Borrowing, not later than 1:30 p.m., Local Time, and (b) in the case of a
Facility B Borrowing, not later than 12:00 noon, Local Time, to the account of
the Applicable Agent most recently designated by it for such purpose by notice
to the Lenders. The Applicable Agent will make such Loans available to the
Applicable Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Applicable Borrower maintained with the Applicable
Agent and designated by the Applicable Borrower in the applicable Borrowing
Request.
38
(b) Unless the Applicable Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Applicable Agent such Lender's share of such Borrowing,
the Applicable Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Applicable Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Applicable Agent, then the
applicable Lender and the Applicable Borrower severally agree to pay to the
Applicable Agent forthwith on demand such corresponding amount with interest
thereon (the Applicable Agent hereby agreeing that it will first make such
demand on the applicable Lender), for each day from and including the date such
amount is made available to the Applicable Borrower to but excluding the date of
payment to the Applicable Agent, at (i) in the case of such Lender, the greater
of the Federal Funds Effective Rate (in the case of Borrowings denominated in US
Dollars) and a rate determined by the Applicable Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case of the
Applicable Borrower, the interest rate applicable to ABR Loans (in the case of
Borrowings denominated in US Dollars) or the Yen Base Rate plus 2.5% per annum
(in the case of Borrowings denominated in Yen). If such Lender pays such amount
to the Applicable Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Borrowing initially
shall be of the Type specified in the applicable Borrowing Request. Each
Eurocurrency Borrowing shall have an initial Interest Period as specified in the
applicable Borrowing Request. Thereafter, the Applicable Borrower may elect to
convert any Borrowing to a Borrowing of a different permitted Type or to
continue any Borrowing, all as provided in this Section. The Applicable Borrower
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
applicable Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Applicable
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if the
Applicable Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a
39
form approved by the Administrative Agent and signed by the Applicable Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day; and
(iii) in the case of a Facility A Borrowing, whether the
resulting Borrowing is to be an ABR Borrowing or a Eurocurrency
Borrowing, and in the case of a Facility B Borrowing, whether the
resulting Borrowing is to be a Yen Base Rate Borrowing or a Eurocurrency
Borrowing.
(d) Promptly following receipt of an Interest Election Request,
the Applicable Agent shall advise each applicable Lender of the details thereof
and of such Lender's portion of each resulting Borrowing.
(e) If the Applicable Borrower fails to either to deliver a
timely Interest Election Request with respect to a Eurocurrency Borrowing or to
notify the Applicable Agent that it will repay such Borrowing at the end of the
interest Period applicable thereto, in either case prior to the third Business
Day before the end of such Interest Period, then at the end of such Interest
Period such Borrowing shall be continued as a Eurocurrency Borrowing with an
Interest Period of one month. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Applicable Borrower or
Borrowers, then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurocurrency Borrowing and (ii)
unless repaid, each Eurocurrency Borrowing denominated in US Dollars shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto and each Eurocurrency Borrowing denominated in Yen shall be converted to
a Yen Base Rate Borrowing at the end of the Interest Period applicable thereto.
40
SECTION 2.06. Optional Termination and Reduction of Commitments.
(a) The Borrowers may at any time terminate, or from time to time reduce, the
Facility A and Facility B Commitments, pro rata as between Facility A and
Facility B; provided that (i) each reduction of the Commitments shall be in an
amount that is an integral multiple of US$100,000 (including the US Dollar
Equivalent of the relevant Yen denominated amount with respect to Facility B)
and not less than US$5,000,000 (including the US Dollar Equivalent of the
relevant Yen denominated amount with respect to Facility B) and (ii) the
Borrowers shall not terminate or reduce the Commitments if, after giving effect
to any concurrent prepayment of the Loans in accordance with Section 2.08 and
2.09, (x) the sum of the Facility A Exposures would exceed the total Facility A
Commitments or (y) the sum of the Facility B Exposures would exceed the total
Facility B Commitments.
(b) The Borrowers shall notify the Administrative Agent of any
election to terminate or reduce the Facility A and Facility B Commitments under
paragraph (a) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and
the effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrowers pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by the
Borrowers may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrowers (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Facility A or
Facility B Commitments shall be made ratably among the Facility A and Facility B
Lenders respectively in accordance with their respective Commitments.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) Each
Borrower hereby unconditionally promises to pay to the Applicable Agent for the
account of each applicable Lender the then unpaid principal amount of each Loan
on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrowers to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Applicable Agents shall maintain accounts in which they
shall record (i) in the case of the Administrative Agent, the amount of each
Loan made to MTS, and in the case of
41
the Japanese Agent, the amount of each Loan made to TRKK, (ii) the Type of each
such Loan and the Interest Period applicable thereto, (iii) the amount and
currency of any principal or interest due and payable or to become due and
payable from the Applicable Borrower to each Lender hereunder and (iv) the
amount of any sum received by such Agent hereunder for the account of the
Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Applicable Agents to maintain such accounts or any
error therein shall not in any manner affect the obligation of the Borrowers to
repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that all Loans made by it to any
Borrower be evidenced by a single promissory note. In such event, the Applicable
Borrower shall promptly prepare, execute and deliver to such Lender a promissory
note payable to the order of such Lender (or, if requested by such Lender, to
such Lender and its registered assigns) and in a form approved by the
Administrative Agent. Thereafter, the Loans evidenced by such promissory note
and interest thereon shall at all times (including after assignment pursuant to
Section 9.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is
a registered note, to such payee and its registered assigns).
SECTION 2.08. Optional Prepayment of Loans. (a) The Applicable
Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with
paragraph (b) of this Section.
(b) The Applicable Borrower shall notify the Applicable Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurocurrency Borrowing, not later than (a) in the case of a
Facility A Eurocurrency Borrowing, not later than 1:30 p.m., Local Time, three
Business Days before the date of prepayment, (b) in the case of a Facility B
Eurocurrency Borrowing, not later than 11:00 a.m., Local Time, three Business
Days before the date of prepayment, (c) in the case of an ABR Borrowing, not
later than 1:30 p.m., Local Time, one Business Day before the date of
prepayment, and (d) in the case of a Yen Base Rate Borrowing, not later than
11:00 a.m., Local Time, two Business Days before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as
42
contemplated by Section 2.06, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.06. Promptly
following receipt of any such notice relating to a Borrowing, the Applicable
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11.
SECTION 2.09. Mandatory Commitment Reductions and Prepayments.
(a) Unless previously terminated, the Commitments shall terminate on the
Maturity Date.
(b) The Commitments will be automatically reduced, pro rata as
between Facility A and Facility B (based on the respective aggregate amounts of
the Facility A Commitments and the Facility B Commitments and on Exchange Rates
prevailing on the dates of such Commitment reductions), (i) on July 31, 2001, by
US$15,000,000, and (ii) on October 1, 2001, by an additional US$15,000,000, in
each case in addition to any reductions made pursuant to paragraph (d) below
(other than any such reductions resulting from the receipt of net cash proceeds
from the monetization of the cash surrender value of life insurance maintained
by the Parent, MTS or any Subsidiary, which shall be credited against the
reductions required to be made under this paragraph), and the Facility A
Borrowings and Facility B Borrowings will be prepaid to the extent required
under paragraph (c) below after giving effect to such reductions. On or before
December 31, 2001, the aggregate Commitments shall be reduced to an amount not
greater than US$100,000,000.
(c) If on any date the total Facility A Exposures shall be
greater than the total Facility A Commitments, the Administrative Agent shall so
notify MTS and MTS shall prepay Loans on such date in such amounts as shall be
necessary to eliminate such excess. If on any date the total Facility B
Exposures shall be greater than the total Facility B Commitments, the
Administrative Agent shall so notify the Borrowers' Agent and TRKK shall prepay
Loans on such date in such amounts as shall be necessary to eliminate such
excess.
(d) In the event and on each occasion that any Net Cash Proceeds
are received by or on behalf of the Parent, MTS or any Subsidiary in respect of
any Prepayment Event, the Commitments shall automatically be reduced, pro rata
as between Facility A and Facility B (based on the respective aggregate amounts
of the Facility A Commitments and the Facility B Commitments and on Exchange
Rates prevailing on the dates of such Commitment reductions), by an amount equal
to such Net Cash
43
Proceeds and the Loans will be prepaid in an amount equal to such Net Cash
Proceeds, pro rata as between Facility A and Facility B based on the respective
aggregate amounts of the Loans outstanding under Facility A and Facility B.
Notwithstanding the foregoing provisions of this paragraph, if the
Administrative Agent, with the consent of each Lender, shall so notify the
Borrowers' Agent, the Net Cash Proceeds of any Prepayment Event will be applied
as between Facility A and Facility B in such other manner as the Lenders shall
direct with a view to minimizing withholding taxes referred to in clause (iv) of
the definition of "Net Cash Proceeds".
(e) All prepayments under this Section 2.09 shall be subject to
Section 2.14, but shall otherwise be without premium or penalty.
SECTION 2.10. Fees. (a) MTS agrees to pay and/or cause TRKK to
pay for the account of each applicable Lender a commitment fee of 0.50% per
annum on the amount of such Lender's unused Commitments under the Credit
Facilities. Commitment fees shall be computed on the basis of a year of 360 days
and shall accrue on the daily amount of the unused Commitment under the Credit
Facilities of such Lender during the period from and including the date hereof
to but excluding the date on which such Commitment terminates. Accrued
commitment fees shall be payable in arrears on the last day of each month of
each year and on the date on which the Commitments terminate in US Dollars with
respect to Facility A Commitments and in Yen with respect to Facility B
Commitments. Payments of commitment fees by MTS will be made to the
Administrative Agent and payments of commitment fees by TRKK will be made to the
Japanese Agent.
(b) MTS agrees to pay, and/or cause TRKK to pay, for the account
of each Lender an extension fee of 0.75% on the amount of such Lender's
aggregate Commitments under the Facilities on the Effective Date. Payments of
extension fees in respect of the Facilities will be made in US Dollars to the
Administrative Agent.
(c) MTS agrees to pay to the Administrative Agent, for its own
account, fees in the amounts and at the times separately agreed upon between MTS
and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Applicable Agent for distribution (in the
case of extension fees, commitment fees and participation fees) to the
applicable Lenders. Fees paid shall not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest at the Alternate Base Rate plus 2.50% per annum.
