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EXHIBIT 10.24
EXECUTION COPY
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$50,000,000
REVOLVING CREDIT AGREEMENT
AMONG
GC COMPANIES, INC.,
AS BORROWER
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO,
AS LENDERS
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.,
AS ADMINISTRATIVE AGENT AND ARRANGER
THE BANK OF NOVA SCOTIA,
AS DOCUMENTATION AGENT
and
BANKBOSTON, N.A.,
AS ADMINISTRATIVE AGENT
Dated as of January 26, 1999
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TABLE OF CONTENTS
REVOLVING CREDIT AGREEMENT
PAGE
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ARTICLE I DEFINITIONS............................................... 1
1.1. DEFINITIONS.............................................. 1
1.2. ACCOUNTING TERMS......................................... 21
ARTICLE II DESCRIPTION OF CREDIT..................................... 21
2.1. THE LOANS................................................. 21
2.2. NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS..... 22
2.3. FEES...................................................... 24
2.4. REDUCTION OF MAXIMUM CREDIT............................... 25
2.5. THE NOTES................................................. 25
2.6. DURATION OF INTEREST PERIODS.............................. 25
2.7. INTEREST RATES AND PAYMENTS OF INTEREST................... 26
2.8. DEFAULT RATE OF INTEREST.................................. 27
2.9. CHANGED CIRCUMSTANCES..................................... 27
2.10. REPLACEMENT OF LENDERS.................................... 29
2.11. PAYMENTS AND PREPAYMENTS OF LOANS......................... 29
2.12. METHOD OF PAYMENT......................................... 29
2.13. PAYMENTS NOT AT END OF INTEREST PERIOD.................... 30
2.14. COMPUTATION OF INTEREST AND FEES.......................... 30
2.15. USE OF PROCEEDS........................................... 30
2.16. CAPITAL REQUIREMENTS...................................... 31
ARTICLE III CONDITIONS OF LOANS..................................... 31
3.1. CONDITIONS PRECEDENT TO INITIAL LOAN...................... 31
3.2. CONDITIONS PRECEDENT TO ALL LOANS......................... 33
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................ 34
4.1. EXISTENCE AND POWER....................................... 34
4.2. AUTHORIZATION............................................. 34
4.3. VALID OBLIGATIONS......................................... 35
4.4. FINANCIAL INFORMATION, ETC................................ 35
4.5. CONSENTS OR APPROVALS..................................... 36
4.6. LITIGATION................................................ 37
4.7. DEFAULTS, ETC............................................. 37
4.8. TAXES..................................................... 37
4.9. USE OF PROCEEDS........................................... 37
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4.10. SUBSIDIARIES.............................................. 37
4.11. INVESTMENT COMPANY ACT.................................... 38
4.12. COMPLIANCE WITH ERISA..................................... 38
4.13. ENVIRONMENTAL MATTERS..................................... 38
4.14. YEAR 2000 PROBLEM......................................... 38
ARTICLE V AFFIRMATIVE COVENANTS...................................... 39
5.1. FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS..... 39
5.2. CONDUCT OF BUSINESS....................................... 42
5.3. MAINTENANCE AND INSURANCE................................. 42
5.4. TAXES..................................................... 42
5.5. INSPECTION BY LENDERS..................................... 43
5.6. MAINTENANCE OF BOOKS AND RECORDS.......................... 43
5.7. CONSOLIDATED NET WORTH.................................... 43
5.8. CONSOLIDATED ADJUSTED EBITDA TO CONSOLIDATED INTEREST
CHARGES.................................................. 44
5.9. CONSOLIDATED ADJUSTED CASH FLOW TO CONSOLIDATED FIXED
CHARGES.................................................. 44
5.10. CONSOLIDATED TOTAL DEBT FOR BORROWED FUNDS TO
CONSOLIDATED ADJUSTED EBITDA............................. 44
5.11. SUBSIDIARY GUARANTIES..................................... 44
5.12. YEAR 2000 COMPLIANCE...................................... 46
5.13. FURTHER ASSURANCES........................................ 46
ARTICLE VI NEGATIVE COVENANTS........................................ 47
6.1. BORROWED FUNDS INDEBTEDNESS............................... 47
6.2. CONTINGENT LIABILITIES.................................... 48
6.3. ENCUMBRANCES.............................................. 49
6.4. MERGER;CONSOLIDATION; SALE OR LEASE OF ASSETS............. 51
6.5. ADDITIONAL STOCK ISSUANCE................................. 54
6.6. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS............... 54
6.7. DISTRIBUTIONS............................................. 54
6.8. INVESTMENTS............................................... 55
6.9. MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES................. 55
6.10. ERISA..................................................... 56
6.11. TRANSACTIONS WITH AFFILIATES.............................. 56
6.12. AMENDMENT OF CERTAIN DOCUMENTS............................ 57
6.13. LOANS TO EMPLOYEES........................................ 57
ARTICLE VII DEFAULTS................................................. 57
7.1. EVENTS OF DEFAULT......................................... 57
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7.2. REMEDIES.................................................. 60
7.3. DISTRIBUTION OF PROCEEDS.................................. 61
ARTICLE VIII THE AGENTS.............................................. 62
8.1. APPOINTMENT AND AUTHORIZATION............................. 62
8.2. AGENTS AND AFFILIATES..................................... 62
8.3. ACTION BY ADMINISTRATIVE AGENT............................ 63
8.4. CONSULTATION WITH EXPERTS................................. 63
8.5. LIABILITY OF ADMINISTRATIVE AGENT......................... 63
8.6. INDEMNIFICATION........................................... 63
8.7. CREDIT DECISION........................................... 64
8.8. SUCCESSOR ADMINISTRATIVE AGENT............................ 64
8.9. THE ARRANGER AND DOCUMENTATION AGENT...................... 64
ARTICLE IX MISCELLANEOUS............................................. 65
9.1. NOTICES................................................... 65
9.2. NO WAIVERS................................................ 65
9.3. EXPENSES; INDEMNIFICATION................................. 65
9.4. SHARING OF SET-OFFS....................................... 66
9.5. AMENDMENTS AND WAIVERS.................................... 67
9.6. SUCCESSORS AND ASSIGNS.................................... 67
9.7. COLLATERAL................................................ 69
9.8. GOVERNING LAW; SUBMISSION TO JURISDICTION................. 69
9.9. COUNTERPARTS; INTEGRATION................................. 70
9.10. WAIVER OF JURY TRIAL...................................... 70
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SCHEDULES
SCHEDULE I Commitment Amounts and Commitment Percentages
SCHEDULE 4.10 Subsidiaries and Guarantor Subsidiaries
SCHEDULE 6.1 Borrowed Funds Indebtedness
SCHEDULE 6.2 Guaranties
SCHEDULE 6.3 Encumbrances
SCHEDULE 6.4 B Theatres, Problem Theatres and Permitted Dispositions
SCHEDULE 6.8 Investments
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Notice of Borrowing or Conversion
EXHIBIT C Form of Compliance Certificate
EXHIBIT D Form of Subsidiary Guaranty Agreement
EXHIBIT E Form of Assignment and Assumption Agreement
EXHIBIT F Form of Intercreditor Agreement
EXHIBIT G Form of Opinion of Special Counsel to Borrower and Guarantor
Subsidiaries
EXHIBIT H Form of Opinion of General Counsel of Harcourt General, Inc.
EXHIBIT I Form of Opinion of Special Counsel to Administrative Agent
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is made on and as of January 26, 1999 by
and among each of GC COMPANIES, INC., a Delaware corporation, as borrower
hereunder (the "BORROWER"), the several banks and other financial institutions
or entities from time to time party hereto as lenders hereunder (individually, a
"LENDER" and, collectively, the "LENDERS"), BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.,
as syndication agent and arranger hereunder (in such capacity, the "ARRANGER"),
THE BANK OF NOVA SCOTIA, a Canadian chartered bank acting through its Boston
Branch ("BNS"), as documentation agent hereunder (in such capacity, the
"DOCUMENTATION AGENT"), and BANCBOSTON, N.A., a national banking association
("BANKBOSTON"), as administrative agent hereunder (in such capacity, the
"ADMINISTRATIVE AGENT").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS.
All capitalized terms used in this Agreement, the Notes or any of the
other Loan Documents or in any certificate, report or other document made or
delivered pursuant to this Agreement or any of the other Loan Documents (unless
otherwise defined therein) shall have the meanings assigned to them below:
ADJUSTED EURODOLLAR RATE. Applicable to any Interest Period, shall mean a
rate PER ANNUM determined pursuant to the following formula:
AER = [ IOR ]*
----------
[1.00 - RP]
AER = Adjusted Eurodollar Rate
IOR = Interbank Offered Rate
RP = Reserve Percentage
* The amount in brackets shall be rounded upwards, if necessary, to the
next higher 1/100 of 1%.
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WHERE:
"INTERBANK OFFERED RATE" applicable to any Eurodollar Loan for any
Interest Period means the rate of interest determined by the
Administrative Agent to be the prevailing rate PER ANNUM at which deposits
in U.S. dollars are offered to the Administrative Agent by first-class
banks in the Interbank Eurodollar market in which it regularly
participates on or about 10:00 a.m., Boston time, two (2) Business Days
before the first day of such Interest Period in an amount approximately
equal to the principal amount of the Eurodollar Loan to which such
Interest Period is to apply for a period of time beginning on the first
day of such Interest Period and of a length approximately equal to such
Interest Period.
"RESERVE PERCENTAGE" applicable to any Interest Period means the rate
(expressed as a decimal) applicable to any Lender during such Interest
Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System for determining the maximum
reserve requirement (including, without limitation, any basic,
supplemental or emergency reserve requirement) of such Lender with respect
to "Eurocurrency Liabilities" as that term is defined under such
regulations.
The Adjusted Eurodollar Rate shall be adjusted automatically as of the
effective date of any change in the Reserve Percentage.
ADJUSTED TOTAL DEBT. As at any date of determination, (a) the Consolidated
Total Debt for Borrowed Funds of the Borrower and its Subsidiaries as at such
date, MINUS (b) the SUM of (i) to the extent included in Consolidated Total Debt
for Borrowed Funds as at such date, all of the Foreign Non-Recourse Debt of the
Foreign Subsidiaries as at such date, all as determined on a Consolidated basis
and in accordance with GAAP as at such date, PLUS (ii) the aggregate of the
Eligible Securities Values of all Eligible Securities as at such date.
ADMINISTRATIVE AGENT. See PREAMBLE.
AFFILIATE. (a) Any director or executive officer of the Borrower, or (b)
any Person that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the Borrower. As
used herein, the term "CONTROL" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
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AGENTS. Collectively, the Administrative Agent, the Documentation Agent
and the Arranger.
AGREEMENT. This Agreement, as the same may be supplemented, modified or
amended from time to time.
APPLICABLE PERCENTAGES. The respective percentages applicable from time to
time to (a) the Eurodollar Loans, or (as the case may be) (b) the Facility Fees,
which percentages shall be determined in accordance with the following
provisions and the table set forth below and be subject to adjustment (upwards
or downwards, as appropriate) based upon the Leverage Ratio at the end of each
of the first three fiscal quarters of each Fiscal Year of the Borrower and at
the end of each Fiscal Year of the Borrower. For purposes of determining the
Applicable Percentages in effect from time to time, the Leverage Ratio shall be
determined (i) in the case of determinations made with respect to each of the
first three fiscal quarters of each Fiscal Year, by reference to the monthly
financial statements for the fiscal month ending on the last day of such fiscal
quarter and the Compliance Certificate for such fiscal quarter delivered
pursuant to SECTIONS 5.1(b) and 5.1(c), and (ii) in the case of determinations
made with respect to the last fiscal quarter of each Fiscal Year, by reference
to the financial statements and Compliance Certificate for such Fiscal Year
delivered pursuant to SECTIONS 5.1(a) and 5.1(c). The adjustment, if any, to the
Applicable Percentages shall be effective commencing on the fifth Business Day
after the delivery of the required financial statements and Compliance
Certificate and shall be effective only for the period beginning on such fifth
Business Day. In the event that the Borrower shall at any time fail to furnish
to the Administrative Agent and the Lenders, within the prescribed time period,
the financial statements and Compliance Certificate required to be delivered
pursuant to SECTION 5.1(a), (b) or (c), the Applicable Percentages then in
effect shall remain in effect and shall not become subject to further adjustment
as provided above until the fifth Business Day after the date on which such
financial statements and Compliance Certificate are so delivered to the
Administrative Agent.
APPLICABLE PERCENTAGES
EURODOLLAR FACILITY
LEVERAGE RATIO LOANS FEES
-------------- ---------- --------
Greater than or equal to 3.5:1.0 1.250% 0.500%
Less than 3.5:1.0 but greater than or
equal to 3.0:1.0 1.000% 0.400%
Less than 3.0:1.0 but greater than or
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equal to 1.5:1.0 0.875% 0.375%
Less than 1.5:1.0 0.625% 0.250%
Anything in the foregoing provisions of this definition of the term "APPLICABLE
PERCENTAGES" to the contrary notwithstanding, the Applicable Percentage for
Eurodollar Loans shall not be less than 0.875% and the Applicable Percentage for
Facility Fees shall not be less than 0.375% at any time prior to January 26,
2000.
APPROVED FUND. Shall mean, with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
that is managed or advised (a) by the same investment advisor that manages or
advises such Lender, or (b) by an affiliate of such investment advisor.
ARRANGER. See PREAMBLE.
ASSIGNMENT AND ASSUMPTION AGREEMENT. See SECTION 9.6(c).
BANKBOSTON. See PREAMBLE.
BASE RATE. The greater of (a) the rate of interest announced from time to
time by the Administrative Agent at its head office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as its "Base Rate," or (b) the sum of the Federal
Funds Effective Rate PLUS one-half of one percent (0.5%) PER ANNUM (rounded
upwards, if necessary, to the next one-eighth of one percent (0.125 %)).
BASE RATE LOAN. Any Loan bearing interest determined with reference to
the Base Rate.
BNS. See PREAMBLE.
BORROWED FUNDS INDEBTEDNESS. As applied to any Person, without
duplication, (a) all obligations and liabilities of such Person for borrowed
money or other extensions of credit, whether secured or unsecured, absolute or
contingent, liquidated or unliquidated, or matured or unmatured, including,
without limitation, unmatured reimbursement obligations with respect to letters
of credit or Guaranties issued for the account of or on behalf of such Person,
all obligations of such Person in respect of bankers' acceptances, and all
obligations of such Person representing the deferred purchase price of property,
other than accounts payable or other liabilities arising in the ordinary course
of business, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) all
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obligations of such Person secured by any mortgage, pledge, security interest or
other lien on property owned or acquired by such Person, whether or not the
obligations secured thereby shall have been assumed, (d) that portion of all
obligations of such Person arising under Capitalized Leases that are required to
be capitalized on the consolidated balance sheet of such Person, and (e) all
obligations of such Person under or in respect of Guaranties (whether direct or
indirect) by such Person of any obligations or liabilities of any other Person
or Persons of the kind described in CLAUSE (a), (b), (c) or (d) of this
definition.
BORROWER. See PREAMBLE.
BUSINESS DAY. (a) For all purposes other than as provided by CLAUSE (b)
below, any day (other than a Saturday, Sunday or legal holiday) on which banks
in Boston, Massachusetts are open for the conduct of a substantial part of their
commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, any day that is a Business Day described in CLAUSE (a) and
that is also a day for trading by and between banks in U.S. dollar deposits in
the Interbank Eurodollar market.
CAPITAL EXPENDITURES. As applied to any Person, amounts paid or
indebtedness incurred by such Person in connection with the purchase or lease of
capital assets that are required to be capitalized and shown on the balance
sheet of such Person in accordance with GAAP.
CAPITALIZED LEASES. Leases under which the discounted future rental
payment obligations are required to be capitalized on the balance sheet of the
lessee or obligor thereunder in accordance with GAAP.
CHANGE OF CONTROL. Any event or series of events by which (a) any Person
(other than a member of the ▇▇▇▇▇ Family Group), together with "affiliates" and
"associates" of such Person, within the meaning of Rule 12b-2 of the Exchange
Act, shall become the beneficial owner within the meaning of Rule 13d-3 of the
Exchange Act of more voting stock or total equity capital of the Borrower than
that beneficially owned by the ▇▇▇▇▇ Family Group if such Person together with
such "affiliates" and "associates" is also the beneficial owner within the
meaning of Rule 13d-3 of the Exchange Act of at least twenty-five percent (25%)
of either the voting stock or total equity capital of the Borrower, or (b)
during any period of two (2) consecutive years, individuals who at the beginning
of such period constituted the Borrower's Board of Directors (together with any
new directors whose election by the Borrower's Board of Directors or whose
nomination for election by the Borrower's shareholders was approved by a vote of
66-2/3% of the directors then still in office who were either directors at the
beginning of such period or
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whose election or nomination for election was previously so approved) shall
cease for any reason to constitute a majority of the directors then in office.
CINEMA VENTURES. Cinema Ventures, LLC, a limited liability company
organized under the laws of the State of Delaware.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
COMMITMENT. Shall mean, as to each Lender, such Lender's obligation
pursuant to SECTION 2.1, SECTION 2.2 and the other provisions of ARTICLE II to
participate in making Loans to the Borrower hereunder.
COMMITMENT AMOUNT. Shall mean, as to each Lender, an amount equal to the
Maximum Credit times such Lender's Commitment Percentage from time to time in
effect.
COMMITMENT PERCENTAGE. Shall mean, as to each Lender, the percentage set
forth opposite such Lender's name on SCHEDULE I, as such SCHEDULE I may be
supplemented, modified or amended from time to time, whether pursuant to
Assignment and Assumption Agreements or otherwise.
COMMITMENT TERMINATION DATE. The earliest to occur of: (a) the day before
the Final Maturity Date; (b) the date on which any sums shall first be paid to
any of the Agents or to the Lenders by Harcourt General or by any of the other
Reimbursement Creditors (as defined in the Intercreditor Agreement) pursuant to
the terms of the Intercreditor Agreement, all as provided and required by
SECTION 2(a) of the Intercreditor Agreement; or (c) the date on which all of the
obligations of the Lenders to make further Loans shall terminate in full
pursuant to SECTION 7.2.