44
(b) The Loans comprising each Yen Base Rate Borrowing shall bear
interest at the Yen Base Rate plus 2.50% per annum.
(c) The Loans comprising each Eurocurrency Borrowing shall bear
interest (i) (x) in the case of a Eurocurrency Loan denominated in US Dollars,
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus 3.50% per annum and (y) in the case of a Eurocurrency Loan denominated in
Yen, at the TIBO Rate for the Interest Period in effect for such Borrowing plus
3.50% per annum.
(d) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by a Borrower hereunder
is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% per annum plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section, (ii) in the case of any
other amount payable in US Dollars, 2% per annum plus the rate applicable to ABR
Loans as provided in paragraph (a) of this Section or (iii) in the case of any
other amount payable in Yen, 2% per annum plus the rate applicable to Yen Base
Rate Loans as provided in paragraph (b) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Facility A or
Facility B Loans, upon termination of the Facility A or Facility B Commitments,
respectively; provided that (i) interest accrued pursuant to paragraph (d) of
this Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end
of the Availability Period), accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and (iii)
in the event of any conversion of Eurocurrency Loan prior to the end of the
current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion. All interest that accrues under a Loan
shall be payable in the currency of such Loan.
(f) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate and
interest computed by reference to the Yen Base Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in each case shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate,
Yen Base Rate and TIBO
45
Rate shall be determined by the Applicable Agent, and such determination shall
be conclusive absent manifest error.
(g) The Administrative Agent will furnish to the Applicable
Borrower an invoice setting forth the amount of interest to become due on each
Interest Payment Date.
SECTION 2.12. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurocurrency Borrowing:
(a) the Administrative Agent determines or is advised by the
Applicable Agent (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate or the TIBO Rate, as applicable, for
such Interest Period; or
(b) the Administrative Agent is advised by the Lenders holding
Commitments that represent at least 66-2/3% of the total Facility A or
Facility B Commitments, as the case may be, that the Adjusted LIBO Rate
or the TIBO Rate, as applicable, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers' Agent
and the Lenders by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrowers and the Lenders that
the circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurocurrency Borrowing shall be ineffective
and (A) any such Facility A Borrowing that is requested to be continued shall be
converted on the last day of the then current Interest Period applicable thereto
to an ABR Borrowing, and (B) any such Facility B Borrowing that is requested to
be continued shall be converted on the last day of the then current Interest
Period applicable thereto to a Yen Base Rate Borrowing, and (ii) if any
Borrowing Request requests a Eurocurrency Borrowing, then (A) in the case of a
Facility A Borrowing, such Borrowing shall be made as an ABR Borrowing and (B)
in the case of a Facility B Borrowing, such Borrowing Request shall be made as a
Yen Base Rate Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by,
46
any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement, Eurocurrency Loans made by
such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise), then MTS will pay to such Lender, without duplication, such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time MTS will pay to such Lender, without
duplication, such additional amount or amounts as will compensate such Lender or
such Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Applicable Borrower and shall be conclusive absent manifest error. The
Applicable Borrower shall pay such Lender, as the case may be, the amount shown
as due on any such certificate within 10 Business Days after receipt thereof.
Such amount shall be payable in the currency in which the corresponding Loan is
denominated.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the Applicable
Borrower shall not be required to compensate a Lender pursuant to this Section
for any increased costs or reductions incurred more than 120 days prior to the
date that such Lender notifies the Applicable Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's intention
to claim compensation therefor; provided further that, if the Change in Law
giving rise to such increased
47
costs or reductions is retroactive, then the 120-day period referred to above
shall be extended to include the period of retroactive effect thereof.
(e) Notwithstanding the foregoing provisions of this Section, in
determining the amount of any compensation to which it is entitled under this
Section, a Lender shall exclude the effects of any Change in Law regarding
capital requirements to the extent such Change in Law is applicable to such
Lender as a result of a material deterioration in the creditworthiness of such
Lender after the date of this Agreement.
SECTION 2.14. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurocurrency Loan other than on the last day of
an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurocurrency Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section
2.08(b) and is revoked in accordance therewith), or (d) the assignment of any
Eurocurrency Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Applicable Borrower pursuant to Section
2.17, or any deemed assignment of any such Loan pursuant to Section 7.02, then,
in any such event, the Applicable Borrower shall compensate each applicable
Lender for the loss, cost and expense attributable to such event. In the case of
a Eurocurrency Loan, such loss, cost or expense to any Lender shall (except in
the case of a deemed assignment of any such Loan pursuant to Section 7.02) be
deemed to equal an amount determined by such Lender to be the excess, if any, of
(i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at the Adjusted LIBO Rate or the TIBO
Rate, as the case may be, that would have been applicable to such Loan, for the
period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period for such Loan), over
(ii) the amount of interest which would accrue on such principal amount for such
period at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for US Dollar or Yen deposits, as the case may be,
of a comparable amount and period from other banks in the Eurocurrency market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Applicable Borrower and shall be conclusive absent manifest error. The
Applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 Business Days after receipt thereof in the currency in
which the corresponding Loan is denominated.
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SECTION 2.15. Taxes. (a) Any and all payments by or on account of
any obligation of each Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if any
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Applicable Agent or Lender (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Applicable Borrower shall make such
deductions and (iii) the Applicable Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law. Each
Facility B Lender will make any Loans from a lending office that is able under
laws, regulations and treaties in effect on the date hereof to receive payments
of interest from borrowers in Japan free of Japanese withholding tax.
(b) In addition, but without duplication, each Borrower shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) Each Borrower shall indemnify the Applicable Agents and each
Lender, within 10 Business Days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Applicable Agent or
such Lender, as the case may be, on or with respect to any payment by or on
account of any obligation of each such Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to any Borrower by a Lender, or by an Applicable Agent on
its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.
(d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by any Borrower to a Governmental Authority, such Borrower shall
deliver to the Applicable Agent the original or a certified copy of a receipt
issued by such Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment reasonably
satisfactory to the Applicable Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Applicable Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to such
Borrower
49
(with a copy to the Applicable Agent), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Applicable Borrower or the
Applicable Agent as will permit such payments to be made without withholding or
at a reduced rate.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees, or of amounts payable under
Section 2.13, 2.14 or 2.15, or otherwise), prior to (i) in the case of a
Facility A Borrowing, 1:30 p.m., Local Time, and (ii) in the case of a Facility
B Borrowing, 12:00 noon, Local Time, on the date when due, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Applicable Agent, be deemed
to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to (i) the
Administrative Agent at its offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx or
(ii) the Japanese Agent at its offices at Xxxxxxx Xxxx Xxxxxxxx, 0xx Xxxxx, 0-00
Xxxxxxx 5-chome, Xxxxxx-xx, Xxxxx 000, Xxxxx, as the case may be. The Applicable
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder for which no currency has been
specified shall be made in US Dollars.
(b) If at any time insufficient funds are received by and
available to the Applicable Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Facility A or Facility B Lender shall, by exercising
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its applicable Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
applicable Loans and accrued interest thereon than the proportion received by
any other Facility A or Facility B Lender, then the Lender receiving such
greater proportion shall purchase (for cash
50
at face value) participations in the Facility A or Facility B Loans of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the applicable Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective applicable
Loans; provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this paragraph shall not
be construed to apply to any payment made by the Applicable Borrower pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to
a Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of
this paragraph shall apply). Each Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against any Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(d) Unless the Applicable Agent shall have received notice from
the Applicable Borrower prior to the date on which any payment is due to the
Applicable Agent for the account of the Lenders hereunder that the Applicable
Borrower will not make such payment, the Applicable Agent may assume that the
Applicable Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the applicable Lenders
the amount due. In such event, if the Applicable Borrower has not in fact made
such payment, then each of the applicable Lenders severally agrees to repay to
the Applicable Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Applicable Agent, at the greater of (i) the Federal Funds Effective Rate (in the
case of payments to be made in US Dollars) and (ii) a rate determined by the
Applicable Agent to reflect such Applicable Agent's cost of funds for overnight
borrowings in Yen (in the case of payments to be made in Yen) and a rate
determined by the Applicable Agent in accordance with banking industry rules on
interbank compensation.
(e) If any Lender shall fail to make any payment required to be
made by it pursuant to Section 2.04(b) or 2.16(d), then the Applicable Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Applicable Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
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SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a)
If any Lender requests compensation under Section 2.13, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The
Borrowers' Agent hereby agrees to pay all reasonable costs and expenses incurred
by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if
the Applicable Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then
MTS may, at no expense to any such Lender (other than a Lender that has
defaulted in its obligation to fund Loans), upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) MTS shall have
received the prior written consent of the Administrative Agent, which consent
shall not unreasonably be withheld, (ii) such Lender shall have received payment
of an amount equal to the outstanding principal of its Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Applicable Borrower (in the case of all other amounts) and (iii) in
the case of any such assignment resulting from a claim for compensation under
Section 2.13 or payments required to be made pursuant to Section 2.15, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling MTS to require such assignment and delegation cease to apply.
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ARTICLE III
Representations and Warranties
Each Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Parent, the
Borrowers and the Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions to
be entered into by each Loan Party are within such Loan Party's corporate or
other powers and have been and will be duly authorized by all necessary
corporate or other action and, if required, stockholder action. This Agreement
has been duly executed and delivered by each Borrower and constitutes, and each
other Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of each Borrower or such Loan Party (as the case may be), enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or other action by, any Governmental Authority, except such as have
been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrowers or any of the Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture or material agreement or other instrument binding upon the
Borrowers or any of the Subsidiaries or their assets, or give rise to a right
thereunder to require any payment to be made by the Borrowers or any of the
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrowers or any of the Subsidiaries (other than those
created under the Loan Documents).
53
SECTION 3.04. Financial Condition; No Material Adverse Change.
(a) (i) The audited consolidated balance sheet of MTS and the Subsidiaries as at
July 31, 2000, and the related consolidated statements of income, shareholders,
equity and cash flows for the fiscal year then ended, (ii) the unaudited
consolidated balance sheet of MTS and the Subsidiaries as at January 31, 2001,
and the related consolidated statements of income, shareholders, equity and cash
flows for the portion of the fiscal year then ended, and (iii) monthly
consolidated balance sheets and statements of income and cash flows of MTS and
the Subsidiaries for each month commencing with November 2000 and ending with
February 2001, all as heretofore delivered to the Lenders, are complete and
correct and fairly present the financial condition of MTS and the Subsidiaries
as at such dates and the results of operations of MTS and the Subsidiaries for
the periods covered by such statements, in each case on a consolidated basis in
accordance with GAAP consistently applied, subject, in the case of the financial
statements delivered pursuant to clauses (ii) and (iii) above, to normal
year-end adjustments and the absence of footnotes.
(b) Since July 31, 2000, there has been no material adverse
change, and no event that could reasonably be expected to result in a material
adverse change, in the business, assets, operations or condition, financial or
otherwise, of MTS and the Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of MTS and the Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for minor defects in title that do not
interfere in any material respect with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
(b) Each of MTS and the Subsidiaries (i) owns all "Tower", "Tower
Records", "Tower Books", "Tower Video" and related trademarks and tradenames,
including those listed on Schedule 11A to the Perfection Certificate, and (ii)
owns, or is licensed or otherwise has rights to use, all other trademarks and
tradenames, copyrights, patents and other intellectual property, in each case
material to its business, and the use thereof by MTS and the Subsidiaries does
not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are
no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrowers, threatened
against or affecting MTS or any of the Subsidiaries (i) as to which there is a
reasonable
54
possibility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve
this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to
any other matters that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect, neither MTS nor any of the
Subsidiaries (i) to the best of its knowledge, has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) to the best of its
knowledge, has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.
(c) Since the date of April 23, 1998, there has been no change in
the status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements; Margin
Regulations. (a) Each of MTS and the Subsidiaries is in compliance with all
laws, regulations and orders of any Governmental Authority applicable to it or
its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
(b) The Borrowers have not, and are not presently, engaged in the
business of extending credit for the purpose of purchasing or carrying "margin
stock" (within the meaning of Regulations U of the Board). No part of the
proceeds of the Loans will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
SECTION 3.08. Investment and Holding Company Status. Neither MTS
nor any of the Subsidiaries is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of MTS and the Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it,
55
except (a) Taxes that are being, or promptly will be, contested in good faith by
appropriate proceedings and for which MTS or such Subsidiary, as applicable, has
set aside on its books adequate reserves or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than US$5,000,000 the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than US$10,000,000 the fair
market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. None of the Restructuring Plan, the
Business Plan and any of the other reports, financial statements, certificates
or other information furnished by or on behalf of the Borrowers to the
Administrative Agent, the Japanese Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains or, when furnished (as
modified or supplemented by other information so furnished), will contain any
material misstatement of fact or omits or, when furnished (as modified or
supplemented by other information so furnished), will omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, to the extent such
information was based upon or constitutes projected financial information, the
Borrowers represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time, after due inquiry.
SECTION 3.12. Security Documents. (a) The Pledge Agreements are
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral covered by the Pledge Agreements and, when the certificates and other
instruments referred to in Section 4.01(f) have been delivered to the Collateral
Agent, the Pledge Agreements shall constitute fully perfected first priority
Liens on, and security interests in, all right, title and interest of the
pledgors thereunder in
56
such Collateral securing the Obligations, in each case prior and superior in
right to any other person.
(b) The Security Agreements are effective to create in favor of
the Collateral Agent, for the ratable benefit of the Secured Parties, legal,
valid and enforceable security interests in the Collateral covered by the
Security Agreements and, when financing statements in appropriate form are filed
in the offices specified on Schedule 5 to the Perfection Certificate, the
Security Agreements shall constitute a fully perfected first priority Liens on,
and security interests in, all right, title and interest of the Grantors
thereunder in such Collateral securing the Obligations (except as and to the
extent permitted by the proviso in the definition of "Collateral Requirement"),
in each case prior and superior in right to any other person, other than with
respect to Liens expressly permitted by Section 6.02 and the Security Agreements
and, in the case of the UK Security Agreement and the Irish Security Agreement,
other than those Persons mandatorily preferred by law applying to companies
generally in England and Scotland and Ireland, respectively.
(c) The trademarks, tradenames and other intellectual property in
which security interests have been granted under the Security Agreements
constitute all the trademarks, tradenames and other intellectual property used
in the business of MTS and the Subsidiaries, and all such trademarks, tradenames
and other intellectual property are owned by the Persons indicated in the
Perfection Certificate.
(d) The Mortgages will, when executed and delivered, be effective
to create in favor of the Collateral Agent, legal, valid and enforceable Liens
on all right, title and interest of the grantors thereunder in and to the
Mortgaged Properties and the proceeds thereof, and when the Mortgages are filed
in the appropriate offices in the jurisdictions in which the mortgaged
Properties are located, the Mortgages will constitute perfected first priority
Liens on and security interests in all right, title and interest of such
grantors in and to the Mortgaged Properties and the proceeds thereof, subject
only to Liens existing on the date hereof and expressly permitted by Section
6.02 (subject, in the case of the Designated Mortgaged Properties, to the
qualifications set forth in the parenthetical in clause (c) of the definition of
"Collateral Requirement").
SECTION 3.13. Subsidiaries. Schedule 3.13 sets forth the name of,
and the ownership interest of MTS and each Subsidiary in, each Subsidiary and
identifies each Subsidiary that is a Loan Party, in each case as of the
Effective Date.
57
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. This Agreement shall not become
effective until the date on which each of the following conditions shall have
been satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed
on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a
signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement.
(b) The Administrative Agent shall have received favorable
written opinions (addressed to the Agents and the Lenders and dated the
Effective Date) of each of (i) Wilson, Sonsini, Xxxxxxxx & Xxxxxx, US
counsel to the Borrowers, substantially in the form of Exhibit B-1, (ii)
Xxxx Xxxxx & Company, Solicitors, English counsel to the Borrowers,
substantially in the form of Exhibit B-2, (iii) Haruki, Sawai & Inoue,
Japanese counsel to the Borrowers, substantially in the form of Exhibit
B-3, (iv) XxXxxx Xxxxxxxxxx, Irish counsel to the Lenders, substantially
in the form of Exhibit B-4, and (v) Xxxxxx Xxxxxx & Spens, Scottish
counsel to the Lenders, substantially in the form of Exhibit B-5, in
each case covering such other matters relating to the Borrowers, this
Agreement or the Transactions as the Administrative Agent or the
Required Lenders shall reasonably request. The Borrowers hereby request
such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents
and certificates as the Agents or their respective counsel may
reasonably request relating to the organization, existence and good
standing of each Loan Party, the authorization of the Transactions and
any other legal matters relating to the Loan Parties, this Agreement or
the Transactions, all in form and substance satisfactory to the Agents
and their respective counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President
or a Financial Officer of MTS, confirming compliance with the conditions
set forth in paragraph (j) of this Section 4.01 and paragraphs (a) and
(b) of Section 4.02.
58
(e) The Administrative Agent shall have received all interest,
fees and other amounts accrued for the accounts of the Lenders or the
Administrative Agent under the Existing Credit Agreement to the
Effective Date, whether or not then due under the terms of the Existing
Credit Agreement, and, to the extent invoiced, reimbursement or payment
of all expenses, indemnities and other amounts required to be reimbursed
or paid by either Borrower under the Existing Credit Agreement or this
Agreement. The Administrative Agent shall have received the extension
fee referred to in Section 2.10(b).
(f) The Administrative Agent shall have received counterparts of
the Pledge Agreements signed on behalf of the Borrowers and Subsidiaries
party thereto, together with stock certificates or other instruments (if
any) representing all the shares of capital stock or other equity
interests pledged thereunder and stock powers and instruments of
transfer, endorsed in blank, with respect to such stock certificates and
other equity interests.
(g) The Administrative Agent shall have received counterparts of
the Security Agreements signed on behalf of the applicable Borrowers and
Subsidiaries, together with:
(i) all documents and instruments, including Uniform
Commercial Code financing statements, required by law or
reasonably requested by the Agents to be filed, registered or
recorded to create or perfect the Liens intended to be created
under the Security Agreements; and
(ii) a completed Perfection Certificate dated the
Effective Date and signed by an executive officer or a Financial
Officer of the Borrowers' Agent, together with all attachments
contemplated thereby.
(h) The Administrative Agent shall have received counterparts of
the Guarantee Agreement signed on behalf of the Parent, MTS and each
Subsidiary.
(i) The Administrative Agent shall have received counterparts of
the Indemnity, Subrogation and Contribution Agreement signed on behalf
of the Parent and each Subsidiary.
(j) The Collateral Requirement (giving effect to the
parenthetical in clause (c) thereof) and the Guarantee Requirement shall
have been satisfied. The Administrative Agent shall have completed, and
the Administrative Agent
59
and the Lenders shall be satisfied with, the results of an audit of the
Collateral, all records related thereto and the premises upon which any
of the Collateral is located.
(k) MTS shall have selected and retained, and the Lenders shall
be satisfied with the terms and scope of the engagement of, FTI/PM to
serve as advisor to MTS.
(l) MTS shall have retained a Chief Restructuring Officer
satisfactory to the Lenders (it being agreed that Xxxxx Xxxxxxxxx,
Xxxxxx Xxxxx and Xxxx Xxxxxx of FTI/PM, if employed to perform the
functions of the Chief Restructuring Officer, will be satisfactory to
the Lenders), and the Lenders shall be satisfied with the terms and
scope of the engagement of such Chief Restructuring Officer.
(m) The Administrative Agent and the Lenders shall be satisfied
with the cash management arrangements of the Borrowers, provided that
the Borrowers promptly comply with Section 5.11.
(n) The Lenders shall have received the financial statements
referred to in Section 3.04.