COMPLIANCE CERTIFICATE. See SECTION 5.1(c).
CONSOLIDATED AND CONSOLIDATING. When used with reference to any other term
and as applied to any Person and to its Subsidiaries, shall mean that term as
applied to the accounts of such Person and all of its Subsidiaries, or such of
its Subsidiaries as may be specified, consolidated (or combined) or
consolidating (or combining), as the case may be, in accordance with GAAP, and
with appropriate deductions for minority interests in such Subsidiaries.
CONSOLIDATED ADJUSTED CASH FLOW. For each period for which the amount
thereof shall be determined, the total of (a) the Consolidated Adjusted EBITDA
of the Borrower and its Subsidiaries for such period, PLUS (b) the aggregate
amount of all rental expense for real property operating
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leases of the Borrower and its Subsidiaries for such period, all as determined
on a Consolidated basis and in accordance with GAAP for such period.
CONSOLIDATED ADJUSTED EBITDA. For each period for which the amount thereof
shall be determined, the Consolidated Net Income of the Borrower and its
Subsidiaries for such period, PLUS (a) without duplication and only to the
extent reflected as a charge in the statement of such Consolidated Net Income
for such period, the SUM of (i) the Consolidated Interest Charges, taxes,
depreciation and amortization expenses of the Borrower and its Subsidiaries for
such period, PLUS (ii) expenses or losses from any Permitted Non-Theatre
Investments, PLUS (iii) any extraordinary, unusual or non-recurring expenses or
losses, all as determined on a Consolidated basis and in accordance with GAAP
for such period, PLUS (iv) all of the general and administrative expenses for
such period of GCCI and its Subsidiaries, provided that if such general and
administrative expenses of GCCI and its Subsidiaries for such period shall
exceed $4,250,000, only $4,250,000 of such expenses shall be added to such
Consolidated Net Income for such period pursuant to this CLAUSE (iv), and MINUS
(b) without duplication and only to the extent reflected as an addition (or, as
the case may be, reduction) in the statement of such Consolidated Net Income for
such period, the SUM of (i) any income or gains from any Permitted Non-Theatre
Investments, PLUS (ii) any extraordinary, unusual or non-recurring income or
gains, PLUS (iii) that part of such Consolidated Net Income of the Borrower and
its Subsidiaries for such period that is attributable to the Consolidated net
income (or loss) of all of the Foreign Subsidiaries for such period, all as
determined on a Consolidated basis and in accordance with GAAP for such period.
CONSOLIDATED EXCESS CASH FLOW. For each period for which the amount
thereof shall be determined, (a) the SUM of (i) the Consolidated Adjusted EBITDA
of the Borrower and its Subsidiaries for such period, PLUS (ii) the net cash
proceeds paid to or for the account of the Borrower during such period in
respect of the issuance of additional Equity Interests of the Borrower, MINUS
(b) the SUM of (i) the Consolidated Interest Charges for such period, PLUS (ii)
the Capital Expenditures of the Borrower and its Subsidiaries for such period,
PLUS (iii) all regularly scheduled payments of principal of Consolidated Total
Debt for Borrowed Funds (other than Foreign Non-Recourse Debt) payable during
such period, PLUS (iv) Distributions made by the Borrower and its Subsidiaries
during such period, PLUS (v) cash taxes paid by the Borrower and its
Subsidiaries during such period, all as determined on a Consolidated basis and
in accordance with GAAP for such period.
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CONSOLIDATED EXCESS THEATRE CASH FLOW. For each period for which the
amount thereof shall be determined, the Consolidated Excess Cash Flow for such
period, (a) MINUS, without duplication and only to the extent reflected as an
addition to such Consolidated Excess Cash Flow for such period, any income or
gains from any Permitted Non-Theatre Investments for such period, and (b) PLUS,
without duplication and only to the extent reflected as a charge to such
Consolidated Excess Cash Flow for such period, any expenses or losses from any
Permitted Non-Theatre Investments for such period.
CONSOLIDATED FIXED CHARGES. For each period for which the amount thereof
shall be determined, the SUM of (a) all regularly scheduled payments of
principal of Consolidated Total Debt for Borrowed Funds (other than Foreign
Non-Recourse Debt) payable during such period, PLUS (b) the Consolidated
Interest Charges for such period, PLUS (c) the aggregate amount of all rental
expense for real property operating leases of the Borrower and its Subsidiaries
for such period, all as determined on a Consolidated basis and in accordance
with GAAP for such period.
CONSOLIDATED INTEREST CHARGES. For each period for which the amount
thereof shall be determined, the aggregate amount of interest, including
interest expense under Capitalized Leases, paid or accrued by the Borrower or by
any of its Subsidiaries during such period, MINUS the aggregate amount of
interest, including interest expense under Capitalized Leases, paid or accrued
by Foreign Subsidiaries during such period on or in respect of any Foreign
Non-Recourse Debt, all as determined on a Consolidated basis and in accordance
with GAAP for such period.
CONSOLIDATED NET INCOME. For each period for which the amount thereof
shall be determined, the Consolidated net income (or loss) of the Borrower and
its Subsidiaries for such period, all as determined on a Consolidated basis and
in accordance with GAAP.
CONSOLIDATED NET INVESTMENT CASH FLOW. In relation to the Borrower and its
Subsidiaries for each period for which the amount thereof shall be determined,
(a) the SUM of (i) the Net Cash Proceeds received by the Borrower or by any of
its Subsidiaries in such period from the sale or other transfer of any Permitted
Non-Theatre Investments, PLUS without duplication, (ii) all cash income and
other cash gains, including, without limitation, cash interest, cash dividends
and other cash distributions, received by the Borrower or by any of its
Subsidiaries from Permitted Non-Theatre Investments in such period, all as
determined on a Consolidated basis and in accordance with GAAP for such period,
MINUS (b) the aggregate amount of (i) all cash expenses and cash losses incurred
or sustained by the
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Borrower or by any of its Subsidiaries from Permitted Non-Theatre Investments in
such period, PLUS (ii) without duplication, non-cash losses realized by the
Borrower or by any of its Subsidiaries in such period from Permitted Non-Theatre
Investments to the extent of any write-downs or write-offs of any thereof taken
by the Borrower or by any of its Subsidiaries in such period, all as determined
on a Consolidated basis and in accordance with GAAP for such period.
CONSOLIDATED NET WORTH. At any date as of which the amount thereof shall
be determined, shareholders' equity of the Borrower and its Subsidiaries as at
such date, all as determined on a Consolidated basis and in accordance with GAAP
as at such date; PROVIDED, HOWEVER, that for purposes of determining the
Consolidated Net Worth of the Borrower and its Subsidiaries as at any date
falling on or after the date hereof, the amount thereof shall be adjusted so as
to eliminate the effect of any unrealized gains or any unrealized losses in the
total market value as at such date of the Investments of the Borrower and its
Subsidiaries in the Equity Interests of each of Global Telesystems Group, Inc.
and GrandVision relative to the total market value of such Investments as at
October 31, 1998 as reflected in the audited consolidated balance sheet of the
Borrower and its Subsidiaries as at such date.
CONSOLIDATED TOTAL DEBT FOR BORROWED FUNDS. As at any date of
determination, all of the Borrowed Funds Indebtedness of the Borrower and its
Subsidiaries outstanding on and as of such date, all as determined on a
Consolidated basis.
CONTROLLED GROUP. All trades or businesses (whether or not incorporated)
under common control that, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
CREDITOR PARTIES. Collectively, the Lenders and the Agents.
CUMULATIVE EXCESS THEATRE CASH FLOW. As at any date of determination, the
aggregate of the Consolidated Excess Theatre Cash Flows for all Fiscal Years of
the Borrower ending on or after October 31, 1998 but prior to such date of
determination; PROVIDED, HOWEVER, that the Consolidated Excess Theatre Cash Flow
for any such particular Fiscal Year of the Borrower shall not, for purposes of
this definition, be added to and included in the Cumulative Excess Theatre Cash
Flow until the later of (a) the first Business Day after the delivery to the
Administrative Agent of the financial statements and Compliance Certificate
required to be delivered pursuant to SECTION 5.1(a) and SECTION 5.1(c) for such
Fiscal Year, or (b) if any Default shall be continuing when such financial
statements and Compliance
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Certificate are delivered to the Administrative Agent, on the first Business Day
thereafter on which no Default shall be continuing.
CUMULATIVE NET INVESTMENT CASH FLOW. As at any date of determination, the
aggregate of the Consolidated Net Investment Cash Flows for all fiscal quarters
of the Borrower ending on or after October 31, 1998 but prior to such date of
determination; PROVIDED, HOWEVER, that the Consolidated Net Investment Cash Flow
for any such particular fiscal quarter of the Borrower shall not, for purposes
of this definition, be added to and included in the Cumulative Net Investment
Cash Flow until the later of (a) the first Business Day after the delivery to
the Administrative Agent of the financial statements and Compliance Certificate
required to be delivered pursuant to SECTION 5.1(a) or (as the case may be)
SECTION 5.1(b) and SECTION 5.1(c) for such fiscal quarter, or (b) if any Default
shall be continuing when such financial statements and Compliance Certificate
are delivered to the Administrative Agent, on the first Business Day thereafter
on which no Default shall be continuing.
DEFAULT. An Event of Default or any event or condition that, but for the
requirement (if any) that time elapse or notice be given, or both, would (unless
cured or waived) constitute an Event of Default.
DISTRIBUTIONS. Shall mean any of the following:
(a) the declaration or payment of any dividends (other than
dividends payable in Equity Interests in the Borrower) on or in respect of
any Equity Interests in the Borrower;
(b) the purchase, redemption or other retirement of any Equity
Interests in the Borrower, or of options, warrants or other rights for the
purchase of any of such Equity Interests, directly, indirectly through a
Subsidiary, or otherwise;
(c) any other distributions on or in respect of any Equity Interests
of any class or other beneficial interests in the Borrower;
(d) any prepayment, purchase, redemption or defeasance of any
Subordinated Debt; and
(e) any payment, loan or advance by the Borrower (or such
Subsidiary) to, or any other Investment by the Borrower (or such
Subsidiary) in, (i) any beneficial owner of five percent (5%) or more of
any class of Equity Interests or other beneficial interests in the
Borrower, or (ii) any Affiliate of such beneficial owner;
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PROVIDED, HOWEVER, that the term "DISTRIBUTIONS" shall not in any event include
any declaration or payment of dividends or other distributions by any Subsidiary
of the Borrower to the Borrower or to any other Subsidiary of the Borrower or
payments by the Borrower or by any of its Subsidiaries in the ordinary course of
business in respect of (i) reasonable compensation paid to employees, officers
or directors, including stock appreciation rights and stock options granted to
employees, (ii) advances to employees for travel expenses and other similar
expenditures, (iii) loans, drawing accounts and advances to employees permitted
under SECTION 6.12, (iv) rent paid to or accounts payable for services rendered
or goods sold by non-Affiliates which may hold Equity Interests in the Borrower
(or such Subsidiaries), (v) inter-company accounts payable and real property
leases to non-Affiliates which may hold Equity Interests in the Borrower (or
such Subsidiaries), or (vi) payments to Harcourt General under the Harcourt
General Documents; and, PROVIDED, FURTHER, that, for purposes of SECTION 6.7, an
aggregate of $1,000,000 in cash Distributions made by the Borrower after the
date hereof to repurchase stock options granted to employees of the Borrower or
of any of its Subsidiaries shall be excluded in determining the aggregate amount
of Distributions permitted to be made by the Borrower and its Subsidiaries.
DOCUMENTATION AGENT. See PREAMBLE.
ELIGIBLE SECURITIES. As at any date of determination with respect to any
particular marketable Securities of any particular issuer, marketable Securities
of such issuer that (a) are owned by the Borrower or by any of its Subsidiaries
as at such date free and clear of all liens and other encumbrances, and (b) are
determined by the Administrative Agent in its sole and complete discretion to be
"Eligible Securities" as at such date for the purposes of this Agreement, each
such determination by the Administrative Agent to be in each case final and
binding on the Borrower for all purposes of this Agreement.
ELIGIBLE SECURITIES VALUE. As at any date of determination with respect to
any particular Eligible Securities of any particular issuer, the product of (a)
the Fair Market Value of such Eligible Securities as at such date, such Fair
Market Value to be determined by mutual agreement of the Borrower and the
Administrative Agent, and (b) the percentage used or to be used by the
Administrative Agent in calculating the Eligible Securities Value of such
Eligible Securities as at such date, such percentage to be (i) no greater than
fifty percent (50%), and (ii) to be determined by the Administrative Agent in
its sole and complete discretion, each such determination by the Administrative
Agent to be in each case final and binding on the Borrower for all purposes of
this Agreement; PROVIDED, HOWEVER, that the percentage which shall be so used by
the Administrative
17
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Agent for the marketable Securities of each of Global Telesystems Group, Inc.
and GrandVision shall, as determined by the Administrative Agent on or as of the
date hereof, be and remain fifty percent (50%).
ENCUMBRANCES. See SECTION 6.3.
ENFORCEMENT ACTION. Shall have the meaning specified for the term
"Enforcement Action" in the Intercreditor Agreement.
EQUITY INTERESTS. (a) In the case of any corporation, any corporate
capital stock of any class or series, (b) in the case of any association or
business entity, any shares, interests, participations, rights or other
equivalents (howsoever designated) of corporate capital stock, (c) in the case
of any partnership or limited liability company, partnership or membership
interests (whether general or limited), and (d) any warrants, options or other
rights to purchase or otherwise acquire any capital stock, shares or interests
of the kind described in CLAUSE (a), (b) or (c) of this definition.
ERISA. The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.
ENVIRONMENTAL LAWS. Any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
ground water, land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
EURODOLLAR LOAN. Any Loan bearing interest at a rate determined with
reference to the Adjusted Eurodollar Rate.
EVENT OF DEFAULT. Any event described in SECTION 7.1.
EXCHANGE ACT. The Federal Securities Exchange Act of 1934, amended (or any
successor statute), and the rules and regulations promulgated thereunder, all as
from time to time in effect.
FACILITY FEES. See SECTION 2.3(a).
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FAIR MARKET VALUE. With respect to any Securities or other property, the
price which could be negotiated in an arm's length free market transaction
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
FEDERAL FUNDS EFFECTIVE RATE. For any day, a fluctuating interest rate PER
ANNUM equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by the Administrative Agent.
FINAL MATURITY DATE. January 25, 2002.
FISCAL YEAR. The twelve-month fiscal period of the Borrower commencing at
or around November 1 of each calendar year and expiring at or around October 31
of the next succeeding calendar year. Subsequent changes to the fiscal year of
the Borrower shall not change the term "FISCAL YEAR" unless the Administrative
Agent shall consent to such change in writing, which consent shall not be
unreasonably withheld.
FOREIGN NON-RECOURSE DEBT. As applied to any Foreign Subsidiary at any
particular time, all or any portion of the Borrowed Funds Indebtedness of such
Foreign Subsidiary at such time (a) as to which none of the Borrower or any of
its Subsidiaries (other than Foreign Subsidiaries) (i) provides any credit
support of any kind (including any undertaking, agreement or instrument that
would constitute a Guaranty), (ii) is directly or indirectly obligated or liable
(as a guarantor under a Guaranty or otherwise), or (iii) constitutes the lender
or obligor thereof; (b) with respect to which none of the Borrower or any of its
Subsidiaries (other than Foreign Subsidiaries) has granted any security
interests, liens or other encumbrances to secure the payment or performance of
all or any part thereof; and (c) no default with respect to which (including any
rights that the holders thereof may have to take any Enforcement Action against
any Foreign Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any Borrowed Funds Indebtedness (other than the Loans and the
Obligations) of the Borrower or of any of its Subsidiaries (other than Foreign
Subsidiaries) to declare a default on such other Borrowed Funds Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity.
FOREIGN SUBSIDIARIES. At any time of reference, collectively, (a) General
Cinema International, Inc., and (b) each of the direct or indirect
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Subsidiaries of the Borrower that is organized or incorporated at such time
under the laws of any jurisdiction other than any State of the United States or
the District of Columbia. For purposes of this Agreement and the other Loan
Documents, none of GCCI or any of its direct or indirect Subsidiaries shall at
any time be or be deemed to be a "FOREIGN SUBSIDIARY".
FOREIGN THEATRE INVESTMENTS. At any time of reference, Investments of the
Borrower or of any of its Subsidiaries (other than any Foreign Subsidiaries) in
any Person (other than any Foreign Subsidiary) (a) that is organized or
incorporated at such time under the laws of any jurisdiction other than any
State of the United States or the District of Columbia, and (b) that is
primarily engaged at such time in the business of motion picture exhibition or
managing the motion picture exhibition or concession business of any other
Person or Persons.
GAAP. Generally accepted accounting principles as defined by the United
States Financial Accounting Standards Board as in effect from time to time,
applied on a basis consistent (except for changes concurred with by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Subsidiaries delivered
to the Administrative Agent and the Lenders; PROVIDED, HOWEVER, that, if the
Borrower notifies the Administrative Agent that it wishes to amend any of the
covenants in any of SECTIONS 5.7 through 5.10 to eliminate or otherwise to
modify the effect of any changes in generally accepted accounting principles on
the operation of such covenants (or, if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend any of the covenants in any of
SECTIONS 5.7 through 5.10 for such purpose), then the Borrower's compliance with
any of such covenants shall be determined on the basis of generally accepted
accounting principles in effect immediately before the relevant changes in
generally accepted accounting principles became effective, until either such
notice is withdrawn or such covenants are amended in a manner mutually
satisfactory to the Borrower and the Required Lenders.
GCCI. GCC Investments, Inc., a Delaware corporation and a wholly-owned
Subsidiary of the Borrower.
GUARANTIES. As applied to any Person, all guaranties, endorsements or
other contingent or surety obligations or liabilities of such Person with
respect to any obligations or liabilities of any other Person or Persons,
whether or not reflected on the balance sheet of such first Person, including,
without limitation, any obligations of such first Person to furnish funds,
directly or indirectly (whether by virtue of partnership arrangements, by
agreements to keep-well or otherwise), through the purchase of goods,
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supplies or services, or by way of stock purchase, capital contribution, advance
or loan, or to enter into any contract for any of the foregoing, for the purpose
of payment of any obligations of any other Person or entity.