The Administrative Agent shall notify the Borrowers' Agent and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
SECTION 4.02. Each Credit Event. The obligation of each Lender to
make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of the Borrowers set forth
in this Agreement shall be true and correct in all material respects on
and as of the date of such Borrowing, except to the extent they
expressly relate to an earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrowers on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
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ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, each Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
Borrowers' Agent will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of MTS, the
consolidated balance sheet of MTS and the Subsidiaries as of the end of
such fiscal year, and the related consolidated statements of income,
shareholders equity and cash flows of MTS and the Subsidiaries for such
fiscal year, prepared on a consolidated basis in accordance with GAAP
consistently applied, all in reasonable detail and setting forth in
comparative form the figures for the previous fiscal year, accompanied
by a report thereon of a firm of independent certified public
accountants of recognized national standing (which report shall not be
qualified with respect to the scope of the audit undertaken by such firm
or in any other material respect except that a going concern
qualification may be made relating solely to the Maturity Date of the
Credit Facilities);
(b) within 120 days after the end of each fiscal year of TRKK,
the consolidated balance sheet of TRKK and its Subsidiaries as of the
end of such fiscal year, and the related consolidated statements of
income, shareholders equity and cash flows of TRKK and its Subsidiaries
for such fiscal year, prepared on a consolidated basis in accordance
with GAAP consistently applied, all in reasonable detail and setting
forth in comparative form the figures for the previous fiscal year,
accompanied by an report thereon of a firm of independent certified
public accountants of recognized national standing (which report shall
not be qualified with respect to the scope of the audit undertaken by
such firm or in any other material respect, except that a going concern
qualification may be made relating solely to the Maturity Date of the
Credit Facilities);
(c) within 45 days after the end of each quarter of each fiscal
year of MTS, a consolidated balance sheet of MTS and the Subsidiaries as
of the end of such quarter, and the related consolidated statements of
income, shareholders equity and cash flows of MTS and the Subsidiaries
for such quarter and the portion of the fiscal year through the end of
such quarter, prepared on a consolidated basis in
61
accordance with GAAP consistently applied, all in reasonable detail and
setting forth in comparative form the figures for the corresponding
periods in the preceding fiscal year, together with a certificate of a
Financial Officer of the Borrowers' Agent stating that such financial
statements fairly present the financial condition of MTS and the
Subsidiaries as at such date and the results of operations of MTS and
its Subsidiaries for the period ended on such date and have been
prepared on a consolidated basis in accordance with GAAP consistently
applied, subject to changes resulting from normal, year-end audit
adjustments and except for the absence of footnotes;
(d) concurrently with any delivery of financial statements under
paragraph (a), (b) or (c) above, or (f) below, a certificate of a
Financial Officer of the Borrowers' Agent (i) certifying as to whether a
Default has occurred and, if a Default has occurred and is continuing,
specifying the details thereof and any action taken or proposed to be
taken with respect thereto and (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.07, 6.12, 6.13 and
6.14;
(e) concurrently with any delivery of financial statements under
paragraph (a) above, a certificate of the accounting firm that reported
on such financial statements stating whether they obtained knowledge
during the course of their examination of such financial statements of
any uncured Default with respect to any financial or numerical covenant
in Article VI (which certificate may be limited to the extent required
by generally accepted accounting rules or guidelines);
(f) within thirty days after the end of each month, (i)
consolidated balance sheets of MTS and the Subsidiaries as of the end of
such month, and the related consolidating statements of income and
consolidated shareholders equity and cash flows of MTS and the
Subsidiaries for such month and the portion of the fiscal year through
the end of such month, prepared in accordance with GAAP consistently
applied, all in reasonable detail and setting forth in comparative form
the figures for the corresponding periods in the Business Plan and
including narrative discussions and quantitative analyses thereof, all
reviewed and analyzed by the Chief Restructuring Officer and FTI/PM, and
(ii) projections setting forth the anticipated Indebtedness, Inventory,
Accounts Receivable, capital expenditures and property, plant and
equipment of MTS and TRKK and their respective Subsidiaries for each of
the six succeeding months, all reviewed and analyzed by the Chief
Restructuring Officer and FTI/PM and accompanied by a
62
statement of a Financial Officer that such projections are based on
assumptions believed by MTS to be reasonable;
(g) within thirty days after the end of each month, (i) a
Progress Report, reviewed and analyzed by the Chief Restructuring
Officer and FTI/PM, and (ii) projections of the Inventory, Accounts
Receivable, capital expenditures, property, plant and equipment and
Indebtedness of MTS and TRKK and their respective subsidiaries for the
period of six months following such month, all reviewed and analyzed by
the Chief Restructuring Officer and FTI/PM and accompanied by a
statement of a Financial Officer that such projections are based on
assumptions believed by MTS to be reasonable;
(h) within three Business Days after the end of each week,
commencing with the last week in May 2001, rolling 13-week cash flow
forecasts of MTS and TRKK and their respective subsidiaries, all
reviewed and analyzed by the Chief Restructuring Officer and FTI/PM;
(i) within thirty days after the end of each month, a borrowing
base certificate substantially in the form of Exhibit H hereto for such
month;
(j) concurrently with any delivery of financial statements under
paragraph (c) above for a fiscal quarter ended on July 31 or January 31,
an updated Business Plan in form and detail satisfactory to the
Administrative Agent;
(k) promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials
filed by MTS or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities
exchange, as the case may be; and
(l) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of MTS or any Subsidiary, or compliance with the terms of this
Agreement, as the Administrative Agent or any Lender may reasonably
request.
SECTION 5.02. Notices of Material Events. The Borrowers' Agent
will furnish to the Administrative Agent and each Lender prompt written notice
of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding
by or before any arbitrator or Governmental
63
Authority against or affecting MTS or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of MTS and the Subsidiaries in an
aggregate amount exceeding US$3,000,000;
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect;
(e) the occurrence of any Prepayment Event; and
(f) the formation or acquisition of any Subsidiary.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or another executive officer of the Borrowers' Agent setting
forth the details of the event or development requiring such notice and any
action taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each Borrower will,
and will cause the Parent and each of the Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and franchises
material to the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.04.
SECTION 5.04. Payment of Obligations. Each Borrower will, and
will cause the Parent and each of the Subsidiaries to, pay its obligations,
including Taxes, that, if not paid, could reasonably be expected to result in a
Material Adverse Effect before the same shall become delinquent or in default,
except where (a) the validity or amount thereof is being contested in good faith
by appropriate proceedings and (b) the applicable Borrower or Subsidiary or the
Parent, as the case may be, has set aside on its books adequate reserves with
respect thereto in accordance with GAAP (or the equivalent of GAAP in the
applicable country).
SECTION 5.05. Maintenance of Properties; Insurance. Each Borrower
will, and will cause the Parent and each of the Subsidiaries to, (a) keep and
maintain all property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and (b) maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained
64
by companies engaged in the same or similar businesses operating in the same or
similar locations.
SECTION 5.06. Books and Records; Inspection Rights. Each Borrower
will, and will cause the Parent and each of the Subsidiaries to, keep proper
books of record and account in which full, true and correct entries are made of
all dealings and transactions in relation to its business and activities. Each
Borrower will, and will cause the Parent and each of the Subsidiaries to, permit
any representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice from the Administrative Agent, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers, independent
accountants and advisors, including the Chief Restructuring Officer, FTI/PM and
investment banking firms. The Collateral Agent shall audit, at such times as
Lenders having Revolving Credit Exposures and unused Commitments representing at
least 66-2/3% of the aggregate Revolving Credit Exposures and unused Commitments
at such time (with Yen amounts being converted into U.S. Dollar amounts for this
purpose at the Exchange Rate for Yen at such time) shall reasonably request, and
at the expense of the Borrowers, the Collateral, all records related thereto and
the premises upon which any of the Collateral is located.
SECTION 5.07. Compliance with Laws. Each Borrower will, and will
cause the Parent and each of the Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be
used only for general corporate purposes, including the financing of working
capital requirements. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
SECTION 5.09. Lien Searches; Guarantee Requirement; Collateral
Requirement; Further Assurances. (a) Within 30 days after the Effective Date,
MTS will deliver to the Collateral Agent the results of a search of the Uniform
Commercial Code (or equivalent) filings made with respect to the Loan Parties in
the jurisdictions in which filings have been made to perfect the security
interests created by the Security Documents and copies of the financing
statements (or similar documents) disclosed by such search and evidence
reasonably satisfactory to the Collateral Agent that the Liens indicated by such
financing
65
statements (or similar documents) are permitted by Section 6.02 and the Security
Agreements or have been released.
(b) The Borrowers will take and cause the Parent and the
Subsidiaries to take all such actions as shall be necessary, or as the Required
Lenders, the Administrative Agent or the Collateral Agent may reasonably
request, to cause the Guarantee Requirement to be met at all times.
(c) The Borrowers will take and cause the Subsidiaries to take
all such actions as shall be necessary, or as the Required Lenders, the
Administrative Agent or the Collateral Agent may reasonably request, to cause
the Collateral Requirement to be met at all times. Without limiting the
foregoing provisions of this paragraph, the Borrower or Subsidiary owning each
Mortgaged Property shall execute and deliver to the Collateral Agent, not later
than the 10th Business Day after the date of this Agreement, a Mortgage, in form
suitable for recordation, with respect to such Mortgaged Property, together with
any filing fee required to be paid at the time such Mortgage is recorded. Prior
to the filing of a Mortgage, the Borrowers shall furnish the form thereof to any
Lender that so requests. In the case of the Designated Mortgaged Properties, the
Borrowers will make prompt diligent efforts to obtain any consent required under
the terms of the existing first mortgage or ground lease, as the case may be, in
respect of such property for such Mortgage to be placed on such property.
(d) The Borrowers will, and will cause the Parent and each
Subsidiary to, execute any and all further documents, financing statements,
agreements and instruments, and take all further action (including filing
Uniform Commercial Code and other financing statements) that may be required
under applicable law, or that the Required Lenders, the Administrative Agent or
the Collateral Agent may reasonably request, in order to grant and perfect
security interests securing the Obligations in any assets designated by the
Administrative Agent or the Required Lenders that shall not already be subject
to the Liens of the Security Documents. Such security interests and Liens shall
be created under the Security Documents and other security agreements,
mortgages, deeds of trust and other instruments and documents in form and
substance satisfactory to the Collateral Agent, and the Borrowers shall deliver
or cause to be delivered to the Lenders all such instruments and documents
(including legal opinions and lien searches) as the Collateral Agent shall
reasonably request to evidence compliance with this paragraph (d).
(e) The Borrowers' Agent shall provide from time to time such
evidence as the Collateral Agent or the Required Lenders shall reasonably
request as to the perfection and
66
priority status of each security interest created by the Security Documents.
SECTION 5.10. Continued Engagement of FTI/PM. The Borrowers shall
continue their engagement of FTI/PM, or another Person satisfactory to the
Required Lenders, in each case upon such terms and scope as shall be
satisfactory to the Required Lenders.
SECTION 5.11. Cash Management Arrangements. (a) With respect to
Cash Receipts (as defined below) derived from a retail store location within the
United States or from account debtors located in, or making payments in or to,
United States locations, the Borrowers shall, and shall cause each of the
Subsidiaries to, implement, maintain and comply with the following cash
management procedures:
(i) there shall be deposited into a Cash Sweep Account or a
Concentration Account (x) all over the counter payments received in cash
(including payments by check) at any retail store location in respect of
merchandise sales or other retail transactions, and (y) all payments
received from credit card companies or banks or other financial
institutions (whether directly or through Bank of America, N.A., as
funding agent) or from other account debtors (the payments referred to
in clauses (x) and (y) being referred to herein as "Cash Receipts");
(ii) the Borrowers shall not, and shall not permit their
Subsidiaries to, (x) establish any depositary account that does not
constitute either a Cash Sweep Account or a Concentration Account, or
(y) permit any Cash Receipts to be deposited into any account other than
a Cash Sweep Account or a Concentration Account;
(iii) If any Lender that maintains a Concentration Account shall
cease to be a Lender under this Agreement, the Borrowers shall, within
five Business Days after such Lender's ceasing to be a Lender, establish
one or more Concentration Accounts into which the deposits of Cash
Receipts shall be made in accordance with Section 5.11(a)(i); and
(iv) Upon the establishment of each Cash Sweep Account and each
Concentration Account, the Borrowers shall provide to the Administrative
Agent a certificate, indicating the name, address and branch of the
financial institution in which the applicable Cash Sweep Account or
Concentration Account has been established, the name in which the
account is held, and the account number thereof.
(b) With respect to Cash Receipts derived from a retail store
location outside the United States or from account
67
debtors located outside, and making payments in or to locations outside, the
United States, the Borrowers shall (i) at the request of the Collateral Agent or
any Lender, provide the requesting party with such information regarding the
cash management arrangements of MTS and its Subsidiaries outside the United
States as may reasonably be requested and (ii) implement such changes or
additional cash management arrangements as shall reasonably be requested by the
Collateral Agent or the Required Lenders, consistent with local law and
practice.
SECTION 5.12. Chief Restructuring Officer. The Borrowers shall
continue to employ Chief Restructuring Officer and cause it to report directly
to the Board of Directors of MTS and (a) to work directly with MTS to implement
the Restructuring Plan and be involved in all operational issues that may affect
the implementation of the Business Plan; (b) to lead all merger, acquisition,
divestiture and financing activities of MTS and the Subsidiaries, including
acting as MTS's principal liaison with the investment bank referred to in
Section 5.13 and pursuing asset-based and other financings to reduce or replace
the Credit Facilities; (c) to provide the Board of Directors of MTS with
ongoing, periodic assessments of MTS's operations and financial performance,
including progress towards achieving the Restructuring Plan; and (d) to be
responsible, together with the Chief Financial Officer, for ongoing, routine
communications with the Lenders, including meetings (in person or by telephone)
not less frequently than monthly, and for the preparation, review and analysis
of Progress Reports and monthly reports on MTS's performance, including
comparisons to the corresponding periods in the Business Plan and the related
narrative discussions and quantitative analyses thereof.
Section 5.13. Post-Closing Undertakings. (a) MTS shall, as
promptly as practicable, cause the cash surrender values of all life insurance
policies owned by the Parent, MTS or any Subsidiary to be monetized through the
termination of such insurance policies or borrowings against such cash surrender
values, and shall apply the Net Cash Proceeds of such monetization as provided
in Section 2.09(d). MTS shall cause any such insurance policies to remain in
effect until such time as such insurance policies shall have been monetized as
set forth in the preceding sentence.
(b) Not later than May 23, 2001, MTS shall engage an investment
banking firm satisfactory to the Lenders to (i) develop strategic alternatives,
including potential sale of, or financing alternatives related to, the
businesses, operations and/or assets of MTS and the Subsidiaries in Japan, the
United States and the United Kingdom, (ii) make recommendations to the Board of
Directors of MTS as to the most effective means of achieving a prompt
refinancing or termination and repayment of the Credit Facilities and (iii)
assist in implementing such
68
recommendations following their approval by the Board of Directors. MTS shall
cause such investment banking firm to present recommendations to MTS's Board of
Directors as promptly as reasonably practicable and in any event by September 1,
2001.
(c) Within 30 days following the date hereof, MTS shall have
obtained and delivered to the Lenders a report, reviewed and analyzed by FTI/PM,
of the foreign currency exchange exposure of MTS and the Subsidiaries, which
report shall include a recommendation, satisfactory to the Lenders, by FTI/PM as
to one or more foreign currency exchange rate strategies to be implemented by
MTS and the Subsidiaries. Within 30 days following the date of delivery of such
report and recommendation, MTS and the Subsidiaries shall implement, and
thereafter shall maintain in effect, such foreign currency exchange rate
strategies on such terms and with such parties as shall be satisfactory to the
Required Lenders.
(d) On or before October 1, 2001, MTS shall have obtained and
delivered to the Lenders (i) firm commitments from independent financial
institutions for financings that shall not require the creation of Liens on any
Collateral located in the United States or the United Kingdom (other than any
real property owned by MTS or any Subsidiary, located in the United States and
listed on Schedule 10), or on any intellectual property or equity interests in
Subsidiaries, and/or (ii) firm offers from financially responsible third parties
for the purchase of all or a portion of the businesses, operations and/or assets
of MTS and the Subsidiaries in Japan or of any equity interests in such
businesses or operations, in the case of each such financing or purchase on
terms that shall be satisfactory to the Required Lenders, taking into account
the amount of consideration to be received, the Lenders' collateral position,
the Borrowers' ability to perform their obligations hereunder and such other
matters as the Required Lenders shall determine to be relevant, and that shall,
upon the completion of such financings and/or purchases, generate Net Cash
Proceeds in an amount that will result in the reduction, in accordance with
Section 2.09, of the aggregate Commitments and the aggregate outstanding
principal amount of Loans to no more than US$100,000,000. It is understood that
such firm commitments and offers may contain usual and customary terms and
conditions satisfactory to the Required Lenders.
(e) On or before December 31, 2001, the Lenders shall have
received the Net Cash Proceeds from the financings and/or purchases referred to
in paragraph (c) above, and the aggregate Commitments and the aggregate
outstanding principal amount of Loans shall be reduced pursuant to Section 2.09
as a result of such transactions to no more than US$100,000,000.
69
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, each Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness. The Borrowers will not, and will not
permit the Parent or any of the Subsidiaries to, create, incur, assume or permit
to exist any Indebtedness, except:
(a) Indebtedness created under the Loan Documents;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof;
(c) Indebtedness (i) resulting from any loan or advance by a Loan
Party to another Loan Party, (ii) resulting from any loan or advance by
a Subsidiary that is not a Loan Party to a Loan Party and (iii)
resulting from any loan or advance by any Subsidiary that is not a Loan
Party to any other Subsidiary that is not a Loan Party;
(d) Indebtedness of the Borrowers incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including purchase money liens, Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount
thereof; provided that (i) such Indebtedness is incurred prior to or
within 120 days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate outstanding principal
amount of Indebtedness permitted by this paragraph (d) shall not exceed
US$7,500,000 at any time;
(e) Indebtedness of any Person that becomes a Subsidiary after
the date hereof; provided that such Indebtedness (i) exists at the time
such Person becomes a Subsidiary and is not created in contemplation of
or in connection with such Person becoming a Subsidiary and (ii) is
without recourse to and is not Guaranteed by MTS or any other
Subsidiary;
70
(f) Indebtedness of any Borrower as an account party in respect
of trade letters of credit;
(g) in the case of MTS, the Senior Subordinated Debt;
(h) Indebtedness deemed to arise under Hedging Agreements entered
into to mitigate interest rate, exchange rate, commodity price or other
risks incurred by MTS and the Subsidiaries in the ordinary course of
business and not for speculative purposes;
(i) Indebtedness of MTS and the Subsidiaries incurred pursuant to
commitments made in compliance with Section 5.13; provided that the Net
Cash Proceeds of such Indebtedness are applied to prepay Loans and to
reduce the Commitments in accordance with Section 2.09(d); and
(j) other unsecured Indebtedness of MTS in an aggregate principal
amount at any time outstanding not exceeding US$10,000,000.
SECTION 6.02. Liens. The Borrowers will not, and will not permit
the Parent or any of the Subsidiaries to, create, incur, assume or allow to
exist any Lien upon or with respect to any of their properties, revenues or
assets, whether now owned or hereafter acquired, other than Permitted Liens.
SECTION 6.03. Sale-Leaseback Transactions. The Borrowers will
not, and will not permit the Parent or any of the Subsidiaries to, enter into
any arrangement, directly or indirectly, with any Person whereby they shall sell
or transfer any property, real or personal, used or useful in their business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property which they intend to use for substantially the same
purpose or purposes as the property being sold or transferred; provided that the
Borrowers and the Subsidiaries may enter into any such transaction to the extent
the Capital Lease Obligations and Liens associated therewith would be permitted
by paragraphs (d), (e) and (i) of Section 6.01 and Section 6.02, respectively.
SECTION 6.04. Fundamental Changes. (a) The Borrowers will not,
nor will they permit the Parent or any Subsidiary to, merge or consolidate with
or into, or acquire all or substantially all of the assets of, any Person, or
sell, transfer, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of their assets, except that:
71
(i) any Subsidiary (other than TRKK) may merge with, consolidate
into or transfer all or substantially all of its assets to another
Subsidiary and in connection therewith such Subsidiary may be liquidated
or dissolved; provided, that (A) MTS shall not own a lesser percentage
of the surviving or resulting Person than it owned in either of the
constituent Persons or the transferor, as the case may be, and (B) if a
Guarantor, a Grantor or a Subsidiary the capital stock of or other
equity interests in which are pledged pursuant to the Pledge Agreement
shall merge, consolidate or transfer all or substantially all of its
assets, the Borrowers shall cause each Subsidiary resulting from such
merger or consolidation or receiving assets as a result of such
transfer, to become a party to the Guarantee Agreement and the Security
Documents, and shall cause the capital stock of or other equity
interests in such Subsidiary to be pledged pursuant to the Pledge
Agreement, to at least the same extent as such merging, consolidating or
transferring Subsidiary and the capital stock or other equity interests
thereof or therein;
(ii) TRKK may merge with, consolidate into or transfer all or
substantially all of its assets to another Person; provided that (i) the
Net Cash Proceeds of such merger, consolidation or transfer shall be
applied as required by Section 2.09 and (ii) the terms of such merger,
consolidation or transfer shall have been approved in writing by the
Required Lenders, taking into account the amount of consideration to be
received, the Lenders' collateral position, the Borrowers' ability to
perform their obligations hereunder and such other matters as the
Lenders shall determine to be relevant;
(iii) the Borrowers or any of the Subsidiaries may sell or
dispose of assets in accordance with the provisions of Section 6.06; and
(iv) the Borrowers or any of the Subsidiaries may make any
investment permitted by Section 6.05.