GUARANTOR SUBSIDIARIES and GUARANTORS. Shall mean, collectively, the
Subsidiaries of the Borrower from time to time party to the Subsidiary Guaranty
Agreement as "Guarantors" thereunder. The Subsidiaries of the Borrower party or
to become party to the Subsidiary Guaranty Agreement on and as of the date
hereof as "Guarantors" thereunder are identified as "GUARANTOR SUBSIDIARIES" in
SCHEDULE 4.10.
HARCOURT GENERAL. Harcourt General, Inc., a Delaware corporation.
HARCOURT GENERAL DOCUMENTS. See SECTION 6.11.
INTERCREDITOR AGREEMENT. The Intercreditor Agreement, dated as of January
26, 1999, among the Administrative Agent, Harcourt General and the Borrower, as
the same may be supplemented, modified or amended from time to time.
INTEREST PERIOD. (a) With respect to each Eurodollar Loan, the period
commencing on the date of the making or continuation of or conversion to such
Eurodollar Loan and ending one, two, three or six months thereafter, as the
Borrower may elect in the applicable Notice of Borrowing or Conversion, and (b)
with respect to each Base Rate Loan, the period commencing on the date of the
making or continuation of or conversion to such Base Rate Loan and ending thirty
(30) days thereafter; PROVIDED, HOWEVER, that:
(i) any Interest Period (other than an Interest Period determined
pursuant to CLAUSE (iii)) that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless,
in the case of Eurodollar Loans, such Business Day falls in the next
calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to CLAUSE (iii), end on the last Business Day of a
calendar month;
(iii) any Interest Period that would otherwise end after the Final
Maturity Date shall end on the Final Maturity Date; and
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(iv) notwithstanding CLAUSE (iii), no Interest Period applicable to
a Eurodollar Loan shall have a duration of less than one (1) month, and if
any Interest Period applicable to any such Eurodollar Loan would be for a
shorter period, then such Interest Period shall not be available
hereunder.
INVESTMENT. As applied to any Person, the purchase or acquisition of any
shares of capital stock, partnership interests, membership interests or other
Equity Interests, evidences of indebtedness or other Securities of any other
Person or entity, any loans, advances or other extensions of credit to, or
contributions to the capital of, any other Person or entity, any real estate
held for investment, any commodities futures contracts held other than in
connection with BONA FIDE hedging transactions, any other investment in any
other Person or entity, and the making of any commitment or acquisition of any
option to make any Investment.
LENDER and LENDERS. See PREAMBLE.
LEVERAGE RATIO. As at the last day of each fiscal quarter of the Borrower,
the ratio of (a) the Adjusted Total Debt as at such date, to (b) the
Consolidated Adjusted EBITDA of the Borrower and its Subsidiaries for the
Reference Period ending on such date.
LOAN. Any loan made or to be made to the Borrower by the Lenders pursuant
to ARTICLE II of this Agreement; and "LOANS" means, collectively, all of such
loans. Whenever the context so requires, the term "LOAN" shall also mean, in
relation to any particular Lender, such Lender's Commitment Percentage or share
of any Loan made or to be made to the Borrower by the Lenders pursuant to
ARTICLE II of this Agreement.
LOAN DOCUMENTS. This Agreement, the Notes, the Subsidiary Guaranty
Agreement, the Intercreditor Agreement and any other present or future agreement
from time to time entered into between the Borrower and/or any Subsidiary of the
Borrower and one or more of the Lenders or the Agents relating to this Agreement
or any of the other Loan Documents, each as from time to time supplemented,
modified or amended, and the Compliance Certificates and all other written
statements, reports and certificates delivered by the Borrower and/or by any
such Subsidiary to any of the Lenders or the Agents in connection with this
Agreement or any of the other Loan Documents.
MATERIAL SUBSIDIARY. See SECTION 5.11(a).
MAXIMUM CREDIT. $50,000,000 or any lesser amount, including zero,
resulting from a reduction of such amount in accordance with SECTION 2.4.
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MAXIMUM PERMITTED LEVEL. See SECTION 6.8(c).
MINIMUM GUARANTY CONDITIONS. See SECTION 5.11(a).
NET AVAILABLE AMOUNT. As at any date of determination, the lesser of (a)
fifty percent (50%) of the Cumulative Excess Theatre Cash Flow as at such date
of determination, or (b) the amount determined by subtracting (i) from the
Cumulative Excess Theatre Cash Flow as at such date of determination, (ii) the
sum of (A) the aggregate amount of all Distributions made prior to such date of
determination pursuant to SECTION 6.7 in excess of the Section 6.7 Base Amount,
PLUS (B) the aggregate amount of all Permitted Non-Theatre Investments made
prior to such date of determination pursuant to SECTION 6.8(c) in excess of the
Section 6.8(c) Base Amount, PLUS (C) the aggregate amount of all Investments in
Foreign Subsidiaries made prior to such date of determination pursuant to
SECTION 6.8(d) in excess of the Section 6.8(d) Base Amount.
NET CASH PROCEEDS. With respect to any sale or transfer of any Investment
or other property by any Person, the cash portion of the Net Proceeds from such
sale or transfer, including, without limitation, all such cash paid from time to
time under any instruments evidencing or securing any obligations to pay all or
any part of the purchase price or other consideration payable in connection with
such sale or transfer.
NET PROCEEDS. With respect to any sale or transfer of any Investment or
other property by any Person, all cash and other property (including, without
limitation, instruments evidencing or securing indebtedness and Equity Interests
or other Securities) payable to or receivable by such Person from such sale or
transfer, net of (a) all income, sales, use, transfer or other taxes (state,
federal or local) solely attributable to such sale or transfer and reasonably
estimated to be payable in cash by such Person for the taxable year in which
such sale or transfer occurred, (b) all sales or other similar commissions and
fees, costs and other expenses incurred in connection with such sale or
transfer, and (c) appropriate amounts to be provided by such Person as a
reserve, in accordance with GAAP, against any liabilities associated with such
Investment or property and retained by such Person after such sale or transfer,
or against any indemnification obligations associated with the sale or transfer
of such Investment or other property.
NET WORTH COMPLIANCE LEVEL. See SECTION 5.7.
NON-MATERIAL SUBSIDIARY. See SECTION 5.11(a).
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NOTES. The promissory notes of the Borrower, substantially in the form of
EXHIBIT A, evidencing the obligations of the Borrower to each Lender to repay
all of the Loans made by such Lender.
NOTICE OF BORROWING OR CONVERSION. See SECTION 2.2(a).
OBLIGATIONS. Any and all obligations and other liabilities of the Borrower
or of any of its Subsidiaries to the Lenders or the Agents of every kind and
description, direct or indirect, absolute or contingent, liquidated or
unliquidated, matured or unmatured, primary or secondary, secured or unsecured,
due or to become due, now existing or hereafter created, incurred or arising,
and including all obligations to perform acts and refrain from taking action, as
well as all obligations to pay money, under or with respect to (a) any and all
Loans or other extensions of credit made or to be made by any of the Creditor
Parties under any of the Loan Documents, (b) this Agreement or any of the other
Loan Documents, (c) any other agreements or instruments pursuant to which any
Borrowed Funds Indebtedness to the Creditor Parties or any of them under this
Agreement or any of the other Loan Documents shall be deferred, extended,
renewed, replaced, refunded or refinanced, in whole or in part, and without
limitation as to parties, interest rates or other provisions, and (d) each of
the other instruments executed in connection with or otherwise evidencing,
governing, guarantying or securing any Borrowed Funds Indebtedness under any
agreements or instruments referred to in CLAUSE (b), CLAUSE (c) or CLAUSE (d) of
this definition; in each case (with respect to any agreements or instruments
referred to in CLAUSE (b), CLAUSE (c) or CLAUSE (d)), as modified, amended or
supplemented from time to time.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding to
any or all of its functions under ERISA.
PERMITTED ENCUMBRANCES. See SECTION 6.3.
PERMITTED NON-THEATRE INVESTMENTS. Collectively, (a) Investments by GCCI
or by any of the direct or indirect Subsidiaries of GCCI, and (b) Investments by
the Borrower in GCCI or in any of the direct or indirect Subsidiaries of GCCI.
PERSON. Any present or future natural person or any corporation,
association, partnership, limited partnership, joint venture, limited liability
company, company, business trust, trust, organization, business or government or
any governmental agency or political subdivision thereof.
PLAN. At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards
24
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under Section 412 of the Code and is either (a) maintained by the Borrower or
any member of the Controlled Group for employees of the Borrower or any member
of the Controlled Group, or (b) if such Plan is established, maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which the Borrower or any member of
the Controlled Group is then making or accruing an obligation to make
contributions or has, within the preceding five Plan years, made contributions.
PLEDGED COLLATERAL. Has the meaning specified for the term "Pledged
Collateral" in the Intercreditor Agreement.
QUALIFIED INVESTMENTS. As applied to any Person: (a) investments in notes,
bonds or other obligations of the United States of America or any agency or
instrumentality thereof that, as to principal and interest, constitute direct
obligations of or are guaranteed by the United States of America or any agency
or instrumentality thereof; (b) investments in municipal obligations, municipal
auction preferred stock and asset backed securities; PROVIDED, HOWEVER, that any
such instrument shall be rated, at the time of investment, a minimum rating of
AAA by Standard & Poor's Corporation ("S&P") or AAA by ▇▇▇▇▇'▇ Investors
Service, Inc. ("MOODY'S") or the equivalent short-term municipal ratings of SP1+
by S&P or MIGI by Moody's; (c) investments in certificates of deposit, time
deposits, money market funds or bankers' acceptances issued by any United States
commercial bank (or branch thereof) or issued by any foreign bank (or branch
thereof) or a bank holding company having at the time of investment capital and
surplus of at least $100,000,000; PROVIDED, HOWEVER, that any such banking
instruments shall be rated, at the time of investment, a Thomson Bank Watch
rating of B/C or better; (d) investments in commercial paper issued by any
corporation and rated at the time of investment a minimum rating of A1 or better
by S&P or P1 or better by Moody's and, in either case, maturing within 270 days
after the date of the acquisition thereof; and (e) investments in auction rate
preferred stock and fixed rate or adjustable rate bonds or notes; PROVIDED,
HOWEVER, that any such instrument shall be rated, at the time of investment, a
minimum rating of A- by S&P and/or A3 by Moody's.
REFERENCE PERIOD. Each period of four (4) consecutive fiscal quarters of
the Borrower.
REFUNDING BORROWING. Any Loan which, after application of the proceeds
thereof, results in no net increase in the aggregate outstanding principal
amount of all Loans made by the Lenders.
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REIMBURSEMENT AGREEMENT. The Amended and Restated Reimbursement and
Security Agreement, dated as of January 26, 1999, between the Borrower and
Harcourt General, as the same may be supplemented, modified or amended from time
to time.
REQUIRED LENDERS. At any time of reference, the Lenders that have made in
the aggregate at least sixty-six and two-thirds percent (66-2/3%) of the total
unpaid principal amount of all Loans outstanding at such time, or, if no Loans
are outstanding at such time, the Lenders holding in the aggregate at least
sixty-six and two-thirds percent (66-2/3%) of the total of all Commitment
Amounts in effect at such time.
REVOLVING CREDIT PERIOD. The period beginning on the date of this
Agreement and extending through and including the Commitment Termination Date or
such earlier date on which all of the Commitments of the Lenders to make Loans
shall be terminated in full or the Maximum Credit shall be reduced to zero, all
in accordance with the terms hereof.
SECURITIES. Any Equity Interests, bonds, debentures, notes or other
evidences of indebtedness for borrowed money, whether secured or unsecured, and
whether convertible, subordinated or otherwise, or, in general, any instruments
commonly known as "securities".
SIGNIFICANT SUBSIDIARY. As at any date of determination, any Subsidiary or
group of Subsidiaries of the Borrower, that singly or in the aggregate, as the
case may be, accounted for ten percent (10%) or more of the Consolidated
Adjusted EBITDA of the Borrower and its Subsidiaries for the Reference Period
ending on or immediately prior to such date of determination.
▇▇▇▇▇ FAMILY GROUP. Collectively, the group of Persons originally party to
the ▇▇▇▇▇/▇▇▇▇▇/Marks Stockholders Agreement pertaining to the Equity Interests
of the Borrower (whether or not such agreement is terminated), and includes the
progeny of each such Person.
SUBORDINATED DEBT. Unsecured Borrowed Funds Indebtedness of the Borrower
which is subordinated and made junior in right of payment to all of the
Obligations on terms and conditions approved in writing by the Administrative
Agent and by the Required Lenders.
SUBSIDIARY. Any Person of which the Borrower (or other specified Person)
shall at any time, whether directly or indirectly through one or more of its
Subsidiaries, (a) own more than fifty percent (50%) of the outstanding Equity
Interests of such Person entitled to vote generally, or (b) hold more than fifty
percent (50%) of all of the outstanding Equity Interests of such
26
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Person; PROVIDED, HOWEVER, that notwithstanding the foregoing, none of Cinema
Ventures, Sundance or any of their direct or indirect Subsidiaries shall
constitute or otherwise be treated as a Subsidiary of the Borrower or of any of
its other Subsidiaries for any purposes or under any provisions of this
Agreement EXCEPT (i) as and to the extent otherwise required by GAAP, SECTIONS
5.1(a) and (b), and (ii) SECTIONS 5.1(h) and (i).
SUBSIDIARY GUARANTY AGREEMENT. The Subsidiary Guaranty Agreement,
substantially in the form of EXHIBIT D hereto, to be executed and delivered to
the Administrative Agent by the Subsidiaries of the Borrower identified as
"GUARANTOR SUBSIDIARIES" in SCHEDULE 4.10, as the same may be supplemented,
modified or amended from time to time.
SUNDANCE. Sundance Cinema Circuit, LLC, a limited liability company
organized under the laws of the State of Delaware.
THEATRE SUBSIDIARY. At any time of reference, any of the direct or
indirect Subsidiaries of the Borrower (a) that is primarily engaged in the
business of motion picture exhibition or managing the motion picture exhibition
or concession business of any other Person or Persons, and (b) that is organized
or incorporated at such time under the laws of any State of the United States or
the District of Columbia. For purposes of this Agreement and the other Loan
Documents, none of GCCI or any of its direct or indirect Subsidiaries, and none
of the Foreign Subsidiaries or any of their direct or indirect Subsidiaries,
shall at any time be or be deemed to be "THEATRE SUBSIDIARIES".
1.2. ACCOUNTING TERMS. Except as and to the extent otherwise expressly
provided by the provisions contained in the definition of the term "GAAP", all
terms of an accounting character shall have the meanings assigned thereto by
GAAP applied on a basis consistent (except for changes concurred with by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of the Borrower and its Subsidiaries delivered
to the Administrative Agent and the Lenders.
ARTICLE II
DESCRIPTION OF CREDIT
2.1. THE LOANS.
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to participate, in accordance with its Commitment
Percentage, in making Loans to the Borrower from time to time until the
termination of the Commitments on the Commitment Termination
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Date in such sums as the Borrower may from time to time request; PROVIDED,
HOWEVER, that the aggregate principal amount of all Loans at any one time
outstanding hereunder shall not exceed (i) as to each Lender, the amount
of such Lender's Commitment Amount, and (ii) as to all of the Lenders, the
Maximum Credit. The Borrower may borrow, repay pursuant to SECTION 2.11
and reborrow, from the date of this Agreement until the Commitment
Termination Date, the full amount of the Maximum Credit or any lesser sum
that is at least $1,000,000 and an integral multiple of $100,000. Any
Loans not repaid prior to the Final Maturity Date shall in any event
become and be absolutely due and payable on the Final Maturity Date.
(b) Each of the Commitments shall terminate in full on the
Commitment Termination Date in accordance with the applicable terms
hereof. Each of the parties hereto acknowledges and agrees that, as
expressly provided and acquired by SECTION 2(a) of the Intercreditor
Agreement, each of the Commitments shall terminate in full on the date in
which any sums shall first be paid to any of the Creditor Parties by
Harcourt General or by any of the other Reimbursement Creditors (as
defined in the Intercreditor Agreement) pursuant to the terms of the
Intercreditor Agreement.
(c) Provided that no Default shall be continuing, the Borrower may
convert all or any part (in a minimum amount of $1,000,000 and in integral
multiples of $100,000) of any outstanding Loan into a Loan of any other
type provided for in this Agreement in the same aggregate principal
amount. Any such conversion shall be on any Business Day (which, in the
case of a conversion of a Eurodollar Loan, shall be the last day of the
Interest Period applicable to such Eurodollar Loan). The Borrower shall
give the Administrative Agent prior written notice of each such conversion
(which notice shall be effective upon receipt) in accordance with SECTION
2.2.
2.2. NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.
(a) Whenever the Borrower desires to obtain or continue a Loan
hereunder or to convert an outstanding Loan into a Loan of another type
provided for in this Agreement, the Borrower shall notify the
Administrative Agent in writing (which notice shall be irrevocable), by
hand delivery or facsimile transmission, received no later than (i) 11:00
a.m., Boston time, on the date on which the requested Loan is to be made
or continued as or converted to a Base Rate Loan, and (ii) 11:00 a.m.,
Boston time, on the date three (3) Business Days before the
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day on which the requested Loan is to be made or continued as or converted
to a Eurodollar Loan. Each such notice (a "NOTICE OF BORROWING OR
CONVERSION") shall specify the effective date and amount of each Loan or
portion thereof to be continued or converted, subject to the limitations
set forth in SECTION 2.1, the interest rate option to be applicable
thereto, and the duration of the applicable Interest Period, if any
(subject to the provisions of the definition of the term "INTEREST PERIOD"
and the provisions of SECTION 2.6) and shall be substantially in the form
of EXHIBIT B. The Administrative Agent shall give the Lenders notice of
each Notice of Borrowing or Conversion in accordance with the
Administrative Agent's customary practices. The Borrower agrees to
indemnify and hold the Administrative Agent and the Lenders harmless for
any action, including the making of any Loan hereunder, or loss or
expense, taken or incurred by the Administrative Agent or the Lenders in
good faith reliance upon any such request.