(b) The Borrowers will not, nor will they permit any Subsidiary
to, engage to any material extent in any business other than businesses of the
type conducted by the such Borrower and its Subsidiaries on the date of
execution of this Agreement and businesses reasonably related thereto. The
Borrowers will not permit the Parent to engage in any business or incur any
Indebtedness or other obligations other than the ownership of the capital stock
of MTS and obligations incidental thereto.
72
SECTION 6.05. Investments, Loans, Advances, Guarantees and
Acquisitions; New Retail Locations. (a) The Borrowers will not, nor will they
permit the Parent or any Subsidiary to, purchase or otherwise acquire the
capital stock, assets (constituting a business unit), obligations or other
securities of or any interest in any Person, or otherwise extend any credit or
advances to, Guarantee any obligations of or make any additional investments in
any Person (any of the foregoing being collectively called "Investments"), other
than, in the case of the Borrowers and the Subsidiaries:
(i) Investments existing on the date hereof and set forth in
Schedule 6.05;
(ii) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sales of goods or services in the
ordinary course of business;
(iii) Indebtedness permitted by paragraph (c) of Section 6.01;
(iv) Guarantees constituting Indebtedness permitted by Section
6.01; provided that a Subsidiary shall not Guarantee the Senior
Subordinated Debt unless (A) such Subsidiary also has Guaranteed the
Obligations pursuant to the Guarantee Agreement, and (B) such Guarantee
of the Senior Subordinated Debt is subordinated to such Guarantee of the
Obligations on terms no less favorable to the Lenders than the
subordination provisions of the Senior Subordinated Debt;
(v) Permitted Investments;
(vi) loans and advances to management and employees (A) existing
on the date hereof and set forth in Schedule 6.05, (B) consisting of
employee trade receivables in connection with employee purchases of
product and (C) in addition to those loans and advances described in the
foregoing clauses (A) and (B), not to exceed US$500,000 in any fiscal
year;
(vii) Investments of MTS in TRKK as a result of the conversion of
the TRKK Loan into equity interests of TRKK; and
(viii) Hedging Agreements entered into to mitigate interest rate,
exchange rate, commodity price or other risks incurred by MTS and its
subsidiaries in the ordinary course of business and not for speculative
purposes.
73
(b) The Borrowers will not, nor will they permit any Subsidiary
to, establish any new retail outlet or incur financial or other obligations in
connection with any such new retail outlet (other than (i) new outlets required
to be established pursuant to legally binding agreements existing on the date
hereof and set forth on Schedule 6.05(b) hereto and (ii) any new outlet
established in connection with the relocation of an outlet existing on the date
hereof to a new location within the same market).
SECTION 6.06. Asset Sales. The Borrowers will not, nor will they
permit the Parent or any Subsidiary to, sell, transfer, lease or otherwise
dispose of any asset, including any capital stock, nor will the Borrowers permit
any Subsidiary to issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except:
(a) sales of Inventory and Permitted Investments in the ordinary
course of business;
(b) sales or other dispositions in the ordinary course of
business of assets that have become worn out or obsolete or that are
promptly being replaced;
(c) sales, transfers and dispositions to MTS or a Subsidiary;
provided that any such sales, transfers or dispositions involving a
Subsidiary that is not a Loan Party shall be made in compliance with
Section 6.09; and
(d) other sales, transfers and dispositions; provided, that (i)
the Net Cash Proceeds of each such sale, transfer or disposition shall
be applied as required by Section 2.09 and (ii) the terms of each such
sale, transfer or disposition (or series of related sales, transfers or
dispositions) for consideration in excess of US$5,000,000 (other than
sales of non-Japanese assets contemplated by the Business Plan and
listed in Schedule 6.06 hereto) shall have been approved in writing by
the Required Lenders, taking into account the amount of consideration to
be received, the Lenders' collateral position, the Borrowers' ability to
perform their obligations hereunder and such other matters as the
Required Lenders shall determine to be relevant;
provided that all sales, transfers, leases and other dispositions permitted
hereby shall be made for fair value and, except in the case of a sale, transfer,
lease or other disposition to a Borrower or a Subsidiary, all of the
consideration for any such sale, transfer, lease or other disposition shall be
in cash.
SECTION 6.07. Capital Expenditures. For any month set forth
below, the Borrowers will not permit Capital Expenditures
74
of MTS and the Subsidiaries on a consolidated basis to exceed (i) the amount set
forth opposite such month plus (ii) the amount, if any, by which the sum of the
amounts set forth below opposite the months preceding such month exceeds the
aggregate Capital Expenditures made by MTS and the Subsidiaries on a
consolidated basis since the date hereof:
Month Amount
----- ------
May 2001 US$2,500,000
June 2001 2,500,000
July 2001 2,500,000
August 2001 2,500,000
September 2001 2,500,000
October 2001 2,500,000
November 2001 833,000
December 2001 833,000
January 2002 833,000
February 2002 833,000
March 2002 833,000
April 2002 833,000
; provided, however, that the Borrowers will not permit Capital Expenditures of
MTS and the Subsidiaries on a consolidated basis to exceed US$20,000,000 in the
aggregate during the Availability Period.
SECTION 6.08. Restricted Payments; Certain Payments of
Indebtedness. (a) MTS will not, nor will it permit the Parent or any of its
Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, except (i) Subsidiaries may declare and pay
dividends ratably with respect to their capital stock, (ii) MTS may make
non-cash Restricted Payments pursuant to and in accordance with stock option
plans or other benefit plans for management or employees of MTS and the
Subsidiaries, (iii) MTS or any Subsidiary may declare and pay dividends payable
solely in shares of its own common stock and (iv) MTS may make Restricted
Payments in amounts necessary to pay annual insurance premiums on the
US$100,000,000 life insurance policy owned by the Parent on the lives of Xxxxxxx
and Xxxxx Xxxxxxx.
(b) MTS will not, nor will it permit the Parent or any Subsidiary
to, make or agree to pay or make, directly or indirectly, any payment or other
distribution (whether in cash, securities or other property) of or in respect of
principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the payment, purchase,
redemption, retirement, acquisition, cancelation or termination of any
Indebtedness, except:
75
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness, other than
payments in respect of the Senior Subordinated Debt prohibited by the
subordination provisions thereof;
(iii) refinancings of Indebtedness to the extent permitted by
Section 6.01; and
(iv) payment of secured Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing
such Indebtedness.
SECTION 6.09. Transactions with Affiliates. The Borrowers will
not, nor will they permit the Parent or any Subsidiary to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property, assets or services from, or otherwise engage in any other
transactions with, any of their respective Affiliates, except (a) transactions
in the ordinary course of business that are at prices and on terms and
conditions not less favorable to the relevant Borrower or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrowers and the Subsidiaries not involving
any other Affiliate and (c) any Restricted Payment permitted by Section 6.08.
SECTION 6.10. Restrictive Agreements. The Borrowers will not, nor
will they permit the Parent or any Subsidiary to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrowers or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to a Borrower or any other Subsidiary or
to Guarantee Indebtedness of a Borrower or any other Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document or Subordinated Debt Document, (ii) the foregoing shall
not apply to restrictions and conditions existing on April 23, 1998, identified
on Schedule 6.10 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
such sale, provided such restrictions and conditions apply only to the
Subsidiary that is to be sold and such sale is permitted hereunder, (iv)
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clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.
SECTION 6.11. Amendment of Material Documents. The Borrowers will
not, nor will they permit the Parent or any Subsidiary to, (a) amend, modify or
waive any of its rights under any Senior Subordinated Debt Document if the
effect of such amendment, modification or waiver would be to change the terms on
which any Senior Subordinated Debt is subordinated to any other obligations,
shorten the maturity or weighted average life to maturity of any Senior
Subordinated Debt, require, either on one or more fixed dates or upon the
happening of one or more events, the repayment, purchase or defeasance of any
Senior Subordinated Debt, add any covenant or make more restrictive the
covenants benefitting any Senior Subordinated Debt or otherwise modify the terms
of any Senior Subordinated Debt in a manner that is adverse to the Borrowers or
to the rights or interests of the Lenders in any material respect, or (b) amend,
modify or waive any of its rights under its certificate of incorporation,
by-laws or other organizational documents in a manner that is adverse to the
Borrowers or to the rights or interests of the Lenders in any material respect.
SECTION 6.12. Balance Sheet Coverage Ratio. The Borrowers will
not permit the Balance Sheet Coverage Ratio at any month end to be less than
1.25 to 1.00.
SECTION 6.13. EBITDA. The Borrowers will not permit EBITDA of MTS
and the Subsidiaries for any period set forth below to be less than the amount
set forth below opposite such period:
Period Min EBITDA
------ ----------
02/01/01 - 04/30/01 US$ 7,580,000
03/01/01 - 05/31/01 11,410,000
04/01/01 - 06/30/01 11,330,000
05/01/01 - 07/31/01 11,500,000
06/01/01 - 08/31/01 11,710,000
07/01/01 - 09/30/01 10,940,000
08/01/01 - 10/31/01 14,820,000
09/01/01 - 11/30/01 15,300,000
10/01/01 - 12/31/01 28,230,000
11/01/01 - 01/31/02 21,450,000
12/01/01 - 02/28/02 22,070,000
01/01/02 - 03/31/02 11,310,000
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SECTION 6.14. Leverage Ratio. The Borrowers will not permit the
Leverage Ratio as of any date during any period set forth below to be greater
than the ratio set forth below opposite such period:
Period Ratio
------ ------
04/27/01 - 05/30/01 11.17:1
05/31/01 - 06/29/01 7.37:1
06/30/01 - 07/30/01 7.08:1
07/31/01 - 08/30/01 7.10:1
08/31/01 - 09/29/01 7.19:1
09/30/01 - 10/30/01 7.68:1
10/31/01 - 11/29/01 5.37:1
11/30/01 - 12/30/01 5.20:1
12/31/01 - 01/30/02 2.65:1
01/31/02 - 02/27/02 3.47:1
02/28/02 - 03/30/02 3.17:1
03/31/02 - 04/23/02 6.74:1
SECTION 6.15. Fiscal Year. The Borrowers will not, and will not
permit any Subsidiary to, have a fiscal year ending on any date other than the
date in existence of the Borrowers' and the Subsidiaries' respective fiscal
years as of the date of this Agreement; provided, however, that MTS or any
Subsidiary may change the existing date of its fiscal year end upon delivery to
the Lenders of any financial and financial reporting information as reasonably
requested by the Required Lenders.
ARTICLE VII
Events of Default; CAM
SECTION 7.01. Events of Default. If any of the following events
("Events of Default") shall occur:
(a) any Borrower shall fail to pay any principal of any Loan,
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;
(b) any Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in
paragraph (a) of this Section) payable under this Agreement or any other
Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of five Business
Days;
(c) any representation, warranty or statement made or deemed made
by or on behalf of any Borrower, the Parent or any Subsidiary in or in
connection with any Loan Document
78
or any amendment or modification thereof or waiver thereunder, or in any
report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) any Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to
such Borrower's existence), 5.08, 5.09(a), 5.10, 5.11, 5.12 or 5.13 or
in Article VI;
(e) any Borrower, the Parent or any Subsidiary shall fail to
observe or perform any covenant, condition or agreement contained in
this Agreement or any other Loan Document (other than those specified in
paragraph (a), (b) or (d))of this Article), and such failure shall
continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent to the Borrower's Agent (which notice will be
given at the request of any Lender);
(f) any Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition occurs that results in any Material
Indebtedness (or obligations under leases of real property that would
constitute Material Indebtedness but for the proviso in the definition
of "Capital Lease Obligations") becoming due prior to the scheduled
maturity thereof or that enables or permits (with or without the giving
of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness (or any such obligations) or any trustee or agent
on its or their behalf to cause any Material Indebtedness (or any such
obligations) to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;
provided that this paragraph (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Parent, any Borrower or
any Material Subsidiary or its debts, or of a substantial part of its
assets, under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or
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(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, any Borrower or any
Material Subsidiary or for a substantial part of its assets, and, in any
such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing
shall be entered;
(i) the Parent, any Borrower or any Material Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in paragraph (h) of this Article, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, such Borrower or
Subsidiary or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(j) the Parent, any Borrower or any Material Subsidiary shall
become unable, admit in writing its inability or fail generally to pay
its debts as they become due;
(k) one or more judgments for the payment of money in an
aggregate amount (net of any insured amount as to which an insurance
company has acknowledged coverage) in excess of US$10,000,000 shall be
rendered against the Parent, any Borrower, any Subsidiary or any
combination thereof and the same shall remain undischarged for a period
of 30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to
attach or levy upon any assets of the Parent, any Borrower or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a Material
Adverse Effect;
(m) any Lien purported to be created under the Security Documents
shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected first priority Lien on any significant portion of
the Collateral,
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except (i) as a result of the sale or other disposition of the
applicable Collateral in a transaction permitted under the Loan
Documents or (ii) as a result of the Collateral Agent's failure to
maintain possession of any stock certificates delivered to it under a
Pledge Agreement;
(n) any Guarantee of any Guarantor under the Guarantee Agreement
shall cease to be, or shall be asserted by any Loan Party not to be, a
legal, valid and binding obligation of such Guarantor; or
(o) a Change in Control shall occur;
then, and in every such event (other than an event with respect to a Borrower
described in paragraph (h) or (i) of this Section), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower's Agent, take
either or both of the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrowers accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers; and in case of any event with respect to a Borrower described in
paragraph (h) or (i) of this Section, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and other obligations of the Borrowers accrued
hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers.
SECTION 7.02. Implementation of CAM. On the CAM Exchange Date,
the Lenders shall automatically and without further act be deemed to have
exchanged interests in the Designated Obligations outstanding under the Credit
Facilities such that in lieu of the interest of each Lender in the Designated
Obligations outstanding under each Credit Facility in which it shall participate
as of such date, such Lender shall hold an interest in the Designated
Obligations outstanding under each of the Credit Facilities, whether or not such
Lender shall previously have participated therein, equal to such Lender's CAM
Percentage thereof. Each Participant that has acquired a participation from any
Lender as contemplated by Section 9.04(e) and each Loan Party hereby consents
and agrees to the CAM Exchange. Each Loan Party agrees from time to time to
execute
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and deliver to the Administrative Agent all such promissory notes and other
instruments and documents as the Administrative Agent shall reasonably request
to evidence and confirm the respective interests of the Lenders after giving
effect to the CAM Exchange, and each Lender agrees to surrender any promissory
notes originally received by it in connection with its Loans hereunder to the
Administrative Agent against delivery of any promissory notes so executed and
delivered; provided, however, that the failure of any Loan Party to execute or
deliver or of any Lender to accept any such promissory note, instrument or
document shall not affect the validity or effectiveness of the CAM Exchange.
ARTICLE VIII
The Agents
Each of the Lenders hereby irrevocably appoints each of the
Agents as its agent and authorizes each Agent to take such actions on its behalf
and to exercise such powers as are delegated to such Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
Each bank serving as an Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with any Borrower or any Subsidiary or other Affiliate thereof
as if it were not an Agent hereunder.
The Agents shall not have any duties or obligations except those
expressly set forth herein. Without limiting the generality of the foregoing,
(a) no Agent shall be subject to any fiduciary or other implied duties (other
than as expressly assumed in the Security Documents), regardless of whether a
Default has occurred and is continuing, (b) no Agent shall have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that such Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth herein, no
Agent shall have any duty to disclose, and shall not be liable for the failure
to disclose, any information relating to any Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Agent or any of its
Affiliates in any capacity. No Agent shall be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders (or
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such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. Each Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to
such Agent by a Borrower or a Lender, and no Agent shall be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement or any other
agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Article IV or elsewhere herein, other than to confirm receipt of items
expressly required to be delivered to such Agent.
Each Agent shall be entitled to rely upon, and shall not incur
any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for a
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by any
Agent. Each Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of any such Agent and any such sub-agent,
and shall apply to their respective activities in connection with the
syndication of the Credit Facilities provided for herein as well as activities
as Agent.
Subject to the appointment and acceptance of a successor Agent as
provided in this paragraph, each Agent may resign at any time by notifying the
Lenders and the Borrowers or the Borrowers and the Required Lenders may replace
any Agent. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrowers' Agent (and with the Borrowers' Agent's
consent, unless an Event of Default shall have occurred and be continuing), to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders
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and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent. Upon any such replacement, the Borrowers and
the Required Lenders shall cause the successor Agent to purchase all of the
replaced Agent's Commitments and the related Loans at the time owing to the
replaced Agent. Upon the acceptance of its appointment as Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrowers to a successor Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After an Agent's resignation or replacement hereunder, the provisions
of this Article and Section 9.03 shall continue in effect for the benefit of
such retiring or replaced Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon any Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon any Agent or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to a Borrower, to it in care of the Borrowers' Agent at
MTS, Incorporated, 0000 Xxx Xxxxx, Xxxx Xxxxxxxxxx, Xxxxxxxxxx 00000,
Attention of Xx. Xx Xxxxxx X. Xxxxxxx (Telecopy No. 916-373-2471);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Loan and Agency Services Group, One Chase
00
Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Xx.
Xxxxx Xxxxxx (Telecopy No. (000) 000-0000), with a copy to The Chase
Manhattan Bank, 000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention of Xxxxx X. Xxxxxx, Managing Director (Telecopy No. (212)
622-4834);
(c) if to the Japanese Agent, to it at The Chase Manhattan Bank,
Tokyo, Banking Services Department, Xxxxxxx Xxxx Xxxxxxxx, 0xx Xxxxx,
0-00 Xxxxxxx 5-chome, Xxxxxx-xx, Xxxxx 000, Xxxxx, Xxxxxxxxx of Xx.
Xxxxx Xxxxxxxx (Telecopy No. 011-81-3-5570-7539); and
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by a Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders or by the
Borrowers and the Administrative Agent with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
as in effect at any time without the written consent of such Lender, (ii) reduce
the principal amount of any
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Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the date of payment of the principal amount of any Loan or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.16(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, or change or waive any provision of Section
5.09(b) or (c), 5.11, 5.13 or 7.02, in each case without the written consent of
each Lender, (v) change any of the provisions of this Section or the definition
of "Required Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, or (vi) except for
releases of Collateral required to be effected under Section 9.15, release any
Lien created by the Security Documents or any Guarantee created by the Guarantee
Agreement (other than as permitted pursuant to the terms of this Agreement or
any relevant Security Document) without the written consent of each Lender;
provided further that no such agreement shall (x) amend, modify or otherwise
affect the rights or duties of the Administrative Agent or the Japanese Agent
hereunder without the prior written consent of such Agent or (y) adversely
affect one Credit Facility to a greater extent than the other without the prior
written consent of Lenders representing at least 662/3% of the Commitments and
outstanding Loans under the adversely affected Credit Facility. Without limiting
the foregoing, if and to the extent that any transaction by any Borrower or any
Subsidiary under Section 5.13 or elsewhere in this Agreement for which the
consent of the Required Lenders is required would have any of the effects
referred to (1) in any of the clauses (i) through (vi) of the first proviso
above, then the written consent of each affected Lender shall be required for
such transaction, in addition to the consent of the Required Lenders, or (2) in
clause (x) or (y) of the second proviso, then the written consent of Lenders
representing at least 662/3% of the Commitments and outstanding Loans under the
adversely affected Credit Facility shall be required for such transaction, in
addition to the consent of the Required Lenders.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) MTS shall
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent (including in its capacity as Collateral Agent) or any of its Affiliates,
including the reasonable fees, charges and disbursements of counsel for the
Administrative Agent, in connection with the preparation or administration of
this Agreement, any amendments, modifications or waivers of the provisions
hereof or any release of the Liens created by the Security Documents as
contemplated by Section 9.15 (whether or not the transactions contemplated
hereby or thereby
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shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by
any Agent or any Lender, including the fees, charges and disbursements of any
counsel for any Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement, including its rights
under this Section, or in connection with the Loans made hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans and (iii) the reasonable charges and
expenses associated with the Administrative Agent's audits of Collateral, all
records related thereto and the premises upon which any of the Collateral is
located pursuant to the terms of this Agreement or the Security Agreements (it
being agreed that so long as no Event of Default has occurred and is continuing,
MTS shall be required to pay such charges and expenses in connection with not
more than one audit of the Collateral during any fiscal year of MTS) and ongoing
monitoring efforts relating to Sections 6.07, 6.12, 6.13 and 6.14.