(b) Subject to the terms and conditions of this Agreement, each
Lender shall make available, not later than 12:00 noon, Boston time, on
the date on which any requested Loan is to be made, at the offices of the
Administrative Agent at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in
immediately available funds, such Lender's Commitment Percentage of each
Loan. After the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in ARTICLE III, the
Administrative Agent will credit such funds to the Borrower's demand
deposit account with the Administrative Agent.
(c) Unless the Administrative Agent shall have received notice from
a Lender prior to the date of any Loan that such Lender will not make
available to the Administrative Agent such Lender's Commitment Percentage
of such Loan, the Administrative Agent may assume that such Lender has
made such funds available to the Administrative Agent on the date of such
Loan in accordance with and as provided in this SECTION 2.2, and the
Administrative Agent may, in reliance upon such assumption, (but shall
have no obligation to) make available on such date a corresponding amount
to the Borrower. If and to the extent that any Lender shall not have made
its Commitment Percentage of any Loan available to the Administrative
Agent and the Administrative Agent shall have made available a
corresponding amount to the Borrower, such Lender agrees to pay to the
Administrative Agent forthwith on demand (a copy of which demand shall be
simultaneously given to the Borrower), and the Borrower agrees to repay to
the Administrative Agent within four (4) Business Days after demand has
been made to such Lender and such Lender
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has failed to make such payment, an amount equal to such corresponding
amount together with interest thereon for each day from the date the
Administrative Agent shall have made such amount available to the Borrower
until the date such amount is paid or repaid to the Administrative Agent,
at an interest rate equal to the Federal Funds Effective Rate. If such
Lender shall pay to the Administrative Agent such corresponding amount,
such amount so paid shall constitute such Lender's Commitment Percentage
of such Loan for purposes of this Agreement. If the Borrower makes a
repayment required by the foregoing provisions of this SECTION 2.2(c) and,
thereafter, the applicable Lender or Lenders make the payments to the
Administrative Agent required by this SECTION 2.2(c), the Administrative
Agent shall promptly refund the amount of the Borrower's payment.
(d) The failure of any Lender to make available its Commitment
Percentage of any Loan shall not relieve any other Lender of its
obligation, if any, hereunder to make its Commitment Percentage of such
Loan on the date of such Loan, but no Lender shall be responsible for the
failure of any other Lender to make available its Commitment Percentage of
any Loan to be made available by such other Lender.
2.3. FEES.
(a) The Borrower shall pay to the Administrative Agent, for the
ratable account of the Lenders, during the Revolving Credit Period,
facility fees (the "FACILITY FEES") computed at a rate PER ANNUM equal to
the Applicable Percentage for Facility Fees in effect from time to time on
the average daily amount of the Maximum Credit during each fiscal quarter
of the Borrower or portion thereof. Facility Fees shall be payable
quarter-annually in arrears, on the last day of March, June, September and
December of each year, beginning March 31, 1999, and on the last day of
the Revolving Credit Period.
(b) The Borrower shall pay to the Administrative Agent, for the
ratable account of the Lenders, a non-refundable closing fee in the amount
previously agreed by the Borrower with the Agents, which fee shall be
payable by the Borrower and deemed earned in full on the date of this
Agreement.
(c) The Borrower shall pay to the Administrative Agent, for its own
account, a non-refundable arrangement fee in the amount previously agreed
by the Borrower with the Administrative Agent, which arrangement fee shall
be payable by the Borrower and deemed
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earned in full on the date of this Agreement. The Borrower shall pay to
the Administrative Agent annually, for its own account, an Administrative
Agent's fee in the amount PER ANNUM previously agreed by the Borrower with
the Administrative Agent, which fee shall be payable by the Borrower and
deemed earned in full on the date of this Agreement and on each
anniversary of the date of this Agreement.
2.4. REDUCTION OF MAXIMUM CREDIT. The Borrower may from time to time, by
written notice delivered to the Administrative Agent at least three (3) Business
Days prior to the date of the requested reduction, reduce permanently by
integral multiples of $1,000,000 any unborrowed portion of the Maximum Credit.
No reduction of the Maximum Credit shall be subject to reinstatement.
2.5. THE NOTES.
(a) The Loans made available by each Lender shall be evidenced by a
Note payable to the order of such Lender. Each Note shall be in the
original principal amount of the applicable Lender's Commitment Percentage
of the Maximum Credit, shall be dated on or before the date of the first
Loan, and shall be stated to mature on the Final Maturity Date.
(b) Each Lender shall, and is hereby irrevocably authorized by the
Borrower to, enter on the schedule forming a part of its Note or otherwise
in its records appropriate notations evidencing the date and the amount of
the portion of each Loan made available by such Lender and the date and
amount of each payment of principal made by the Borrower with respect
thereto, and, in the absence of clearly demonstrable error, such notations
shall constitute conclusive evidence thereof. Each Lender is hereby
irrevocably authorized by the Borrower to attach to and make a part of its
Note a continuation of any such schedule as and when required. No failure
on the part of a Lender to make any notation as provided in this PARAGRAPH
(b) shall in any way affect any Loan or the rights or obligations of the
Lender or the Borrower with respect thereto.
2.6. DURATION OF INTEREST PERIODS.
(a) Subject to the provisions of the definition of the term
"INTEREST PERIOD", the duration of each Interest Period applicable to a
Loan shall be as specified in the applicable Notice of Borrowing or
Conversion. The Borrower shall have the option to elect a subsequent
Interest Period to be applicable to such Loan by delivering to the
Administrative Agent a Notice of Borrowing or Conversion evidencing
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such election received no later than 11:00 a.m., Boston time, on the date
one (1) Business Day before the end of the then applicable Interest Period
if such Loan is to be continued as or converted to a Base Rate Loan and
three (3) Business Days before the end of the then applicable Interest
Period if such Loan is to be continued as or converted to a Eurodollar
Loan.
(b) If the Administrative Agent does not receive a notice of
election of duration of an Interest Period for a Eurodollar Loan pursuant
to PARAGRAPH (a) above within the applicable time limits specified
therein, or if, when such notice must be given, an Event of Default shall
be continuing, the Borrower shall be deemed to have elected to convert
such Loan in whole into a Base Rate Loan on the last day of the then
current Interest Period with respect thereto.
(c) Notwithstanding the foregoing, the Borrower may not select an
Interest Period that would end, but for the provisions of the definition
of Interest Period, after the Final Maturity Date.
(d) Notwithstanding anything to the contrary herein, the Borrower
shall not have more than six (6) Eurodollar Loans with different Interest
Periods outstanding at any given time.
2.7. INTEREST RATES AND PAYMENTS OF INTEREST.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Base Rate in
effect from time to time, which rate shall change contemporaneously with
any change in the Base Rate. Interest accruing on each Base Rate Loan
shall be payable quarter-annually in arrears, on the last day of March,
June, September and December of each year, beginning March 31, 1999, and
when such Loan is due (whether at maturity, by reason of acceleration or
otherwise).
(b) Each Eurodollar Loan shall bear interest on the outstanding
principal amount thereof, for each Interest Period applicable thereto, at
a rate per annum equal to the Adjusted Eurodollar Rate, PLUS the
Applicable Percentage for Eurodollar Loans in effect from time to time.
Such interest shall be payable for such Interest Period on the last day
thereof and when such Eurodollar Loan is due (whether at maturity, by
reason of acceleration or otherwise), and, if such Interest Period is
longer than three (3) months, at intervals of three (3) months after the
first day thereof.
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2.8. DEFAULT RATE OF INTEREST. During the continuation of any Event of
Default of the type specified in CLAUSE (a), (h) or (i) of SECTION 7.1, the
entire unpaid principal balance of the Loans and, to the extent permitted by
applicable law, overdue interest, overdue fees and all other overdue amounts
payable under this Agreement, the Notes or any other Loan Documents shall bear
interest, compounded monthly and payable on demand, at a rate PER ANNUM equal to
two percent (2%) in excess of the rate otherwise payable under SECTION 2.7.
2.9. CHANGED CIRCUMSTANCES.
(a) In the event that:
(i) on any date on which the Adjusted Eurodollar Rate would
otherwise be set, the Administrative Agent shall have determined in
good faith (which determination shall be final and conclusive) that
adequate and fair means do not exist for ascertaining the Interbank
Offered Rate; or
(ii) at any time the Required Lenders shall have determined
in good faith (which determination shall be final and conclusive)
that
(A) the making or continuation of or conversion of any
Loan to a Eurodollar Loan has been made impracticable or unlawful by
(1) the occurrence of a contingency that materially and adversely
affects the Interbank Eurodollar market, or (2) compliance by the
Administrative Agent or any Lender in good faith with any applicable
law or governmental regulation, guideline or order or interpretation
or change thereof by any governmental authority charged with the
interpretation or administration thereof or with any request or
directive of any such governmental authority (whether or not having
the force of law); or
(B) the Adjusted Eurodollar Rate shall no longer
represent the effective cost to the Administrative Agent or any
Lender for U.S. dollar deposits in the Interbank Eurodollar market
for deposits in which it regularly participates;
then, and in such event, the Administrative Agent shall forthwith so
notify the Borrower thereof. Until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such notice no longer
apply, the obligation of the Lenders and the Administrative Agent to allow
selection by the Borrower of Eurodollar Loans shall be
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suspended. If, at the time the Administrative Agent so notifies the
Borrower, the Borrower has previously given the Administrative Agent a
Notice of Borrowing or Conversion with respect to one or more Eurodollar
Loans, but such Eurodollar Loans have not yet gone into effect, then such
notification shall automatically be deemed to be a Notice of Borrowing or
Conversion (as the case may be) with respect to a Base Rate Loan, unless
the Administrative Agent is instructed otherwise by the Borrower's giving
of a substitute Notice of Borrowing or Conversion pursuant to SECTION 2.2.
Upon such date as shall be specified in such notice (which shall not
be earlier than the date such notice is given), the Borrower shall prepay
all outstanding Eurodollar Loans together with interest thereon and may
borrow a Base Rate Loan in accordance with SECTION 2.1 by giving a Notice
of Borrowing or Conversion pursuant to SECTION 2.2.
(b) In case any change in law, regulation, treaty or official
directive or in the interpretation or application thereof by any court or
by any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(i) subjects any Lender to any tax with respect to payments
of principal or interest or any other amounts payable hereunder by
the Borrower or otherwise with respect to the transactions
contemplated hereby (except for taxes on the net income of any
Lender imposed by the United States of America or any State or other
political subdivisions thereof); or
(ii) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by,
any Lender (other than such requirements as are already included in
the determination of Adjusted Eurodollar Rate); or
(iii) imposes upon any Lender any other condition with respect
to its performance under this Agreement or the other Loan Documents;
and the result of any of the foregoing is to increase the cost to such
Lender, reduce the income receivable by such Lender or impose any expense
upon such Lender with respect to its Commitment or any of
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-29-
the Loans, such Lender shall notify the Borrower thereof. The Borrower
agrees to pay to such Lender the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction
or expense is incurred or determined, upon presentation by such Lender of
a written statement in the amount and setting forth such Lender's
calculation thereof, which statement shall be deemed true and correct
absent clearly demonstrable error.
2.10. REPLACEMENT OF LENDERS. In the event that any Lender refuses to
agree to a proposed amendment, modification, waiver or other action that is
consented to by the Required Lenders, then, so long as no Event of Default shall
then be continuing, the Borrower shall have the right to substitute for any such
Lender a replacement lender or lenders (which may be one or more of the Lenders)
reasonably satisfactory to the Administrative Agent.
2.11. PAYMENTS AND PREPAYMENTS OF LOANS. Base Rate Loans may be prepaid at
any time, without premium or penalty, upon one (1) Business Day's notice.
Subject to the provisions of SECTION 2.13 hereof, Eurodollar Loans may be
prepaid upon three (3) Business Day's notice. Any interest accrued on the
amounts so prepaid to the date of such payment shall become and be due and
payable by the Borrower at the time of any such payment. Except as set forth in
SECTION 2.4 hereof, no prepayment of the Loans during the Revolving Credit
Period shall affect the Maximum Credit or Commitment Amounts or impair the
Borrower's right to borrow as set forth in SECTION 2.1.
2.12. METHOD OF PAYMENT. All payments and prepayments of principal and all
payments of interest shall be made by the Borrower to the Administrative Agent
at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in immediately available
funds, on or before 12:00 noon, Boston time, on the due date thereof, free and
clear of, and without any deduction or withholding for, any taxes or other
payments. The Administrative Agent may, and the Borrower hereby authorizes the
Administrative Agent to, debit the amount of any payment not made by such time
to the demand deposit account of the Borrower with the Administrative Agent. The
Administrative Agent will, promptly after its receipt of payments by the
Borrower, distribute like funds to the Lenders for the account of their
respective Loans, ratably in proportion to the Lenders' respective Commitment
Percentages.
2.13. PAYMENTS NOT AT END OF INTEREST PERIOD. If the Borrower for any
reason (other than pursuant to SECTION 2.9) makes any payment of principal with
respect to any Eurodollar Loan on any day other than the last day of an Interest
Period applicable to such Eurodollar Loan, or fails to
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-30-
borrow or continue or convert to a Eurodollar Loan after giving a Notice of
Borrowing or Conversion pursuant to SECTION 2.2, or if any Eurodollar Loan is
accelerated pursuant to SECTION 7.2, the Borrower shall pay to each Lender an
amount computed by such Lender to compensate such Lender for losses incurred in
connection with such event, which losses shall include (without limitation) any
losses incurred in obtaining, liquidating or re-employing deposits from third
parties, but excluding loss of margin for the period after such payment or
failure to borrow or prepay. The Borrower shall pay such amount upon
presentation by the Administrative Agent of a written statement setting forth
the amount and the Administrative Agent's calculation thereof pursuant hereto,
which statement shall be deemed true and correct absent clearly demonstrable
error.
2.14. COMPUTATION OF INTEREST AND FEES. All interest and fees payable
hereunder shall be computed on the basis of a 360-day year for the actual number
of days elapsed. If the due date of any payment of principal, interest or other
sum is extended by operation of law, interest shall be payable for such extended
time. If any payment required by this Agreement becomes due on a day that is not
a Business Day, then such payment may be made on the next succeeding Business
Day (subject to CLAUSE (i) of the definition of the term "INTEREST PERIOD"), and
such extension shall be included in computing interest in connection with such
payment. The rate of interest payable with respect to Base Rate Loans shall vary
from time to time as the Base Rate varies, and any change in the rate of
interest shall become effective on the effective date of a change in the Base
Rate.
2.15. USE OF PROCEEDS. The Borrower shall utilize the proceeds of the
Loans for working capital and other general corporate purposes and also for
other business purposes that are not otherwise prohibited by the terms of this
Agreement.
2.16. CAPITAL REQUIREMENTS. If after the date hereof any Lender determines
that (a) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (b) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's commitment to
make Loans hereunder to a level below that which such Lender or such holding
company could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's or such holding company's then existing
policies with respect to capital
36
-31-
adequacy and assuming the full utilization of such entity's capital) by any
amount deemed by such Lender to be material, then such Lender shall notify the
Borrower thereof. The Borrower agrees to pay to such Lender the amount of such
reduction of the return on capital as and when such reduction is determined,
upon presentation by the Lender of a written statement in the amount and setting
forth the Lender's calculation thereof, which statement shall be deemed true and
correct absent clearly demonstrable error. In determining such amount, the
Lenders may use any reasonable averaging and attribution methods.
ARTICLE III
CONDITIONS OF LOANS
3.1. CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of each Lender
to make available its Commitment Percentage of the initial Loan to be made to
the Borrower hereunder is subject to the condition precedent that the
Administrative Agent and the Lenders shall have received, in form and substance
reasonably satisfactory to each of the Administrative Agent, the Lenders and
their counsel, the following:
(a) this Agreement and the Notes, duly executed and delivered by the
Borrower;
(b) certificates of the Secretary or an Assistant Secretary of the
Borrower with respect to resolutions of the Borrower's Board of Directors
authorizing the execution and delivery of this Agreement, the Notes, the
Intercreditor Agreement and the other Loan Documents to which the Borrower
is or is to become a party (all as contemplated hereby), and identifying
the officers of the Borrower authorized to execute, deliver and take all
other actions required under this Agreement or under any of the other Loan
Documents to which the Borrower is or is to become a party, and attesting
to the signatures of such officers;
(c) the Certificate of Incorporation of the Borrower and all
amendments and supplements thereto, filed in the office of the Secretary
of State of the State of Delaware, each certified by such Secretary of
State as being a true and correct copy thereof;
(d) the By-Laws of the Borrower and all amendments and supplements
thereto, each certified by the Secretary or an Assistant Secretary of the
Borrower as being a true and correct copy thereof;
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-32-
(e) a certificate of the Secretary of State of the State of Delaware
as to the Borrower's legal existence and good standing in such State and
listing all documents on file in the office of such Secretary of State
with respect to the Borrower;
(f) the Subsidiary Guaranty Agreement, duly executed and delivered
to the Administrative Agent by each Guarantor Subsidiary, substantially in
the form of EXHIBIT D;
(g) an opinion, substantially in the form of EXHIBIT G, addressed to
the Administrative Agent and the Lenders from special counsel to the
Borrower and the Guarantor Subsidiaries;
(h) payment by the Borrower of the closing fee referred to in
SECTION 2.3(b) and the Administrative Agent's fees referred to in SECTION
2.3(c), all as provided by the letter of agreement, dated as of the date
hereof, among the Borrower and the Agents;
(i) payment by the Borrower of all costs and expenses of the
Administrative Agent (including fees of the Administrative Agent's special
counsel);
(j) a certificate of the Secretary or Assistant Secretary of
Harcourt General certifying that (i) Harcourt General has obtained and is
in possession of all capital stock or other certificates or instruments
evidencing the Pledged Collateral and all appropriate stock or other
powers duly endorsed in blank, and (ii) has taken all other steps
necessary or advisable to perfect its security interests in uncertificated
Equity Interests constituting a part of the Pledged Collateral;
(k) the Intercreditor Agreement, duly executed and delivered to the
Administrative Agent by Harcourt General and the Borrower;
(l) copies of the Harcourt General Documents and all amendments and
supplements thereto, duly executed and delivered by the Borrower and
Harcourt General, each certified by the Secretary or Assistant Secretary
of the Borrower as being a true and accurate copy thereof and each to be
in form and substance reasonably satisfactory to the Agents;
(m) an opinion addressed to the Administrative Agent and the Lenders
from the General Counsel of Harcourt General, substantially in the form of
EXHIBIT H;
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-33-
(n) an opinion addressed to the Administrative Agent and the Lenders
from ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel to the Administrative Agent,
substantially in the form of EXHIBIT I; and
(o) such other documents, and completion of such other matters,
including termination of the Revolving Credit Agreement, dated as of March
24, 1994, among the Borrower, the lenders party thereto, and BankBoston,
as agent, and the payment in full by the Borrower of all of its unpaid
obligations thereunder, as the Administrative Agent or special counsel for
the Administrative Agent or as counsel for any of the Lenders may
reasonably deem necessary or appropriate.
3.2. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of each Lender to
make available its Commitment Percentage of each Loan, including the initial
Loan, is further subject to the following conditions:
(a) timely receipt by the Administrative Agent of the Notice of
Borrowing or Conversion as provided in SECTION 2.2;
(b) the representations and warranties of the Borrower contained in
ARTICLE IV (except that, in the case of a Refunding Borrowing, the
representations and warranties set forth in SECTIONS 4.4(b) and 4.6 need
not be true if the matter which would make them untrue has theretofore
been disclosed in writing by the Borrower to the Administrative Agent)
shall be true and accurate in all material respects on and as of the date
of such Notice of Borrowing or Conversion and also on and as of the
effective date of the making or conversion of each Loan or Refunding
Borrowing as though made at and as of each such date (except to the extent
that such representations and warranties expressly relate to an earlier
date), and no Default shall be continuing or shall result from such Loan;
(c) the resolutions referred to in SECTION 3.1(b) shall remain in
full force and effect;
(d) no Default or First Tier Default (as each of such terms is
defined in the Reimbursement Agreement) shall be continuing or shall
result from such Loan; and
(e) no change shall have occurred in any law or regulation or
interpretation thereof that would make it illegal for the Lenders to make
any Loans hereunder.
39
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The making or conversion of each Loan or Refunding Borrowing shall be
deemed to be a representation and warranty by the Borrower on and as of the
effective date of the making or conversion of such Loan or Refunding Borrowing
(i) as to the accuracy of the facts referred to in PARAGRAPH (b) of this SECTION
3.2, and (ii) that each of the conditions precedent described in PARAGRAPHS (b),
(c) and (d) of this SECTION 3.2 has been satisfied..
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make
Loans hereunder, the Borrower represents and warrants to the Administrative
Agent and the Lenders that:
4.1. EXISTENCE AND POWER. Each of the Borrower and its Subsidiaries is a
corporation or (as the case may be) limited liability company or partnership
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, has all requisite power and authority to carry on
its business as now being conducted and to own its properties, and is duly
qualified and in good standing as a foreign corporation or (as the case may be)
foreign limited liability company or foreign partnership in each other
jurisdiction in which the failure to be so qualified would materially and
adversely affect the conduct of its business or the enforceability of its
contractual rights.
4.2. AUTHORIZATION.
(a) The execution, delivery and performance by the Borrower of this
Agreement, the Notes, the Intercreditor Agreement and each of the other
Loan Documents to which the Borrower is or is to become a party (as all
contemplated hereby) and the transactions contemplated hereby or thereby
are within the corporate power and authority of the Borrower and have been
duly authorized by all necessary corporate action and do not and will not
contravene any provision of the charter documents or by-laws of the
Borrower, any law, rule or regulation applicable to the Borrower, or any
provision of, or constitute an event of default or event that, but for the
requirement that time elapse or notice be given, or both, would constitute
an event of default under, any other agreement, instrument, order or
undertaking binding on the Borrower, or result in or require the
imposition of any Encumbrance on any of the properties, assets or rights
of the Borrower.
(b) The execution, delivery and performance of the Subsidiary
Guaranty Agreement by each Guarantor Subsidiary will, when such
40
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Guarantor Subsidiary becomes a party thereto, (i) be within the power and
authority of such Guarantor Subsidiary as a corporation, limited liability
company or (as the case may be) partnership, (ii) have been duly
authorized by all necessary action as a corporation, limited liability
company or (as the case may be) partnership, and (iii) will not contravene
any provision of the charter documents or by-laws of such Guarantor
Subsidiary, any law, rule or regulation applicable to such Guarantor
Subsidiary, or any provision of, or constitute an event of default or
event that, but for the requirement that time elapse or notice be given,
or both, would constitute an event of default under, any other agreement,
instrument, order or undertaking binding on such Guarantor Subsidiary, or
result in or require the imposition of any Encumbrance on any of the
properties, assets or rights of such Guarantor Subsidiary.
4.3. VALID OBLIGATIONS.
(a) This Agreement, the Notes and the Intercreditor Agreement and
all of their respective terms and provisions are the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms.
(b) The Subsidiary Guaranty Agreement and all of the terms and
provisions thereof are, or (as the case may be) will, when executed and
delivered, be, the legal, valid and binding obligations of each Guarantor
Subsidiary party thereto, enforceable against each such Guarantor
Subsidiary in accordance with their respective terms.
4.4. FINANCIAL INFORMATION, ETC.
(a) All balance sheets, all statements of operations and of cash
flows, and all other financial statements which have been furnished by the
Borrower to the Administrative Agent and the Lenders for the purposes of
or in connection with this Agreement, including:
(i) the audited consolidated balance sheet at October 31,
1997, and the related audited consolidated statements of operations,
of shareholders' equity and of cash flows, for the Fiscal Year then
ended, of the Borrower and its Subsidiaries accompanied by the notes
thereto and the reports thereon of Deloitte & Touche LLP; and
(ii) the unaudited consolidated balance sheet at July 31,
1998, and the related unaudited consolidated
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statements of operations and of cash flows, for the one-month and
nine-month period then ended of the Borrower and its Subsidiaries
(the financial statements referred to in CLAUSES (i) and (ii) being
herein referred to, collectively, as the "HISTORICAL FINANCIALS");
have been prepared in accordance with GAAP consistently (except as
otherwise described therein) applied throughout the periods involved
(except that the financial statements referred to in CLAUSE (ii) do not
include footnotes) and present fairly (subject to normal year-end
adjustments in the case of the financial statements referred to in CLAUSE
(ii)) the financial condition of the corporations, limited liability
companies or (as the case may be) partnerships covered thereby as at the
dates thereof and the results of their operations for the periods then
ended.
(b) Since October 31, 1998, there has been no material adverse
change in the financial condition, results of operations or business of
the Borrower and its Subsidiaries, taken as a whole, which has not been
disclosed by the Borrower to the Agents and the Lenders in the financial
information pertaining to the Borrower furnished to the Agents and the
Lenders prior to the date hereof.
4.5. CONSENTS OR APPROVALS. The execution, delivery and performance of
this Agreement, the Notes, the Subsidiary Guaranty Agreement and the
Intercreditor Agreement and the transactions contemplated hereby or thereby do
not require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other Person.
4.6. LITIGATION. There are no actions, suits or proceedings pending
against or, to the knowledge of the Borrower's officers, threatened against or
affecting, the Borrower or any of its Subsidiaries in any court or before or by
any governmental department, agency or instrumentality, in which there is a
reasonable possibility of an adverse decision which would materially and
adversely affect the financial condition or business of the Borrower and its
Subsidiaries, taken as a whole.
4.7. DEFAULTS, ETC.
(a) No Default is continuing under this Agreement.
(b) No Default (as that term is defined in the Reimbursement
Agreement) is continuing under the Reimbursement Agreement.
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(c) No First Tier Default (as that term is defined in the
Reimbursement Agreement) is continuing under the Reimbursement Agreement.
4.8. TAXES. The Borrower and each of its Subsidiaries have filed all
federal, state and other tax returns required to be filed, and all taxes,
assessments and other governmental charges due from the Borrower or from any of
its Subsidiaries have been fully paid, except where the payment of any such
taxes is being contested in good faith by appropriate proceedings. The Borrower
and each of its Subsidiaries have established on their books reserves adequate
for the payment of all federal, state and other tax liabilities.
4.9. USE OF PROCEEDS. No portion of any Loan is to be used for the
"purpose of purchasing or carrying" any "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. 221 and 224, as amended, and, following the application of the proceeds
of each Loan, the value of all "margin stock" of the Borrower will not exceed
twenty-five (25%) of the value of the total assets of the Borrower.
4.10. SUBSIDIARIES.
(a) Each of the Subsidiaries of the Borrower is listed on SCHEDULE 4.10.
The Borrower is the owner, free and clear of all liens and other encumbrances,
of all of the issued and outstanding Equity Interests in each such Subsidiary,
except as otherwise described in SCHEDULE 4.10 and except that the Borrower has
pledged the Pledged Collateral to Harcourt General in connection with the
Reimbursement Agreement. All of the issued and outstanding Equity Interests in
each of such Subsidiaries have been validly issued and are fully paid and
nonassessable, and no rights to subscribe to any additional Equity Interests
have been granted, and no options, warrants or other similar rights are
outstanding.
(b) Each of the Guarantor Subsidiaries party or (as the case may be) to
become a party to the Subsidiary Guaranty Agreement on or as of the date of the
initial Loan hereunder is listed on SCHEDULE 4.10. The Minimum Guaranty
Conditions will be satisfied on and as of the date of the initial Loan
hereunder.
4.11. INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
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4.12. COMPLIANCE WITH ERISA. The Borrower and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable provisions of ERISA and
the Code with respect to each Plan. No member of the Controlled Group has (a)
sought a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (b) failed to make any contribution or payment, or made any
amendment to any Plan, which has resulted or could result in the imposition of a
lien or the posting of a bond or other security under ERISA or the Code, or (c)
incurred any liability under Title IV of ERISA.
4.13. ENVIRONMENTAL MATTERS.
(a) As of the date hereof, to the knowledge of the Borrower's
officers, no notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed,
no penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
violation by the Borrower or by any of its Subsidiaries of any
Environmental Law in which there is a reasonable possibility of a
determination that could have a material adverse effect on the business,
financial condition or results of operations of the Borrower or any
Significant Subsidiary.
(b) The Borrower has reasonably concluded that the costs of
compliance with Environmental Laws are unlikely to have a material adverse
effect on the business, financial condition or results of operations of
the Borrower and its Subsidiaries, taken as a whole.
4.14. YEAR 2000 PROBLEM. The Borrower has reviewed the areas within the
operations and business of the Borrower and its Subsidiaries which could be
adversely affected by, and has developed or is developing a program to address
on a timely basis, the Year 2000 Problem and has made related inquiry of
material suppliers and vendors of the Borrower and its Subsidiaries. Based on
such review and program, the Borrower represents and warrants that, to the best
of the Borrower's knowledge, the Year 2000 Problem will not have a materially
adverse effect on the business, financial condition or results of operations of
the Borrower or any Significant Subsidiary. As used herein, the term "YEAR 2000
PROBLEM" means the possibility that any computer applications or equipment used
by the Borrower or by any of its Subsidiaries may be unable to recognize and
properly perform date-sensitive functions involving certain dates prior to and
any dates on or after January 1, 2000.
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ARTICLE V
AFFIRMATIVE COVENANTS
So long as any of the Lenders have any Commitments to lend hereunder or
any of the Loans or other Obligations remain outstanding, the Borrower covenants
as follows:
5.1. FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS. The Borrower
shall furnish to the Administrative Agent and the Lenders:
(a) As soon as practicable, but in any event within 100 days after
the close of each Fiscal Year of the Borrower, (i) a consolidated balance
sheet of the Borrower and its Subsidiaries, as of the end of, and related
consolidated statements of operations, shareholders' equity and cash flows
for, such Fiscal Year, audited and certified by Deloitte & Touche LLP or
other independent certified public accountants of nationally recognized
standing reasonably satisfactory to the Administrative Agent (delivery by
the Borrower of its Annual Reports on Form 10-K, together with its annual
report to shareholders, if incorporated by reference therein, shall be
deemed compliance with this provision), and, concurrently with such
financial statements, a written statement by such accountants that, in the
making of the audit necessary for their report and opinion upon such
financial statements, they have obtained no knowledge of any Default or,
if in the opinion of such accountants any such Default exists, they shall
disclose in such written statement the nature and status thereof, (ii) a
listing of all Permitted Non-Theatre Investments made by the Borrower, by
GCCI or by any of GCCI's Subsidiaries during such Fiscal Year, and (iii)
if requested by the Administrative Agent, consolidating balance sheets of
the Borrower and of its Subsidiaries, as of the end of, and related
consolidating statements of operations, shareholders' equity and cash
flows for, such Fiscal Year, certified by the chief financial officer or
the chief accounting officer of the Borrower.
(b) As soon as practicable, but in any event within 55 days after
the close of each of its first three fiscal quarters, a consolidated
balance sheet of the Borrower and its Subsidiaries, as of the end of, and
related consolidated statements of operations, shareholders' equity and
cash flows for, the period then ended, certified by the chief financial
officer or chief accounting officer of the Borrower (delivery by the
Borrower of its Quarterly Reports on Form 10-Q shall be deemed compliance
with this provision).
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(c) Concurrently with each delivery of financial statements pursuant
to PARAGRAPH (a) or PARAGRAPH (b) of this Section 5.1, a report, in or in
substantially the form of EXHIBIT C, signed on behalf of the Borrower by
its chief financial officer or chief accounting officer (each, a
"COMPLIANCE CERTIFICATE"), and setting forth or (as the case may be)
identifying (i) in reasonable detail the calculations made by the Borrower
to determine compliance with each of SECTIONS 5.7 through 5.10, inclusive,
and with each of SECTIONS 6.7, 6.8 and 6.9, and the information necessary
for the Administrative Agent to determine compliance by the Borrower with
each of SECTIONS 5.7 through 5.10, inclusive, and with each of SECTIONS
6.7, 6.8 and 6.9, and (ii) the Cumulative Excess Theatre Cash Flow and the
Net Available Amount as of the date of such Compliance Certificate; and
also concurrently with each delivery of financial statements pursuant to
PARAGRAPH (a) of this SECTION 5.1, a supplemental report, signed on behalf
of the Borrower by its chief financial officer or chief accounting
officer, and setting forth or (as the case may be) identifying (A) each
Material Subsidiary of the Borrower, determined as of the date of such
Compliance Certificate in accordance with SECTION 5.11, (B) the statement
that, as of the date of such Compliance Certificate, the Minimum Guaranty
Conditions have been satisfied, and (C) the statement that there are,
except as disclosed in such Compliance Certificate, no other Material
Subsidiaries as of the date of such Compliance Certificate.
(d) Promptly upon completion thereof, and in any event not later
than thirty (30) days after the first day of each Fiscal Year of the
Borrower, a copy of the annual business plan and budget for such Fiscal
Year for the Borrower and its Subsidiaries, including, in each case,
budgeted results and cash flows for each fiscal quarter of such Fiscal
Year and for such Fiscal Year as a whole, together with an explanation of
any differences between the sum of the individual budgets and the
consolidated totals.
(e) Promptly after the same shall become available, copies of all
such proxy statements, financial statements and other reports as the
Borrower shall send to its stockholders or as the Borrower may file with
the Securities and Exchange Commission or any governmental authority
succeeding to any of its functions and having jurisdiction over the
Borrower or its Subsidiaries.
(f) If and when the Borrower shall give or shall be required to give
notice to the PBGC of any "Reportable Event" (as defined in Section 4043
of ERISA) with respect to any Plan that might constitute
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grounds for a termination of such Plan under Title IV of ERISA, or shall
become aware that any member of the Controlled Group or the plan
administrator of any Plan has given or is required to give notice of any
such Reportable Event, a copy of the notice of such Reportable Event given
or required to be given to the PBGC.
(g) Immediately upon becoming aware of the existence of any
condition or event that constitutes any Default hereunder or any "Default"
or "First Tier Default" under the Reimbursement Agreement, written notice
thereof specifying the nature and the duration thereof and the action
being or proposed to be taken with respect thereto, and, promptly after
the receipt thereof by the Borrower, true and complete copies of any
written notice of any such "Default" or "First Tier Default" under the
Reimbursement Agreement.
(h) Promptly upon becoming aware of any litigation or of any
investigative proceedings by any governmental agency or authority
commenced or threatened against the Borrower or against any of its
Subsidiaries of which the Borrower has notice, and in which there is a
reasonable possibility of an adverse decision which would materially and
adversely affect the financial condition, results of operations or
business of the Borrower and its Subsidiaries, taken as a whole, written
notice thereof and the action being or proposed to be taken with respect
thereto.
(i) From time to time, such other financial data and other
information about the Borrower or any of its Subsidiaries as the
Administrative Agent may reasonably request.
5.2. CONDUCT OF BUSINESS. Each of the Borrower and its Subsidiaries
shall:
(a) duly observe and comply in all material respects with all
applicable laws and requirements of any governmental authorities relative
to its corporate existence, rights and franchises, to the conduct of its
business and to its property and assets (including, without limitation,
all Environmental Laws and ERISA), and shall maintain and keep in full
force and effect all licenses and permits necessary in any material
respect to the proper conduct of its business; and
(b) subject to the provisions of SECTION 6.4, maintain its corporate
existence.
5.3. MAINTENANCE AND INSURANCE. Each of the Borrower and its Subsidiaries
shall maintain its properties in satisfactory repair, working
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order and condition as required for the normal conduct of its business. Each of
the Borrower and its Subsidiaries shall at all times maintain liability and
casualty insurance with financially sound and reputable insurers in such amounts
and to the extent customary for companies of like size in similar businesses, it
being understood that the Borrower may self-insure against exposures which, in
the judgment of its management, are reasonable in relation to its financial
position. The Borrower shall furnish to the Administrative Agent upon written
request certificates or other evidence reasonably satisfactory to the
Administrative Agent of compliance with the foregoing insurance provisions.
5.4. TAXES. The Borrower shall pay or cause to be paid all lawful taxes,
assessments and other governmental charges or levies imposed on or against it or
any of its Subsidiaries or its or their income or properties as and when or
prior to the time they shall become due; PROVIDED, HOWEVER, that this covenant
shall not apply to any tax, assessment or other charge or levy that is being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established and are being maintained in accordance
with GAAP.
5.5. INSPECTION BY LENDERS. The Borrower shall permit the Administrative
Agent, the Lenders and their respective designees, at any reasonable time, and
upon reasonable notice (given to a senior financial officer of the Borrower), to
(a) visit and inspect the properties of the Borrower and of each of its
Subsidiaries, and (b) discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with their appropriate officers, employees and accountants.
During any such inspection, the Administrative Agent and the Lenders shall be
furnished, from the books, records and files of the Borrower and its
Subsidiaries, such financial and other information as the Administrative Agent
or any of the Lenders may reasonably request and upon such reasonable conditions
relating to the confidentiality of the material and information so supplied as
the Borrower might impose. In handling such information, each of the
Administrative Agent and the Lenders shall respect the confidential nature of
the material and information so supplied and shall take reasonable measures to
preserve such confidentiality. It is understood that each of the Administrative
Agent and the Lenders may disclose such information (i) to its subsidiaries or
affiliates in connection with their present or prospective business relations
with the Borrower or any of its Subsidiaries, (ii) to any prospective
transferees or purchasers of any interest in the Loans or Commitments, (iii) as
required by law, regulation, rule or order, subpoena, judicial order or other
similar order, and (iv) as may be required in connection with the examination,
audit or similar investigation of the Administrative Agent or any of the
Lenders.
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5.6. MAINTENANCE OF BOOKS AND RECORDS. Each of the Borrower and its
Subsidiaries shall keep adequate books and records of account, in which true and
complete entries shall be made reflecting all of its business and financial
transactions, and such entries shall be made in accordance with GAAP.
5.7. CONSOLIDATED NET WORTH. The Consolidated Net Worth of the Borrower
and its Subsidiaries shall, as at the last day of each Reference Period, be
equal to or exceed the Net Worth Compliance Level. As used in this SECTION 5.7,
the term "NET WORTH COMPLIANCE LEVEL" shall mean the SUM of (a) $135,000,000,
PLUS (b) fifty percent (50%) of the Consolidated Net Income of the Borrower and
its Subsidiaries for each Fiscal Year of the Borrower ending on or after October
31, 1998 for which the Consolidated Net Income is positive. The Net Worth
Compliance Level shall be increased, as contemplated by the foregoing provisions
of this SECTION 5.7, as at the date on which the financial statements of the
Borrower and its Subsidiaries for each Fiscal Year are delivered to the
Administrative Agent pursuant to SECTION 5.1(a), PROVIDED that the Consolidated
Net Income for such Fiscal Year is positive. If the Consolidated Net Income for
any Fiscal Year is negative, the Net Worth Compliance Level shall not be
decreased or otherwise adjusted pursuant to the foregoing provisions of this
SECTION 5.7 as at the end of such Fiscal Year.
5.8. CONSOLIDATED ADJUSTED EBITDA TO CONSOLIDATED INTEREST Charges. The
Consolidated Adjusted EBITDA for each Reference Period ending on or after
October 31, 1998 shall equal or exceed 250% of the Consolidated Interest Charges
for each such Reference Period.
5.9. CONSOLIDATED ADJUSTED CASH FLOW TO CONSOLIDATED FIXED Charges. The
Consolidated Adjusted Cash Flow for each Reference Period ending on or after
October 31, 1998 shall equal or exceed 105% of Consolidated Fixed Charges for
each such Reference Period.
5.10. ADJUSTED TOTAL DEBT TO CONSOLIDATED ADJUSTED EBITDA. The Adjusted
Total Debt as of the last day of each Reference Period ending on or after
January 31, 1999 shall be less than or equal to 400% of the Consolidated
Adjusted EBITDA for the Reference Period then ended.
5.11. SUBSIDIARY GUARANTIES.
(a) The Borrower shall cause each of the following conditions ("MINIMUM
GUARANTY CONDITIONS") to be satisfied on and as of each date of determination
with respect thereto (each, a "TEST DATE"), as provided by PARAGRAPH (b) of this
SECTION 5.11:
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(i) each Theatre Subsidiary of the Borrower that has contributed
more than two percent (2%) of the Consolidated Adjusted EBITDA of the
Borrower and its Subsidiaries for the Reference Period applicable to such
Test Date (each, a "MATERIAL SUBSIDIARY") shall, on and as of such Test
Date, be a party to and bound by the Subsidiary Guaranty Agreement; and
(ii) there shall also be party to and bound by the Subsidiary
Guaranty Agreement on and as of such Test Date, in addition to each of the
Material Subsidiaries, such other Subsidiaries of the Borrower that are
not Material Subsidiaries as of such Test Date as shall have been
identified and selected by the Borrower (each, a "NON-MATERIAL
SUBSIDIARY") so that the Guarantor Subsidiaries party to and bound by the
Subsidiary Guaranty Agreement on and as of such Test Date shall together
have contributed more than eighty-five percent (85%) of the Consolidated
Adjusted EBITDA of the Borrower and its Subsidiaries for the Reference
Period applicable to such Test Date, all as determined for such Guarantor
Subsidiaries and for such applicable Reference Period on a consolidated
basis and in accordance with GAAP;
(b) Compliance by the Borrower with the Minimum Guaranty Conditions
shall be determined on or as of each Test Date set forth in the table below and
by reference (in each case) to the Consolidated Adjusted EBITDA of each of the
Borrower and its Subsidiaries, the Material Subsidiaries and Non-Material
Subsidiaries for the Reference Period set forth below opposite such Test Date:
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APPLICABLE REFERENCE
TEST DATE PERIOD
--------- --------------------
The date of this Agreement The Reference Period ending
October 31, 1998
The date of the Compliance Certificate The Reference Period ending on the
delivered to the Administrative Agent last day of such Fiscal Year for any
Fiscal Year ending after October 31,
1998
The date on which any Non-Material The most recently completed
Subsidiary is to be released from the Reference Period for which
Subsidiary Guaranty Agreement financial statements have been
delivered to the Administrative
Agent pursuant to SECTION 5.1(a) or
5.1(b)
(c) The Borrower may at any time and from time to time request the
Administrative Agent to release any Non-Material Subsidiary from the Subsidiary
Guaranty Agreement and all of such Subsidiary's obligations thereunder by giving
to the Administrative Agent a written notice identifying the Non-Material
Subsidiary and the date by which the release is to be completed and stating that
the Minimum Guaranty Conditions will continue to be satisfied after giving
effect to such release. The Administrative Agent will, on the date requested by
the Borrower, release the Non-Material Subsidiary from the Subsidiary Guaranty
Agreement in accordance with the Borrower's request, PROVIDED that, on the date
of such release and after giving effect thereto, (i) each of the Minimum
Guaranty Conditions shall continue to be satisfied, and (ii) no Defaults shall
be continuing. In connection with each such release, the Administrative Agent
will execute and deliver to the Borrower such further instruments and take such
further action as may reasonably be requested by the Borrower to complete such
release.
5.12. YEAR 2000 COMPLIANCE. The Borrower shall, and shall cause each of
its Subsidiaries to, perform all acts necessary to ensure that the Borrower and
its Subsidiaries shall become Year 2000 Compliant in a timely manner. Such acts
will include, as and to the extent determined by the Borrower on a reasonable
basis to be reasonably necessary and appropriate considering the nature of the
business and operations conducted by the Borrower and its Subsidiaries,
performing a comprehensive review and
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assessment of all material systems of the Borrower and its Subsidiaries and, if
and as reasonably necessary or appropriate, adopting a plan, with itemized
budget, if appropriate, for the remediation, monitoring and testing of such
systems. As used in this SECTION 5.12, the term "YEAR 2000 COMPLIANT" means,
with respect to any Person, that all software, hardware, equipment, or systems
utilized by and material to the business, operations or financial condition of
such Person will properly perform date sensitive functions before, during and
after the year 2000. The Borrower shall, promptly upon the reasonable request of
the Administrative Agent or the Required Lenders from time to time, provide to
the Administrative Agent and the Lenders such evidence of compliance by the
Borrower and its Subsidiaries with the terms of this SECTION 5.12 as the
Administrative Agent or the Required Lenders may reasonably require.
5.13. FURTHER ASSURANCES. At any time and from time to time, the Borrower
shall, and shall cause each of its Subsidiaries to, execute and deliver such
further instruments and take such further action as may reasonably be requested
by the Administrative Agent or the Required Lenders to effect the purposes of
this Agreement, the Notes and the other Loan Documents.
ARTICLE VI
NEGATIVE COVENANTS
So long as any of the Lenders have any Commitments to lend hereunder or
any of the Loans or other Obligations remain outstanding, the Borrower covenants
as follows:
6.1. BORROWED FUNDS INDEBTEDNESS. Neither the Borrower nor any of its
Subsidiaries shall create, incur, assume, guarantee or be or remain liable with
respect to any Borrowed Funds Indebtedness, EXCEPT the following:
(a) Borrowed Funds Indebtedness of the Borrower or of any of its
Subsidiaries to any of the Creditor Parties or any of their affiliates
under this Agreement or any of the other Loan Documents.
(b) Borrowed Funds Indebtedness of the Borrower or of any of its
Subsidiaries existing on or as of the date of this Agreement and disclosed
on SCHEDULE 6.1.
(c) Borrowed Funds Indebtedness of the Borrower or of any of its
Subsidiaries to Harcourt General under the Harcourt General Documents.
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(d) Borrowed Funds Indebtedness of the Borrower or of any of its
Subsidiaries secured by Permitted Encumbrances to the extent permitted
under SECTION 6.3.
(e) Unsecured Borrowed Funds Indebtedness of the Borrower or of any
of its Subsidiaries to one or more financial institutions not in excess of
$24,000,000 in the aggregate at any one time outstanding.
(f) Subordinated Debt.
(g) Foreign Non-Recourse Debt.
(h) Borrowed Funds Indebtedness of the Borrower under Guaranties by
the Borrower to the extent permitted by PARAGRAPH (h) or (k) of SECTION
6.2.
(i) Unsecured Borrowed Funds Indebtedness of any corporation or
other Person existing at the time such corporation or other Person becomes
a Subsidiary of the Borrower and not created in contemplation of such
corporation or other Person becoming a Subsidiary of the Borrower;
PROVIDED, HOWEVER, that, on each occasion on which any corporation or
other Person shall become a Subsidiary of the Borrower and after giving
effect thereto, no Default shall be continuing or shall result therefrom.
6.2. CONTINGENT LIABILITIES. Neither the Borrower nor any of its
Subsidiaries shall create, incur, assume, guarantee or be or remain liable with
respect to any Guaranties, EXCEPT the following:
(a) Guaranties in favor of any of the Creditor Parties or any of
their affiliates under this Agreement or any of the other Loan Documents.
(b) Guaranties existing on or as of the date of this Agreement and
disclosed on SCHEDULE 6.2.
(c) Guaranties resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business.
(d) Guaranties with respect to surety, appeal, performance and
return-of-money and other similar obligations incurred in the ordinary
course of business (exclusive of obligations for the payment of Borrowed
Funds Indebtedness) not exceeding in the aggregate at any time $500,000.
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(e) Guaranties of normal trade debt relating to the acquisition of
goods and supplies in the ordinary course of business.
(f) Guaranties executed by the Borrower with respect to obligations
(exclusive of obligations for the payment of Borrowed Funds Indebtedness)
of any of the Borrower's Subsidiaries; PROVIDED, HOWEVEr, that the
creation, incurrence or assumption of any of such obligations by any of
the Borrower's Subsidiaries shall not be prohibited by SECTION 6.1 or by
any of the other provisions of this Agreement.
(g) Guaranties executed by the Borrower in connection with Permitted
Non-Theatre Investments; PROVIDED, HOWEVER, that (i) for purposes of
SECTION 6.8(c), the aggregate amount of all of the obligations so
guaranteed shall be included (without duplication) in determining the
aggregate amount of Permitted Non-Theatre Investments that may be made by
the Borrower, by GCCI and by the Subsidiaries of GCCI in compliance with
such SECTION 6.8(c), and (ii) at the time of making any such Guaranty and
after giving effect thereto, no Default shall be continuing and no Default
shall result therefrom.
(h) Unsecured Guaranties by the Borrower of the secured or unsecured
Borrowed Funds Indebtedness of Hoyts General Cinema South America, Inc. or
of any of its direct or indirect Subsidiaries; provided, HOWEVER, that the
aggregate amount of all of the Borrowed Funds Indebtedness for which the
Borrower shall be liable under all of such Guaranties shall not at any
time exceed $75,000,000.
(i) Unsecured Guaranties by the Borrower of the secured or unsecured
Borrowed Funds Indebtedness of the Borrower's Foreign Subsidiaries;
PROVIDED, HOWEVER, that (A) any such Borrowed Funds Indebtedness shall, if
and so long as it continues to be guarantied by the Borrower, not
constitute Foreign Non-Recourse Debt for any purpose in this Agreement;
and (B) at the time of the making of any such Guaranty by the Borrower and
after giving effect thereto, no Default shall be continuing and no Default
shall result therefrom.
(j) Continuing obligations of the Borrower and its Subsidiaries with
respect to real property leases assigned to third parties or with respect
to real property leases of Sundance or Cinema Ventures.
(k) Unsecured Guaranties by the Borrower or by any of its
Subsidiaries of the secured or unsecured Borrowed Funds Indebtedness of
Sundance or of any of its direct or indirect
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Subsidiaries, but only to the extent, in any case, that such Guaranties
are permitted by PARAGRAPH (f) of SECTION 6.8.
6.3. ENCUMBRANCES. Neither the Borrower nor any of its Subsidiaries shall
create, incur, assume or suffer to exist any mortgage, pledge, security
interest, lien or other charge or encumbrance ("ENCUMBRANCES"), including,
without limitation, the lien or retained security title of a conditional vendor,
upon or with respect to any of its property or assets, including, without
limitation, any of the Pledged Collateral, or assign or otherwise convey any
right to receive income, including the sale or discount of accounts receivable,
whether with or without recourse, EXCEPT the following ("PERMITTED
ENCUMBRANCES"):
(a) Encumbrances in favor of any of the Creditor Parties or any of
their affiliates under this Agreement or any of the other Loan Documents.
(b) Encumbrances in favor of Harcourt General upon the terms
contained in the Reimbursement Agreement.
(c) Encumbrances existing on or as of the date of this Agreement and
disclosed on SCHEDULE 6.3.
(d) Liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is not
required in accordance with the provisions of SECTION 5.4.
(e) Landlords' and lessors' liens in respect of rent or liens in
respect of pledges or deposits under workmen's compensation, unemployment
insurance, social security laws or other similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to
litigation; mechanics', laborers' and materialmen's and other similar
liens, if the obligations secured by such liens are not then delinquent;
liens securing the performance of bids, tenders or contracts (other than
for the payment of money); and statutory obligations incidental to the
conduct of the business of the Borrower or of any of its Subsidiaries and
that do not in the aggregate materially detract from the value of its
property or materially impair the use thereof in the operation of its
business.
(f) Judgment liens that shall not have been in existence for a
period longer than thirty (30) days after the creation thereof, or, if a
stay of execution shall have been obtained, for a period longer than
thirty (30) days after the expiration of such stay.
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(g) Rights of lessors under Capitalized Leases.
(h) Encumbrances in respect of any purchase money obligation of the
Borrower or of any of its Subsidiaries for tangible property (realty or
personalty) used in the business of the Borrower or of any of its
Subsidiaries; PROVIDED, HOWEVER, that the aggregate principal amount of
all obligations secured by such Encumbrances shall not exceed $10,000,000
in the aggregate at any one time outstanding; and PROVIDED, FURTHER, that
any such Encumbrances shall not extend to property of the Borrower or of
any of its Subsidiaries not financed by such purchase money obligation.
(i) Easements, rights of way, restrictions and other similar charges
or Encumbrances relating to real property and not interfering in any
material way with the ordinary conduct of the business of the Borrower or
of any of its Subsidiaries.
(j) Encumbrances on the property or assets of the Borrower or of any
of its Subsidiaries created in connection with the refinancing of
indebtedness secured by Permitted Encumbrances on such property; PROVIDED,
HOWEVER, that the amount of indebtedness secured by any such Encumbrance
shall not be increased as a result of such refinancing, and no such
Encumbrance shall extend to property and assets of the Borrower or of any
of its Subsidiaries not encumbered prior to any such refinancing.
(k) Encumbrances incidental to the conduct of the business of the
Borrower or of any of its Subsidiaries or the ownership of its properties
or assets which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit and which do not materially
detract from the value of its properties or assets or materially impair
the use thereof in the operation of its business.
(l) Encumbrances on any of the property or assets of, or on any of
the Equity Interests in, Hoyts General Cinema South America, Inc. or any
of its direct or indirect Subsidiaries.
(m) Encumbrances on the property or assets of any Foreign Subsidiary
to secure the payment or performance of any Foreign Non-Recourse Debt of
such Foreign Subsidiary or of any other Foreign Subsidiary.
(n) Any Encumbrance existing on any assets of any corporation or
other Person at the time it becomes a Subsidiary and not created in
contemplation of such corporation or other Person
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becoming a Subsidiary, or existing on any assets acquired by the Borrower
or by any of its Subsidiaries through a purchase, merger, consolidation or
other transaction and not created in contemplation of such purchase,
merger, consolidation or other transaction.
6.4. MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS. Neither the Borrower
nor any of its Theatre Subsidiaries shall become a party to any merger or
consolidation or sell, lease, sell and leaseback, sublease or otherwise dispose
of any of its properties or assets (including, without limitation, any Equity
Interests in any Theatre Subsidiaries), or contract, or make other arrangements,
with any Person (other than a Theatre Subsidiary of the Borrower ) to manage the
theater business of, or provide management or concession services to, any
Theatre Subsidiary of the Borrower, EXCEPT that:
(a) the Borrower or any of its Theatre Subsidiaries may sell or
otherwise dispose of (i) inventory in the ordinary course of business,
(ii) tangible assets to be replaced in the ordinary course of business by
other tangible assets of equal or greater value, and (iii) tangible assets
that are no longer used or useful in its business;
(b) any Theatre Subsidiary of the Borrower may merge or liquidate
into the Borrower or into any other Theatre Subsidiary of the Borrower so
long as, after giving effect hereto, the surviving corporation is (i) the
Borrower, in the case of any merger involving the Borrower, or (ii) any
wholly-owned Theatre Subsidiary of the Borrower, in the case of any merger
involving Theatre Subsidiaries of the Borrower only;
(c) the Borrower or any of its Theatre Subsidiaries may sell or
transfer any of the Equity Interests owned by such Person in any Theatre
Subsidiary of the Borrower to the Borrower and to any wholly-owned Theatre
Subsidiaries of the Borrower;
(d) the Borrower or any of its Theatre Subsidiaries may sell or
otherwise dispose of any Investments, other than Investments in any of the
Theatre Subsidiaries of the Borrower;
(e) the Borrower and its Theatre Subsidiaries may transfer the
assets of or Equity Interests in any Problem Theatre (as hereinafter
defined in this PARAGRAPH (e)) so long as (i) such transfer effects a
release of Harcourt General from all obligations under each Guaranteed
Lease and Transferred Lease (as such terms are defined in the
Reimbursement Agreement) relating to such Problem Theatre, or (ii) such
assets or Equity Interests are transferred to a transferee
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having a consolidated net worth of at least $10,000,000 and the aggregate
amount of buyout payments made by the Borrower and its Subsidiaries to
such transferee in connection with such transfer does not exceed the
product of (A) four multiplied by (B) the negative cash flow generated by
such Problem Theatre during the then most recently ended Reference Period;
PROVIDED, HOWEVER, that the aggregate amount of all buyout payments made
by the Borrower and its Subsidiaries from time to time after the date
hereof in connection with all transfers of assets or Equity Interests
pursuant to this PARAGRAPH (e) shall not exceed $15,000,000. As used in
this SECTION 6.4, the term "B THEATRES" shall mean the theatres identified
as such in SCHEDULE 6.4, and the term "PROBLEM THEATRES" shall mean the
theatres identified as such in SCHEDULE 6.4;
(f) the Borrower and its Theatre Subsidiaries may sell the assets of
or Equity Interests in any B Theatre so long as (i) such sale effects a
release of Harcourt General from all obligations under each Guaranteed
Lease and Transferred Lease relating to such B Theatre, or (ii) such
assets or Equity Interests are sold to a buyer having a consolidated net
worth of at least $10,000,000 and the cash consideration received by the
Borrower and its Theatre Subsidiaries in connection with such sale equals
or exceeds the product of (A) four multiplied by (B) the cash flow
generated by such B Theatre during the then most recently ended Reference
Period;
(g) the Borrower and its Theatre Subsidiaries may transfer the
assets of or Equity Interests in any Problem Theatre or B Theatre to any
transferee in exchange for theatre assets of such transferee having
substantially the same cash flow during the then most recently ended
Reference Period as the Problem Theatre or B Theatre being transferred by
the Borrower and its Theatre Subsidiaries pursuant to this PARAGRAPH (g);
(h) the Borrower and its Theatre Subsidiaries may at any time or
from time to time sell, transfer or otherwise dispose of any of the assets
or other properties of or Equity Interests in any theatre identified in
SCHEDULE 6.4 under the caption "Permitted Dispositions"; and
(i) in addition to assets or Equity Interests which may be sold and
exchanged. pursuant to PARAGRAPHS (a) through (h) above, the Borrower may
sell any (but not substantially all) of its assets or all of the Equity
Interests in any Theatre Subsidiary, and any Theatre Subsidiary may sell
all or substantially all of its assets, in each case, at
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not less than Fair Market Value; PROVIDED, HOWEVER, that: (A) immediately
after giving effect to each sale proposed to be made pursuant to this
PARAGRAPH (i), the aggregate amount of all of the Consolidated Adjusted
EBITDA attributable to all of the Theatre Subsidiaries and assets or
Equity Interests sold and proposed to be sold pursuant to this PARAGRAPH
(i) from time to time after the date hereof shall not exceed an aggregate
amount equal to ten percent (10%) of Consolidated Adjusted EBITDA for the
then most recently completed Reference Period for which financial
statements shall have been delivered pursuant to SECTION 5.1(a) or (b);
and (B) at the time of each such sale and after giving effect thereto, no
Default shall be continuing and no Default shall result therefrom.
This SECTION 6.4 shall not prevent (1) the Borrower from merging with any
corporation or other Person if the Borrower is the surviving corporation, or (2)
any Theatre Subsidiary of the Borrower from merging with any corporation or
other Person (other than the Borrower) if such Theatre Subsidiary is the
surviving corporation; PROVIDED, HOWEVER, that, in each case, at the time of
such merger and after giving effect thereto, no Default shall be continuing and
no Default shall result therefrom.
6.5. ADDITIONAL STOCK ISSUANCE. The Borrower shall not permit any of its
Theatre Subsidiaries to issue any additional Equity Interests, any options
therefor or any securities convertible therein, other than (a) to the Borrower
or to any of its wholly-owned Theatre Subsidiaries, or (b) as required by
applicable law or licensing authorities.
6.6. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Except for this
Agreement, the other Loan Documents and the Reimbursement Agreement, none of (a)
the Borrower, (b) the Theatre Subsidiaries, or (c) GCCI or its Subsidiaries,
shall enter into or become or be bound by any agreement, instrument or indenture
(including, in each case, covenants requiring the maintenance of specified
amounts of working capital) restricting the right of any of Theatre
Subsidiaries, or (as the case may be) the right of GCCI or any of its
Subsidiaries, to declare or pay dividends or make any other distributions or
extensions of credit to the Borrower or to any Subsidiaries of the Borrower
(whether directly or indirectly through any other Subsidiaries of the Borrower).
6.7. DISTRIBUTIONS. Neither the Borrower nor any of its Subsidiaries
(whether on behalf of or for the account of the Borrower) shall make any
Distributions; PROVIDED, HOWEVER, that so long as no Default shall be continuing
at the time of any Distributions and so long as no Default shall result
therefrom, the Borrower may make any Distributions from time to
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time after (and not before) the delivery to the Administrative Agent of the
financial statements and the Compliance Certificate required to be delivered
pursuant to SECTION 5.1(a) and SECTION 5.1(c) for the Fiscal Year ending October
31, 1999, if the aggregate amount of any Distributions proposed to be made by
the Borrower on or as of any particular date falling after the delivery of such
financial statements, when added to all Distributions made by the Borrower
pursuant to this SECTION 6.7 from time to time prior to such particular date,
shall not exceed the SUM of (a) $40,000,000 (the "SECTION 6.7 BASE AMOUNT"),
PLUS (b) the Net Available Amount as at such particular date.
6.8. INVESTMENTS. Neither the Borrower nor any of its Subsidiaries shall
make or maintain any Investments other than:
(a) Investments in Theatre Subsidiaries;
(b) Qualified Investments;
(c) Permitted Non-Theatre Investments by the Borrower, by GCCI or by
any Subsidiaries of GCCI; PROVIDED, HOWEVER, that (i) at the time of each
such Permitted Non-Theatre Investment and after giving effect thereto, no
Default shall be continuing and no Default shall result therefrom, and
(ii) the aggregate amount of any such Permitted Non-Theatre Investment to
be made on or as of any particular date, when added to all of such
Permitted Non-Theatre Investments existing on or as of the date of this
Agreement or made pursuant to this PARAGRAPH (c) from time to time after
the date hereof, shall not exceed the SUM of (A) $125,000,000 (the
"SECTION 6.8(c) BASE AMOUNT"), PLUS (B) the Net Available Amount as at
such date, PLUS (C) the Cumulative Net Investment Cash Flow as at such
date;
(d) Investments by the Borrower and its Subsidiaries in Foreign
Subsidiaries and in Foreign Theatre Investments; PROVIDED, HOWEVER, that
(i) at the time of each such Investment in Foreign Subsidiaries or (as the
case may be) each such Foreign Theatre Investment and after giving effect
thereto, no Default shall be continuing and no Default shall result
therefrom, and (ii) the aggregate amount of any such Investment in any
Foreign Subsidiaries, or (as the case may be) the aggregate amount of any
such Foreign Theatre Investment, to be made on or as of any particular
date, when added to all of such Investments made pursuant to this
PARAGRAPH (d) from time to time after the date hereof, shall not exceed
the SUM of (A) $50,000,000 (the "SECTION 6.8(d) BASE AMOUNT"), PLUS (B)
the Net Available Amount as at such date;
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(e) Investments by the Borrower or by any of its Subsidiaries
existing on or as of the date of this Agreement and disclosed on SCHEDULE
6.8; and
(f) Investments by the Borrower and its Subsidiaries from time to
time after the date hereof in Cinema Ventures, Sundance or any of their
direct or indirect Subsidiaries; PROVIDED, HOWEVER, that (i) at the time
of each such Investment in Cinema Ventures, Sundance or any of their
direct or indirect Subsidiaries and after giving effect thereto, no
Default shall be continuing and no Default shall result therefrom, and
(ii) the aggregate amount of any such Investment in Cinema Ventures,
Sundance or any of their direct or indirect Subsidiaries to be made on or
as of any particular date, when added to all of such Investments made
pursuant to this PARAGRAPH (f) from time to time after the date hereof,
shall not exceed $25,000,000.
For the purposes of determining the amount or value of any particular
Investment, including, without limitation, any particular Permitted Non-Theatre
Investment or any Investment in any Foreign Subsidiary: (A) there shall not be
deducted in respect of such Investment any amounts received in cash as earnings
on such Investment, whether as dividends, interest or otherwise; and (B)
increases or decreases in value, or write-ups, write-downs or write-offs, of
such Investment shall be disregarded.
6.9. MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES. Neither the Borrower nor
any of its Subsidiaries shall cause or permit the Consolidated Capital
Expenditures of the Borrower and its Subsidiaries (a) for the Fiscal Year ending
October 31, 1999 to be greater than $25,000,000, and (b) for any Fiscal Year
ending after October 31, 1999 to be greater than $15,000,000; PROVIDED, HOWEVER,
that (a) up to 50% of the maximum Consolidated Capital Expenditures so permitted
for any Fiscal Year, if not so expended in the Fiscal Year for which they are so
permitted, may be carried over for expenditure in the next succeeding Fiscal
Year, and (b) Capital Expenditures made during any Fiscal Year shall be deemed
made, FIRST, in respect of the maximum amount permitted for such Fiscal Year as
provided above, and, SECOND, in respect of amounts carried over from the prior
Fiscal Year pursuant to CLAUSE (a) above.
6.10. ERISA. Neither the Borrower nor any member of the Controlled Group
shall permit any Plan maintained by it to (a) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code), (b) incur any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) unless
waived, or (c) terminate any Plan in a manner that could result in the
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imposition of any lien or encumbrance on the assets of the Borrower or of any of
its Subsidiaries pursuant to Section 4068 of ERISA.
6.11. TRANSACTIONS WITH AFFILIATES. Except as otherwise expressly set
forth in SECTION 6.13 hereof, the Borrower shall not directly or indirectly
enter into or permit to exist any transaction with any Subsidiary or other
Affiliate of the Borrower, EXCEPT (a) transactions that are in the ordinary
course of the Borrower's business, upon fair and reasonable terms, and no less
favorable to the Borrower than would be obtained in an arms-length transaction
with a non-affiliate, and (b) transactions contemplated by the terms of, and the
performance of the Borrower's obligations under, the Reimbursement Agreement and
the Tax Agreement, dated as of December 14, 1993, between the Borrower and
Harcourt General (collectively, the "HARCOURT GENERAL DOCUMENTS"). The Borrower
further agrees that it shall not make any payments to or for the account of
Harcourt General in violation of the terms of the Intercreditor Agreement.
6.12. AMENDMENT OF CERTAIN DOCUMENTS. The Borrower shall not alter, amend
or otherwise change or supplement in any respect, or waive any of its rights
with respect to, any of the Harcourt General Documents, in each case, if the
effect thereof would be to (a) increase materially the obligations of the
Borrower or any of its Subsidiaries thereunder, (b) impose on the Borrower or
any of its Subsidiaries covenants or events of default that are materially more
burdensome or restrictive on the Borrower or any of its Subsidiaries, or (c)
adversely affect the interests of any of the Creditor Parties. The Borrower
shall promptly notify the Administrative Agent in writing of all amendments,
modifications or waivers of any of the provisions of any of such Harcourt
General Documents.
6.13. LOANS TO EMPLOYEES. The Borrower shall not permit the aggregate
principal balance of all loans, advances and drawing accounts outstanding from
the Borrower or from any of its Subsidiaries to all employees of the Borrower or
of any of its Subsidiaries to exceed $5,000,000 at any time.
ARTICLE VII
DEFAULTS
7.1. EVENTS OF DEFAULT. There shall be an Event of Default hereunder if
any of the following events shall at any time occur:
(a) the Borrower shall fail to pay (i) any amount of principal of
any of the Loans when due, or (ii) any amount of interest thereon or on
any of the other Obligations or any fees, expenses or other sums
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payable hereunder or under the Notes or any of the other Loan Documents,
in each case within three (3) days after the due date thereof; or
(b) the Borrower shall fail to perform any term, covenant or
agreement contained in any of SECTIONS 5.7 through 5.11, inclusive, or in
any of SECTIONS 6.1 through 6.13; inclusive, or
(c) the Borrower shall fail to perform any covenant contained (i) in
any of SECTION 5.1 or SECTION 5.5, and any such failure shall continue for
five (5) days or more, or (ii) in any of SECTION 5.2, 5.3, 5.4, 5.6, 5.12
or 5.13, and any such failure shall continue for thirty (30) days or more;
or
(d) the Borrower shall fail to perform any term, covenant or
agreement (other than any term, covenant or agreement referred to in
PARAGRAPH (a), (b) or (c) of this SECTION 7.1) contained in this Agreement
or in any of the other Loan Documents, and any such default shall continue
for thirty (30) days or more after notice thereof has been given to the
Borrower by the Administrative Agent; or
(e) any representation or warranty of the Borrower made in this
Agreement or in any of the other Loan Documents shall prove to have been
false in any material respect upon the date when made or deemed to have
been made, and, if the same shall be susceptible of cure, such
incorrectness shall not have been cured to the reasonable satisfaction of
the Required Lenders within thirty (30) days after notice thereof has been
given to the Borrower by the Administrative Agent; or
(f) there shall occur: (i) any default by the Reimbursement
Creditors (as such term is defined in the Intercreditor Agreement) under
the Intercreditor Agreement; or (ii) any default by the Borrower in the
payment to Harcourt General of amounts exceeding $1,000,000 in the
aggregate when and as the same shall become due and payable by the
Borrower under the Reimbursement Agreement; or (iii) any "Event of
Default" (as such term is defined in the Reimbursement Agreement) shall
occur under the Reimbursement Agreement; or (iv) (A) Harcourt General
shall give a written notice to the Borrower pursuant to Section 7.2 of the
Reimbursement Agreement requiring the Borrower to make any deposits with
Harcourt General pursuant to such Section 7.2, or (B) Harcourt General
shall take, commence or otherwise institute any Enforcement Action
pursuant to Section 7.3, Section 8.4 or any other provisions of the
Reimbursement Agreement, or (C) Harcourt General shall take, commence or
otherwise institute
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any other Enforcement Action against the Borrower or any of its
Subsidiaries or against any of their property; or
(g) (i) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any Borrowed Funds
Indebtedness of the Borrower or of any of its Subsidiaries in an aggregate
amount exceeding $1,000,000; or (ii) the Borrower or any of its
Subsidiaries shall fail to observe or perform any other term, covenant or
agreement evidencing or securing any such Borrowed Funds Indebtedness, and
(A) the holder or holders of such Borrowed Funds Indebtedness shall have
caused such Borrowed Funds Indebtedness in an aggregate amount exceeding
$1,000,000 to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment, or (B) such failure shall permit the
holder or holders of such Borrowed Funds Indebtedness in an aggregate
amount exceeding $5,000,000 to cause such Borrowed Funds Indebtedness to
become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, and such failure of the kind described in this
CLAUSE (B) shall not have been cured or waived in writing within
forty-five (45) days after the date of such failure; or
(h) the Borrower, or any Significant Subsidiary, shall (i) apply for
or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee, liquidator or similar official of itself or
of all or a substantial part of its property, (ii) be generally not paying
its debts as such debts become due, (iii) make a general assignment for
the benefit of its creditors, (iv) commence a voluntary case under the
Federal Bankruptcy Code (as now or hereafter in effect), (v) take any
action or commence any case or proceeding under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, or any other law providing for the relief of debtors,
(vi) fail to contest in a timely or appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Federal Bankruptcy Code or other law, (vii) take any action under the laws
of its jurisdiction of organization similar to any of the foregoing, or
(viii) take any action, whether as a corporation, limited liability
company or (as the case may be) a partnership, for the purpose of
effecting any of the foregoing; or
(i) any proceeding or case shall be commenced against the Borrower,
or any Significant Subsidiary, without the application or consent of the
Borrower or such Significant Subsidiary, before any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution,
winding up, or composition or
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readjustment of the debts of the Borrower or such Significant Subsidiary,
(ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of it or of all or any substantial part of the assets of the Borrower
or such Significant Subsidiary, or (iii) similar relief in respect of the
Borrower or such Significant Subsidiary, under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts or any other law providing for the relief of debtors,
and such proceeding or case shall continue undismissed, or unstayed and in
effect, for a period of sixty (60) days or more; or an order for relief
shall be entered in an involuntary case under the Federal Bankruptcy Code,
against the Borrower or any Significant Subsidiary; or any action under
the laws of the jurisdiction of organization of the Borrower or any
Significant Subsidiary similar to any of the foregoing shall be taken with
respect to the Borrower or such Significant Subsidiary and shall continue
unstayed and in effect for any period of sixty (60) days or more; or
(j) any judgments or orders for the payment of money shall be
entered against the Borrower or any of its Subsidiaries by any court, or
warrants of attachment or execution or similar process shall be issued or
levied against any property of the Borrower or such Subsidiary, that in
the aggregate exceeds $1,000,000 in value, and such judgments, orders,
warrants or process shall continue undischarged or unstayed for thirty
(30) days or more; or
(k) the Borrower or any member of the Controlled Group shall fail to
pay when due an amount or amounts (other than amounts being contested in
good faith by appropriate proceedings) aggregating in excess of $1,000,000
that it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or Plans in a
distress termination under Section 4041(c) of ERISA shall be filed under
Title IV of ERISA by the Borrower, any member of the Controlled Group, any
plan administrator or any combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause a
trustee to be appointed to administer any such Plan or Plans or a
proceeding shall be instituted by a fiduciary of any such Plan or Plans
against the Borrower and such proceedings shall not have been dismissed
within sixty (60) days thereafter; or any condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that
any such Plan or Plans must be terminated; or
(l) any Change of Control shall occur.
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7.2. REMEDIES. Upon the occurrence of any Event of Default, at any time
thereafter while such Event of Default shall be continuing, (a) at the election
of the Required Lenders, the Lenders' obligations to make any further Loans
hereunder shall terminate, and (b) the Administrative Agent may, and upon the
request of the Required Lenders, shall proceed to protect and enforce the rights
and remedies of the Agents and the Lenders by suit in equity, action at law
and/or other appropriate proceeding, either for specific performance of any
covenant or condition contained in this Agreement or in any of the other Loan
Documents or in any instruments delivered to the Administrative Agent or the
Lenders pursuant hereto or thereto, or in aid of the exercise of any powers
granted in this Agreement, any of the other Loan Documents or any such
instruments, and (unless there shall have occurred any Event of Default
described in PARAGRAPH (h) or PARAGRAPH (i) of SECTION 7.1, in which case the
Lenders' obligations to make any further Loans hereunder shall automatically
terminate and the unpaid balance of all Obligations shall automatically become
due and payable without notice or demand) by notice in writing to the Borrower,
shall declare all or any part of the unpaid balance of the Obligations then
outstanding to be forthwith due and payable, whereupon such unpaid balance or
part thereof shall become so due and payable without presentation, protest or
further demand or notice of any kind, all of which are hereby expressly and
irrevocably waived by the Borrower, and the Administrative Agent may proceed to
enforce payment of such balance or part thereof in such manner as it may elect,
and the Administrative Agent and each Lender may offset and apply toward the
payment of such balance or part thereof any indebtedness of it to the Borrower,
or to any obligor on the Obligations, including any indebtedness represented by
deposits in any general or special account maintained with the Administrative
Agent or any Lender.
7.3. DISTRIBUTION OF PROCEEDS. Notwithstanding anything to the contrary
contained herein, in the event that following the occurrence or during the
continuance of any Event of Default, the Administrative Agent or any Lender
receives any monies on account of the Obligations from the Borrower or
otherwise, such monies shall be distributed for application as follows:
(a) FIRST, to the payment of or the reimbursement of each of the
Administrative Agent and the Lenders for or in respect of all costs,
expenses, disbursements and losses (i) which shall have been incurred or
sustained by any of the Administrative Agent or the Lenders in connection
with the collection of such monies by any of the Administrative Agent or
the Lenders, or in connection with the exercise, protection or enforcement
by any of the Administrative Agent or the Lenders of all or any of the
rights, remedies, powers or
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privileges of the Administrative Agent and/or the Lenders and other
Creditor Parties under this Agreement or any of the other Loan Documents,
and (ii) which shall be payable or (as the case may be) reimbursable by
the Borrower or by any of the Guarantors to any of the Creditor Parties
pursuant to any of the Loan Documents.
(b) SECOND, to the payment of all interest, including interest on
overdue amounts, and late charges, then due and payable with respect to
the Loans or any of the other Obligations, allocated among the Lenders in
proportion to their respective shares of the Loans and other Obligations
then outstanding.
(c) THIRD, to the payment of the outstanding principal balance of
the Loans, allocated among the Lenders in proportion to their respective
shares of the Loans then outstanding.
(d) FOURTH, to any other outstanding Obligations, allocated among
the Lenders in proportion to their respective interests in such other
Obligations.
(e) FIFTH, the excess, if any, shall be returned to the Borrower or
to such other Persons as shall be entitled thereto.
ARTICLE VIII
THE AGENTS
8.1. APPOINTMENT AND AUTHORIZATION. Each Lender irrevocably appoints and
authorizes the Administrative Agent to take such action as Administrative Agent
on its behalf and to exercise such powers under this Agreement, the Notes, the
Intercreditor Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
8.2. AGENTS AND AFFILIATES. BankBoston and its affiliates and successors
shall have the same rights and powers under this Agreement as any other Lender
and may exercise or refrain from exercising the same as though it were not the
Administrative Agent, and BankBoston and its successors and affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
it were not also the Administrative Agent hereunder.
8.3. ACTION BY ADMINISTRATIVE AGENT. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
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Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default, except as
expressly provided in SECTION 7.2.
8.4. CONSULTATION WITH EXPERTS. The Administrative Agent may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
8.5. LIABILITY OF ADMINISTRATIVE AGENT. Neither the Administrative Agent
nor any of its affiliates nor any of its or their directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (a) with the consent or at the request of the Required Lenders, or (b)
in the absence of its own gross negligence or willful misconduct. Neither the
Administrative Agent nor any of its affiliates nor any of its or their
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify: (i) any statement, warranty or
representation made in connection with this Agreement, any of the other Loan
Documents or any borrowings hereunder; (ii) the performance or observance of any
of the covenants or agreements of the Borrower or any of the Guarantor
Subsidiaries; (iii) the satisfaction of any condition specified in ARTICLE III,
except receipt of items required to be delivered to the Administrative Agent; or
(iv) the validity, effectiveness or genuineness of (other than its own due
execution and delivery) this Agreement, the Notes, the Intercreditor Agreement,
any of the other Loan Documents or any other instruments or writings furnished
in connection herewith or therewith. The Administrative Agent shall not incur
any liability by acting in reliance upon any notice, consent, certificate,
statement or other writing (which may be a bank wire, facsimile transmission or
similar writing) believed by it to be genuine or to have been signed by the
proper party or parties.
8.6. INDEMNIFICATION. Each Lender shall, ratably in accordance with its
Commitment Percentage, indemnify the Administrative Agent, its affiliates and
its directors, officers, agents and employees (to the extent not reimbursed by
the Borrower) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any of the
other Loan Documents or any action taken or omitted by such indemnitees
hereunder or thereunder.
8.7. CREDIT DECISION. Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any of
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the other Agents, 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 the Administrative Agent or any of
the other Agents, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this Agreement or any
of the other Loan Documents.
8.8. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may resign
at any time by giving notice thereof to the Lenders and the Borrower. Upon any
such resignation, the Borrower shall have the right to appoint a successor
Administrative Agent, which shall be reasonably satisfactory to the Required
Lenders (other than the resigning Administrative Agent in its capacity as a
Lender). If no successor Administrative Agent shall have been so appointed by
the Borrower, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent gives notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank having a combined capital
and surplus of at least $50,000,000. Upon the acceptance of its appointment as
Administrative Agent hereunder, such successor Administrative Agent shall
thereupon succeed to and become empowered with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this ARTICLE VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent.
8.9. THE ARRANGER AND DOCUMENTATION AGENT. Neither the Arranger, in its
capacity as such, nor the Documentation Agent, in its capacity as such, shall
have any duties or responsibilities, and shall incur no liabilities, under this
Agreement or any of the other Loan Documents.
ARTICLE IX
MISCELLANEOUS
9.1. NOTICES. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission or other similar
writing) and shall be given to such party: (a) in the case of any of the
Borrower, any Lender, BNS, BankBoston or any Agent, at its address or telecopier
number set forth on the signature pages hereof, (b) in the case of
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any assignee of any Lender, at the address or telecopier number of such assignee
set forth in the Assignment and Assumption Agreement executed by such assignee
in accordance with SECTION 9.6 hereof, or (c) in the case of any party, such
other address or telecopier number as such party may hereafter specify for the
purpose by notice to the Administrative Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if given by
telecopier, when such telecopy is transmitted to the telecopier number specified
in this SECTION 9.1 and the appropriate answerback is received, and (ii) if
given by mail or by any other means (including, without limitation, facsimile
transmission), when received at the address specified in this SECTION 9.1.
9.2. NO WAIVERS. No failure or delay by the Administrative Agent or any
Lender in exercising any right, remedy, power or privilege under this Agreement,
any Note or any of the other Loan Documents shall operate as a waiver hereof or
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any other rights or remedies provided by law or by any of the other
Loan Documents.
9.3. EXPENSES; INDEMNIFICATION.
(a) The Borrower shall pay (i) all reasonable out-of-pocket costs
and expenses of the Administrative Agent, including reasonable fees and
disbursements of special counsel for the Administrative Agent, in
connection with the preparation, execution and delivery of this Agreement
and the other Loan Documents, any waiver or consent hereunder or
thereunder or any amendment hereof or thereof or any Default or alleged
Default hereunder, and (ii) if any Event of Default occurs, all reasonable
out-of-pocket costs and expenses incurred by the Administrative Agent and
each Lender, including reasonable fees and disbursements of counsel, in
connection with any such Event of Default and in connection waivers,
consents, amendments and modifications in connection therewith or related
thereto or any collection, bankruptcy, insolvency and other enforcement
proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Documentation Agent and each Lender, their respective affiliates and the
respective directors, officers, agents and employees of the foregoing
(each an "INDEMNITEE") and hold each Indemnitee harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind,
including, without limitation, the reasonable fees and disbursements of
counsel, which may be incurred
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by such Indemnitee in connection with any investigative, administrative or
judicial proceeding (whether or not such Indemnitee shall be designated a
party thereto) brought or threatened relating to or arising out of this
Agreement or any of the other Loan Documents or any actual or proposed use
of proceeds of any of the Loans hereunder; PROVIDED, HOWEVER, that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a
court of competent jurisdiction; and PROVIDED, FURTHER, that the Lenders,
the Documentation Agent and the Administrative Agent shall use reasonable
efforts to avoid inappropriate duplication of expense in connection with
any matter for which they are indemnified by the Borrower under this
PARAGRAPH (b).
9.4. SHARING OF SET-OFFS. Each Lender agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any Note held by it which is greater than the proportion received by any
other Lender in respect of the aggregate amount of principal and interest due
with respect to any Note held by such other Lender, the Lender receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Lenders, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Notes held by the Lenders shall be shared by the Lenders PRO RATA; PROVIDED,
HOWEVER, that nothing in this SECTION 9.4 shall impair the right of any Lender
to exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrower
other than its indebtedness under the Notes. The Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation in a Note acquired pursuant to the foregoing arrangements may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
9.5. AMENDMENTS AND WAIVERS. Any provisions of this Agreement or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrower, the Administrative Agent and the
Required Lenders; PROVIDED, HOWEVER, that no such amendment or waiver shall,
unless signed by all of the Lenders, (a) increase or decrease the Commitment
Amount of any Lender (except for a ratable decrease in the Commitment Amounts of
all Lenders) or subject any Lender to any additional obligations, (b) reduce the
principal of or rate of interest on any Loan or any fees hereunder, (c) postpone
the date fixed for any payment of principal of or interest on any Loans or any
fees hereunder or
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for termination of any Commitments to make Loans hereunder, (d) release any
Guarantor Subsidiary from its obligations as a guarantor of the Obligations
(except for any releases pursuant to SECTION 5.11 and any release at the time a
Subsidiary ceases to be a Subsidiary pursuant to a transaction permitted under
SECTION 6.4 of this Agreement), or (e) change the provisions of this SECTION 9.5
or the definition of the term "REQUIRED LENDERS".
9.6. 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, except that the Borrower may not assign or otherwise transfer any
of its rights under this Agreement without the prior written consent of
all Lenders, it being agreed that no merger permitted by SECTION 6.4 shall
be deemed to be an assignment or transfer for purposes of this SECTION
9.6.
(b) Any Lender may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its
Commitment Percentage of any or all Loans outstanding or its Commitment
Percentage to make future Loans to the Borrower. In the event of any such
grant by a Lender of a participating interest to a Participant, whether or
not upon notice to the Borrower and the Administrative Agent, such Lender
shall remain responsible for the performance of its obligations hereunder,
and the Borrower and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement pursuant to
which any Lender may grant such a participating interest shall provide
that such Lender shall retain the sole right and responsibility to enforce
the obligations of the Borrower hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any
provision of this Agreement; PROVIDED, HOWEVER, that such participation
agreement may provide that such Lender will not agree to any modification,
amendment or waiver of this Agreement described in PARAGRAPH (a), (b) or
(c) of SECTION 9.5 without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of ARTICLE VIII of
this Agreement with respect to its participating interest. An assignment
or other transfer which is not permitted by PARAGRAPH (c) or (d) of this
SECTION 9.6 shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance with this
PARAGRAPH (b).
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(c) Any Lender may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part of all, of
its rights and obligations under this Agreement, the Notes and other Loan
Documents, and such Assignee shall assume such rights and obligations,
pursuant to an Assignment and Assumption Agreement in substantially the
form of EXHIBIT E, executed by such Assignee and such transferor Lender
(each an "ASSIGNMENT AND ASSUMPTION AGREEMENT"), with (and subject to)
notice to and the prior consent of the Administrative Agent and, if no
Event of Default shall then be continuing, the consent of the Borrower
(such consents not to be unreasonably withheld); PROVIDED, HOWEVER, that:
(i) if an Assignee is another Lender or an affiliate or Approved Fund of
such transferor Lender, such notices shall be given to the Administrative
Agent and the Borrower, but no such consents shall be required from the
Administrative Agent or from the Borrower; (ii) if any Event of Default
shall be continuing at the time of any such assignment, notice thereof
shall be given to the Borrower as provided above, but no consents therefor
shall be required from the Borrower; (iii) such assignment may, but need
not, include rights of the transferor Lender in respect of outstanding
Loans; and (iv) unless the assignment covers all rights and obligations of
such transferor Lender, or unless the assignment is to another Lender or
to an affiliate or Approved Fund of such transferor Lender, the assignment
shall cover the equivalent of a Commitment Amount of not less than
$5,000,000. Upon execution and delivery of an Assignment and Assumption
Agreement and payment by such Assignee to such transferor Lender of an
amount equal to the purchase price agreed between such transferor Lender
and such Assignee, such Assignee shall be a Lender party to this Agreement
and shall have all the rights and obligations of a Lender with a
Commitment Percentage as set forth in such Assignment and Assumption
Agreement, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any
assignment pursuant to this PARAGRAPH (c), the transferor Lender, the
Administrative Agent and the Borrower shall make appropriate arrangements
so that, if required, a new Note shall be issued to the Assignee. In
connection with any such assignment, the transferor Lender shall pay to
the Administrative Agent an administrative fee for processing such
assignment in the amount of $3,000. If the Assignee is not incorporated
under the laws of the United States of America or a State thereof, it
shall, prior to the first date on which interest or fees are payable
hereunder for its account, deliver to the Borrower and the Administrative
Agent certification as
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to exemption from deduction or withholding of any United States federal
income tax.
(d) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of PARAGRAPH (c) relating to assignment
relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without
limitation, any assignment or pledge by any Lender at any time of all or
any portion of its rights under this Agreement, its Note or any of the
other Loan Documents to a Federal Reserve Bank. No such assignment shall
release the transferor Lender from its obligations hereunder.
(e) No assignee, participant or other transferee of any Lender's
rights shall be entitled to receive any greater payment under SECTION 2.9,
2.13 or 2.16 than such Lender would have been entitled to receive with
respect to the rights assigned, participated or transferred unless such
assignment, participation or transfer is made with the Borrower's prior
written consent.
9.7. COLLATERAL. Each of the Lenders represents to the Administrative
Agent and each of the other Lenders that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
9.8. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement, each Note
and each of the other Loan Documents shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts. The Borrower
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the District of Massachusetts and of any court of The Commonwealth of
Massachusetts sitting in Boston, Massachusetts for purposes of all legal
proceedings arising out of or relating to this Agreement, the Notes or any of
the other Loan Documents or any of the transactions contemplated hereby or
thereby. The Borrower irrevocably waives, to the fullest extent permitted by
law, any objections which the Borrower may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
9.9. COUNTERPARTS; INTEGRATION. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement and the other Loan Documents constitute the entire agreement and
understanding among the parties hereto and supersede
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any and all prior commitment letters, term sheets, agreements and
understandings, oral or written, relating to the subject matter hereof or
thereof.
9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY
OF THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers on and as of the day and in the year
first above written.
THE BORROWER:
-------------
GC COMPANIES, INC.
By: ________________________________
Name: G. ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President and
Chief Financial Officer
ADDRESS FOR NOTICES:
--------------------
GC Companies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: G. ▇▇▇▇ ▇▇▇▇▇▇▇
Vice President and
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
THE LENDERS:
------------
BANKBOSTON, N.A.
By: ________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Title: Director
ADDRESS FOR NOTICES:
--------------------
BankBoston, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Director
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
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-▇▇-
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By: ________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Relationship Manager
ADDRESS FOR NOTICES:
--------------------
The Bank of Nova Scotia
Boston Branch
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Relationship
Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
THE ADMINISTRATION AGENT:
-------------------------
BANKBOSTON, N.A., as Administrative Agent
By: ________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
ADDRESS FOR NOTICES:
--------------------
BankBoston, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Director
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
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THE DOCUMENTATION AGENT:
------------------------
THE BANK OF NOVA SCOTIA
By: _________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Relationship Manager
ADDRESS FOR NOTICES:
--------------------
The Bank of Nova Scotia
Boston Branch
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Relationship
Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
THE ARRANGER:
-------------
BANCBOSTON ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.,
as Arranger
By: _________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
ADDRESS FOR NOTICES:
--------------------
BancBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