(b) The Borrowers shall, on a joint and several basis, indemnify
the Administrative Agent, each other Agent, and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (i) the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the consummation of the
Transactions or any other transactions contemplated hereby, (ii) any Loan or the
use of the proceeds therefrom, (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property owned or operated by MTS or any
Subsidiary, or any Environmental Liability related in any way to MTS or any
Subsidiary, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
shall have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) To the extent that either Borrower fails to pay any amount
required to be paid by it to the Administrative Agent or any other Agent under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or such Agent, as the case may be, such Lender's Applicable
Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such
87
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent or such Agent in its capacity as
such.
(d) To the extent permitted by applicable law, no Borrower shall
assert, and each Borrower hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or the use of the proceeds
thereof.
(e) Each Borrower hereby forever releases, discharges and holds
harmless the Administrative Agent, each other Agent, and each Lender, and each
Related Party of any of the foregoing Persons, and the financial and legal
advisors, directors, trustees, partners, members, employees, agents and advisors
of any of the foregoing (any such person, a "Releasee"), from any and all
losses, claims, damages, demands, debts, liabilities, expenses, obligations,
actions, causes of action, suits, sums of money, accounts, reckonings,
covenants, contracts, controversies, agreements, promises and rights whatsoever,
whenever arising, out of actions or omissions occurring prior to the
effectiveness of this Release, whether arising under the Credit Agreement or the
other Loan Documents, the Transactions, any Loan or Commitment or the use of the
proceeds thereof, or any other agreements, instruments, engagements,
conversations or transactions contemplated by or relating to any of the
foregoing, known or unknown, suspected or unsuspected, contingent or fixed,
liquidated or unliquidated, matured or unmatured, in law, equity or otherwise
that the Borrowers ever had, now have, or hereafter can, shall or may have
against any of the Releasees for, upon, or by reason of any matter, cause,
transaction or thing whatsoever occurring at any time prior to the effectiveness
of this release.
(f) All amounts due under this Section shall be payable not later
than 30 days after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that no
Borrower may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by any Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the
88
Administrative Agent, the other Agents and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment, Facility A Commitment or Facility B Commitment and
the related Loans at the time owing to it); provided, that (i) except in the
case of an assignment to any Federal Reserve Bank or to a Lender or a Lending
Affiliate of a Lender, the Administrative Agent must give its prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or a Lending Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning Lender's
Facility A Commitment or Facility B Commitment, the amount of the Commitment of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than US$5,000,000 (or the
approximate equivalent in Yen based on the then current Exchange Rate) unless
the Administrative Agent otherwise consents, (iii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement (or under one of the Credit
Facilities), (iv) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of US$3,500, and (v) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an agent
of the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance
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delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitment of, and principal amount of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive absent manifest error, and the
Borrowers, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrowers and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Acceptance and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrowers or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Facility A Commitment,
Facility B Commitment or Commitment and the related Loans owing to it); provided
that (i) such Lender's obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) the Borrowers, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to
Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrowers agree that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the
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benefits of Section 9.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.16(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's Agent's prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower's Agent is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrowers, to
comply with Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.05. Survival. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that the Administrative Agent, any
other Agent or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15,
9.03(a) and 9.03(b) and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Commitments or
the termination of this Agreement or any provision hereof; provided, that
Sections 2.13, 2.14 and 9.03(a) shall so survive and remain in full force and
effect for up to 90 days after the termination of this Agreement.
SECTION 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts
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(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement and any separate letter agreements with respect
to fees payable to the Agents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Set-off; Certain Agreements With Respect
to Deposit Accounts. (a) If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of any Borrower against
any of and all the obligations of the Borrowers now or hereafter existing under
this Agreement held by such Lender, irrespective of whether or not such Lender
shall have made any demand under this Agreement and although such obligations
may be unmatured. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of setoff) which such
Lender may have.
(b) Each Lender that maintains or at any time hereafter shall
maintain any Cash Sweep Account or any Concentration Account agrees to act as a
subagent of the Collateral Agent for purposes of perfecting the Lien of the
Collateral Agent on such account and all amounts from time to time on deposit
therein. Each such Lender is hereby notified by the Collateral Agent of the
Collateral Agent's security interest in all such accounts and amounts and hereby
acknowledges receipt
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of such notice. The Borrowers acknowledge and agree, on their own behalf and on
behalf of the Subsidiaries, that the Collateral Agent, in its own right or
acting through any applicable subagent, shall have full dominion and control
over each such account, subject to the right of each applicable Borrower or
Subsidiary to withdraw funds from such account for purposes permitted hereunder
so long as no Event of Default shall have occurred and be continuing. Each such
Lender agrees that if it shall receive a notice from the Collateral Agent
stating that an Event of Default has occurred and is continuing and directing
such Lender to remit amounts in any such account to the Collateral Agent, it
will thereafter, until such notice shall have been withdrawn, not permit
withdrawals by any Borrower or Subsidiary from such account and will remit all
collected amounts in such account to an account designated by the Collateral
Agent at the end of each Business Day. The Collateral Agent agrees, and the
Lenders acknowledge, that the Collateral Agent shall not exercise its signature
authority in respect of any Cash Sweep Account or any Concentration Account
unless an Event of Default has occurred and is continuing. The Borrowers consent
to the foregoing arrangements and agree that neither the Collateral Agent nor
any Lender shall have any liability to any Borrower or Subsidiary for acting in
accordance therewith.
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against any Borrower or its properties in the courts of any
jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court
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referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent,
the other Agents and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the written consent of the Borrower's Agent or (h) to the
extent such Information (i) becomes publicly available other than as a result of
a breach of
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this Section or (ii) becomes available to the Administrative Agent, any other
Agent or any Lender on a nonconfidential basis from a source other than a
Borrower. For the purposes of this Section, "Information" means all information
received from any Borrower relating to a Borrower or its business, other than
any such information that is available to the Administrative Agent, any other
Agent or any Lender on a nonconfidential basis prior to disclosure by a
Borrower; provided that, in the case of information received from a Borrower
after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14. Conversion of Currencies. (a) If, for the purpose
of obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which in accordance with normal banking procedures in the
relevant jurisdiction the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.
(b) The obligations of each party hereto in respect of any sum
due to any other party hereto or any holder of the obligations owing hereunder
(the "Applicable Creditor") shall, notwithstanding any judgment in a currency
(the "Judgment Currency") other than the currency in which such sum is stated to
be due hereunder (the "Agreement Currency"), be discharged only
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to the extent that, on the Business Day following receipt by the Applicable
Creditor of any sum adjudged to be so due in the Judgment Currency, the
Applicable Creditor may in accordance with normal banking procedures in the
relevant jurisdiction purchase the Agreement Currency with the Judgment
Currency; if the amount of the Agreement Currency so purchased is less than the
sum originally due to the Applicable Creditor in the Agreement Currency, such
party agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Applicable Creditor against such loss. The obligations of the
parties contained in this Section 9.14 shall survive the termination of this
Agreement and the payment of all other amounts owing hereunder.
SECTION 9.15. Releases of Collateral. In the event that MTS or
any Subsidiary sells, transfers or otherwise disposes of, or subjects to any
Lien, any assets or property owned by it as permitted by Section 5.13 (and in
accordance with the provisions of this Agreement), or in the event MTS or any
Subsidiary otherwise sells, transfers or disposes of any assets or property
owned by it in a transaction not prohibited by this Agreement (other than to MTS
or an Affiliate of MTS), the Administrative Agent and the Collateral Agent shall
promptly (and the Lenders hereby authorize and instruct the Administrative Agent
and the Collateral Agent to) take such action and execute any such documents as
may be reasonably requested by the Borrowers' Representative to release any
Liens created by any Security Document in respect of such assets or property
and, in the case of a disposition of all or substantially all the equity
interests or assets of any Subsidiary that is a Loan Party, to terminate such
Subsidiary's obligations under the Guarantee Agreement and each other Loan
Document. In addition, the Administrative Agent and the Collateral Agent will
take such actions as are reasonably requested by the Borrower's Representative
to terminate the Liens and security interests created by the Loan Documents when
all the Obligations have been paid in full and the Commitments have been
terminated. The Borrowers agree to pay all out-of-pocket expenses of the
Administrative Agent and the Collateral Agent in connection with releases of
Liens and obligations under the Guarantee Agreement provided for in this
Section.
SECTION 9.16. Agreement on Bank Transactions. If there is in
effect at any time an Agreement on Bank Transactions between any Lender and
TRKK, the provisions of such Agreement on Bank Transactions shall not apply to
any Loan or other transaction contemplated by this Agreement notwithstanding
anything to the contrary contained in such Agreement on Bank Transactions.
SECTION 9.17. No Novation. This Agreement shall not extinguish
the Loans outstanding under the Existing Credit Agreement. Nothing herein
contained shall be construed as a
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substitution or novation of the Loans outstanding under the Existing Credit
Agreement, which shall remain outstanding as modified hereby. Notwithstanding
any provision of this Agreement, the provisions of Sections 2.15, 2.16, 2.17 and
9.03 of Existing Credit Agreement, each as in effect immediately prior to the
Effective Date, will continue to be effective as to all matters arising out of
or in any way related to facts or events existing or occurring prior to the
Effective Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
MTS, INCORPORATED,
by
Name:
Title:
TOWER RECORDS KABUSHIKI KAISHA,
by
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent,
by
Name:
Title:
98
SIGNATURE PAGE to
MTS, INCORPORATED
TOWER RECORDS KABUSHIKI KAISHA
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 27, 2001
Name of Institution:
by:
Name:
Title:
