EXHIBIT 10.1
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AMENDED AND RESTATED CREDIT, SECURITY, GUARANTY
AND PLEDGE AGREEMENT
DATED AS OF DECEMBER 15, 2003
AMONG
LIONS GATE ENTERTAINMENT CORP.
AND
LIONS GATE ENTERTAINMENT INC.,
AS BORROWERS
AND
THE GUARANTORS REFERRED TO HEREIN
AND
THE LENDERS REFERRED TO HEREIN
AND
JPMORGAN CHASE BANK,
AS ADMINISTRATIVE AGENT
AND
AS ISSUING BANK
AND
JPMORGAN CHASE BANK (TORONTO BRANCH),
AS CANADIAN FACILITY AGENT
AND
FLEET NATIONAL BANK
AND
BNP PARIBAS,
AS CO-SYNDICATION AGENTS
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS...................................................................................................... 2
2. THE LOANS........................................................................................................ 41
SECTION 2.1 U.S. Dollar Revolving Credit Loans............................................................... 41
SECTION 2.2 Term Loans....................................................................................... 44
SECTION 2.3 Canadian Dollar Loans............................................................................ 44
SECTION 2.4 Bankers' Acceptances............................................................................. 46
SECTION 2.5 Notes; Repayment................................................................................. 50
SECTION 2.6 Letters of Credit................................................................................ 51
SECTION 2.7 Interest......................................................................................... 57
SECTION 2.8 Commitment Fee and Other Fees.................................................................... 57
SECTION 2.9 Termination and/or Reduction of the Revolving Credit Commitments................................ 58
SECTION 2.10 Default Interest; Alternate Rate of Interest..................................................... 59
SECTION 2.11 Continuation and Conversion of Loans and Bankers' Acceptances.................................... 60
SECTION 2.12 Prepayment of Loans and Bankers' Acceptances; Reimbursement of Lenders.......................... 63
SECTION 2.13 Change in Circumstances.......................................................................... 66
SECTION 2.14 Change in Legality............................................................................... 69
XXXXXXX 0.00 Xxxxxx Xxxxxx Withholding........................................................................ 69
SECTION 2.16 Foreign Currency Conversion; Withholding......................................................... 71
SECTION 2.17 Interest Act (Canada)............................................................................ 73
SECTION 2.18 Interest Adjustments............................................................................. 73
SECTION 2.19 Manner of Payments............................................................................... 74
SECTION 2.20 Provisions Relating to the Borrowing Base........................................................ 74
3. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES................................................................. 75
SECTION 3.1 Existence and Power.............................................................................. 75
SECTION 3.2 Authority and No Violation....................................................................... 76
SECTION 3.3 Governmental Approval............................................................................ 76
SECTION 3.4 Binding Agreements............................................................................... 76
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SECTION 3.5 Financial Statements............................................................................. 77
SECTION 3.6 No Material Adverse Change....................................................................... 77
SECTION 3.7 Ownership of Pledged Securities, Subsidiaries, etc............................................... 78
SECTION 3.8 Copyrights, Trademarks and Other Rights.......................................................... 78
SECTION 3.9 Fictitious Names................................................................................. 79
SECTION 3.10 Title to Properties.............................................................................. 79
SECTION 3.11 Places of Business............................................................................... 79
SECTION 3.12 Litigation....................................................................................... 79
SECTION 3.13 Federal Reserve Regulations...................................................................... 79
SECTION 3.14 Investment Company Act........................................................................... 80
SECTION 3.15 Taxes............................................................................................ 80
SECTION 3.16 Compliance with ERISA............................................................................ 80
SECTION 3.17 Agreements....................................................................................... 81
SECTION 3.18 Security Interest................................................................................ 81
SECTION 3.19 Disclosure....................................................................................... 81
SECTION 3.20 Distribution Rights.............................................................................. 82
SECTION 3.21 Environmental Liabilities........................................................................ 82
SECTION 3.22 Pledged Securities............................................................................... 82
SECTION 3.23 Compliance with Laws............................................................................. 83
SECTION 3.24 Canadian Plans................................................................................... 83
4. CONDITIONS OF LENDING............................................................................................ 84
SECTION 4.1 Conditions Precedent to Initial Loan or Letter of Credit......................................... 84
SECTION 4.2 Conditions Precedent to Each Loan, Bankers' Acceptance and Letter of Credit...................... 89
SECTION 4.3 Conditions Precedent to Loans and/or Letters of Credit under the Special Production Tranche...... 89
5. AFFIRMATIVE COVENANTS............................................................................................ 90
SECTION 5.1 Financial Statements and Reports................................................................. 91
SECTION 5.2 Corporate Existence; Compliance with Laws........................................................ 92
SECTION 5.3 Maintenance of Properties........................................................................ 93
SECTION 5.4 Notice of Material Events........................................................................ 93
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SECTION 5.5 Insurance........................................................................................ 94
SECTION 5.6 Production and Distribution...................................................................... 95
SECTION 5.7 Music............................................................................................ 95
SECTION 5.8 Copyrights and Trademarks........................................................................ 95
SECTION 5.9 Books and Records................................................................................ 96
SECTION 5.10 Third Party Audit Rights......................................................................... 96
SECTION 5.11 Observance of Agreements......................................................................... 97
SECTION 5.12 Laboratories; No Removal......................................................................... 97
SECTION 5.13 Taxes and Charges; Indebtedness in Ordinary Course of Business................................... 97
SECTION 5.14 Liens............................................................................................ 98
SECTION 5.15 Further Assurances; Security Interests........................................................... 98
SECTION 5.16 ERISA and Canadian Plan Compliance and Reports................................................... 98
SECTION 5.17 Subsidiaries..................................................................................... 100
SECTION 5.18 Environmental Laws............................................................................... 100
SECTION 5.19 Use of Proceeds.................................................................................. 101
SECTION 5.20 Uncompleted Items of Product..................................................................... 101
SECTION 5.21 Negative Cost Statements......................................................................... 102
SECTION 5.22 Distribution Agreements, Acceptable L/C's, Etc................................................... 103
SECTION 5.23 Completion Guaranty.............................................................................. 103
SECTION 5.24 Security Agreements with the Guilds.............................................................. 103
6. NEGATIVE COVENANTS............................................................................................... 104
SECTION 6.1 Limitations on Indebtedness and Preferred Equity Interests....................................... 104
SECTION 6.2 Limitations on Liens............................................................................. 105
SECTION 6.3 Limitation on Guarantees......................................................................... 107
SECTION 6.4 Limitations on Investments....................................................................... 108
SECTION 6.5 Restricted Payments.............................................................................. 108
SECTION 6.6 Limitation on Leases............................................................................. 109
SECTION 6.7 Consolidation, Merger, Sale or Purchase of Assets, etc........................................... 110
SECTION 6.8 Receivables...................................................................................... 110
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(continued)
PAGE
SECTION 6.9 Sale and Leaseback............................................................................... 110
SECTION 6.10 Places of Business; Change of Name............................................................... 111
SECTION 6.11 Limitations on Capital Expenditures.............................................................. 111
SECTION 6.12 Transactions with Affiliates..................................................................... 111
SECTION 6.13 Business Activities.............................................................................. 111
SECTION 6.14 Fiscal Year End.................................................................................. 111
SECTION 6.15 Overhead Expense................................................................................. 111
SECTION 6.16 Consolidated Capital Base........................................................................ 112
SECTION 6.17 Leverage Ratio................................................................................... 112
SECTION 6.18 Unused Availability.............................................................................. 112
SECTION 6.19 Liquidity Ratio.................................................................................. 112
SECTION 6.20 Fixed Charges Coverage Ratio..................................................................... 113
SECTION 6.21 Film Spending Ratio.............................................................................. 113
SECTION 6.22 Prohibitions of Amendments and Waivers........................................................... 113
SECTION 6.23 Amortization Method.............................................................................. 113
SECTION 6.24 No Further Negative Pledge....................................................................... 113
SECTION 6.25 Development Costs................................................................................ 113
SECTION 6.26 Additional Limitation on Production and Acquisition of Product................................... 114
SECTION 6.27 Bank Accounts.................................................................................... 114
SECTION 6.28 ERISA Compliance................................................................................. 114
SECTION 6.29 Hazardous Materials.............................................................................. 115
SECTION 6.30 Use of Proceeds of Loans and Requests for Letters of Credit...................................... 115
SECTION 6.31 Interest Rate Protection Agreements, etc......................................................... 115
SECTION 6.32 Subsidiaries..................................................................................... 115
SECTION 6.33 AFI Facility..................................................................................... 115
7. EVENTS OF DEFAULT................................................................................................ 116
8. GRANT OF SECURITY INTEREST; REMEDIES............................................................................. 119
SECTION 8.1 Security Interests............................................................................... 119
SECTION 8.2 Use of Collateral................................................................................ 119
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(continued)
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SECTION 8.3 Collection Accounts.............................................................................. 119
SECTION 8.4 Credit Parties to Hold in Trust.................................................................. 120
SECTION 8.5 Collections, etc................................................................................. 120
SECTION 8.6 Possession, Sale of Collateral, etc.............................................................. 120
SECTION 8.7 Application of Proceeds on Default............................................................... 122
SECTION 8.8 Power of Attorney................................................................................ 122
SECTION 8.9 Financing Statements, Direct Payments............................................................ 123
SECTION 8.10 Further Assurances............................................................................... 123
SECTION 8.11 Termination and Release.......................................................................... 123
SECTION 8.12 Remedies Not Exclusive........................................................................... 124
SECTION 8.13 Quiet Enjoyment.................................................................................. 124
SECTION 8.14 Continuation and Reinstatement................................................................... 124
9. GUARANTY......................................................................................................... 124
SECTION 9.1 Guaranty......................................................................................... 124
SECTION 9.2 No Impairment of Guaranty, etc................................................................... 126
SECTION 9.3 Continuation and Reinstatement, etc.............................................................. 126
SECTION 9.4 Limitation on Guaranteed Amount etc.............................................................. 127
10. PLEDGE........................................................................................................... 127
SECTION 10.1 Pledge........................................................................................... 127
SECTION 10.2 Covenant......................................................................................... 127
SECTION 10.3 Registration in Nominee Name; Denominations...................................................... 128
SECTION 10.4 Voting Rights; Dividends; etc.................................................................... 128
SECTION 10.5 Remedies Upon Default............................................................................ 128
SECTION 10.6 Application of Proceeds of Sale and Cash......................................................... 130
SECTION 10.7 Securities Act, etc.............................................................................. 130
SECTION 10.8 Continuation and Reinstatement................................................................... 131
SECTION 10.9 Termination...................................................................................... 131
11. CASH COLLATERAL.................................................................................................. 131
SECTION 11.1 Cash Collateral Accounts......................................................................... 131
SECTION 11.2 Investment of Funds.............................................................................. 132
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SECTION 11.3 Grant of Security Interest....................................................................... 132
SECTION 11.4 Remedies......................................................................................... 132
12. THE ADMINISTRATIVE AGENT, THE CANADIAN AGENT AND THE ISSUING BANK................................................ 133
SECTION 12.1 Administration by the Administrative Agent....................................................... 133
SECTION 12.2 Advances and Payments............................................................................ 134
SECTION 12.3 Sharing of Setoffs, Cash Collateral and Sharing Events........................................... 135
SECTION 12.4 Notice to the Lenders............................................................................ 136
SECTION 12.5 Liability of the Administrative Agent, Canadian Agent, Issuing Bank and Syndication Agent........ 136
SECTION 12.6 Reimbursement and Indemnification................................................................ 137
SECTION 12.7 Rights of Administrative Agent and Canadian Agent................................................ 138
SECTION 12.8 Independent Investigation by Lenders............................................................. 138
SECTION 12.9 Agreement of Required Lenders.................................................................... 138
SECTION 12.10 Notice of Transfer............................................................................... 139
SECTION 12.11 Successor Administrative Agent................................................................... 139
SECTION 12.12 Successor Issuing Bank........................................................................... 139
SECTION 12.13 Successor Canadian Agent......................................................................... 140
SECTION 12.14 Quebec Power of Attorney......................................................................... 140
13. MISCELLANEOUS.................................................................................................... 141
SECTION 13.1 Notices.......................................................................................... 141
SECTION 13.2 Survival of Agreement, Representations and Warranties, etc....................................... 141
SECTION 13.3 Successors and Assigns; Syndications; Loan Sales; Participations................................. 142
SECTION 13.4 Expenses; Documentary Taxes...................................................................... 145
SECTION 13.5 Indemnification of the Administrative Agent, the Issuing Bank and the Lenders.................... 146
SECTION 13.6 CHOICE OF LAW.................................................................................... 147
SECTION 13.7 WAIVER OF JURY TRIAL............................................................................. 147
SECTION 13.8 WAIVER WITH RESPECT TO DAMAGES................................................................... 147
SECTION 13.9 No Waiver........................................................................................ 148
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SECTION 13.10 Extension of Payment Date........................................................................ 148
SECTION 13.11 Amendments, etc.................................................................................. 148
SECTION 13.12 Severability..................................................................................... 149
SECTION 13.13 SERVICE OF PROCESS............................................................................... 149
SECTION 13.14 Headings......................................................................................... 150
SECTION 13.15 Execution in Counterparts........................................................................ 150
SECTION 13.16 Subordination of Intercompany Indebtedness, Receivables and Advances............................. 150
SECTION 13.17 Entire Agreement................................................................................. 150
SECTION 13.18 Transition....................................................................................... 151
vii
Schedules
1.1 Schedule of Commitments
1.2 Acceptable Obligors/Allowable Amounts
1.3 Guarantors
1.4 Pay Television Formula
1.5 Home Video Formula
3.1(a) List of jurisdictions where the Credit Parties are qualified
3.7(a) Credit Parties/Pledged Securities
3.7(b) Beneficial Interests
3.7(c) Inactive Subsidiaries
3.7(d) Unrestricted Subsidiaries
3.8(a)(i) All Items of Product
3.8(a)(ii) Items of Product: Copyrights
3.8(b) Trademarks
3.9 Fictitious Names
3.11 Chief Executive Office, Location of Collateral and Records
3.12 Litigation
3.17 Material Agreements
3.18 Filing Offices for UCC-1, PPSA and CCQ Financing Statements
3.22 Pledged Securities
3.24 Real Properties
6.1 Existing Indebtedness
6.2 Existing Liens
6.3 Existing Guarantees
6.4 Existing Investments
6.26 Existing Bank Accounts
Exhibits
A-1 Form of U.S. Dollar Revolving Credit Note
A-2 Form of Canadian Dollar Note
A-3 Form of Term Note
B-1 Form of Opinion of Xxxxxx Xxxxxxx LLP, Canadian counsel to the Borrowers
B-2 Form of Opinion of O'Melveny & Xxxxx LLP, U.S. counsel to the Borrowers
C-1 Form of Copyright Security Agreement
C-2 Form of Copyright Security Agreement Supplement
D Form of Laboratory Access Letter
E-1 Form of Pledgeholder Agreement (Uncompleted Product)
E-2 Form of Pledgeholder Agreement (Completed Product)
F Form of Trademark Security Agreement
G Form of Contribution Agreement
H Form of Borrowing Certificate
I Form of Borrowing Base Certificate
J Form of Assignment and Acceptance
K Form of Notice of Assignment and Irrevocable Instructions
L Form of Instrument of Assumption and Joinder
M-1 Form of Hypothec
M-2 Form of Pledge of Debenture
N Form of Special Purpose Producer Credit Agreement
O Letter to Sellers regarding Excluded Assets and Box Office Contingent
Payments
P Form of Xxxxxxx Pledge Agreement
AMENDED AND RESTATED CREDIT, SECURITY, GUARANTY AND
PLEDGE AGREEMENT, dated as of September 25, 2000, as
amended and restated as of December 15, 2003 (as
further amended, supplemented or otherwise modified,
renewed or replaced from time to time, the "Credit
Agreement"), among (i) Lions Gate Entertainment
Corp., a British Columbia corporation ("LGEC") and
Lions Gate Entertainment Inc., a Delaware corporation
("LGEI" and, together with LGEC, the "Borrowers");
(ii) the Guarantors referred to herein; (iii) the
Lenders referred to herein; (iv) JPMORGAN CHASE BANK,
a New York banking corporation, as agent for the
Lenders (in such capacity, the "Administrative
Agent") and as the issuer of letters of credit (in
such capacity, the "Issuing Bank"); (v) JPMorgan
Chase Bank (Toronto Branch), as Canadian Agent (in
such capacity, "Canadian Agent"); and (vi) FLEET
NATIONAL BANK and BNP PARIBAS as Co-Syndication
Agents (in such capacity, the "Co-Syndication
Agents").
INTRODUCTORY STATEMENT
All terms not otherwise defined above or in this Introductory
Statement are as defined in Article 1 hereof or as defined elsewhere herein.
On September 25, 2000 the Borrowers, certain of the
Guarantors, the Administrative Agent and certain lenders entered into a Credit,
Security Guaranty and Pledge Agreement providing for a secured credit facility
(the "Existing Credit Agreement").
LGEC has requested that the Lenders amend and restate the
Existing Credit Agreement, in order, among other things, to make available a
US$350,000,000 five-year secured credit facility consisting of (x) a five-year
revolving credit facility (the "Revolving Credit Facility") of US$215,000,000
consisting of a U.S. Dollar Revolving Credit Facility pursuant to which U.S.
Dollar Revolving Credit Loans in an aggregate amount not to exceed
US$200,000,000 outstanding at any one time may be made to LGEI by the U.S.
Dollar Lenders and a Canadian Dollar Facility pursuant to which Canadian Dollar
Loans in an amount not to exceed the Canadian Dollar Equivalent of US$15,000,000
outstanding at any one time may be made by the Canadian Dollar Lenders to LGEC
and (y) a five-year term loan of US$135,000,000 to LGEI (the "Term Loan
Facility"). The proceeds of the Term Loan Facility will be used to finance, in
part, the merger of LGF Acquisition Corporation ("Merger Sub") with and into
Film Holdings Co. ("FHC"), which is the corporate parent of Artisan
Entertainment Inc. ("Artisan") and certain related transactions which will
result in Artisan becoming a wholly-owned subsidiary of LGEI (collectively, the
"Acquisition"), all as described in the Merger Agreement among FHC, LGEC and
Merger Sub dated as of October 24, 2003 (the "Merger Agreement") and to
refinance indebtedness of the Borrowers and Artisan in connection with the
Acquisition. The proceeds of the Revolving Credit Facility will be used to (i)
finance, in part, the Acquisition, (ii) refinance existing indebtedness of the
Borrowers and Artisan in connection with the Acquisition, (iii) finance the
development, production, distribution or acquisition of intellectual properties
including feature films, television and video product and/or rights therein or
thereto and (iv) for other general corporate purposes, including acquisitions.
To provide assurance for the repayment of the Loans and the
other Obligations of the Borrowers hereunder, the Borrowers will, among other
things, provide or cause to be provided to the Administrative Agent, for the
benefit of itself, the Issuing Bank and the Lenders, the following (each as more
fully described herein):
(i) a guaranty of the Obligations by each of the Guarantors pursuant to
Article 9 hereof;
(ii) a security interest in the Collateral from each of the Credit Parties
pursuant to Article 8 hereof; and
(iii) a pledge by each of the Pledgors of the Pledged Securities owned by it
pursuant to Article 10 hereof.
Subject to the terms and conditions set forth herein, the
Administrative Agent is willing to act as agent for the Lenders, the Issuing
Bank is willing to issue the Letters of Credit, the Canadian Agent is willing to
act as agent for the Canadian Dollar Lenders, and each Canadian Dollar Lender is
willing to make Canadian Dollar Loans to LGEC and Special Purpose Producers, to
create Bankers' Acceptances for the account of LGEC as provided herein and to
participate in Letters of Credit as provided herein, and each U.S. Dollar Lender
is willing to make Term Loans to LGEI, to make US. Dollar Revolving Credit Loans
to LGEI and Special Purpose Producers and to participate in the Letters of
Credit as provided herein, in an aggregate amount at any one time outstanding
not in excess of its Commitment hereunder.
Accordingly, the parties hereto hereby agree as follows that,
effective on the Closing Date, the Existing Credit Agreement is amended and
restated in its entirety to read as follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise requires,
all Section references herein shall be deemed to correspond with Sections
herein, the following terms shall have the meanings indicated, all accounting
terms not otherwise defined herein shall have the respective meanings accorded
to them under GAAP and all terms defined in the UCC and not otherwise defined
herein shall have the respective meanings accorded to them therein.
Notwithstanding the foregoing, for purposes of computing Consolidated Capital
Base, Consolidated Net Income, Consolidated Senior Debt and compliance with the
covenants contained in Sections 6.15 through 6.21, inclusive, Cine-Groupe
Corporation, Xxxxxxxx Films Distribution Inc., Xxxxxxxx Films Productions Inc.
and CinemaNow shall not be consolidated. The income or loss of such companies
shall not be consolidated going forward except to the extent that cash dividends
are actually paid by such entities to LGEC or one of its Consolidated
Subsidiaries and the balance sheet entries for such entities shall be the amount
that would have been their current contribution as of the date hereof to
Consolidated Capital Base had it been computed as of the date hereof with such
entities being consolidated in accordance with GAAP. Notwithstanding the
foregoing qualification if subsequent to the date hereof LGEC determines to sell
its interest in any of such entities, their contribution to Consolidated Capital
Base shall be the lesser of the foregoing amount and such amount as represents
the estimated Net Proceeds from
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the sale thereof. Unless the context otherwise requires, any of the following
terms may be used in the singular or the plural, depending on the reference:
"Acceptable L/C" shall mean an irrevocable letter of credit
which (i) is in form and on terms acceptable to the Administrative Agent, (ii)
is payable in Dollars at an office of the issuing or confirming bank in New York
City, and (iii) is issued or confirmed by (a) any Person that on the date of
issuance or confirmation of the letter of credit, is a Lender; (b) any
commercial bank that has (or which is the principal operating subsidiary of a
holding company which has) as of the time such letter of credit is issued,
public debt outstanding with a rating of at least "A" (or the equivalent of an
"A") from one of the nationally recognized debt rating agencies; or (c) any
other bank which the Required Lenders may in their sole discretion determine to
be of acceptable credit quality.
"Acceptable Domestic Account Debtor" shall mean any Person
listed as such on Schedule 1.2 hereto (as modified from time to time in
accordance with Section 2.20).
"Acceptable Foreign Account Debtor" shall mean any Person
listed as such on Schedule 1.2 hereto (as modified from time to time in
accordance with Section 2.20).
"Acceptable Major Account Debtor" shall mean any Person listed
as such on Schedule 1.2 hereto (as modified from time to time in accordance with
Section 2.20).
"Acceptable Obligor" shall mean any of the Acceptable Domestic
Account Debtors, the Acceptable Foreign Account Debtors and the Acceptable Major
Account Debtors.
"Acceptable Tax Credit" shall mean the amount that a Credit
Party is entitled to or can reasonably be expected to be entitled to receive as
a refund of tax with respect to any tax credit pursuant to sections 125.4 or
125.5 of the ITA, sections 80, 81 or 82.1 of the Income Tax Act (British
Columbia) R.S.B.C. 1996, c.215, as amended (the "BC Act") or the comparable
provision of law of any other Canadian Province (an "Other Provincial Act"),
which meets the following criteria:
(i) the tax credit is in respect of an item of Product that has commenced
principal photography and that does not remain Uncompleted beyond the time
period, if any, permitted under the Federal Act, the BC Act or Other Provincial
Act, as applicable, with respect to such credit;
(ii) the Credit Party shall have delivered to the Administrative Agent the
items listed in Sections 5.20 and 5.23 hereof for the applicable item of Product
to the extent required thereunder;
(iii) not more than eighteen months has elapsed since the "taxation year" (as
defined under the ITA) of the Credit Party to which such tax credit would
relate;
(iv) the Credit Party has filed an application with the Minister of Canadian
Heritage in respect of the item of Product for:
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(a) in the case of a tax credit under section 125.4 of the ITA, a
Canadian Film or Video Production Certificate (Part A) and has requested to be
provided with an estimated amount of the tax credit to which the Credit Party
will be entitled; or
(b) in the case of a tax credit under section 125.5 of the ITA, an
Accredited Film or Video Production Certificate;
(v) the Credit Party has filed an application with the Minister of Small
Business, Tourism and Culture in respect of the item of Product for:
(a) in the case of a tax credit under sections 80 or 81 of the BC
Act, an Eligibility Certificate appropriate to the particular credit and
Product; or
(b) in the case of a tax credit under section 82.1 of the BC Act,
an Accreditation Certificate;
(vi) the amount of a refund of tax with respect to a tax credit that a
Credit Party is entitled or can reasonably be expected to be entitled to receive
is net of any tax, interest, penalty or other amount payable by a Credit Party
under the Federal Act, the BC Act or Other Provincial Act, as applicable, or any
other amount payable by the Credit Party to which the credit can be or has been
applied by set-off or in any other manner whatsoever by Her Majesty in Right of
Canada, Her Majesty in Right of the Province of British Columbia, any other
applicable province or any Governmental Authority thereof;
(vii) the amount of the tax credit shall be reduced by the amount of the
portion, if any, which is the subject matter of any communication from the
Canada Customs and Revenue Agency, the Canadian Audio-Visual Certification
Office, B.C. Film or any other relevant Governmental Authority that questions
the entitlement of the Credit Party thereto or otherwise seeks to restrict or
deny such entitlement;
(viii) where the amount of a tax credit in respect of an item of Product or,
in the case of a television series, any one season of such series exceeds the
sum of C$1,000,000, the Credit Party has provided the Lenders with an
independent accountant's opinion/review letter in form and substance
satisfactory to the Administrative Agent confirming the estimated amount of the
tax credit;
(ix) the Administrative Agent (for the benefit of itself, the Canadian
Agent, the Issuing Bank and the Lenders) has a first priority perfected security
interest in the tax credit and notice of such security interest in accordance
with any applicable requirements of the ITA, the BC Act or Other Provincial Act,
as applicable, has been delivered to the Canada Customs and Revenue Agency and
any other relevant Governmental Authority; and
(x) in the case of any tax credit under any Other Provincial Act, such
other actions or requirements as the Administrative Agent or its counsel may
require;
provided, however, that (x) to the extent that circumstances arise or occur that
would cause the actual tax credit to be less than the amount that would be
determined based on any estimated amounts as set forth on any applications for
any certificate described in clauses (iv) and (v) of
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this definition, the Canadian Film or Video Production Certificate (Part A), the
Certificate of Completion (Part B), any interim estimate letter received from
B.C. Film in the case of a tax credit under Sections 80 and 81 of the BC Act or
a comparable certificate in case of a credit under any Other Provincial Act, as
applicable, the Acceptable Tax Credit shall be reduced to reflect the revised
estimate and (y) an Acceptable Tax Credit shall cease to be an Acceptable Tax
Credit (A) if the Credit Party has not filed its return of income and all other
certificates, forms and documents required under the applicable legislation to
be filed together therewith in order to claim such tax credit within 6 months
from the end of the "taxation year" referred to in clause (iii) of this
definition, (B) in the case of a tax credit under section 125.4 of the ITA, if
the Credit Party has not filed an application to the Minister of Canadian
Heritage, together with all documents required to be filed together therewith,
for a Certificate of Completion (Part B) in respect of an item of Product within
6 months from the end of the "taxation year" referred to in clause (iii) of this
definition and, where such Certificate has been issued, if the Minister has
revoked the Certificate or notified the Credit Party of his or her intention to
revoke such Certificate or (C) if the relevant Governmental Authority has (i)
denied the Credit Party's application of the applicable certificate set forth in
clauses (iv) and (v) of this definition, (ii) not issued the applicable
certificate within fifteen months following the Credit Party's application
thereof or (iii) revoked or notified the Credit Party of their intention to
revoke such certificate.
"Acceptance Fee" shall have the meaning given to such term in
Section 2.4(b).
"Acquisition" shall have the meaning given such term in the
Introductory Statement hereof.
"Administrative Agent" shall mean JPMorgan Chase Bank, in its
capacity as agent for the Lenders hereunder or such successor Administrative
Agent as may be appointed pursuant to Section 12.11 hereof.
"AFI" shall mean Artisan Film Investors, a Delaware Business
Trust.
"AFI Facility" shall mean the secured credit facility for AFI
pursuant to the Credit and Security Agreement dated as of October 13, 1999 among
AFI, the Lenders named therein and JPMorgan Chase Bank as Administrative Agent
and Fronting Bank.
"AFI II" shall mean Artisan Film Investors LLC, a Delaware
limited liability company.
"Affiliate" shall mean any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
another Person. For purposes of this definition, a Person shall be deemed to be
"controlled by" another Person if such latter Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such controlled Person whether by contract or otherwise.
"Affiliated Group" shall mean a group of Persons, each of
which is an Affiliate (other than by reason of having common directors or
officers) of some other Person in the group.
"Allowable Amount" shall mean, with respect to any Acceptable
Obligor, such amount as may be specified on Schedule 1.2 hereto (as applicable)
as the maximum aggregate
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exposure for such Acceptable Obligor (as modified from time to time in
accordance with Section 2.20 hereof).
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
for such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in New
York City. "Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment
Rate. "Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under current practices of the Board,
be published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on such day (or,
if such day shall not be a Business Day, on the next preceding Business Day) by
the Administrative Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "Statutory Reserves"
shall mean a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the aggregate of
the maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board and any
other banking authority to which the Administrative Agent is subject for new
negotiable nonpersonal time deposits in Dollars of over US$100,000 with
maturities approximately equal to three months. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage. "Federal Funds Effective Rate" shall mean, for any day, 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 on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Base CD Rate or the Federal Funds Effective Rate or both
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loan" shall mean a Loan based on the
Alternate Base Rate in accordance with the provisions of Article 2 hereof.
- 6 -
"Applicable Law" shall mean all provisions of statutes, rules,
regulations and orders of the United States or Canada, any state or province
thereof or municipality therein or of any foreign governmental body or of any
regulatory agency applicable to the Person in question, and all orders and
decrees of all courts and arbitrators in proceedings or actions in which the
Person in question is a party.
"Applicable Margin" shall mean (i) in the case of U.S. Dollar
Revolving Credit Loans that are Alternate Base Rate Loans, 1.75% per annum, (ii)
in the case of Revolving Credit Loans that are Eurodollar Loans, 2.75% per
annum, (iii) in the case of Canadian Prime Rate Loans, 1.75% per annum, (iv) in
the case of Term Loans that are Alternate Base Rate, 2.25% per annum and (v) in
the case of Term Loans that are Eurodollar Loans, 3.25% per annum.
"Approved Completion Guarantor" shall mean a financially sound
and reputable completion guarantor approved by the Required Lenders. The
Required Lenders hereby pre-approve as a completion guarantor (i) Fireman's Fund
Insurance Company, acting through its agent, International Film Guarantors, L.P.
(the general partner of which is International Film Guarantors, Inc.), (ii) Film
Finances, Inc. and its Affiliates (including Film Finances Canada (1998) Ltd.)
that are insured under the same Lloyds of London insurance policies as Film
Finances, Inc. (only to the extent the completion guaranty is accompanied by a
Lloyds of London "cut-through endorsement"); provided, however, that any such
pre-approval may be revoked by the Administrative Agent if deemed appropriate in
its sole discretion or if so instructed by the Required Lenders, at any time
upon 30 days prior written notice to the Borrowers; but further, provided, that
such pre-approval may not be revoked with regard to an item of Product if a
Completion Guaranty has already been issued for such item of Product.
"Artisan" shall have the meaning given such term in the
Introductory Statement hereof.
"Assessment Rate" shall mean, for any date, the annual
assessment rate (rounded upwards, if necessary, to the next higher 1/100 of 1%)
most recently estimated by the Administrative Agent as the then current net
annual assessment rate that will be employed in determining amounts payable by
the Administrative Agent to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor) of time
deposits made in Dollars at the Administrative Agent's domestic offices.
"Assignment and Acceptance" shall mean an agreement
substantially in the form of Exhibit J hereto or such other form as is
acceptable to the Administrative Agent, executed by the assignor, assignee and
other parties as contemplated thereby.
"Authorized Officer" shall mean the Vice-Chairman, the Chief
Executive Officer or the Chief Financial Officer of a Borrower.
"BA Exposure" shall mean, at any time, the aggregate face
amount of all outstanding Bankers' Acceptances.
"Bankers' Acceptance" shall mean a xxxx of exchange,
denominated in Canadian Dollars, drawn by LGEC and accepted by a Lender pursuant
to Section 2.4.
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"Bankers' Acceptance Rate" shall mean, on any day, and with
respect to any Bankers' Acceptance, an annual rate of interest equal to the rate
quoted by the Canadian Dollar Lender accepting and discounting such Bankers'
Acceptance for discounting Canadian bankers' acceptances having a face amount
and term comparable to the face amount and term of such Bankers' Acceptance as
of 10:00 a.m. New York City time on such day, or if such day is not a Business
Day, then on the next immediately preceding Business Day.
"Bankruptcy and Insolvency Act" shall mean the Bankruptcy and
Insolvency Act, R.S.C. 1985, c. B-3, as heretofore and hereafter amended.
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of
1978, as heretofore and hereafter amended, as codified at 11 U.S.C. Section 101
et seq.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing" shall mean a group of Loans of a single Interest
Rate Type and as to which a single Interest Period is in effect on a single day.
"Borrowing Base" shall mean, at any date for which the amount
thereof is to be determined, an amount equal to the aggregate (without double
counting) of the following:
(i) 100% of Eligible Receivables from Acceptable Major Account Debtors,
plus
(ii) 100% of Eligible L/C Receivables, plus
(iii) 90% of Eligible Receivables from Acceptable Domestic Account Debtors,
plus
(iv) 85% of Eligible Receivables from Acceptable Foreign Account Debtors,
plus
(v) 75% of Acceptable Tax Credits for which a Credit Party has not received
the applicable certificates referred to in clauses (iv) and (v) of the
definition of "Acceptable Tax Credit" or any analogous certificates required
under any Other Provincial Act, and 85% of Acceptable Tax Credits thereafter,
plus
(vi) 50% of Other Domestic Receivables, plus
(vii) 50% of Other Foreign Receivables, plus
(viii) 50% of the Eligible Library Amount, plus
(ix) 100% of amounts held in the Cash Collateral Accounts, plus
(x) the lesser of fifty percent (50%) of the book value of physical
videocassette inventory or $3,000,000, plus
(xi) in the case of an item of Product which is intended for domestic
theatrical release, the Home Video Credit plus the Pay Television Credit plus
the Free Television Credit; provided, however, that if any such Product has not
had a general theatrical release in the United States
- 8 -
within twelve months of its Completion, the Borrowers shall no longer be
entitled to include the foregoing credits in respect of such item of Product in
the Borrowing Base, plus
(xii) in the case of an item of Product which is intended as a direct to
video release, the Direct To Video Credit; provided, however, that if such
Product has not been released in the domestic home video market within twelve
months of its Completion, the Borrowers shall no longer be entitled to include
the foregoing credits in respect of such item of Product in the Borrowing Base,
plus
(xiii) in the case of an item of Product which is intended for foreign
exploitation, the Foreign Rights Credit; provided, however, that if such item of
Product has not been released in a major foreign territory within 12 months of
its Completion, the Borrowers shall no longer be entitled to include the
foregoing credits in respect of such item of Product in the Borrowing Base,
minus
(xiv) to the extent not otherwise deducted in computing the Borrowing Base,
the aggregate amount of all accrued but unpaid residuals owed to any trade guild
with respect to any item of Product, to the extent that the obligation of any
Credit Party to pay such residuals is secured by a security interest in such
item of Product or rights therein or proceeds thereof, which security interest
is not subordinated to the security interests of the Lenders (but the amount
deducted with respect to any such item of Product shall not exceed the amount
included in the Borrowing Base attributable to such item of Product), minus
(xv) a reserve of US$1,500,000 until such time as a Credit Party has
purchased all of the outstanding certificates of AFI (but the amount deducted
shall in no event be greater than the portion of the Borrowing Base attributable
to all items of Product owned by AFI or rights in items of Product held by AFI
II).
provided, however, that
(i) the portion of the Borrowing Base attributable to any particular
Acceptable Obligor (and its affiliates) other than Fox may not exceed 15% of the
total Borrowing Base;
(ii) the amount included in the Borrowing Base at any time for Other
Domestic Receivables and Other Foreign Receivables (in each case, other than
theatrical receivables) shall not exceed US$15,000,000 in the aggregate for all
such receivables or US$250,000 for any domestic obligor or US$250,000 for any
foreign obligor;
(iii) the portion of the Borrowing Base attributable at any time to each item
of Product which has not yet been Completed shall not exceed the Credit Parties'
investment in such item of Product, or if pursuant to the other provisions
hereof a Completion Guaranty is required for such item of Product, such lesser
amount as would be payable to the Administrative Agent by the completion
guarantor under such Completion Guaranty in the event such Product is not timely
Completed (except that if a Letter of Credit is issued hereunder in order to
support the applicable Credit Party's minimum payment obligation to acquire
distribution rights in an item of Product, amounts attributable to such rights
may be included in the Borrowing Base (even though the item of Product has not
yet been Completed) but only if (A) proof of Completion of the Item of Product
must be presented in order to draw under the Letter of Credit and (B) the
portion of the
- 9 -
Borrowing Base attributable to such Item of Product does not exceed the amount
of such Letter of Credit for such Item of Product);
(iv) the portion of the Borrowing Base attributable to Acceptable Tax
Credits shall not exceed US$15,000,000 in the aggregate;
(v) no amounts shall be in included in the Borrowing Base which are
attributable to an item of Product or right in which a Credit Party cannot
warrant sufficient title to the underlying rights;
(vi) no amount shall be included in the Borrowing Base unless the
Administrative Agent (for the benefit of itself, the Canadian Agent, the Issuing
Bank and the Lenders) has a first priority perfected security interest except
for amounts attributable to items of Product for which a guild has a first
priority security interest pursuant to (i) an intercreditor agreement entered
into between such guild and the Administrative Agent in accordance with Section
6.2(e) hereof or (ii) in the case of items of Product that were acquired as part
of the Acquisition, a lien that existed as of the Closing Date;
(vii) the amount included in the Borrowing Base attributable to theatrical
receivables from obligors other than Acceptable Obligors shall not exceed
US$5,000,000 in the aggregate at any one time for all such receivables or
US$500,000 for any such obligor;
(viii) no additional amounts attributable to Acceptable Tax Credits shall be
included in the Borrowing Base after six months before the scheduled Maturity
Date; and
(ix) the portion of the Borrowing Base attributable to any of the Home Video
Credit, Pay Television Credit, Free Television Credit, Direct to Video Credit or
Foreign Rights Credit shall not exceed 90% of the Production Exposure for all
such items of Product to which such credits relate.
"Borrowing Base Certificate" shall have the meaning given to
such term in Section 5.1(e) hereof.
"Borrowing Certificate" shall mean a borrowing certificate,
substantially in the form of Exhibit H hereto, to be delivered by the Borrowers
to the Administrative Agent in connection with each Borrowing.
"Box Office Contingent Payments" shall mean certain contingent
payments based on the box office performance of the films currently entitled
"The Punisher" and "Dirty Dancing: Havana Nights" to be made by the Borrowers to
the Sellers on the terms set forth in the Merger Agreement.
"Budgeted Negative Cost" shall mean, with respect to any item
of Product, the amount of the cash budget (stated in U.S. Dollars) for such item
of Product including all costs customarily included in connection with the
acquisition of all underlying literary, musical and other rights with respect to
such item of Product and in connection with the preparation, production and
completion of such item of Product including costs of materials, equipment,
physical properties, personnel and services utilized in connection with such
item of Product, both "above-the-line" and "below-the-line", any Completion
Guaranty fee, and all other items
- 10 -
customarily included in negative costs, including finance charges and interest
expense, but excluding production fees and overhead charges payable to a Credit
Party, except to the extent such payments to a Credit Party are reimbursements
for production or development costs advanced by a Credit Party to a Person that
is not a Credit Party.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks are required or permitted to close in the
State of New York, the State of California and the provinces of Ontario, Quebec
and British Columbia; provided, however, that when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in Dollar deposits on the London Interbank
Market.
"Canadian Agent" shall mean JPMorgan Chase Bank (Toronto
Branch) in its capacity as agent for the Canadian Dollar Lenders hereunder or
such successor Canadian Agent as may be appointed pursuant to Section 12.13
hereof.
"Canadian Clearing Account" shall mean the account of the
Canadian Agent.
"Canadian Dollar Cash Collateral Account" shall have the
meaning given such term in Section 11.1 hereof.
"Canadian Dollar Credit Commitment" shall mean the commitment
of each Canadian Dollar Lender to make Canadian Dollar Loans, accept and
discount Bankers' Acceptances and to participate in Letters of Credit from the
Initial Date applicable to such Lender through the Commitment Termination Date
up to an aggregate amount at any one time outstanding, not in excess of the
amount set forth (i) opposite its name in the Schedule of Commitments appearing
in Schedule 1.1 hereto (or its Canadian Dollar Equivalent) or (ii) in any
applicable Assignment and Acceptance(s) to which it may be a party, as the case
may be, as such amount may be reduced from time to time in accordance with the
terms of this Credit Agreement.
"Canadian Dollar Equivalent" shall mean with respect to any
amount which is denominated in a currency other than Canadian Dollars, the
amount in Canadian Dollars determined by converting such other currency into
Canadian Dollars at the Bank of Canada noon spot rate in effect on the preceding
business day, as determined by the Canadian Agent.
"Canadian Dollar Facility" shall mean a revolving credit
facility providing for the issuance of Canadian Dollar Loans, Bankers'
Acceptances and Letters of Credit to LGEC in an aggregate principal amount of
US$15,000,000 or the Canadian Dollar Equivalent.
"Canadian Dollar Lenders" shall mean (i) the financial
institutions whose names appear at the foot hereof and who are designated as
such on Schedule 1.1 hereto and (ii) any assignee of a Canadian Dollar Lender
pursuant to Section 13.3.
"Canadian Dollar Loans" shall mean the loans made hereunder in
accordance with Section 2.3.
"Canadian Dollar Note" shall have the meaning given to such
term in Section 2.5(b) hereof.
- 11 -
"Canadian Dollars" and "C$" shall mean the lawful currency of
Canada.
"Canadian L/C Exposure" shall mean, at any time, the amount
expressed in Canadian Dollars or the Canadian Dollar Equivalent of the aggregate
face amount of all drafts which may then or thereafter be presented by
beneficiaries under all Letters of Credit issued to LGEC then outstanding plus
(without duplication), the face amount of all drafts which have been presented
or accepted under all Letters of Credit issued to LGEC but have not yet been
paid or have been paid but not reimbursed, whether directly or from the proceeds
of a Canadian Dollar Loan hereunder.
"Canadian Plan" shall mean any employee benefit, pension,
retirement or other equivalent or analogous plan or program including, without
limitation, any multi-employer pension plan, established or maintained by, for
or on behalf of any Credit Party, or any Subsidiary of any Credit Party,
domiciled in Canada which is subject to the minimum funding standards prescribed
by Applicable Law of Canada or any province, territory or other political
subdivision thereof.
"Canadian Prime Rate" shall mean the rate of interest per
annum in effect from time to time that is equal to the greater of (i) the prime
rate of the Canadian Agent, being the rate of interest publicly announced by it
from time to time as its reference rate then in effect for determining interest
rates for commercial loans in Canadian Dollars made by the Canadian Agent in
Canada; and (ii) the annual rate of interest equal to the sum of the CDOR Rate
for bankers' acceptances having a term of one month plus 1% per annum.
"Canadian Prime Rate Loan" shall mean a Loan based on the
Canadian Prime Rate in accordance with the provisions of Article 2.
"Capital Expenditures" shall mean, with respect to any Person
for any period, the sum of (i) the aggregate of all expenditures (whether paid
in cash or accrued as a liability) by such Person during that period which, in
accordance with GAAP, are or should be included in "additions to property, plant
or equipment" or similar items included in cash flows (including Capital Leases)
and (ii) to the extent not covered by clause (i) hereof, the aggregate of all
expenditures properly capitalized in accordance with GAAP by such Person to
acquire, by purchase or otherwise, the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any other Person (other than
the portion of such expenditures allocable in accordance with GAAP to net
current assets or which is allocable to the acquisition of items of Product).
"Capital Lease", as applied to any Person, shall mean any
lease of any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Cash Collateral Accounts" shall have the meaning given to
such term in Section 11.1 hereof.
"Cash Equivalents" shall mean (i) marketable securities
issued, or directly and fully guaranteed or insured, by the United States of
America or any agency or instrumentality thereof (provided that the full faith
and credit of the United States of America is pledged in
- 12 -
support thereof) having maturities of not more than twelve months from the date
of acquisition, (ii) time deposits, demand deposits, certificates of deposit,
acceptances or prime commercial paper or repurchase obligations for underlying
securities of the types described in clause (i) entered into with, any Lender or
any commercial bank having a short-term deposit rating of at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Xxxxx'x Investors Service, Inc., (iii) commercial paper
with a rating of A-1 or A-2 or the equivalent thereof by Standard & Poor's
Corporation or P-1 or P-2 or the equivalent thereof by Xxxxx'x Investors
Service, Inc. and in each case maturing within twelve months after the date of
acquisition, (iv) any mutual fund or other pooled investment vehicle which
invests principally in the foregoing obligations or (v) any book-based
securities, negotiable instruments or securities represented by instruments in
bearer or registered form which evidence any of: (a) direct obligations of, or
obligations fully guaranteed as to the timely payment of principal and interest
by, the Government of Canada having remaining terms to maturity of no more than
365 days, (b) direct obligations of, or obligations fully guaranteed as to the
timely payment of principal and interest by, the Government of a province of
Canada having remaining terms to maturity of no more than 365 days, (c) demand
deposits, term deposits or certificates of deposits (having original maturities
of no more than 365 days) of banks or trust companies chartered or licensed
under the laws of Canada or any province thereof; provided that, at the time of
the investment or contractual commitment to invest therein, the short-term debt
rating of such bank or trust company shall have a rating of at least R-1
(middle) from Dominion Bond Rating Service Limited or of at least an equivalent
rating from Canadian Bond Rating Service, (d) commercial paper (having a
remaining term to maturity of no more than 365 days) having, at the time of the
investment or contractual commitment to invest therein, a rating of at least R-1
(middle) from Dominion Bond Rating Service Limited or of at least an equivalent
rating from Canadian Bond Rating Service or (e) notes issued by or bankers'
acceptances (having original maturities of no more than 365 days) accepted by
any bank or trust company referred to in (c) above.
"CCQ" shall mean the Civil Code of Quebec as in effect in the
province of Quebec on the date of execution of this Credit Agreement (as amended
from time to time).
"CDOR Rate" shall mean, on any day, the annual rate of
interest which is the rate determined by the Canadian Agent as being the
arithmetic average (rounded to the nearest one-thousandth of 1%, with five
ten-thousandths of 1% being rounded upwards) of the rates applicable to bankers
acceptances for the appropriate term displayed and identified as such on the
"Reuters Screen CDOR Page" (as defined in the International Swap and Derivatives
Association Inc. definitions, as modified and amended from time to time) as at
approximately 10:00 a.m. on such day, or if such day is not a Business Day then
on the immediately preceding Business Day (as adjusted by the Canadian Agent
after 10:00 a.m. to reflect any error in a posted rate of interest or in the
posted average annual rate of interest); provided, however, if such rates do not
appear on the Reuters Screen CDOR Page as contemplated, then the CDOR Rate on
any day shall be calculated as the arithmetic average of the discount rates
applicable to bankers' acceptances for the appropriate term quoted by the
Canadian Lenders as of approximately 10:00 a.m. on such day, or if such day is
not a Business Day, then on the immediately preceding Business Day. If less than
all the Canadian Lenders quote the aforementioned rate on the days and at the
times described above, the "CDOR Rate" shall be such other rate or rates as LGEC
and the Canadian Agent may agree.
- 13 -
"Chain of Title" shall have the meaning given to such term in
Section 5.20 hereof.
"Change in Control" shall mean (i) any Person or group (such
term being used as defined in Section 13(s) and 14(d) of the Securities Exchange
Act of 1934, as amended) that acquires ownership or control of in excess of 20%
of equity securities having voting power to vote in the election of the Board of
Directors of LGEC either on a fully diluted basis or based solely on the voting
stock then outstanding, (ii) if at any time, individuals who at the date hereof
constituted the Board of Directors of LGEC (together with any new directors
whose election by such Board of Directors or whose nomination for election by
the shareholders of LGEC, as the case may be, was approved by a vote of the
majority of the directors then still in office who were either directors at the
date hereof or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of LGEC then in office or (iii) any change of control as defined in
the Indenture for the Convertible Senior Subordinated Notes.
"Change in Management" shall mean either (i) Xxx Xxxxxxxxxx or
(ii) Xxxxx Xxxxxx, or a replacement for any such individuals approved in
accordance with this definition (a "Key Manager") shall cease for any reason,
including, without limitation, termination of employment, death or disability
(the term "disability" or "disabled" as used herein meaning an inability
continuing for one hundred and eighty (180) consecutive days (the "Disability
Period") to materially perform the functions and services currently being
performed by such Person), to materially perform the functions and services
currently being performed for the Borrowers by such Person and (ii) the
Borrowers shall fail, for a period of ninety (90) consecutive days following the
last day of the Disability Period in which a Key Manager may be considered
disabled or the day on which a Key Manager shall have otherwise ceased to
materially perform his executive functions with the Borrowers as aforesaid, to
replace such Key Manager with an individual acceptable to the Required Lenders
in their sole discretion. Any replacement for a Key Manager shall be deemed
reasonably acceptable to the Required Lenders unless, within 30 days after
receiving a written notice from the Borrowers containing the name of the
proposed replacement, the Administrative Agent notifies the Borrowers in writing
that the Required Lenders object to such replacement.
"Chase Clearing Account" shall mean the account of the
Administrative Agent maintained at the office of JPMorgan Chase Bank, Loan and
Agency Services Group, 0000 Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention:
Xxxxx Xxxxxxx, designated as the "Lions Gate Clearing Account", Account No.
323151353.
"Closing Date" shall mean the date on which the conditions
precedent set forth in Section 4.1 hereof have been satisfied or waived.
"Code" shall mean the Internal Revenue Code of 1986 and the
rules and regulations issued thereunder, as now and hereafter in effect, as
codified at 26 U.S.C. Section 1 et seq. or any successor provision thereto.
"Collateral" shall mean with respect to each Credit Party, all
of such Credit Party's right, title and interest in and to all personal
property, tangible and intangible, wherever located or situated and whether now
owned, presently existing or hereafter acquired or created,
- 14 -
including, but not limited to, all goods, accounts, instruments, intercompany
obligations, contract rights, partnership and joint venture interests,
documents, chattel paper, general intangibles, goodwill, equipment, machinery,
inventory, investment property, copyrights, trademarks, trade names, insurance
proceeds, cash, deposit accounts and the Pledged Securities, and any proceeds
thereof, products thereof or income therefrom, further including but not limited
to, all of such Credit Party's right, title and interest in and to each and
every item and type of Product, the scenario, screenplay or script upon which an
item of Product is based, all of the properties thereof, tangible and
intangible, and all domestic and foreign copyrights and all other rights therein
and thereto, of every kind and character, whether now in existence or hereafter
to be made or produced, and whether or not in possession of such Credit Party,
including with respect to each and every item of Product and without limiting
the foregoing language, each and all of the following particular rights and
properties (to the extent they are now owned or hereafter created or acquired by
such Credit Party):
(i) all scenarios, screenplays and/or scripts at every stage thereof;
(ii) all common law and/or statutory copyright and other rights in all
literary and other properties (hereinafter called "said literary properties")
which form the basis of such item of Product and/or which are or will be
incorporated into such item of Product, all component parts of such item of
Product consisting of said literary properties, all motion picture rights in and
to the story, all treatments of said story and said literary properties,
together with all preliminary and final screenplays used and to be used in
connection with such item of Product, and all other literary material upon which
such item of Product is based or from which it is adapted;
(iii) all motion picture rights in and to all music and musical compositions
used and to be used in such item of Product, if any, including, each without
limitation, all rights to record, rerecord, produce, reproduce or synchronize
all of said music and musical compositions in and in connection with motion
pictures;
(iv) all tangible personal property relating to such item of Product,
including, without limitation, all exposed film, developed film, positives,
negatives, prints, positive prints, answer prints, special effects, preparing
materials (including interpositives, duplicate negatives, internegatives, color
reversals, intermediates, lavenders, fine grain master prints and matrices, and
all other forms of pre-print elements), sound tracks, cutouts, trims and any and
all other physical properties of every kind and nature relating to such item of
Product whether in completed form or in some state of completion, and all
masters, duplicates, drafts, versions, variations and copies of each thereof, in
all formats whether on film, videotape, disk or other optical or electronic
media or otherwise and all music sheets and promotional materials relating to
such item of Product (collectively, the "Physical Materials");
(v) all collateral, allied, subsidiary and merchandising rights appurtenant
or related to such item of Product including, without limitation, the following
rights: all rights to produce remakes, sequels or prequels to such item of
Product, based upon such item of Product, said literary properties or the theme
of such item of Product and/or the text or any part of said literary properties;
all rights throughout the world to broadcast, transmit and/or reproduce by means
of television (including commercially sponsored, sustaining and subscription or
"pay" television) or by streaming video or by other means over the internet or
any other open or closed physical or
- 15 -
wireless network or by any process analogous to any of the foregoing, now known
or hereafter devised, such item of Product or any remake, sequel or prequel to
the item of Product; all rights to produce primarily for television or similar
use, a motion picture or series of motion pictures, by use of film or any other
recording device or medium now known or hereafter devised, based upon such item
of Product, said literary properties or any part thereof, including, without
limitation, based upon any script, scenario or the like used in such item of
Product; all merchandising rights including, without limitation, all rights to
use, exploit and license others to use and exploit any and all commercial
tie-ups of any kind arising out of or connected with said literary properties,
such item of Product, the title or titles of such item of Product, the
characters of such item of Product and/or said literary properties and/or the
names or characteristics of said characters and including further, without
limitation, any and all commercial exploitation in connection with or related to
such item of Product, any remake, sequel or prequel thereof and/or said literary
properties;
(vi) all statutory copyrights, domestic and foreign, obtained or to be
obtained on such item of Product, together with any and all copyrights obtained
or to be obtained in connection with such item of Product or any underlying or
component elements of such item of Product, including, in each case without
limitation, all copyrights on the property described in subparagraphs (i)
through (v) inclusive, of this definition, together with the right to copyright
(and all rights to renew or extend such copyrights) and the right to xxx in the
name of any of the Credit Parties for past, present and future infringements of
copyright;
(vii) all insurance policies and completion guaranties connected with such
item of Product and all proceeds which may be derived therefrom;
(viii) all rights to distribute, sell, rent, license the exhibition of and
otherwise exploit and turn to account such item of Product, the Physical
Materials, the motion picture rights in and to the story and/or other literary
material upon which such item of Product is based or from which it is adapted,
and the music and musical compositions used or to be used in such item of
Product;
(ix) any and all sums, proceeds, money, products, profits or increases,
including money profits or increases (as those terms are used in the UCC or
otherwise) or other property obtained or to be obtained from the distribution,
exhibition, sale or other uses or dispositions of such item of Product or any
part of such item of Product, including, without limitation, all sums, proceeds,
profits, products and increases, whether in money or otherwise, from the sale,
rental or licensing of such item of Product and/or any of the elements of such
item of Product including, without limitation, from collateral, allied,
subsidiary and merchandising rights, and further including, without limitation,
all monies held in any Collection Account;
(x) the dramatic, nondramatic, stage, television, radio and publishing
rights, title and interest in and to such item of Product, and the right to
obtain copyrights and renewals of copyrights therein;
(xi) the name or title of such item of Product and all rights of such Credit
Party to the use thereof, including, without limitation, rights protected
pursuant to trademark, service xxxx, unfair competition and/or any other
applicable statutes, common law, or other rule or principle of law;
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(xii) any and all contract rights and/or chattel paper which may arise in
connection with such item of Product;
(xiii) all accounts and/or other rights to payment which such Credit Party
presently owns or which may arise in favor of such Credit Party in the future,
including, without limitation, any refund or rebate in connection with a
completion guaranty or otherwise, all accounts and/or rights to payment due from
Persons in connection with the distribution of such item of Product, or from the
exploitation of any and all of the collateral, allied, subsidiary, merchandising
and other rights in connection with such item of Product;
(xiv) any and all "general intangibles" (as that term is defined in the UCC)
not elsewhere included in this definition, including, without limitation, any
and all general intangibles consisting of any right to payment which may arise
in connection with the distribution or exploitation of any of the rights set out
herein, and any and all general intangible rights in favor of such Credit Party
for services or other performances by any third parties, including actors,
writers, directors, individual producers and/or any and all other performing or
nonperforming artists in any way connected with such item of Product, any and
all general intangible rights in favor of such Credit Party relating to licenses
of sound or other equipment, or licenses for any photograph or photographic or
other processes, and any and all general intangibles related to the distribution
or exploitation of such item of Product including general intangibles related to
or which grow out of the exhibition of such item of Product and the exploitation
of any and all other rights in such item of Product set out in this definition;
(xv) any and all goods including, without limitation, inventory (as that
term is defined in the UCC) which may arise in connection with the creation,
production or delivery of such item of Product and which goods pursuant to any
production or distribution agreement or otherwise are owned by such Credit
Party;
(xvi) all and each of the rights, regardless of denomination, which arise in
connection with the acquisition, creation, production, completion of production,
delivery, distribution, or other exploitation of such item of Product,
including, without limitation, any and all rights in favor of such Credit Party,
the ownership or control of which are or may become necessary or desirable, in
the opinion of the Administrative Agent, in order to complete production of such
item of Product in the event that the Administrative Agent exercises any rights
it may have to take over and complete production of such item of Product;
(xvii) any and all documents issued by any pledgeholder or bailee with respect
to such item of Product or any Physical Materials (whether or not in completed
form) with respect thereto;
(xviii) any and all Collection Accounts, Production Accounts or other bank
accounts established by such Credit Party with respect to such item of Product;
(xix) any and all rights of such Credit Party under any Distribution
Agreements relating to such item of Product; and
(xx) any and all rights of such Credit Party under contracts relating to the
production or acquisition of such item of Product, including but not limited to,
all contracts which have been delivered to the Administrative Agent pursuant to
this Credit Agreement.
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Notwithstanding the foregoing or any contrary provision herein or in any other
Fundamental Document, Collateral shall not include the Excluded Assets.
"Collection Account" shall have the meaning given to such term
in Section 8.3(a) hereof.
"Commitment" shall mean the U.S. Dollar Revolving Credit
Commitment and/or the Term Loan Commitment and/or the Canadian Dollar Credit
Commitment of each Lender.
"Commitment Fee" shall have the meaning given to such term in
Section 2.8(a) hereof.
"Commitment Termination Date" shall mean (i) December 31, 2008
or (ii) such earlier date on which the Commitments shall terminate in accordance
with Section 2.8 or Article 7 hereof.
"Complete" or "Completed" or "Completion" shall mean with
respect to any item of Product, that (A) either (i) sufficient elements have
been delivered by the applicable Borrower to, and accepted, deemed or determined
to be accepted and/or exploited by, a Person (other than the Borrowers or
Affiliates thereof) to permit such Person to exhibit the item of Product in the
theatrical or other medium for which the item of Product is intended for initial
exploitation or (ii) the applicable Borrower has certified to the Administrative
Agent that an independent laboratory has in its possession a complete final 35
mm or 70 mm (or other size which has become standard in the industry) composite
positive print, video master or other equivalent master copy of the item of
Product as finally cut, main and end titled, edited, scored and assembled with
sound track printed thereon in perfect synchronization with the photographic
action and fit and ready for exhibition and distribution in the theatrical or
other medium for which the item of Product is intended for initial exploitation,
provided if such certification shall not be verified to the Administrative Agent
by such independent laboratory within 20 Business Days after a request by the
Administrative Agent for verification, such item of Product shall revert to
being Uncompleted until the Administrative Agent receives such verification, and
(B) if such item of Product was acquired by a Credit Party from a third party,
the entire acquisition price or minimum advance shall have been paid to the
extent then due and there is no condition or event (including, without
limitation, the payment of money not yet due, except to the extent that an
amount sufficient to make such payment has been reserved from availability under
both the Borrowing Base and the unused Commitments hereunder) the occurrence of
which might result in such Credit Party losing any of its rights in such item of
Product.
"Completion Guaranty" shall mean with respect to any item of
Product a completion guaranty, in form and substance satisfactory to the
Administrative Agent, issued by an Approved Completion Guarantor, which (i)
names the Administrative Agent (for the benefit of the Administrative Agent, the
Canadian Agent, the Issuing Bank and the Lenders) or the applicable outside
production financier to the extent such item of Product is financed in
accordance with Section 6.1(f) hereof as a beneficiary thereof to the extent of
the applicable Credit Party's financial interest in such item of Product and
(ii) guarantees that such item of Product will be Completed in a timely manner,
or else payment made to the Administrative Agent (on behalf of the
Administrative Agent, the Canadian Agent, the Issuing Bank and the
- 18 -
Lenders) of an amount at least equal to the aggregate amount expended on the
production of such item of Product by, or for the account of, the applicable
Credit Party plus interest on, and other bank charges with respect to, such
amount.
"Consolidated Capital Base" shall mean the sum of the
principal amount of all Subordinated Debt outstanding plus the amount of total
stockholders' equity (including capital stock and retained earnings and
deficits) of LGEC and its Consolidated Subsidiaries (but excluding any retained
earnings and deficit of Cine-Groupe Corporation, Xxxxxxxx Films Distribution
Inc., Xxxxxxxx Film Productions Inc. and CinemaNow), minus the book value of any
item of Product having a budgeted Negative Cost in excess of US$8,000,000 which
has not been released within 18 months after Completion.
"Consolidated Net Income" shall mean, for any period for which
such amount is being determined, the net income (or loss) of LGEC and its
Consolidated Subsidiaries for such period taken as a single accounting period in
accordance with GAAP, provided that there shall be excluded (i) income (or loss)
of any Person (other than a Consolidated Subsidiary) in which LGEC or any of its
Consolidated Subsidiaries has an equity investment or comparable interest,
except to the extent of the amount of dividends or other distributions actually
paid to LGEC or any of its Consolidated Subsidiaries by such Person during such
period, (ii) the income (or loss) of any Person (other than LGEC or any Person
which is a Consolidated Subsidiary of LGEC on the Closing Date before giving
effect to the Acquisition) accrued prior to the date it becomes a Consolidated
Subsidiary of LGEC or is merged into or Consolidated with LGEC or any of its
Consolidated Subsidiaries or the Person's assets are acquired by LGEC or any of
its Consolidated Subsidiaries, and (iii) the income of any Consolidated
Subsidiary (other than LGEI) to the extent that the declaration or payment of
dividends or similar distributions by that Consolidated Subsidiary of its income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Consolidated Subsidiary.
"Consolidated Senior Debt" shall mean all Indebtedness of LGEC
and its Consolidated Subsidiaries other than Subordinated Debt.
"Consolidated Subsidiaries" shall mean all Subsidiaries of a
Person which are required or permitted to be consolidated with such Person for
financial reporting purposes in accordance with GAAP.
"Contribution Agreement" shall mean the contribution agreement
substantially in the form of Exhibit G hereto, as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to time.
"Copyright Security Agreement" shall mean a Copyright Security
Agreement, substantially in the form of Exhibit C-1 hereto, as the same may be
amended, supplemented or otherwise modified, renewed or replaced from time to
time by delivery of a Copyright Security Agreement Supplement or otherwise.
"Copyright Security Agreement Supplement" shall mean a
Copyright Security Agreement Supplement substantially in the form of Exhibit C-2
hereto.
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"Convertible Senior Subordinated Notes" shall mean LGEI's
convertible senior subordinated notes issued pursuant to an offering circular
dated November 28, 2003 which are due November 30, 2010.
"Credit Exposure" shall mean, without duplication, with
respect to any Lender, the sum of such Lender's (i) aggregate principal amount
of outstanding Loans hereunder and under Special Purpose Producer Credit
Agreements, (ii) Pro Rata Share of the then current L/C Exposure, (iii)
aggregate face amount of outstanding Bankers' Acceptances which have been
accepted by such Lender, with any of the foregoing which are denominated in
Canadian Dollars being included at their U.S. Dollar Equivalent and (iv) Pro
Rata Share of the unused amount of the Revolving Credit Commitment then in
effect.
"Credit Party" shall mean each of the Borrowers and
Guarantors.
"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement designed to protect a Credit Party against fluctuations
in currency values.
"DBNA" shall mean the Depository Bills and Notes Act (Canada)
S.C. 1998, c. 13 as heretofore and hereafter amended.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Designated Picture" shall mean any project for the production
of a theatrical feature motion picture, which meets the following criteria: (a)
is not yet Completed; (b) for which a Credit Party will be the initial copyright
owner or will be acquiring the copyright upon Completion, except to the extent
otherwise approved by the Administrative Agent pursuant to Section 4.3(e); (c)
is being produced by a Credit Party or a Special Purpose Producer; (d) has a
Budgeted Negative Cost which would not result in a violation of the covenants
herein if produced by a Credit Party; (e) will be produced under the terms of a
Completion Guaranty issued by an Approved Completion Guarantor; (f) over which a
Credit Party has meaningful direct or indirect budgetary or artistic control;
and (g) has been declared to the Administrative Agent as a "Designated Picture"
and has satisfied the conditions precedent for Loans under the Special
Production Tranche set forth in Section 4.3 hereof.
"Direct to Video Credit" shall mean shall mean with respect to
each item of Product that is intended for direct-to-video release, an amount
equal to 40% of the Budgeted Negative Cost therefor, or such lesser amount as
the Borrowers determine will be received by them from both the video
distribution and television distribution of such item of Product in the United
States and Canada; provided however, that no Direct To Video Credit will be
included in the Borrowing Base with respect to any item of Product prior to its
Completion except (i) for items of Product being funded under the Special
Production Tranche, (ii) for items of Product for which a Letter of Credit is
issued in order to support the Borrowers' minimum payment obligation to acquire
distribution rights in such item of Product and (iii) for purposes of computing
the Leverage Ratio; provided further that such credit shall be reduced
dollar-for-dollar by the amount of any advance or other payment paid, or
contractually
- 20 -
committed to be paid, to any Credit Party with respect to both the video and
television distribution of such item of Product; provided further that such
credit shall be eliminated with respect to an item of Product upon twenty-four
(24) months after Completion.
"Discount Proceeds" means, for any Bankers' Acceptance, an
amount equal to (A) the amount (rounded to the nearest whole cent, and with
one-half of one cent being rounded up) calculated on the applicable Borrowing
date by multiplying (a) the face amount of the Bankers' Acceptance by (b) the
quotient of one divided by the sum of one plus the product of (i) the Banker's
Acceptance Rate (expressed as a decimal) applicable to such Bankers' Acceptance
multiplied by (ii) a fraction, the numerator of which is the contract period of
the Bankers' Acceptance expressed in days and the denominator of which is 365,
with such quotient being rounded up or down to the fifth decimal place, and with
..000005 being rounded up, minus (B) the Acceptance Fee.
"Distribution Agreements" shall mean (i) any and all
agreements entered into by a Credit Party pursuant to which such Credit Party
has sold, leased, licensed or assigned distribution rights or other exploitation
rights to any item of Product to an un-Affiliated Person and (ii) any and all
agreements hereafter entered into by a Credit Party pursuant to which such
Credit Party sells, leases, licenses or assigns distribution rights or other
exploitation rights to an item of Product to an un-Affiliated Person.
"EBIT" shall mean, for any period, for LGEC and its
Subsidiaries on a Consolidated basis, the sum for such period of (i)
Consolidated Net Income, (ii) Total Interest, and (iii) provision for income
taxes during such period, all as determined for such period in conformity with
GAAP excluding non-cash extraordinary, unusual or non-recurring gains and losses
(e.g., shutdown and consolidation expenses), recognizing that for purposes of
this definition write-downs and amortization of capitalized film costs are not
considered to be extraordinary, unusual or non-recurring
"Eligible Canadian Assignee" shall mean either (x) a
commercial bank or other financial institution regularly engaged in the business
of making commercial loans organized under the laws of Canada or any province
thereof or a branch of a foreign commercial bank which is licensed to do
business in Canada or any province thereof or (y) an institution consented to by
the Borrowers.
"Eligible L/C Receivable" shall have the same definition as an
Eligible Receivable except that (i) an Acceptable L/C shall have been delivered
to the Administrative Agent for the full amount of the receivable and (ii) such
receivable need not be with an Acceptable Obligor.
"Eligible Library Amount" shall be (x) US$358,600,000 as of
the Closing Date and (y) thereafter, the aggregate of the amounts for all of the
components of the Credit Parties' library determined initially and on an annual
basis thereafter by an independent consultant selected and paid for by the
Borrowers and approved by the Administrative Agent in its reasonable discretion
exercised in good faith using methodology consistent with the initial valuation
without double counting for items of Product that are receiving other credit in
the Borrowing Base on an annual basis and on an interim basis at the
Administrative Agent's request
- 21 -
no more than once a year; provided, however, that (i) there will be interim
reductions to the Eligible Library Amount to reflect decreases, if any, in the
remaining value of unsold library rights resulting from significant library
dispositions during such interim period (e.g., any single agreement or series of
related agreements pertaining to the licensing, distribution or sale of library
product providing for aggregate payments (including reasonably estimated
contingent payments) to LGEC or a Subsidiary of LGEC in excess of
US$10,000,000); (ii) the Eligible Library Amount may be increased in the case of
a significant library acquisition upon delivery of a supplemental valuation
report meeting the above requirements; (iii) the portion of the Borrowing Base
attributable to the Eligible Library Amount shall at no time be greater than
US$175,000,000 and shall be decreased by US$10,000,000 on each anniversary of
the Closing Date prior to the Maturity Date; and (iv) the Eligible Library
Amount shall not be eligible for inclusion in the Borrowing Base until all
valuations and legal due diligence deemed necessary by the Administrative Agent
in connection therewith have been completed.
"Eligible Receivables" shall mean, at any date at which the
amount thereof is to be determined, an amount equal to the sum of the present
values (discounted on a quarterly basis, in the case of amounts which are not
due and payable within 12 months following the date of determination by a rate
of interest equal to the interest rate in effect on the date of the computation
with regard to Alternate Base Rate Loans) of (a) all net amounts which pursuant
to a binding agreement are contractually obligated to be paid to any Credit
Party either unconditionally or subject only to normal delivery requirements,
and which are reasonably expected by the Borrowers to be payable and collected
from Acceptable Obligors minus (b) the sum, without double-counting, of (i) the
following items (based on the relevant Credit Party's then best estimates):
royalties, residuals, commissions, participations and other payments to third
parties, collection/distribution expenses and commissions, home video
fulfillment costs, taxes (including foreign withholding, remittance and similar
taxes) chargeable in respect of such accounts receivable, and any other
projected expenses of a Credit Party arising in connection with such amounts and
(ii) the outstanding amount of unrecouped advances made by a distributor to the
extent subject to repayment by a Credit Party or adjustment or recoupment, but
Eligible Receivables shall not include amounts:
(i) in the aggregate due from a single Acceptable Obligor which are in
excess of the Allowable Amount with respect to such Acceptable Obligor or, in
the case of an Affiliated Group, in the aggregate due from the relevant
Acceptable Obligors with respect to that Affiliated Group, unless in either case
such excess is supported by an Acceptable L/C;
(ii) which in the sole judgement of the Administrative Agent, are subject to
material conditions precedent to payment (including a material performance
obligation or a material executory aspect on the part of a Credit Party or any
other party or obligations contingent upon future events not within the relevant
Credit Party's direct control);
(iii) which are (i) more than 120 days past due, in the case of receivables
due from an obligor which has its principal place of business and jurisdiction
of incorporation or formation within North America, or (ii) more than one
hundred and twenty (120) days past due, in the case of receivables due from an
obligor which has its principal place of business and jurisdiction of
incorporation or formation located outside North America;
- 22 -
(iv) which are theatrical receivables due from any obligor in connection
with the theatrical exhibition, distribution or exploitation of an item of
Product that are still outstanding three months after their booking;
(v) to be paid in a currency other than United States Dollars to the extent
exceeding US$3,000,000 (except for Canadian Dollars for which the threshold
shall be C$15,000,000) in the aggregate, unless hedged in a manner satisfactory
to the Administrative Agent;
(vi) to the extent included in the Credit Parties' estimated bad debts;
(vii) due from any obligor which has 20% or more of the total receivable
amount from such obligor 120 or more days past due (exclusive of amounts that
are being disputed or contested in good faith);
(viii) for which there is bona fide request for a material credit, adjustment,
compromise, offset, counterclaim or dispute; provided, however, that only the
amount in question shall be excluded from such receivable;
(ix) which arise from a multi-picture Distribution Agreement which allows
the obligor on such receivable to exercise a right of offset or recoupment for
any amount payable to or advanced by such obligor under such Distribution
Agreement, against any amount payable with respect to such receivable; provided,
however, that only the maximum amount which such obligor may offset or recoup
shall be excluded from Eligible Receivables
(x) which are attributable to an item of Product or right in which a Credit
Party cannot warrant sufficient title to the underlying rights to justify such
receivable;
(xi) in which the Administrative Agent (for the benefit of itself, the
Issuing Bank and the Lenders) does not have a first priority perfected security
interest;
(xii) which are determined by the Administrative Agent in its reasonable
discretion, acting in good faith, upon written notice from the Administrative
Agent to LGEC and effective 10 days subsequent to LGEC's receipt of such notice,
to be unacceptable;
(xiii) which relate to an item of Product or right as to which the
Administrative Agent has not received a fully executed laboratory access letter
or pledgeholder agreement for a laboratory holding physical elements sufficient
to fully exploit the rights held by the Credit Party in such item of Product;
(xiv) which may be subject to repayment to the extent not earned by
performance;
(xv) which are attributable to an item of Product which has not been
Completed unless the relevant Credit Party is in compliance with all credit
agreement covenants applicable to the production of such item of Product,
including without limitation, delivery of any required completion guaranty;
(xvi) which are attributable to any item of Product which has not been
Completed and for which a completion guaranty is required by the credit
agreement, to the extent there is not in
- 23 -
effect a completion guaranty from an Approved Completion Guarantor or to the
extent that such receivable amounts exceed the amount which would be paid to the
relevant Credit Party under the related completion guaranty if the item of
Product were abandoned as of the date of computation of the Borrowing Base
(except that if a Letter of Credit is issued hereunder in order to support the
Credit Party's minimum payment obligation to acquire distribution rights in an
item of Product, amounts attributable to such rights may be treated as Eligible
Receivables (even though the item of Product has not yet been Completed) but
only if (A) proof of Completion of the item of Product must be presented in
order to draw under the Letter of Credit, (B) the portion of the Borrowing Base
attributable to such Eligible Receivables for such item of Product does not
exceed the amount of such Letter of Credit for such item of Product, and (C)
such amounts otherwise meet all of the applicable criteria for inclusion as
Eligible Receivables); or
(xvii) which will not become due and payable until one year or more after the
scheduled Maturity Date.
"Eligible U.S. Assignee" shall mean either (x) a commercial
bank or other financial institution regularly engaged in the business of making
commercial loans organized under the laws of the United States of America or any
State thereof or a branch of a foreign commercial bank which is licensed to do
business in the United States of America or any State thereof or (y) an
institution consented to by the Borrowers.
"Environmental Laws" shall mean any and all federal, state,
provincial, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees or requirements of any Governmental Authority
regulating, relating to, or imposing liability or standards of conduct
concerning, any Hazardous Material or environmental protection or health and
safety, as now or at any time hereafter in effect, including without limitation,
the Clean Water Act also known as the Federal Water Pollution Control Act
("FWPCA"), 33 U.S.C. Section 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C.
Sections 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act
("FIFRA"), 7 U.S.C. Sections 136 et seq., the Surface Mining Control and
Reclamation Act ("SMCRA"), 30 U.S.C. Sections 1201 et seq., the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Superfund Amendments and Reauthorization Act of 1986
("XXXX"), Public Law 99-499, 100 Stat. 1613, the Emergency Planning and
Community Right to Know Act ("EPCRA"), 42 U.S.C. Section 11001 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq.,
the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. Section
655 and Section 657, the Waste Management Act, R.S.B.C. 1996, c. 481, the
Transportation of Dangerous Goods Act, R.S.B.C. 1996, c. 458 and other such laws
relating to the storage, transportation, treatment and disposal of Hazardous
Substances into the air, surface water, ground water, land surface, subsurface
strata or any building or structure and, together, in each case, with any
amendment thereto, and the regulations adopted pursuant thereto.
"Equity Interests" means shares of the capital stock,
partnership interests, membership interest in a limited liability company,
beneficial interests in a trust or other equity interests in any Person or any
warrants, options or other rights to acquire such interests.
- 24 -
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as heretofore and hereafter amended, as codified at 29 U.S.C. Section
1001 et seq. and the regulations promulgated thereunder.
"ERISA Affiliate" shall mean each Person (as defined in
Section 3(9) of ERISA) which is treated as a single employer with any Credit
Party under Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean a Loan based on the LIBO Rate in
accordance with the provisions of Article 2 hereof.
"Event of Default" shall have the meaning given to such term
in Article 7 hereof.
"Excluded Assets" shall mean certain amounts from any
recoveries received by the Borrowers from the Cash Flow Insurance Claims (as
such term is defined in the Merger Agreement) to be paid to the Sellers on the
terms set forth in the Merger Agreement.
"Existing Credit Agreement" shall have the meaning given such
term in the Introductory Statement hereof.
"Fee Letter" shall mean that certain letter agreement dated as
of October 8, 2003 between LGEC and LGEI on the one hand, and the Administrative
Agent and JPMorgan Securities Inc. on the other hand, relating to the payment of
certain fees by the Borrowers.
"FHC" shall mean Film Holdings Co.
"Film Spending Ratio" shall have the meaning given to such
term in Section 6.21 hereof.
"Fixed Charges Coverage Ratio" shall have the meaning given to
such term in Section 6.20 hereof.
"Foreign Rights Credit" shall mean with respect to each item
of Product for which a Credit Party holds foreign distribution rights, an amount
equal to 15% of the Budgeted Negative Cost for such item of Product, or such
lesser amount as such Credit Party reasonably projects will be received by it on
a net present value basis from foreign distribution of such item of Product
(computed in a manner acceptable to the Administrative Agent); reduced in either
case dollar-for-dollar by the amount of any advance or other payment paid, or
committed to be paid, (including, without limitation, any Eligible Receivables)
to any Credit Party with respect to the exhibition or other exploitation of such
item of product in any media outside the United States and Canada; provided
however, that no Foreign Rights Credit will be included in the Borrowing Base
with respect to any item of Product prior to its Completion except (i) for items
of Product being funded under the Special Production Tranche and (ii) for
purposes of computing the Leverage Ratio.
"Fox" shall mean Twentieth Century Fox Home Entertainment Inc.
- 25 -
"Free Television Credit" shall mean with respect to each item
of Product that is intended for theatrical release in the United States and for
which a Credit Party holds free television rights for such territory, an amount
equal to 5% of the Budgeted Negative Cost for such item of Product or such
lesser amount as the Borrower reasonably projects will be received by it on a
net present value basis from exploitation of such item of Product in such media
(computed in a manner acceptable to the Administrative Agent), in each case, net
of any amounts paid or advanced to the Credit Parties with respect to such item
of Product in such media; provided however that no Free Television Credit will
be included in the Borrowing Base with respect to any item of Product prior to
its Completion except (i) for items of Product being funded under the Special
Production Tranche and (ii) for purposes of computing the Leverage Ratio; and
further provided, that the Free Television Credit with respect to each item of
Product shall be eliminated upon the earlier of (A) the sale or licensing of
free television rights for such item of Product in the United States and (B) the
three-year anniversary of the U.S. theatrical release of such item of Product.
"Fundamental Documents" shall mean, this Credit Agreement, the
Notes, the Bankers' Acceptances, the Pledgeholder Agreements, the Laboratory
Access Letters, the Copyright Security Agreement, the Copyright Security
Agreement Supplements, the Trademark Security Agreement, the Xxxxxxx Pledge
Agreement, the Notices of Assignment and Irrevocable Instruction, the
Contribution Agreement, any Instrument of Assumption and Joinder, the Hypothec
and debenture, Pledge of Debenture and mandate delivered in connection
therewith, UCC financing statements, the PPSA financing statements, each Special
Purpose Producer Credit Agreement and each of the agreements delivered pursuant
thereto and any other ancillary documentation which is required to be or is
otherwise executed by any Credit Party and delivered to the Administrative Agent
in connection with this Credit Agreement or any of the documents listed above.
"GAAP" shall mean generally accepted accounting principles as
now or hereafter adopted by the Canadian Institute of Chartered Accountants or
any successor thereto in effect from time to time consistently applied.
"Xxxxxxx Pledge Agreement" shall mean the pledge agreement
entered into among Xxxxx Xxxxxxx as trustee, LGEC, Lions Gate Television Corp.
and the Administrative Agent substantially in the form of Exhibit P hereto.
"Governmental Authority" shall mean any federal, state,
provincial, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, or any court, in each case whether of the
United States, Canada or any foreign jurisdiction.
"Guarantors" shall mean LGEC with respect to the Obligations
of LGEI, LGEI with respect to the Obligations of LGEC, and all the other
entities listed on Schedule 3.7(a) and Schedule 1.3 hereto and any other direct
or indirect Subsidiary of a Credit Party acquired or created after the date
hereof, which Subsidiary becomes a signatory to this Credit Agreement as a
Guarantor as required by Section 5.17; provided, however, that for the sake of
clarification, no Unrestricted Subsidiary or Inactive Subsidiary shall be a
Guarantor hereunder; provided, further, that neither AFI nor AFI II shall be
considered a Guarantor under this Credit Agreement until
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such time as a Credit Party acquires a controlling equity or membership interest
in AFI or AFI II, as applicable.
"Guaranty" shall mean, as to any Person, any direct or
indirect obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, Capital Lease, dividend or other monetary obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, by contract, as a general partner or otherwise,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, or (c) to purchase
property, securities or services, in each case, primarily for the purpose of
assuring the performance by the primary obligor of any such primary obligation.
The amount of any Guaranty shall be deemed to be an amount equal to (x) the
stated or determinable amount of the primary obligation in respect of which such
Guaranty is made (or, if the amount of such primary obligation is not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder)) or (y) the stated
maximum liability under such Guaranty, whichever is less.
"Hazardous Materials" shall mean any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or similar materials defined in any Environmental
Law.
"Home Video Credit" shall mean with respect to each item of
Product that is intended for domestic theatrical release and for which the
Borrowers hold domestic home video rights, an amount equal to (A) for the period
prior to theatrical release of such item of Product, 25% of the Budgeted
Negative Cost therefor and (B) thereafter, shall mean, at any date at which the
amount thereof is to be determined, for each item of Product for which the
Borrowers have not yet received from Fox (or Fox's successor or replacement) a
royalty statement reporting actual home video sales, an amount determined in
accordance with the home video formula set forth on Schedule 1.5 hereto no
earlier than 15 days after theatrical release of such item of Product; provided
however that no Home Video Credit will be included in the Borrowing Base with
respect to any item of Product prior to its Completion except (i) for items of
Product being funded under the Special Production Tranche, (ii) for items of
Product for which a Letter of Credit is issued in order to support the
Borrowers' minimum payment obligation to acquire distribution rights in such
item of Product and (iii) for purposes of computing the Leverage Ratio, and
provided further that with respect only to items of Product that have been
released theatrically on less than 100 screens the Home Video Credit shall not
at any time exceed 25% of the Budgeted Negative Cost therefor.
"Hypothec" shall mean a hypothec substantially in the form of
Exhibit M-1.
"Inactive Subsidiary" shall mean (i) as of the Closing Date,
each direct or indirect Subsidiary of LGEC listed on Schedule 3.7(c) hereto, and
(ii) any additional direct or indirect Subsidiary of LGEC hereafter acquired or
formed by LGEC or any of its Subsidiaries which in either case has assets of
less than US$50,000; provided, however, that an Inactive Subsidiary
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shall cease to be an Inactive Subsidiary hereunder at such time, if any, that
such former Inactive Subsidiary acquires assets valued at more than US$50,000.
"Indebtedness" shall mean (without double counting), at any
time and with respect to any Person, (i) indebtedness of such Person for
borrowed money (whether by loan or the issuance and sale of debt securities) or
for the deferred purchase price of property or services purchased (other than
amounts constituting trade payables (payable within 90 days) arising in the
ordinary course of business); (ii) obligations of such Person in respect of
letters of credit, acceptance facilities, or drafts or similar instruments
issued or accepted by banks and other financial institutions for the account of
such Person; (iii) obligations of such Person under Capital Leases; (iv)
deferred payment obligations of such Person resulting from the adjudication or
settlement of any litigation; and (v) indebtedness of others of the type
described in clauses (i), (ii), (iii) and (iv) hereof which such Person has (a)
directly or indirectly assumed or guaranteed in connection with a Guaranty or
(b) secured by a Lien on the assets of such Person, whether or not such Person
has assumed such indebtedness (provided, that if such Person has not assumed
such indebtedness of another Person then the amount of indebtedness of such
Person pursuant to this clause (v) for purposes of this Credit Agreement shall
be equal to the lesser of the amount of the indebtedness of the other Person or
the fair market value of the assets of such Person which secures such other
indebtedness).
"Initial Date" shall mean (i) in the case of the
Administrative Agent and the Issuing Bank, the date hereof, (ii) in the case of
each Lender which is an original party to this Credit Agreement, the date hereof
and (iii) in the case of any other Lender, the effective date of the Assignment
and Acceptance pursuant to which it became a Lender.
"Instrument of Assumption and Joinder" shall mean an
Instrument of Assumption and Joinder substantially in the form of Exhibit L
hereto.
"Interest Deficit" shall have the meaning given to such term
in Section 2.17 hereof.
"Interest Payment Date" shall mean (i) with respect to
Canadian Prime Rate Loans, the last Business Day of each calendar month
(commencing on the last Business Day of December 2003), (ii) as to any
Eurodollar Loan having an Interest Period of one, two or three months, the last
day of such Interest Period, (iii) as to any Eurodollar Loan having an Interest
Period of more than three months, the last day of such Interest Period and, in
addition, each date during such Interest Period that would be the last day of an
Interest Period commencing on the same day as the first day of such Interest
Period but having a duration of three months or an integral multiple thereof and
(iv) with respect to Alternate Base Rate Loans, the last Business Day of each
March, June, September and December (commencing the last Business Day of
December, 2003).
"Interest Period" shall mean as to any Eurodollar Loan, the
period commencing on the date such Loan is made, continued or converted or the
last day of the preceding Interest Period and ending on the numerically
corresponding day (or if there is no corresponding day, the last day) in the
calendar month that is one, two, three, six, nine or twelve months thereafter as
the Borrowers may elect; provided, however, that (i) if any Interest Period
would end on a day which
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shall not be a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless such next succeeding Business Day would fall in
the next calendar month, in which case, such Interest Period shall end on the
next preceding Business Day, (ii) no Interest Period may be selected which would
end later than the Maturity Date, (iii) interest shall accrue from and including
the first day of such Interest Period to but excluding the last date of such
Interest Period and (iv) no Interest Period of nine or twelve months may be
selected unless such Interest Period is generally available in the market (as
determined by the Administrative Agent at the time of each request) and is
consented to by all the Lenders.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, synthetic cap, collar or floor
or other financial agreement or arrangement designed to protect a Credit Party
against fluctuations in interest rates.
"Interest Rate Type" shall have the meaning given to such term
in Section 2.1(e) hereof.
"Investment" shall mean any stock, evidence of indebtedness or
other security of any Person, any loan, advance, contribution of capital,
extension of credit or commitment therefor (including, without limitation, the
Guaranty of loans made to others, but excluding current trade and customer
accounts receivable arising in the ordinary course of business and payable in
accordance with customary trading terms in the ordinary course of business), any
purchase of (i) any security of another Person or (ii) any business or
undertaking of any Person or any commitment to make any such purchase, or any
other investment.
"Issuing Bank" shall mean (i) with regard to all Letters of
Credit issued to LGEI, JPMorgan Chase Bank, a New York banking corporation in
its capacity as such and (ii) with regard to all Letters of Credit issued to
LGEC, a commercial bank meeting the requirements of Section 12.12 hereof that
has been so appointed by the Administrative AGENT, or in either case such
successor as may be appointed pursuant to Section 12.12 hereof.
"ITA" shall mean the Income Tax Act (Canada) R.S.C. 1985 (5th
supp.) c.1, and the regulations enacted thereunder, as amended.
"Laboratory" shall mean any laboratory acceptable to the
Administrative Agent which is located in the United States or Canada or any
other jurisdiction which may be acceptable to the Administrative Agent in its
discretion and is a party to a Pledgeholder Agreement or a Laboratory Access
Letter.
"Laboratory Access Letter" shall mean a letter agreement among
(i) a Laboratory holding any elements of any item of Product to which any Credit
Party has the right of access, (ii) such Credit Party and (iii) the
Administrative Agent, substantially in the form of Exhibit D hereto or a form
otherwise acceptable to the Administrative Agent.
"L/C Exposure" shall mean, at any time for which it is to be
determined, the sum of the U.S. L/C Exposure plus the U.S. Dollar Equivalent of
the Canadian L/C Exposure.
"Lender" and "Lenders" shall mean the Canadian Dollar Lenders
and/or the U.S. Dollar Lenders, as applicable.
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"Lending Office" shall mean, with respect to any of the
Lenders, the branch or branches (or affiliate or affiliates) from which such
Lender's Canadian Prime Rate Loans, Bankers' Acceptances, Eurodollar Loans or
Alternate Base Rate Loans, as the case may be, are made or maintained and for
the account of which all payments of principal of, and interest on, such
Lender's Canadian Prime Rate Loans, Bankers' Acceptances, Eurodollar Loans or
Alternate Base Rate Loans are made, as notified to the Administrative Agent from
time to time.
"Leverage Ratio" shall have the meaning given such term in
Section 6.17 hereof.
"Letter of Credit" shall mean a letter of credit issued by the
Issuing Bank pursuant to Section 2.5 hereof.
"LIBO Rate" shall mean, with respect to the Interest Period
for a Eurodollar Loan, an interest rate per annum equal to the quotient (rounded
upwards to the next 1/100 of 1%) of (A) the average of the rates at which U.S.
Dollar deposits approximately equal in principal amount to the Administrative
Agent's portion of such Eurodollar Loan and for a maturity equal to the
applicable Interest Period are offered to the Lending Office of the
Administrative Agent in immediately available funds in the London Interbank
Market for Eurodollars at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period divided by (B) one minus
the applicable statutory reserve requirements of the Administrative Agent,
expressed as a decimal (including without duplication or limitation, basic,
supplemental, marginal and emergency reserves), from time to time in effect
under Regulation D or similar regulations of the Board. It is agreed that for
purposes of this definition, Eurodollar Loans made hereunder shall be deemed to
constitute Eurocurrency Liabilities as defined in Regulation D and to be subject
to the reserve requirements of Regulation D.
"Library Revenue" shall mean all revenue earned by a Credit
Party after the first exploitation cycle of a Completed item of Product which
shall include revenue attributable to theatrical exploitation, the first six
months of video sales, the first pay-television contract and minimum guarantees
from the first international sales.
"Lien" shall mean any mortgage, copyright mortgage, pledge,
security interest, hypothec, encumbrance, lien or charge or any other claim of
any kind whatsoever (including, without limitation, any conditional sale or
other title retention agreement, any agreement to grant a security interest at a
future date, any lease in the nature of security, and the filing of, or
agreement to give, any financing statement under the Uniform Commercial Code of
any jurisdiction).
"Liquidity Ratio" shall have the meaning given such term in
Section 6.19 hereof.
"Loan" or "Loans" shall mean the Canadian Dollar Loans and/or
the U.S. Dollar Loans, as applicable.
"Margin Stock" shall be as defined in Regulation U of the
Board.
"Material Adverse Effect" shall mean any change or effect that
(a) has a materially adverse effect on the business, assets, properties,
operations or financial condition of the Credit Parties taken as a whole, (b)
materially impairs the legal right, power or authority of
- 30 -
any Credit Party to perform its respective obligations under the Fundamental
Documents to which it is a party or (c) materially impairs the validity or
enforceability of, or materially impairs the rights, remedies or benefits
available to the Lenders under, the Fundamental Documents ; provided, however,
that any event or condition will be deemed to have a "Material Adverse Effect"
if such event or condition when taken together with all other events and
conditions occurring or in existence at such time (including all other events
and conditions which, but for the fact that a representation, warranty or
covenant is subject to a "Material Adverse Effect" exception, would cause such
representation or warranty contained herein to be untrue or such covenant to be
breached) would result in a "Material Adverse Effect", even though,
individually, such event or condition would not do so.
"Maturity Date" shall mean December 31, 2008.
"Merger Agreement" shall have the meaning given such term in
the Introductory Statement hereof.
"Multiemployer Plan" shall mean a plan described in Section
4001(a)(3) of ERISA to which any Credit Party or ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the five
preceding plan years made or accrued an obligation to make contributions.
"Negative Pick-up Obligation" means, with respect to any item
of Product produced by a third party, a commitment to pay a certain sum of money
or other Investment made by the Credit Party in order to obtain ownership or
distribution rights in such item of Product, but which does not require any
payment unless or until the requirements of clause (A) of the definition of
Completion have been satisfied. Negative Pick-up Obligation includes both
"traditional" negative pickup arrangements and indirect structures.
"Net Cash Proceeds" shall mean cash payments received
(including any cash payments received by way of repayment of intercompany
Indebtedness, special dividend or deferred payment of principal pursuant to a
note or installment receivable or otherwise, but only as and when received) from
any sale, lease, transfer or other disposition of any Investment or other asset
by a Credit Party or a Subsidiary of a Credit Party in each case net of (A) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred, (B) any taxes payable and reasonably estimated income taxes as a
consequence of such sale, lease, transfer or other disposition and (C) all
distributions and other payments made to holders of interests in any such Credit
Party or Subsidiary owned by Persons other than a Credit Party as a result of
such sale, lease, transfer or other disposition and (D) the amount of any
Indebtedness (other than Indebtedness hereunder) secured by the property or
assets being sold and/or required to be repaid by a Credit Party on the occasion
of such sale.
"Note" or "Notes" shall mean the U.S. Dollar Revolving Credit
Notes and/or Canadian Dollar Notes and/or the Term Notes, as applicable.
"Notice of Assignment and Irrevocable Instructions" shall mean
the Notice of Assignment and Irrevocable Instructions substantially in the form
of Exhibit K hereto or in such
- 31 -
other form as shall be acceptable to the Administrative Agent, including,
without limitation, the inclusion of such notice and instructions in a
Distribution Agreement.
"Obligations" shall mean the obligation of the Borrowers to
make due and punctual payment of (i) principal of and interest on the Loans, the
face amount of each Bankers' Acceptance, the Commitment Fees, any reimbursement
obligations in respect of Letters of Credit, monetary obligations of any Credit
Party pursuant to interparty agreements delivered in connection with Special
Purpose Producer Agreements, costs and attorneys' fees and all other monetary
obligations of the Borrowers to the Administrative Agent, the Canadian Agent,
the Issuing Bank or any Lender under this Credit Agreement, the Notes, any other
Fundamental Document or the Fee Letter, (ii) all amounts payable by the
Borrowers to any Lender under any Currency Agreement or Interest Rate Protection
Agreement, provided that the Administrative Agent shall have received written
notice thereof within ten (10) Business Days after execution of such Currency
Agreement or Interest Rate Protection Agreement and (iii) amounts payable to
JPMorgan Chase Bank or any of its Affiliates in connection with any bank account
maintained by the Borrowers or any other Credit Party at JPMorgan Chase Bank or
any such Affiliate or any other banking services provided to the Borrowers or
any other Credit Party by JPMorgan Chase Bank or any such Affiliate.
"Off-Balance Sheet Commitments" shall mean all binding,
irrevocable commitments of the Credit Parties for the acquisition of items of
Product, including cash flow commitments, Program Acquisition Guarantees,
Negative Pick-up Obligations and print and advertising commitments which are
not, pursuant to GAAP, reflected on the Consolidated balance sheet of LGEC;
provided, however, that such obligations for print and advertising commitments
shall not be included in Off-Balance Sheet Commitments until principal
photography has commenced for the item of Product to which such commitment
relates provided, further, that with respect to an item of Product for which
Artisan has committed to provide a portion of the production costs in connection
with an item of Product in connection with the AFI Facility, Off-Balance Sheet
Commitments in respect of Artisan's commitment for such item of Product shall be
reduced (but not below zero) by any amounts in the approved budget of such
Product (e.g. overhead costs and producers' fees) which are payable to Artisan
for its own account..
"Off-Balance Sheet Receivables" shall mean all amounts
contractually required to be paid to any Credit Party under Distribution
Agreements for any item of Product, which amounts are not, pursuant to GAAP,
reflected on the consolidated balance sheet of LGEC.
"Other Domestic Receivables" shall mean those receivables that
meet all of the requirements of an "Eligible Receivable" other than that the
obligor is not an Acceptable Obligor and such obligor has its principal place of
business and jurisdiction of incorporation or formation located within North
America.
"Other Foreign Receivables" shall mean those receivables that
meet all of the requirements of an "Eligible Receivable" other than that the
obligor is not an Acceptable Obligor and such obligor has its principal place of
business or jurisdiction of incorporation or formation located outside North
America.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pay Television Credit" shall mean with respect to each item
of Product that is intended for domestic theatrical release and for which the
Borrowers hold domestic pay television rights, an amount equal to (A) until 30
days after the theatrical release of such item of Product, 5% of the Borrowers'
Production Exposure therefor and (B) thereafter, the greater of (x) the amount
determined 30 days after theatrical release of each item of Product based upon
the pay television formula set forth on Schedule 1.4 hereto and (y) $275,000;
provided however that no Pay Television Credit will be included in the Borrowing
Base with respect to any item of Product prior to its Completion except (i) for
items of Product being funded under the Special Production Tranche, (ii) for
items of Product for which a Letter of Credit is issued in order to support the
Borrowers' minimum payment obligation to acquire distribution rights in such
item of Product and (iii) for purposes of computing the Leverage Ratio; provided
further that such credit shall be eliminated with respect to an item of Product
upon the earlier of: (i) in the case of an item of Product which is not eligible
for inclusion under Artisan's existing output agreement with Showtime Networks
Inc., the entering into a distribution agreement for exploitation of such
Product on pay television and (ii) twenty-four (24) months after the theatrical
release of such item of Product.
"Percentage" shall mean with respect to any Lender, the
percentage of the Total U.S. Dollar Revolving Credit Commitment, Total Term Loan
Commitment or Total Canadian Dollar Credit Commitment, represented by such
Lender's U.S. Dollar Credit Commitment, Term Loan Commitment or Canadian Dollar
Credit Commitment, as applicable.
"Permitted Encumbrances" shall mean Liens permitted under
Section 6.2 hereof.
"Permitted Preferred Stock" shall mean (i) the Series A
Preferred Shares and any additional shares thereof issued in lieu of dividends
thereon and (ii) any shares of additional preferred stock issued by LGEC that
does not require any cash payments at any time prior to one year after the
Maturity Date, whether for dividends, mandatory redemption, change of control
put at the option of the holder or otherwise.
"Person" shall mean any natural person, corporation, division
of a corporation, limited liability company, partnership, trust, joint venture,
association, company, estate, unincorporated organization or government or any
agency or political subdivision thereof.
"Physical Materials" shall have the meaning given to such term
in paragraph (iv) of the definition of "Collateral" herein.
"Pledge of Debenture" shall mean a pledge of debenture
substantially in the form of Exhibit M-2 hereof.
"Pledged Collateral" shall mean the Pledged Securities and any
proceeds (as defined in Section 9-306(1) of the UCC) of the Pledged Securities.
"Pledged Securities" shall mean all of the issued and
outstanding capital stock or other equity interests of each of the Credit
Parties (other than LGEC) and all other equity
- 33 -
securities or interests now owned or hereafter acquired by any of the Credit
Parties, including without limitation the securities listed in Schedule 3.7(a)
hereto.
"Pledgeholder Agreement" shall mean a laboratory pledgeholder
agreement among a Credit Party (or Credit Parties), the Administrative Agent,
certain distributors (as applicable), the Approved Completion Guarantor (if
there is one), and one or more Laboratories, substantially in the form of
Exhibit E-1 or Exhibit E-2 hereto, or in such other form and with such
additional parties as shall be acceptable to the Administrative Agent.
"Pledgors" shall mean those Credit Parties that own any of the
Pledged Securities.
"PPSA" shall mean unless otherwise provided in this Credit
Agreement, the Personal Property Security Act, R.S.O. 1990 c.P.10 as heretofore
and hereafter amended and in effect in the Province of Ontario, or, where the
context requires, the legislation of the other provinces of Canada relating to
security in personal property generally, including accounts receivable, as
adopted by and in effect from time to time in such provinces or territories in
Canada, as applicable.
"Pro Rata Share" shall mean with respect to any Obligation or
other amount, each Lender's pro rata share of such Obligation or other amount
determined in accordance with such Lender's Percentage.
"Product" shall mean any motion picture, film or video tape or
other audio-visual work or any episode thereof produced for theatrical,
non-theatrical or television release or for release in any other medium, in each
case whether recorded on film, videotape, cassette, cartridge, disc or on or by
any other means, method, process or device whether now known or hereafter
developed, with respect to which any Credit Party (i) is the copyright owner or
(ii) acquires an equity interest or distribution rights. The term "item of
Product" shall include, without limitation, the scenario, screenplay or script
upon which such item of Product is based, all of the properties thereof,
tangible and intangible, and whether now in existence or hereafter to be made or
produced, whether or not in possession of a Credit Party, and all rights therein
and thereto, of every kind and character.
"Production Account(s)" shall mean individually or
collectively, as the context so requires, each demand deposit account(s)
established by a Credit Party or Special Purpose Producer at a commercial bank
located in the United States or Canada or otherwise acceptable to the
Administrative Agent, for the sole purpose of paying the production costs of a
particular item of Product, and, where applicable, as to which the Approved
Completion Guarantor for such item of Product, has agreed in writing that
amounts deposited in such account shall be deemed available for production of
such item of Product, for purposes of the Completion Guaranty for such item of
Product.
"Production Exposure" for an Uncompleted item of Product shall
mean (i) with respect to any item of Product for which a Credit Party has direct
production responsibility, the Budgeted Negative Cost for such item of Product
(net of amounts being cash-flowed as and when needed by an Acceptable Obligor
and pursuant to contractual arrangements with such Accepted Obligor and a Credit
Party reasonably acceptable to the Administrative Agent), and
- 34 -
(ii) with respect to all other Product, the acquisition price paid or to be paid
by a Credit Party for such item of Product or any rights therein, including
without limitation, the amount of any related Program Acquisition Guarantee,
Negative Pick-up Obligations or co-financing obligation.
"Program Acquisition Guarantees" shall mean any commitment of
a Credit Party to a producer or owner of Product in conjunction with the
acquisition of Product or distribution rights in Product by such Credit Party to
the effect that (a) the gross revenues to be generated in the future from the
exploitation of such Product or the net revenues to be received by such producer
or owner from the exploitation of such Product will equal or exceed an amount
specified in the acquisition agreement related to such Product or (b) otherwise
requires payment by the Credit Party of a minimum amount specified in the
acquisition agreement related to such Product regardless of actual performance
of such Product.
"Quiet Enjoyment" shall be as defined in Section 8.13 hereof.
"Regulation T", "Regulation U" or "Regulation X" shall mean
such regulation of the Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.
"Replication Advances" shall mean advances incurred pursuant
to (i) that certain DVD Services Agreement dated as of April 18, 2002 between
Artisan Home Entertainment Inc. and Cinram Inc. as in effect on the date hereof,
and (ii) dvd, tape or film processing replication deals which require repayment
if certain replication commitments are not fulfilled; provided, that repayment
of such advances (w) may not be accelerated or be required to be paid on demand
unless such repayment obligation is completely unsecured, (x) does not require
cash payments of interest, (y) is on terms at least as favorable as the Credit
Parties' current replication deals and (z) matures after the Maturity Date.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(c) of ERISA, other than a reportable event as to which provision
for 30-day notice to the PBGC would be waived under applicable regulations had
the regulations in effect on the Closing Date been in effect on the date of
occurrence of such reportable event.
"Required Lenders" shall mean Lenders holding at least 51% of
the Total Credit Exposure.
"Required Revolving Credit Lenders" shall mean Revolving
Credit Lenders holding at least 51% of the Total Revolving Credit Commitment.
"Restricted Payment" shall mean (i) any distribution, cash
dividend or other direct or indirect payment on account of shares of any Equity
Interest in any Credit Party, (ii) any redemption or other acquisition,
re-acquisition or retirement by a Credit Party of any Equity Interest in any
Credit Party or an Affiliate, now or hereafter outstanding, (iii) any payment
made to retire, or obtain the surrender of, any outstanding warrants, puts or
options or other rights to purchase or otherwise acquire any Equity Interest in
any Credit Party or an Affiliate, now or hereafter outstanding, (iv) any payment
by a Credit Party of principal of, premium, if any, or interest on, or any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
- 35 -
with respect to, any Subordinated Debt, the Vialta Note or any Replication
Advance and (v) any payment under any Synthetic Purchase Agreement.
"Revolving Credit Commitment" shall mean the U.S. Dollar
Revolving Credit Commitment and the Canadian Dollar Credit Commitment.
"Revolving Credit Facility" shall have the meaning given to
such term in the Introductory Statement hereof.
"Revolving Credit Loans" shall mean the U.S. Dollar Revolving
Credit Loans and the Canadian Dollar Loans.
"Revolving Credit Notes" shall mean the U.S. Dollar Revolving
Credit Notes and the Canadian Dollar Notes.
"Sellers" shall have the meaning given to such term in the
Merger Agreement.
"Series A Preferred Shares" shall mean the 5.25% convertible
redeemable preferred shares, Series A issued by LGEC.
"Sharing Event" shall mean that (i) an Event of Default shall
have occurred and be continuing and such Event of Default shall either be (x) an
Event of Default specified in paragraph (h) or (i) of Article 7 hereof or (y)
any other Event of Default for which the Administrative Agent has opted to, or
has been directed by the Required Lenders to, declare the principal of and
interest on the Loans and Notes and all other amounts payable hereunder or
thereunder to be forthwith due and payable or (ii) the Borrowers have failed to
pay all outstanding Obligations at the Maturity Date.
"Special Production Tranche" shall mean, with respect to each
Designated Picture, a portion of the Revolving Credit Commitments equal to the
sum of the Strike Price for such Designated Picture, plus the amount of any
enhancements committed to be funded by a Credit Party or Special Purpose
Producer for such Designated Picture, plus to the extent not already included in
one of the foregoing items, an interest reserve for the period through the
projected date of Completion of such Designated Picture.
"Special Purpose Producer" shall mean a special purpose
corporation or limited liability company formed solely for the purpose of
producing a particular theatrical motion picture, television series or direct to
home video Product which, in each case, will be purchased or distributed by a
Credit Party.
"Special Purpose Producer Credit Agreement" shall mean a
credit, security and pledge agreement between a Special Purpose Producer and the
Administrative Agent, substantially in the form of Exhibit N hereto.
"Strike Price" shall mean, with respect to any item of
Product, the amount of funds required to be provided for the production of such
item of Product under the relevant Completion Guaranty.
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"Subordinated Debt" shall mean the Convertible Senior
Subordinated Notes, all Indebtedness of any of the Credit Parties that is
subordinated to the Obligations pursuant to written agreements, containing
interest rates, payment terms, maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in form
and substance satisfactory to the Required Lenders and which does not require
any cash payments prior to one year after the Maturity Date and which has other
terms and conditions acceptable to the Required Lenders provided, however, that
for purposes of clarification, neither the Vialta Note nor any Replication
Advance shall constitute Subordinated Debt.
"Subsidiary" shall mean with respect to any Person, any
corporation, association, joint venture, partnership, limited liability company
or other business entity (whether now existing or hereafter organized) of which
at least a majority of the voting stock or other ownership interests having
ordinary voting power for the election of directors (or the equivalent) is, at
the time as of which any determination is being made, owned or controlled by
such Person or one or more subsidiaries of such Person or by such Person and one
or more subsidiaries of such Person; provided, however, that for purposes of
this Agreement (other than in the definition of Unrestricted Subsidiary and
Inactive Subsidiary) and the Fundamental Documents, neither an Unrestricted
Subsidiary nor an Inactive Subsidiary shall be a Subsidiary of any Credit Party.
"Synthetic Purchase Agreement" means any swap, derivative or
other agreement or combination of agreements pursuant to which any Credit Party
is or may become obligated to make (i) any payment in connection with a purchase
by any third party from a Person other than a Credit Party of any Equity
Interest in any Credit Party or any Subordinated Debt or (ii) any payment (other
than on account of a permitted purchase by it of any Equity Interest in any
Credit Party or any Subordinated Debt) the amount of which is determined by
reference to the price or value at any time of any Equity Interest in any Credit
Party or any Subordinated Debt; provided that no phantom stock or similar plan
providing for payments only to current or former directors, officers or
employees of a Credit Party (or to their heirs or estates) shall be deemed to be
a Synthetic Purchase Agreement.
"Term Loan Commitment" shall mean the commitment of each U.S.
Dollar Lender to make a Term Loan to LGEI up to an aggregate amount not in
excess of the amount set forth (i) opposite its name under the column entitled
"Term Loan Commitment" in the Schedule of Commitments appearing in Schedule 1,
or (ii) any applicable Assignment and Acceptance(s) to which it may be a party,
as the case may be, as such amount may be reduced from time to time in
accordance with this Credit Agreement.
"Term Loans" shall mean the loans made hereunder in accordance
with the provisions of Section 2.2.
"Term Loan Facility" shall have the meaning given such term in
the Introductory Statement.
"Term Note" shall have the meaning given to such term in
Section 2.2 hereof.
"Total Canadian Dollar Credit Commitment" shall mean the
aggregate amount of the Canadian Dollar Credit Commitments then in effect of all
of the Canadian Dollar Lenders, as
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such amount may be reduced from time to time in accordance with the terms of
this Credit Agreement.
"Total Credit Exposure" shall mean an amount equal to (i) the
aggregate principal amount of all outstanding Loans hereunder and under Special
Purpose Producer Credit Agreements, plus (ii) the then current amount of L/C
Exposure and BA Exposure (with any amounts which are denominated in Canadian
Dollars being included at their U.S. Dollar Equivalent), plus (iii) the
aggregate amount of the unused Total Revolving Credit Commitments then in
effect.
"Total Interest" shall mean the sum of (i) all interest
expense (net of interest income) of LGEC and its Consolidated Subsidiaries as
consolidated in accordance with GAAP plus (ii) any interest expense that has
been capitalized other than as part of film and television costs during the
relevant period.
"Total Revolving Credit Commitment" shall mean the sum of the
Total Canadian Dollar Credit Commitment and the Total U.S. Dollar Revolving
Credit Commitment.
"Total Term Loan Commitment" shall mean the aggregate amount
of the Term Loan Commitments then in effect of all the U.S. Dollar Lenders.
"Total U.S. Dollar Revolving Credit Commitment" shall mean the
aggregate amount of the U.S. Dollar Revolving Credit Commitments then in effect
of all of the U.S. Dollar Lenders, as such amount may be reduced from time to
time in accordance with the terms of this Credit Agreement.
"Trademark Security Agreement" shall mean the Trademark
Security Agreement substantially in the form of Exhibit F hereto to be executed
by the Borrowers, as such agreement may be amended, supplemented or otherwise
modified, renewed or replaced from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of New York on the date of execution of this Credit Agreement.
"Uncompleted" shall mean not Completed.
"Unrecouped Print and Advertising Expenses" shall mean with
respect to an item of Product produced for domestic theatrical release, the
amount, if any, by which (a) print and advertising expenses exceeds the sum of
(i) total receipts from all domestic media and markets plus (ii) receipts from
all media and markets other than domestic media and markets after recoupment of
negative costs.
"Unrestricted Subsidiary" shall mean each Subsidiary of LGEC
listed in Schedule 3.7(d).
"Unused Availability" shall have the meaning given such term
in Section 6.18 hereof.
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"U.S. Dollar Cash Collateral Account" shall have the meaning
given such term in Section 11.1 hereof.
"U.S. Dollar Equivalent" shall mean on any Business Day (i)
with respect to any amount which is denominated in Canadian Dollars, the amount
in U.S. Dollars determined by converting Canadian Dollars into U.S. Dollars at
the Bank of Canada noon spot rate in effect on the preceding Business Day, as
determined by the Canadian Agent, and (ii) with respect to any amount that is
denominated in a currency other than U.S. Dollars and Canadian Dollars, the
amount in U.S. Dollars determined by converting such other currency into U.S.
Dollars at the Administrative Agent's noon spot rate in effect on such Business
Day, as determined by the Administrative Agent; provided, however, the
Administrative Agent may, in its sole discretion adjust the U.S. Dollar
Equivalent for any currency other than U.S. Dollars and Canadian Dollars to
reflect any hedging agreement in effect.
"U.S. Dollar Lender" shall mean (i) the financial institutions
whose names appear at the foot hereof and who are designated as such on Schedule
1.1 hereof and (ii) any assignee of a U.S. Dollar Lender pursuant to Section
13.3 hereof.
"U.S. Dollar Loans" shall mean the U.S. Dollar Revolving
Credit Loans and the Term Loans.
"U.S. Dollar Revolving Credit Commitment" shall mean the
Commitment of each U.S. Dollar Lender to make U.S. Dollar Revolving Credit Loans
and to participate in Letters of Credit from the Initial Date applicable to such
Lender through the Commitment Termination Date up to an aggregate amount at any
one time outstanding not in excess of the amount set forth (i) opposite its name
in the Schedule of Commitments appearing in Schedule 1.1 hereto or (ii) in any
applicable Assignment and Acceptance(s) to which it may be a party, as the case
may be, as such amount may be reduced from time to time in accordance with the
terms of this Credit Agreement.
"U.S. Dollar Revolving Credit Facility" shall mean a revolving
credit facility providing for the issuance of U.S. Dollar Loans to and Letters
of Credit for the account of, LGEI in an aggregate principal amount not to
exceed US$200,000,000.
"U.S. Dollar Revolving Credit Loans" shall mean the loans made
hereunder in accordance with Section 2.1 hereof.
"U.S. Dollar Revolving Credit Note" shall have the meaning
given to such term in Section 2.5(a) hereof.
"U.S. Dollars", "US$" and "$" shall mean lawful money of the
United States of America.
"U.S. L/C Exposure" shall mean, at any time, the amount
expressed in U.S. Dollars or the U.S. Dollar Equivalent of the aggregate face
amount of all drafts which may then or thereafter be presented by beneficiaries
under all Letters of Credit issued to LGEI then outstanding plus (without
duplication), the face amount of all drafts which have been presented
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or accepted under all Letters of Credit issued to LGEI but have not yet been
paid or have been paid but not reimbursed, whether directly or from the proceeds
of a U.S. Dollar Loan hereunder.
"U.S. Plan" shall mean an employee benefit plan within the
meaning of Section 3(3) of ERISA (other than a Multiemployer Plan), maintained
or contributed to by any Credit Party, or any ERISA Affiliate, or with respect
to which any Credit Party could otherwise have any liability.
"Vialta Note" shall mean the subordinated promissory note
dated January 17, 2002 between Artisan and Vialta, Inc. as lender thereunder.
2. THE LOANS
SECTION 2.1 U.S. Dollar Revolving Credit Loans.
(a) Each U.S. Dollar Lender, severally and not jointly,
agrees, upon the terms and subject to the conditions hereof, to make loans of
U.S. Dollars (the "U.S. Dollar Revolving Credit Loans") to LGEI on any Business
Day and from time to time from the Closing Date to but excluding the Commitment
Termination Date, each in a principal amount which when added to the aggregate
principal amount of all U.S. Dollar Revolving Credit Loans then outstanding to
LGEI from such Lender, plus such Lender's Pro Rata Share of the then current
U.S. L/C Exposure and the unused portion of the Special Production Tranche for
all Designated Pictures for which Loans have been made to LGEI which have not
yet been Completed, does not exceed such Lender's U.S. Dollar Revolving Credit
Commitment; provided, however, that the undrawn U.S. Dollar Revolving Credit
Commitments as of the Closing Date, after giving effect to the consummation of
all transactions on the Closing Date (including, without limitation, the
Acquisition), must be at least US$70,000,000.
(b) In addition to the U.S. Dollar Revolving Credit Loans
contemplated pursuant to Section 2.1(a) above, with regard to each Designated
Picture, each U.S. Dollar Lender, severally and not jointly, agrees upon the
terms and subject to the conditions hereof, to make U.S. Dollar Loans pursuant
to the Special Production Tranche, to LGEI or to a Special Purpose Producer, on
any Business Day from time to time from the Closing Date to but excluding the
Commitment Termination Date or such earlier time as that Designated Picture is
Completed, each in an aggregate principal amount which when added to the
aggregate principal amount of all U.S. Dollar Revolving Credit Loans then
outstanding with regard to that Designated Picture under the Special Production
Tranche, does not exceed such Lender's Pro Rata Share of the aggregate U.S.
Dollar Revolving Credit Commitments then reserved as part of the Special
Production Tranche for such Designated Picture.
(c) Notwithstanding anything to the contrary above, a
U.S. Dollar Lender shall not be obligated to make any U.S. Dollar Revolving
Credit Loan or to incur any incremental L/C Exposure if, as a result thereof,
either (i) the sum of the aggregate principal amount of all U.S. Dollar
Revolving Credit Loans then outstanding plus the then current U.S. L/C Exposure
plus the unused portion of the Special Production Tranche for all Designated
Pictures for which U.S. Dollar Revolving Credit Loans have been made to LGEI
which have not
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yet been Completed would exceed the Total U.S. Dollar Revolving Credit
Commitment then in effect or (ii) the sum of the aggregate principal amount of
all U.S. Dollar Loans then outstanding plus the then current L/C Exposure plus
the U.S. Dollar Equivalent of the aggregate principal amount of all Canadian
Dollar Loans then outstanding plus the U.S. Dollar Equivalent of the then
current BA Exposure plus the unused portion of the Special Production Tranche
for all Designated Pictures which have not yet been Completed would exceed the
Borrowing Base.
(d) Subject to the terms and conditions of this Credit
Agreement, at any time prior to the Commitment Termination Date, LGEI may
borrow, repay and re-borrow amounts constituting the U.S. Dollar Revolving
Credit Commitments.
(e) Each U.S. Dollar Revolving Credit Loan shall be
either an Alternate Base Rate Loan or Eurodollar Loan (each such type of Loan,
an "Interest Rate Type") as LGEI may request. Subject to Section 2.13(d), each
U.S. Dollar Lender may at its option fulfill its U.S. Dollar Revolving Credit
Commitment with respect to any Eurodollar Loan by causing a foreign branch or
affiliate to make such U.S. Dollar Revolving Credit Loan, provided that any
exercise of such option shall not affect the obligation of LGEI to repay such
U.S. Dollar Revolving Credit Loan in accordance with the terms hereof and of the
relevant U.S. Dollar Revolving Credit Note. Subject to the other provisions of
this Section, Section 2.10(b) and Section 2.14, U.S. Dollar Revolving Credit
Loans of more than one Interest Rate Type may be outstanding at the same time.
(f) Each U.S. Dollar Revolving Credit Loan requested
hereunder on any date shall be made by each U.S. Dollar Lender in accordance
with its respective Percentage.
(g) LGEI shall give the Administrative Agent prior
written, facsimile or telephonic (promptly confirmed in writing) notice of each
Borrowing hereunder. Each such notice shall be irrevocable and to be effective,
must be received by the Administrative Agent not later than 2:00 p.m., New York
City time, (i) in the case of Alternate Base Rate Loans, on the Business Day
preceding the date on which such Loan is to be made and (ii) in the case of
Eurodollar Loans, on the third Business Day preceding the date on which such
U.S. Dollar Revolving Credit Loan is to be made. Such notice shall specify (A)
the amount of the requested U.S. Dollar Revolving Credit Loan, (B) the date on
which such U.S. Dollar Revolving Credit Loan is to be made (which shall be a
Business Day), (C) whether the U.S. Dollar Revolving Credit Loan then being
requested is to be (or what portion or portions thereof are to be) an Alternate
Base Rate Loan or a Eurodollar Loan and the Interest Period or Interest Periods
with respect thereto in the case of Eurodollar Loans and (D) if applicable, the
portion of the requested U.S. Dollar Revolving Credit Loans to be made under the
Special Production Tranche. In the case of a Eurodollar Loan, if no election of
an Interest Period is specified in such notice, such notice shall be deemed a
request for an Interest Period of one month. If no election is made as to the
Interest Rate Type of any U.S. Dollar Revolving Credit Loan, such notice shall
be deemed a request for an Alternate Base Rate Loan.
(h) The Administrative Agent shall promptly notify each
U.S. Dollar Lender of its proportionate share of each Borrowing, the date of
such Borrowing, the Interest Rate Type of each U.S. Dollar Revolving Credit Loan
being requested and the Interest Periods applicable thereto. On the borrowing
date specified in such notice, each U.S. Dollar Lender shall make its
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share of the Borrowing available at the office of JPMorgan Chase Bank, Loan and
Agency Services Group, 0000 Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention:
Xxxxx Xxxxxxx for credit to the Chase Clearing Account and in each case, no
later than 12:00 noon New York City time, in Federal or other immediately
available funds. Upon receipt of the funds to be made available by the U.S.
Dollar Lenders to fund any Borrowing of U.S. Dollar Revolving Credit Loans
hereunder, the Administrative Agent shall disburse such funds by depositing the
requested amounts into an account specified by LGEI provided, however, that if
the Borrowing Certificate for any particular Borrowing indicates that it is to
be made under a Special Production Tranche, then the Administrative Agent shall
deposit the proceeds of such Loan directly into the Production Account for the
Designated Picture relating to such Special Production Tranche.
(i) Notwithstanding any provision to the contrary in this
Credit Agreement, LGEI shall not, in any notice of borrowing under this Section
2.1 request any Eurodollar Loan which, if made, would result in an aggregate of
more than ten (10) separate Eurodollar Loans of any U.S. Dollar Lender being
outstanding hereunder at any one time. For purposes of the foregoing, Eurodollar
Loans having Interest Periods commencing or ending on different days shall be
considered separate Eurodollar Loans.
(j) The aggregate amount of any Borrowing under the U.S.
Dollar Facility consisting of Eurodollar Loans shall be in a minimum aggregate
principal amount of US$1,000,000 or such greater amount which is an integral
multiple of US$100,000 and the aggregate amount of any Borrowing under U.S.
Dollar Facility consisting of Alternate Base Rate Loans shall be in a minimum
aggregate principal amount of US$500,000 or such greater amount which is an
integral multiple of US$100,000 (or such lesser amount as shall equal (i) the
available but unused portion of the Total U.S. Dollar Credit Revolving
Commitment then in effect or (ii) the amount of any Borrowing to fund drawings
under Letters of Credit).
(k) Notwithstanding the provisions of clause (g) above
and/or the absence of a request from the Borrower that the Lenders make a Loan,
the Required Lenders may direct the Lenders to make Loans and apply the proceeds
thereof as follows:
(i) if the Approved Completion Guarantor for any
item of Product being produced by a Credit Party or for which receivables are
included in the Borrowing Base shall take over production of such item of
Product pursuant to the Completion Guaranty with respect to such item of
Product, to make Loans up to the Strike Price with respect to the production of
such item of Product and pay the proceeds thereof directly to the Approved
Completion Guarantor to be used to finance the production and delivery of such
item of Product pursuant to the terms of the Completion Guaranty; and
(ii) if an Event of Default shall have occurred
and be continuing, to make Loans with respect to any item of Product being
produced by a Credit Party or for which receivables are included in the
Borrowing Base and pay the proceeds thereof directly to Persons providing
services in connection with the production, delivery and distribution of such
Product so as to ensure Completion of such item of Product and/or the collection
of Eligible Receivables.
SECTION 2.2 Term Loans. (a) Each U.S. Dollar Lender, severally and not
jointly, agrees, upon the terms and subject to the conditions hereof, to make
loans (the "Term
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Loans") to LGEI on the Closing Date in a total principal amount not exceeding
the amount of such U.S. Dollar Lender's Term Loan Commitment. The aggregate
amount of the Term Loans outstanding at any time shall not exceed the lesser of
(i) the Borrowing Base then in effect and (ii) the aggregate amount of the Term
Loan Commitment then in effect.
(b) Once repaid, amounts constituting the Term Loan
Commitment may not be reborrowed.
SECTION 2.3 Canadian Dollar Loans.
(a) Each Canadian Dollar Lender, severally and not
jointly, agrees upon the terms and subject to the conditions hereof, to make
loans of Canadian Dollars (the "Canadian Dollar Loans") to LGEC on any Business
Day and from time to time from the Closing Date to but excluding the Commitment
Termination Date, each in a principal amount which when added to the aggregate
principal amount of all Canadian Dollar Loans then outstanding to LGEC from such
Lender, plus such Lender's Pro Rata Share of the then current Canadian L/C
Exposure plus the unused portion of the Special Production Tranche for all
Designated Pictures for which Canadian Dollar Loans have been made to LGEC which
have not yet been Completed, does not exceed such Lender's Canadian Dollar
Credit Commitment, plus the aggregate face amount of outstanding Bankers'
Acceptances which have been accepted by such Lender does not exceed such
Lender's Canadian Dollar Credit Commitment.
(b) In addition to the Canadian Dollar Loans contemplated
pursuant to Section 2.3(a) above, with regard to each Designated Picture, each
Canadian Dollar Lender, severally and not jointly, agrees upon the terms and
subject to the conditions hereof, to make Canadian Dollar Loans pursuant to the
Special Production Tranche, to LGEC or to a Special Purpose Producer, on any
Business Day from time to time from the Closing Date to but excluding the
Commitment Termination Date or such earlier time as that Designated Picture is
Completed, each in an aggregate principal amount which when added to the
aggregate principal amount of all Canadian Dollar Loans then outstanding with
regard to that Designated Picture under the Special Production Tranche, does not
exceed such Lender's Pro Rata Share of the aggregate Canadian Dollar Credit
Commitments then reserved as part of the Special Production Tranche for such
Designated Picture.
(c) Notwithstanding anything to the contrary above, a
Canadian Dollar Lender shall not be obligated to make any Canadian Dollar Loan
if, as a result thereof, either (i) the sum of the aggregate principal amount of
all Canadian Dollar Loans then outstanding plus the then current BA Exposure
plus the then current Canadian L/C Exposure, plus the unused portion of the
Special Production Tranche for all Designated Pictures for which Canadian Dollar
Loans have been made to LGEC would exceed the Total Canadian Dollar Credit
Commitment then in effect or (ii) the sum of the aggregate principal amount of
all U.S. Dollar Loans then outstanding plus the then current L/C Exposure plus
the U.S. Dollar Equivalent of the aggregate principal amount of all Canadian
Dollar Loans then outstanding plus the U.S. Dollar Equivalent of the then
current BA Exposure plus the unused portion of the Special Production Tranche
for all Designated Pictures which have not yet been Completed would exceed the
Borrowing Base.
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(d) Subject to the terms and conditions of this Credit
Agreement, at any time prior to the Commitment Termination Date, LGEC may
borrow, repay and re-borrow amounts constituting the Canadian Dollar Credit
Commitments.
(e) Each Canadian Dollar Loan shall be either a Canadian
Prime Rate Loan or Eurodollar Loan (each such type of Loan, an "Interest Rate
Type") as LGEC may request. Subject to Section 2.12(d), each Canadian Dollar
Lender may at its option fulfill its Canadian Dollar Credit Commitment with
respect to any Eurodollar Loan by causing a foreign branch or affiliate to make
such Canadian Dollar Loan, provided that any exercise of such option shall not
affect the obligation of LGEC to repay such Canadian Dollar Loan in accordance
with the terms hereof and of the relevant Canadian Dollar Note. Subject to the
other provisions of this Section, Section 2.9(b) and Section 2.13, Canadian
Dollar Loans of more than one Interest Rate Type may be outstanding at the same
time.
(f) Each Canadian Dollar Loan requested hereunder on any
date shall be made by each Canadian Dollar Lender in accordance with its
respective Percentage.
(g) LGEC shall give the Administrative Agent and the
Canadian Agent prior written, facsimile or telephonic (promptly confirmed in
writing) notice of each Borrowing hereunder. Each such notice shall be
irrevocable and to be effective, must be received by the Administrative Agent
and the Canadian Agent not later than 12:00 noon, New York City time (i) in the
case of Canadian Prime Rate Loans, on the second Business Day preceding the date
on which such Loan is to be made and (ii) in the case of Eurodollar Loans, on
the third Business Day preceding the date on which such Loan is to be made and
shall specify the amount of the proposed Borrowing and the date thereof (which
shall be a Business Day). Such notice shall specify (A) the amount of the
requested Canadian Dollar Loan, (B) the date on which such Canadian Dollar Loan
is to be made (which shall be a Business Day), (C) whether the Canadian Dollar
Loan then being requested is to be (or what portion or portions thereof are to
be) a Canadian Prime Rate Loan or a Eurodollar Loan and the Interest Period or
Interest Periods with respect thereto in the case of Eurodollar Loans and (D) if
applicable, the portion of the requested Canadian Dollar Loans to be made under
the Special Production Tranche. In the case of a Eurodollar Loan, if no election
of an Interest Period is specified in such notice, such notice shall be deemed a
request for an Interest Period of one month. If no election is made as to the
Interest Rate Type of any Canadian Dollar Loan, such notice shall be deemed a
request for a Canadian Prime Rate Loan.
(h) The Canadian Agent shall promptly notify each
Canadian Dollar Lender of its proportionate share of each Borrowing under this
Section, the date of such Borrowing, the Interest Rate Type of each Canadian
Dollar Loan being requested and the Interest Periods applicable thereto. On the
borrowing date specified in such notice, each Canadian Dollar Lender shall make
its share of the Borrowing available at the office of the Canadian Agent for
credit to the Canadian Clearing Account and in each case, no later than 12:00
noon New York City time in federal or other immediately available funds. Upon
receipt of the funds to be made available by the Canadian Dollar Lenders to fund
any Borrowing of Canadian Dollar Loans hereunder, the Canadian Agent shall
disburse such funds by depositing the requested amounts into an account
maintained with the Canadian Agent by LGEC.
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(i) Notwithstanding any provision to the contrary in this
Credit Agreement, LGEC shall not, in any notice of borrowing under this Section
2.3 request any Eurodollar Loan which, if made, would result in an aggregate of
more than five (5) separate Eurodollar Loans of any Canadian Dollar Lender being
outstanding hereunder at any one time. For purposes of the foregoing, Eurodollar
Loans having Interest Periods commencing or ending on different days shall be
considered separate Eurodollar Loans.
(j) The aggregate amount of any Borrowing under the
Canadian Dollar Facility consisting of Eurodollar Loans shall be in a minimum
aggregate principal amount of US$1,000,000 or such greater amount which is an
integral multiple of US$100,000 and the aggregate amount of any Borrowing under
the Canadian Dollar Facility consisting of Canadian Prime Rate Loans shall be in
a minimum aggregate principal amount of C$500,000 (or such lesser amount as
shall equal the available but unused portion of the Total Canadian Dollar Credit
Commitment then in effect) or such greater amount which is an integral multiple
of C$100,000.
SECTION 2.4 Bankers' Acceptances.
(a) Each Canadian Dollar Lender, severally and not
jointly, agrees upon the terms and subject to the conditions hereof, to accept
and discount Bankers' Acceptances for LGEC on any Business Day and from time to
time from the Closing Date to but excluding the Commitment Termination Date,
each in a face amount which when added to the aggregate principal amount of all
Canadian Dollar Loans then outstanding to LGEC from such Lender and the
aggregate face amount of outstanding Bankers' Acceptances which have been
accepted by such Lender, does not exceed such Lender's Canadian Dollar Credit
Commitment. Furthermore, no Bankers' Acceptance shall be accepted if, as a
result thereof, either (i) the sum of the aggregate principal amount of all
Canadian Dollar Loans then outstanding plus the then current BA Exposure would
exceed the Total Canadian Dollar Credit Commitment then in effect or (ii) the
sum of the aggregate principal amount of all U.S. Dollar Loans then outstanding
plus the then current L/C Exposure plus the U.S. Dollar Equivalent of the
aggregate principal amount of all Canadian Dollar Loans then outstanding plus
the U.S. Dollar Equivalent of the then current BA Exposure would exceed the
Borrowing Base. Subject to Section 2.4(b) hereof, Bankers' Acceptances shall be
accepted at such times as LGEC shall request, but the Canadian Dollar Lenders
shall not be required to accept Bankers' Acceptances hereunder more often than
once each calendar week.
(b) LGEC agrees to pay to each Canadian Dollar Lender an
acceptance commission (the "Acceptance Fee"), with respect to each Bankers'
Acceptance accepted by such Canadian Dollar Lender, calculated at a rate of
2.75% per annum on the face amount of such Bankers' Acceptance, for the period
from the date of such Bankers' Acceptance, to the date of its maturity, payable
in full on the date of such discounting of such Bankers' Acceptance and on the
basis of a year of 365 days. Payment of the Acceptance Fee with respect to each
Bankers' Acceptance created by each Canadian Lender shall be made for the
account of LGEC by such Canadian Lender's deducting the amount of the Acceptance
Fee from the proceeds of discounting such Bankers' Acceptance as contemplated by
Section 2.4(d) hereof.
(c) LGEC shall give the Administrative Agent and the
Canadian Agent prior written, facsimile or telephonic (promptly confirmed in
writing) notice of each request for a
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Bankers' Acceptance hereunder; such notice shall be irrevocable. Such notice, to
be effective, must be received by the Administrative Agent and the Canadian
Agent not later than 12:00 noon, New York City time on the second Business Day
preceding the date on which such Bankers' Acceptance is to be made. Such notice
shall specify the amount of the proposed Bankers' Acceptance, the date thereof
(which shall be a Business Day) and the maturity date with respect thereto. Each
Bankers' Acceptance draft tendered by LGEC for acceptance by a Canadian Dollar
Lender shall be in a form acceptable to the accepting Canadian Dollar Lenders
and shall have a term of one, two or three months or, if available, six months,
unless otherwise agreed to by all the Canadian Dollar Lenders. If no election of
a maturity date is specified in such notice, such notice shall be deemed a
request for a maturity date of one month. The term of each Banker's Acceptance
shall expire on a Business Day and shall, in any event, expire no later than the
tenth Business Day prior to the Commitment Termination Date.
(d) The Canadian Agent shall promptly notify each
Canadian Dollar Lender of its Pro Rata Share of each Bankers' Acceptance request
under Section 2.4(c), the date of such Bankers' Acceptance and the maturity date
applicable thereto. On the date for acceptance specified in such notice, each
Canadian Dollar Lender shall accept a Bankers' Acceptance draft in the amount of
its Pro Rata Share of the Bankers' Acceptance request no later than 1:00 p.m.
New York City time. Upon acceptance of a Bankers' Acceptance draft by a Canadian
Dollar Lender, such Lender shall purchase, or arrange for the purchase of, such
Bankers' Acceptance from LGEC at the Bankers' Acceptance Rate for each such
Lender applicable to such Bankers' Acceptance accepted by it and provide to the
Canadian Agent the Discount Proceeds. Upon the receipt of such funds by the
Canadian Agent, the Administrative Agent shall disburse such funds by depositing
them directly to the account specified to the Canadian Agent by LGEC in writing.
(e) LGEC shall pay to the Canadian Agent on the maturity
date of each Bankers' Acceptance an amount equal to the face amount of such
maturing Bankers' Acceptance; provided, however, that LGEC may, at its option,
so reimburse the Canadian Dollar Lenders, in whole or in part, by delivering to
the Canadian Agent and the Administrative Agent no later than 10:00 a.m. New
York City time two Business Days prior to the maturity date of such maturing
Bankers' Acceptance, a request to rollover such Bankers' Acceptance and by
presenting drafts to the Canadian Agent for acceptance and purchase having, in
the case of reimbursement in whole by replacement Bankers' Acceptances, an
aggregate face amount such that the Discount Proceeds thereof will equal the
face amount of such maturing Bankers' Acceptance. Prior to the Commitment
Termination Date, in the event that LGEC fails to adequately reimburse the
Canadian Dollar Lenders as set forth above and in Section 2.11(l), the face
amount of such maturing Bankers' Acceptance shall be deemed to be converted to a
Canadian Prime Rate Loan on the relevant maturity date, provided that no default
or Event of Default has occurred and is continuing. If LGEC fails to adequately
reimburse the Canadian Dollar Lenders as set forth above and in Section 2.11(l)
after the Commitment Termination Date or if an Event of Default has occurred and
is continuing, LGEC shall pay to the Canadian Agent for the benefit of the
Canadian Dollar Lenders interest at 2% in excess of the rate then in effect for
Canadian Prime Rate Loans.
(f) LGEC renounces and shall not claim any days of grace
for the payment of a Bankers' Acceptance.
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(g) Pursuant to the DBNA, all Bankers' Acceptances
accepted by the Canadian Dollar Lenders under this Credit Agreement shall be
issued in the form of a "depository xxxx" (as defined in the DBNA), deposited
with the Canadian Depository for Securities Ltd. ("CDS") and will be made
payable to CDS or its nominee. In order to give effect to the foregoing, the
Canadian Agent shall establish and notify LGEC and the Canadian Dollar Lenders
of any additional procedures, consistent with the terms of this Credit Agreement
as are necessary to accomplish such intention, including, without limitation,
(x) any instrument held by the Canadian Agent or any Canadian Dollar Lender for
the purposes of Bankers' Acceptances shall have marked prominently and legibly
on its face and within its text, at or before the time of issue, the words "This
is a depository xxxx subject to the Depository Bills and Notes Act (Canada)";
(y) any reference to the authentication of the Bankers' Acceptance will be
removed; and (z) any reference to the "bearer" will be removed and such Bankers'
Acceptances shall not be marked with any words prohibiting negotiation, transfer
or assignment of it or of an interest in it.
(h) LGEC hereby appoints each Canadian Dollar Lender,
acting by any authorized signatory of such Lender, the attorney of LGEC: (x) to
execute for and on behalf and in the name of LGEC as drawer, drafts in such
Lender's standard form; (y) to complete the amount, date and maturity date of
such Bankers' Acceptances; and (z) to deposit such Bankers' Acceptances which
have been accepted by such Lender with the CDS; provided, that such acts in each
case are to be undertaken by such Lender in accordance with instructions given
to such Lender by LGEC as provided in this Section. For the avoidance of doubt,
signatures of any authorized signatory of such Lender may be mechanically
reproduced in facsimile on Bankers' Acceptances and such facsimile signatures
shall be binding and effective as if they had been manually executed by such
authorized signatory of such Lender. Instructions from the Borrower to such
Lender relating to the execution, completion, endorsement, discount and/or
delivery by such Lender on behalf of the Borrower of Bankers' Acceptances shall
be communicated by the Canadian Agent to such Lender in accordance with this
Credit Agreement.
(i) The Canadian Agent and the Canadian Dollar Lenders
shall not be liable for any damage, loss or improper use of any bankers'
acceptance draft endorsed in blank except for any loss arising by reason of the
Canadian Agent's or such Lender's failing to use the same standard of care in
the custody of such bankers' acceptance drafts as the Canadian Agent or such
Lender uses in the custody of its own property of a similar nature.
(j) LGEC hereby authorizes each Canadian Dollar Lender to
complete, stamp, hold, sell, rediscount or otherwise dispose of all Bankers'
Acceptances accepted by it pursuant to this Section 2.4 and Section 2.11 in
accordance with the instructions provided by LGEC.
(k) The signatures of any authorized signatory of LGEC on
Bankers' Acceptances may, at the option of LGEC, be reproduced in facsimile and
such Bankers' Acceptances bearing such facsimile signatures shall be binding on
LGEC as if they had been manually signed by such authorized signatory.
Notwithstanding the fact that the Person whose signature appears on any Bankers'
Acceptance as a signatory is no longer an authorized signatory of LGEC at the
date of issuance of a Bankers' Acceptance, or that the signature affixed is only
a reproduction, such signature shall nevertheless be valid and sufficient for
all purposes
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as if such authority had remained in force at the time of such issuance and as
if such signature had been manually applied, and any such Bankers' Acceptance so
signed shall, subject to Section 2.3(i), be binding on and at the risk of LGEC;
provided, however, that LGEC may at any time that the authorization of such
signatory has lapsed, provide a new facsimile bearing the signature of an
updated authorized signatory to be used on all future Bankers' Acceptances at
which time the Canadian Dollar lenders shall no longer issue any Bankers'
Acceptances bearing the lapsed authorized signatory's signature.
(l) The amount of any Bankers' Acceptance shall be in an
aggregate minimum principal amount of C$1,000,000 or such greater amount which
is an integral multiple of C$100,000.
(m) Upon the occurrence of an Event of Default, LGEC
shall forthwith pay to the Canadian Agent for deposit into the Canadian Dollar
Cash Collateral Account, an amount equal to the Canadian Dollar Lenders' maximum
potential liability under then outstanding Bankers' Acceptances (the "BA
Collateral Funds"). The BA Collateral Funds shall be held by the Canadian Agent
for set-off against indebtedness then or thereafter owing by LGEC to the
Canadian Dollar Lenders in respect of such Bankers' Acceptances. If such Event
of Default is either waived or cured in compliance with the terms of this Credit
Agreement, then the remaining BA Collateral Funds if any, shall be released to
LGEC if requested by it. If LGEC fails to provide BA Collateral Funds for any
Bankers' Acceptances in accordance with this Section 2.3(m), the amount of such
BA Collateral Funds shall bear interest, to the extent permitted by Applicable
Law, at a rate per annum at 2% in excess of the rate then in effect for Canadian
Prime Rate Loans until the date such BA Collateral Funds are provided.
(n) Notwithstanding the provisions of this Section 2.3,
the Canadian Agent is authorized by LGEC and each Canadian Dollar Lender to
allocate amongst the Canadian Dollar Lenders the Bankers' Acceptances to be
issued and purchased in such manner and amounts as the Canadian Agent may, in
its sole and unfettered discretion acting reasonably, consider necessary and
equitable, rounding up and down, so as to ensure that no Lender is required to
accept and purchase a Bankers' Acceptance for a fraction of C$100,000, and in
such event, the Canadian Dollar Lenders' respective participations in any such
Bankers' Acceptances and repayments thereof shall be altered accordingly.
(o) Notwithstanding the provisions of this Section 2.3,
the Canadian Dollar Lenders shall not be obligated to create or discount any
Bankers' Acceptance hereunder if an aggregate of more than four separate
Bankers' Acceptances would be outstanding hereunder with respect to each Lender
(for purposes of determining the number of Bankers' Acceptances outstanding,
Bankers' Acceptances with different maturity dates shall be counted in different
Bankers' Acceptances even if made on the same date) or if such Bankers'
Acceptance would not be eligible for discount at the Bank of Canada under
applicable rules and regulations, would not meet the requirements of the DBNA or
other Applicable Law, or any liability of a Canadian Dollar Lender that would
arise from the creation of such Bankers' Acceptance would constitute a deposit
for which such Canadian Dollar Lender would be required to maintain reserves
under Applicable Law as from time to time in effect. LGEC will indemnify and
hold each Canadian Dollar Lender harmless from any loss or liability incurred by
any of them if any Bankers' Acceptances are determined to be ineligible for
discount or subject to reserves.
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SECTION 2.5 Notes; Repayment.
(a) Any U.S. Dollar Lender may request that the U.S.
Dollar Revolving Credit Loans made by such U.S. Dollar Lender hereunder be
evidenced by a promissory note substantially in the form of Exhibit A-1 hereto
(each a "U.S. Dollar Revolving Credit Note"). In such event the Borrowers shall
prepare a U.S. Dollar Revolving Credit Note in the face amount of each such
Lender's U.S. Dollar Credit Commitment, payable to the order of each such
Lender, duly executed on behalf of LGEI and dated as of the date hereof. The
outstanding principal balance of each U.S. Dollar Loan shall be payable in full
on the Maturity Date, subject to mandatory prepayment as provided in Section 2.9
hereof and acceleration as provided in Article 7 hereof.
(b) Any U.S. Dollar Lender may request that the Term
Loans made by such U.S. Dollar Lender hereunder be evidenced by a promissory
note substantially in the form of Exhibit A-3 (each a "Term Note"). In such
event the Borrowers shall prepare a Term Note in the face amount of each such
Lender's Term Loan Commitment, payable to the order of each such Lender, duly
executed on behalf of the Borrowers and dated the date hereof. The principal
amount of the Term Loans shall be payable in four annual installments of
US$20,000,000 and a fifth installment of US$55,000,000 payable on the last
Business Day of December commencing on the last Business Day of December 2004
with the last installment of US$55,000,000 payable on the last Business Day of
December 2008.
(c) Any Canadian Dollar Lender may request that the
Canadian Dollar Loans made by such Canadian Dollar Lender hereunder be evidenced
by a promissory note substantially in the form of Exhibit A-2 hereto (each a
"Canadian Dollar Note"). In such event the Borrowers shall prepare a Canadian
Dollar Note in the face amount of each such Canadian Dollar Lender's Canadian
Dollar Credit Commitment, payable to the order of each such Lender, duly
executed on behalf of LGEC and dated as of the date hereof. The outstanding
principal balance of each Canadian Dollar Loan shall be payable in full on the
Maturity Date, subject to mandatory prepayment as provided in Section 2.8 hereof
and acceleration as provided in Article 7 hereof.
(d) To the extent a Loan is evidenced by a Note, each of
such Notes shall bear interest on the outstanding principal balance thereof as
set forth in Section 2.7 hereof. Each Lender and the Administrative Agent or the
Canadian Agent, as applicable, on its behalf is hereby authorized by the
Borrowers, but not obligated, to enter on the reverse of, or on an attachment
to, the appropriate Note the amount of each Loan, the amount of each payment or
prepayment of principal or interest and the other information provided for
therein, in the appropriate spaces; provided, however, that the failure of any
Lender or the Administrative Agent or Canadian Agent, as applicable, to enter
the amount of such Loans, payments or prepayments or other information, or any
error with respect thereto, shall not in any manner affect the obligation of the
Borrowers to repay the Loans.
SECTION 2.6 Letters of Credit.
(a) Upon the terms and subject to the conditions hereof
and of Applicable Law, the Issuing Bank agrees, upon the request of LGEI or
LGEC, to issue Letters of Credit (and
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to extend Letters of Credit previously issued hereunder) payable in U.S.
Dollars, Canadian Dollars or any other foreign currency acceptable to the
Administrative Agent from time to time after the Closing Date and prior to the
Commitment Termination Date, provided, however, that (A) neither LGEI nor LGEC,
as applicable, shall request, and the Issuing Bank shall not issue, any Letter
of Credit if, after giving effect thereto, either (i) (x) the sum of the
aggregate principal amount of all U.S. Dollar Revolving Credit Loans then
outstanding, in the case of Letters of Credit issued to LGEI or (y) Canadian
Dollar Loans, in the case of Letters of Credit issued to LGEC plus the then
current U.S. L/C Exposure or Canadian L/C Exposure, as applicable, plus the
unused portion of the Special Production Tranche for all Designated Pictures
attributable to Loans made to LGEI or LGEC, as applicable, which have not yet
been Completed would exceed the Total U.S. Dollar Revolving Credit Commitment
then in effect or the Canadian Dollar Credit Commitment then in effect, as
applicable or (ii) the sum of the aggregate principal amount of all U.S. Dollar
Loans then outstanding plus the then current L/C Exposure plus the U.S. Dollar
Equivalent of the aggregate principal amount of all Canadian Dollar Loans then
outstanding plus the U.S. Dollar Equivalent of the then current BA Exposure
would exceed the Borrowing Base and (B) neither LGEI nor LGEC shall request, and
the Issuing Bank shall not issue (or extend), any Letter of Credit having an
expiration date (x) later than the tenth day prior to the Commitment Termination
Date or (y) more than one year after its date of issuance (or extension).
Notwithstanding anything to the contrary set forth herein, no Letters of Credit
shall be issued to LGEC until such time as the Administrative Agent has
appointed an Issuing Bank to issue Letters of Credit to LGEC in accordance with
the definition of "Issuing Bank".
(i) Immediately upon the issuance of each Letter
of Credit, each U.S. Dollar Lender or Canadian Dollar Lender, as applicable,
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Bank a participation in such Letter of Credit in accordance with such
U.S. Dollar Lender's Percentage or Canadian Dollar Lender's Percentage, as
applicable.
(ii) Each Letter of Credit may, at the option of
the Issuing Bank, provide that the Issuing Bank may (but shall not be required
to) pay all or any part of the maximum amount which may at any time be available
for drawing thereunder to the beneficiary thereof upon the occurrence or
continuation of an Event of Default and the acceleration of the maturity of the
U.S. Dollar Loans or the Canadian Dollar Loans, as applicable, provided that, if
payment is not then due to the beneficiary, the Issuing Bank shall deposit the
funds in question in a segregated account with the Issuing Bank to secure
payment to the beneficiary and any funds so deposited shall be paid to the
beneficiary of the Letter of Credit if conditions to such payment are satisfied
or returned to the Issuing Bank for distribution to the Lenders (or, if all
Obligations shall have been paid in full in cash, to LGEI or LGEC, as
applicable) if no payment to the beneficiary has been made and the final date
available for drawings under the Letter of Credit has passed. Each payment or
deposit of funds by the Issuing Bank as provided in this paragraph shall be
treated for all purposes of this Credit Agreement as a drawing duly honored by
such Issuing Bank under the related Letter of Credit.
(b) In addition to the Letters of Credit contemplated
pursuant to Section 2.6(a) above, with regard to each Designated Picture, each
Lender, severally and not jointly, agrees upon the terms and subject to the
conditions hereof, to make Letters of Credit pursuant to the Special Production
Tranche, to LGEI, LGEC or to a Special Purpose Producer, on any Business
- 50 -
Day from time to time from the Closing Date to but excluding the Commitment
Termination Date or such earlier time as that Designated Picture is Completed,
each in an aggregate principal amount which when added to the aggregate
principal amount of all Loans then outstanding with regard to that Designated
Picture under the Special Production Tranche, does not exceed such Lender's Pro
Rata Share of the aggregate U.S. Dollar Revolving Credit Commitments or the
Canadian Dollar Commitments, as applicable, then reserved as part of the Special
Production Tranche for such Designated Picture.
(c) Whenever LGEI desires the issuance of a Letter of
Credit, it shall deliver to the Administrative Agent and the Issuing Bank a
written notice no later than 2:00 p.m. (New York City time) at least three (3)
Business Days prior to the proposed date of issuance. That notice shall specify
(i) the proposed date of issuance (which shall be a Business Day), (ii) the face
amount of the Letter of Credit, (iii) the expiration date of the Letter of
Credit and (iv) the name and address of the beneficiary. Such notice shall be
accompanied by a brief description of the underlying transaction and upon
request of the Issuing Bank or the Administrative Agent, LGEI shall provide
additional details regarding the underlying transaction. Concurrently with the
giving of written notice of a request for the issuance of a Letter of Credit,
LGEI shall provide a precise description of the documents and the verbatim text
of any certificate to be presented by the beneficiary of such Letter of Credit
which, if presented by such beneficiary prior to the expiration date of the
Letter of Credit, would require the Issuing Bank to make payment under the
Letter of Credit; provided, however, that the Issuing Bank, in its reasonable
discretion, may require customary changes in any such documents and certificates
to be presented by the beneficiary. Upon issuance of each Letter of Credit to
LGEI, the Issuing Bank shall notify the Administrative Agent of the issuance of
such Letter of Credit. Promptly after receipt of such notice, the Administrative
Agent shall notify each U.S. Dollar Lender of the issuance and the amount of
such U.S. Dollar Lender's respective participation in the applicable Letter of
Credit.
(d) Whenever LGEC desires the issuance of a Letter of
Credit, it shall deliver to the Canadian Agent, the Administrative Agent and the
Issuing Bank a written notice no later than 2:00 p.m. (New York City time) at
least three (3) Business Days prior to the proposed date of issuance. That
notice shall specify (i) the proposed date of issuance (which shall be a
Business Day), (ii) the face amount of the Letter of Credit, (iii) the
expiration date of the Letter of Credit and (iv) the name and address of the
beneficiary. Such notice shall be accompanied by a brief description of the
underlying transaction and upon request of the Issuing Bank, the Administrative
Agent or the Canadian Agent, LGEC shall provide additional details regarding the
underlying transaction. Concurrently with the giving of written notice of a
request for the issuance of a Letter of Credit, LGEC shall provide a precise
description of the documents and the verbatim text of any certificate to be
presented by the beneficiary of such Letter of Credit which, if presented by
such beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Bank to make payment under the Letter of Credit; provided,
however, that the Issuing Bank, in its reasonable discretion, may require
customary changes in any such documents and certificates to be presented by the
beneficiary. Upon issuance of each Letter of Credit, the Issuing Bank shall
notify the Canadian Agent and the Administrative Agent of the issuance of such
Letter of Credit. Promptly after receipt of such notice, the Canadian Agent
shall notify each Canadian Lender of the issuance and the amount of such
Canadian Dollar Lender's respective participation in the applicable Letter of
Credit.
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(e) The acceptance and payment of drafts under any Letter
of Credit shall be made in accordance with the terms of such Letter of Credit
and the Uniform Customs and Practice for Documentary Credits, International
Chamber of Commerce Publication No. 500, as adopted or amended from time to
time. The Issuing Bank shall be entitled to honor any drafts and accept any
documents presented to it by the beneficiary of such Letter of Credit in
accordance with the terms of such Letter of Credit and believed by the Issuing
Bank in good faith to be genuine. Except as otherwise required by Applicable Law
which cannot be waived, the Issuing Bank shall not have any duty to inquire as
to the accuracy or authenticity of any draft or other drawing documents which
may be presented to it, but shall be responsible only to determine in accordance
with customary commercial practices that the documents which are required to be
presented before payment or acceptance of a draft under any Letter of Credit
have been delivered and that they comply on their face with the requirements of
that Letter of Credit.
(f) If the Issuing Bank shall make payment on any draft
presented under a Letter of Credit (regardless of whether a Default, Event of
Default or acceleration has occurred), the Issuing Bank shall give notice of
such payment to the Administrative Agent (and the Canadian Agent if such payment
relates to a Letter of Credit issued to LGEC) and the U.S. Dollar Lenders, or
Canadian Dollar Lenders, as applicable, and each U.S. Dollar Lender or Canadian
Dollar Lender hereby authorizes and requests the Issuing Bank to advance for its
account, pursuant to the terms hereof, its share of such payment based upon its
participation in the Letter of Credit and agrees promptly to reimburse the
Issuing Bank in immediately available funds for the Dollar equivalent of the
amount so advanced on its behalf by the Issuing Bank. If any such reimbursement
is not made by any U.S. Dollar Lender or Canadian Dollar Lender, as applicable,
in immediately available funds on the same day on which the Issuing Bank shall
have made payment on any such draft, such Lender shall pay interest thereon to
the Issuing Bank at a rate per annum equal to the Issuing Bank's cost of
obtaining overnight funds in the New York Federal Funds Market for the three (3)
Business Days following the time such Lender fails to make the reimbursement and
thereafter at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.
(g) The Borrowers are absolutely, unconditionally and
irrevocably obligated to reimburse all amounts drawn under each Letter of
Credit. If any draft is presented under a Letter of Credit, the payment of which
is required to be made at any time on or before the Commitment Termination Date,
then payment by the Issuing Bank of such draft shall constitute an Alternate
Base Rate Loan or Canadian Prime Rate Loan in an amount equal to the U.S. Dollar
Equivalent or the Canadian Dollar Equivalent, as applicable, of the amount drawn
under the Letter of Credit hereunder and interest shall accrue from the date the
Issuing Bank makes payment on such draft under such Letter of Credit. If any
draft is presented under a Letter of Credit, the payment of which is required to
be made after the Commitment Termination Date or at the time when an Event of
Default or Default shall have occurred and then be continuing, then the
Borrowers shall immediately pay to the Issuing Bank, in immediately available
funds, the full amount of such draft together with interest thereon at a rate
per annum of 2% in excess of the rate then in effect for Alternate Base Rate
Loans or Canadian Prime Rate Loans from the date on which the Issuing Bank makes
such payment of such draft until the date it receives full reimbursement for
such payment from LGEI or LGEC, as applicable. LGEI or LGEC, as applicable,
further agrees that the Issuing Bank may reimburse itself for such drawing from
the
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balance in the Chase Clearing Account or from the balance in any other account
of the Borrowers maintained with the Issuing Bank.
(h) The Borrowers agree to pay the following amounts to
the Issuing Bank for its own account with respect to Letters of Credit issued by
it hereunder:
(A) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made thereunder, documentary
and processing charges in accordance with the Issuing Bank's standard schedule
for such charges in effect at the time of such issuance, amendment, transfer or
drawing, as the case may be; and
(B) a fronting fee payable to the Issuing Bank
for the period from and including the Closing Date to, but excluding, the
Maturity Date, computed at a rate equal to 1/4 of 1% per annum of the daily
average L/C Exposure (calculated on the basis of a 360-day year), such fee to be
due and payable in arrears on and through the last Business Day of each March,
June, September and December in each year (commencing on the last Business Day
of December, 2003) prior to the Maturity Date or the expiration of the last
outstanding Letter of Credit (whichever is later) and on the later of the
Maturity Date and the expiration of the last outstanding Letter of Credit.
(i) The Borrowers agree to pay to the Administrative
Agent for distribution to each Lender in respect of its L/C Exposure, such
Lender's Pro Rata Share of a commission (calculated on the basis of a 360-day
year) equal to (A) a per annum percentage rate equal to the Applicable Margin
for Eurodollar Loans multiplied by (B) the average daily amount of the L/C
Exposure. Such commission shall be due and payable in arrears on and through the
last Business Day of each March, June, September and December (commencing the
last Business Day of December, 2003) prior to the Maturity Date or the
expiration of the last outstanding Letter of Credit (whichever is later) and on
the later of the Maturity Date and the expiration of the last outstanding Letter
of Credit; provided, however, that notwithstanding the foregoing, amounts
payable to the Canadian Dollar Lenders with respect to the Canadian L/C Exposure
shall be paid by LGEC to the Canadian Agent for distribution to each Canadian
Dollar Lender.
(j) Promptly upon receipt by the Issuing Bank, the
Administrative Agent or the Canadian Agent of any amount described in clause (B)
of Section 2.6(g), or any amount described in Section 2.6(f) previously
reimbursed to the Issuing Bank by the U.S. Dollar Lenders, the Issuing Bank, the
Administrative Agent or the Canadian Agent (as applicable) shall distribute to
each Lender its Pro Rata Share of such amount.
(k) If by reason of (i) any change in Applicable Law
after the Initial Date, or in the interpretation or administration thereof
(including, without limitation, any request, guideline or policy not having the
force of law) by any Governmental Authority charged with the administration or
interpretation thereof, or (ii) compliance by the Issuing Bank or any Lender
with any direction, request or requirement (whether or not having the force of
law) issued after the Closing Date by any Governmental Authority or monetary
authority, including, without limitation, any change whether or not proposed or
published prior to the Initial Date and any modifications to Regulation D
occurring after the Initial Date:
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(A) the Issuing Bank or any Lender shall be
subject to any tax, levy, impost, duty, fee, charge, deduction or withholding of
any nature with respect to any Letter of Credit (other than withholding tax
imposed by the United States of America, Canada or any political subdivision or
taxing authority thereof or therein or any other tax, levy, impost, duty, fee,
charge, deduction or withholding (1) that is measured with respect to the
overall net income of the Issuing Bank or such Lender or of a Lending Office of
the Issuing Bank or such Lender, and that is imposed by the United States of
America, Canada or by the jurisdiction in which the Issuing Bank or such Lender
is incorporated or carries on business, or in which such Lending Office is
located, managed or controlled or in which the Issuing Bank or such Lender has
its principal office or a presence which is not otherwise connected with, or
required by, this transaction (or any political subdivision or taxing authority
thereof or therein) or (2) that is imposed solely by reason of the Issuing Bank
or such Lender failing to make a declaration of, or otherwise to establish,
non-residence or to make any other claim for exemption, or otherwise to comply
with any certification, identification, information, documentation or reporting
requirements prescribed under the laws of the relevant jurisdiction, in those
cases where the Issuing Bank or such Lender may properly make the declaration or
claim or so establish non-residence or otherwise comply), or to any variation
thereof or to any penalty with respect to the maintenance or fulfillment of its
obligations under this Section 2.6, whether directly or by such being imposed on
or suffered by the Issuing Bank or any Lender;
(B) the basis of taxation of any fee or amount
payable hereunder with respect to any Letter of Credit or any participation
therein shall be changed, other than withholding tax imposed by the United
States of America or Canada as applicable, or any political subdivision or
taxing authority thereof or therein or any other tax, levy, impost, duty,
charge, fee, deduction or withholding that is measured with respect to the
overall net income of such Lender or of a Lending Office of such Lender, and
that is imposed by the United States of America or Canada or by the jurisdiction
in which such Lender or Lending Office is incorporated or carries on business,
in which such Lending Office is located, managed or controlled or in which such
Lender has its principal office or a presence not otherwise connected with, or
required by, this transaction (or any political subdivision or taxing authority
thereof or therein);
(C) any reserve, deposit or similar requirement
is or shall be applicable, imposed or modified in respect of any Letter of
Credit issued by the Issuing Bank or participations therein purchased by any
Lender; or
(D) there shall be imposed on the Issuing Bank
or any Lender any other condition regarding this Section 2.6, any Letter of
Credit or any participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Issuing Bank or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by the Issuing Bank or any
Lender, then and in any such case the Issuing Bank or such Lender may, at any
time, notify the Borrowers, and the Borrowers shall promptly pay the Issuing
Bank or such Lender upon its demand such amounts as the Issuing Bank or such
Lender may specify to be necessary to compensate the Issuing Bank or such Lender
for such additional cost or reduced receipt. Sections 2.13(b), (c) and (d) shall
in all instances apply to the Issuing Bank and any Lender with respect to the
Letters of Credit issued hereunder. The determination by the Issuing
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Bank or any Lender, as the case may be, of any amount due pursuant to this
Section 2.6 as set forth in a certificate setting forth the calculation thereof
in reasonable detail shall, in the absence of manifest error, be final,
conclusive and binding on all of the parties hereto.
(l) If at any time when an Event of Default shall have
occurred and be continuing, any Letters of Credit shall remain outstanding, then
the Administrative Agent may, and if directed by the Required Revolving Credit
Lenders shall, require the Borrowers to deliver to the Administrative Agent Cash
Equivalents in an amount equal to the full amount of the L/C Exposure or to
furnish other security acceptable to the Required Revolving Credit Lenders. Any
amounts so delivered pursuant to the preceding sentence shall be applied to
reimburse the Issuing Bank for the amount of any drawings honored under Letters
of Credit; provided, however, that if prior to the Maturity Date, (i) no Default
or Event of Default is then continuing, then the Administrative Agent shall
return all of such collateral relating to such deposit to the Borrowers if
requested by it or (ii) Letters of Credit shall expire or be returned by the
beneficiary so that the amount of the Cash Equivalents delivered to the
Administrative Agent hereunder shall exceed the then current L/C Exposure, then
such excess shall first be applied to pay any Obligations then due under this
Credit Agreement and the remainder shall be returned to the Borrowers.
(m) Notwithstanding the termination of the Commitments
and the payment of the Loans, the obligations of the Borrowers under this
Section 2.6 shall remain in full force and effect until the Administrative
Agent, the Issuing Bank and the Lenders shall have been irrevocably released
from their obligations with regard to any and all Letters of Credit.
SECTION 2.7 Interest.
(a) In the case of an Alternate Base Rate Loan, interest
shall be payable at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of 365/366 days, as the case may be, during such
times as the Alternate Base Rate is based upon the Prime Rate, and over a year
of 360 days at all other times) equal to the Alternate Base Rate plus the
Applicable Margin for Alternate Base Rate Loans. Interest shall be payable in
arrears on each Alternate Base Rate Loan on each applicable Interest Payment
Date and on the Maturity Date.
(b) In the case of a Eurodollar Loan, interest shall be
payable at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the LIBO Rate plus the Applicable
Margin for Eurodollar Loans. Interest shall be payable on each Eurodollar Loan
on each applicable Interest Payment Date, on the Maturity Date and on the date
of a conversion of such Eurodollar Loan to an Alternate Base Rate Loan. The
Administrative Agent shall determine the applicable LIBO Rate for each Interest
Period as soon as practicable on the date when such determination is to be made
in respect of such Interest Period and shall promptly notify the Borrowers and
the Lenders of the applicable interest rate so determined. Such determination
shall be conclusive absent manifest error.
(c) In the case of a Canadian Prime Rate Loan, interest
shall be payable at a rate per annum (computed on an actual number of days
elapsed over a year of 365 days) equal to the Canadian Prime Rate plus the
Applicable Margin. Interest shall be payable in arrears on each Canadian Prime
Rate Loan on each applicable Interest Payment Date and at maturity.
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(d) Interest in respect of any Loan hereunder shall
accrue from and including the date of such Loan to but excluding the date on
which such Loan is paid or, if applicable, converted to a Loan of a different
Interest Rate Type.
(e) Anything in this Credit Agreement or the Notes to the
contrary notwithstanding, the interest rate on the Loans or with respect to any
drawing under a Letter of Credit shall in no event be in excess of the maximum
rate permitted by Applicable Law.
SECTION 2.8 Commitment Fee and Other Fees.
(a) LGEI agrees to pay to the Administrative Agent for
the account of each U.S. Dollar Lender on the last Business Day of each March,
June, September and December in each year (commencing on the last Business Day
of December, 2003) and LGEC agrees to pay on the last day of each calendar month
to the Canadian Agent for the account of each Canadian Dollar Lender prior to
the Commitment Termination Date, in each case on the date of any termination or
reduction of either of the Canadian Dollar Credit Commitment or the U.S. Dollar
Revolving Credit Commitment, as applicable, and on the Commitment Termination
Date, a fee (the "Commitment Fee" and collectively, for all the Lenders, the
"Commitment Fees") of 1/2 of 1% per annum (computed on the basis of the actual
number of days elapsed during the preceding period or quarter over a year of 360
days in the case of Commitment Fees paid to the Administrative Agent and 365
days in the case of Commitment Fees paid to the Canadian Agent) on the average
daily amount during the preceding period or quarter by which such Lender's
Revolving Credit Commitment (as such Revolving Credit Commitment may be reduced
in accordance with the provisions of this Credit Agreement) exceeded (i) in the
case of the U.S. Dollar Lenders the sum of such Lender's Pro Rata Share of the
U.S. L/C Exposure plus the aggregate principal amount of such Lender's
outstanding U.S. Dollar Revolving Credit Loans and (ii) in the case of Canadian
Dollar Lenders, the sum of the aggregate principal amount of such Lender's
outstanding Canadian Dollar Loans plus the Canadian L/C Exposure plus the
aggregate face amount of outstanding Bankers' Acceptances which have been
accepted by such Lender.
(b) The Commitment Fees shall commence to accrue on the
date this Credit Agreement is executed by all the parties hereto.
(c) In addition, LGEI agrees to pay to the Administrative
Agent, on the date this Credit Agreement is executed by all the parties hereto,
any and all fees that are then due and payable pursuant to the Fee Letter;
provided, however, that any such fees payable for the benefit of the Canadian
Dollar Lenders thereunder shall be paid by LGEC to the Canadian Agent for the
account of each Canadian Dollar Lender.
SECTION 2.9 Termination and/or Reduction of the Revolving Credit
Commitments.
(a) Upon at least three (3) Business Days' prior written,
facsimile or telephonic notice (provided that such telephonic notice is
immediately followed by written confirmation) to the Administrative Agent, the
Borrowers may at any time in whole permanently terminate, or from time to time
in part permanently reduce, either of the Total U.S. Dollar
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Revolving Credit Commitment and/or the Total Canadian Dollar Credit Commitment.
In the case of a partial reduction, each reduction of the Total U.S. Dollar
Revolving Credit Commitment shall be in a minimum aggregate principal amount of
US$5,000,000 or an integral multiple thereof and each reduction of the Total
Canadian Dollar Credit Commitment shall be in a minimum aggregate principal
amount of C$5,000,000 or an integral multiple thereof; provided, however, that
(i) the Total U.S. Dollar Revolving Credit Commitment may not be reduced to an
amount less than the sum of the aggregate principal amount of all U.S. Dollar
Revolving Credit Loans then outstanding, plus the then current U.S. L/C Exposure
plus the unused portion of a Special Production Tranche for all Designated
Pictures for which Loans have been made to LGEI which have not been Completed
and (ii) the Total Canadian Dollar Credit Commitment may not be reduced to an
amount less than the sum of the aggregate principal amount of all Canadian
Dollar Loans then outstanding, plus the unused portion of a Special Production
Tranche for all Designated Pictures for which Loans have been made to LGEC, plus
the then current Canadian L/C Exposure, plus the then current BA Exposure. Any
partial reduction of the Total U.S. Dollar Revolving Credit Commitment or the
Total Canadian Dollar Credit Commitment shall be made among the U.S. Dollar
Lenders or the Canadian Dollar Lenders ratably in accordance with their
respective Percentages.
(b) After the repayment in full of the Term Loans, the
Total U.S. Dollar Revolving Credit Commitment and the Total Canadian Dollar
Credit Commitment shall be automatically and permanently reduced by an amount
equal to one hundred percent (100%) of any Net Cash Proceeds received by any
Credit Party from any sale or other disposition of any asset pursuant to Section
6.7(a) (iv) hereof other than the sale of (i) LGEC's equity interest in any
business incorporated and primarily operating in Canada, (ii) the Lions Gate
Vancouver studio listed on Schedule 3.24 hereto, (iii) the first US$20,000,000
of any Net Cash Proceeds received in connection with the sale of LGEC's equity
interest in any business which is engaged in business activities that are
substantially the same as another business of LGEC's in which LGEC retains all
of its investment (but not including Net Cash Proceeds received from the sale of
LGEC's equity interests contemplated by clause (i) of this paragraph) and (iv)
CinemaNow, but only to the extent that such Net Cash Proceeds have not been
applied to repay the Term Loans.
(c) Simultaneously with each such termination or
reduction of the Total U.S. Dollar Revolving Credit Commitment or the Total
Canadian Dollar Credit Commitment, the Borrowers shall pay to the Administrative
Agent for the benefit of the relevant Lenders all accrued and unpaid Commitment
Fees on the amount of the Commitments so terminated or reduced through the date
of such termination or reduction.
(d) In the event the Borrowers permanently terminate the
Total Canadian Dollar Credit Commitment pursuant to Section 2.9(a) hereof, the
Canadian Dollar Lenders that customarily lend in the United States agree that
they will increase their U.S. Dollar Revolving Credit Commitment by an amount
equal to their Canadian Dollar Commitment before giving effect to such
termination, or, to the extent they did not previously have a U.S. Dollar
Revolving Credit Commitment, they agree that they will commit to lend U.S.
Dollar Revolving Credit Loans in an amount equal to their Canadian Dollar
Commitment before giving effect to such termination. To the extent the aggregate
amount of the Commitments is decreased as a result of any such termination of
the Canadian Dollar Commitment, the Administrative Agent agrees that
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it shall use its best efforts to secure commitments from the Lenders or from
additional banks to lend U.S. Dollar Revolving Credit Loans in an amount equal
to such reduction in the aggregate amount of the Commitments.
SECTION 2.10 Default Interest; Alternate Rate of Interest.
(a) So long as an Event of Default shall have occurred
and be continuing (after, as well as before judgment), the Borrowers shall on
demand from time to time pay interest, to the extent permitted by Applicable
Law, on any then unpaid amount of the Obligations at a rate per annum (i) for
the remainder of the then current Interest Period for each Eurodollar Loan, at
2% in excess of the rate then in effect for each such Eurodollar Loan, (ii) for
all Canadian Prime Rate Loans, at 2% in excess of the rate then in effect for
Canadian Prime Rate Loans and (iii) for all periods subsequent to the then
current Interest Period for each Eurodollar Loan, for all Alternate Base Rate
Loans and for all other overdue amounts hereunder, at 2% in excess of the rate
then in effect for Alternate Base Rate Loans.
(b) In the event, and on each occasion, that on or before
the day on which the LIBO Rate for a Eurodollar Loan is to be determined as set
forth herein, (i) the Administrative Agent shall have received notice from any
U.S. Dollar Lender or the Canadian Agent shall have received notice from any
Canadian Dollar Lender of such Lender's determination (which determination,
absent manifest error, shall be conclusive) that Dollar deposits in an amount
equal to the principal amount of such Lender's Eurodollar Loan are not generally
available in the London Interbank Market or that the rate at which such Dollar
are being offered will not adequately and fairly reflect the cost to such Lender
of making or maintaining the principal amount of such Lender's Eurodollar Loan
during the applicable Interest Period or (ii) the Administrative Agent or the
Canadian Agent, as applicable, shall have determined that reasonable means do
not exist for ascertaining the applicable LIBO Rate, the Administrative Agent or
the Canadian Agent, as applicable, shall, as soon as practicable thereafter,
give written or facsimile notice of such determination by such Lender or the
Administrative Agent or the Canadian Agent, as applicable, to the Borrowers and
the Lenders and any request by the Borrowers for a Eurodollar Loan pursuant to
Section 2.1 or Section 2.3 or conversion to or continuation as a Eurodollar Loan
pursuant to Section 2.11, made after receipt of such notice and until the
circumstances giving rise to such notice no longer exist, shall be deemed to be
a request for an Alternate Base Rate Loan in the case of a U.S. Dollar Revolving
Credit Loan and a Canadian Prime Rate Loan in the case of a Canadian Dollar
Loan; provided, however, that in the circumstances described in clause (i)
above, such deemed request shall only apply to the affected Lender's portion
thereof.
(c) In the event, and on each occasion, that on the day
two Business Days prior to the date of acceptance of a Bankers' Acceptance, the
Canadian Agent shall have received notice from any Canadian Dollar Lender of
such Canadian Dollar Lender's determination (which determination, absent
manifest error, shall be conclusive) that, by reason of circumstances affecting
the Canadian money market, no market for Bankers' Acceptances accepted by such
Lender exists, the Canadian Agent shall, as soon as practicable thereafter, give
written or telegraphic notice of such determination to LGEC and the Canadian
Dollar Lenders, and any request by the Borrower for a Bankers' Acceptance (or
conversion to or rollover of a Bankers' Acceptance pursuant to Section 2.11 and
2.4.(c)), made after receipt of such notice, shall be
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deemed a request for a Canadian Prime Rate Loan; provided, however, that such
deemed request shall only apply to the affected Lender's portion thereof. After
such notice shall have been given and until the circumstances causing such
suspension no longer exist, each request (or portion thereof, as the case may
be) for a Bankers' Acceptance shall be canceled and shall be deemed a request
for a Canadian Prime Rate Loan.
SECTION 2.11 Continuation and Conversion of Loans and Bankers'
Acceptances. The Borrowers shall have the right (i) at any time to convert any
Eurodollar Loan or portion thereof to an Alternate Base Rate Loan or a Canadian
Prime Rate Loan, as applicable, or to continue any Eurodollar Loan or portion
thereof for a successive Interest Period, (ii) at any time to convert any
Alternate Base Rate Loan or Canadian Prime Rate Loan, as applicable, or portion
thereof to a Eurodollar Loan, (iii) on the maturity date of any Bankers'
Acceptance, to convert the face amount of such Bankers' Acceptance or a portion
thereof into a Canadian Prime Rate Loan or a Eurodollar Loan or rollover such
Bankers' Acceptance into a new Bankers' Acceptance or (iv) at any time to
convert any Canadian Prime Rate Loan or Eurodollar Loan made under the Canadian
Dollar Facility or a portion thereof into a Bankers' Acceptance, subject to the
following:
(a) the Borrowers shall give the Administrative Agent
and/or the Canadian Agent, as applicable, prior written, facsimile or telephonic
(promptly confirmed in writing) notice of at least three (3) Business Days of
each continuation or conversion hereunder; such notice shall be irrevocable and
to be effective, must be received by the Administrative Agent on the day
required not later than 2:00 p.m. New York City time or by the Canadian Agent on
the day required not later than 10:00 a.m. New York City time;
(b) no Event of Default or Default shall have occurred
and be continuing at the time of any conversion to a Eurodollar Loan or
continuation of a Eurodollar Loan into a subsequent Interest Period or any
conversion to a Bankers' Acceptance or rollover of a Bankers' Acceptance into a
new Bankers' Acceptance;
(c) the aggregate principal amount of Loans continued as,
or converted to, Eurodollar Loans as part of the same continuation or
conversion, shall be in a minimum amount of US$1,000,000 or in such greater
amount which is an integral multiple of US$100,000;
(d) the aggregate principal amount of Loans converted to
Bankers' Acceptances as part of the same conversion shall not be less than
C$1,000,000 or such greater amount which is an integral multiple of C$100,000;
(e) if fewer than all Loans in a currency at the time
outstanding shall be continued or converted, such continuation or conversion
shall be made pro rata among the applicable Lenders in accordance with the
respective Percentage of the principal amount of such Loans held by such Lenders
immediately prior to such continuation or conversion;
(f) no Alternate Base Rate Loan or Canadian Prime Rate
Loan (or portion thereof) may be converted to a Eurodollar Loan and no
Eurodollar Loan may be continued as a Eurodollar Loan if, after such conversion
or continuation, and after giving effect to any concurrent prepayment of U.S.
Dollar Loans or Canadian Dollar Loans, as applicable, an
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aggregate of more than ten (10) separate Eurodollar Loans would be outstanding
under each of the U.S. Dollar Facility and the Canadian Dollar Facility (for
purposes of determining the number of such Loans outstanding, Loans with
different Interest Periods shall be counted as different Eurodollar Loans even
if made on the same date);
(g) no Canadian Prime Rate Loan (or a portion thereof)
may be converted into a Bankers' Acceptance, no Bankers' Acceptance may be
rolled over as a new Bankers' Acceptance, if, after such continuation and/or
conversion, and after giving effect to any concurrent prepayment of Canadian
Dollar Loans, an aggregate of more than four separate Bankers' Acceptances would
be outstanding hereunder with respect to each Lender (for purposes of
determining the number of Bankers' Acceptances outstanding, Bankers' Acceptances
with different maturity dates shall be counted as different Bankers' Acceptances
even if made on the same date);
(h) the Interest Period with respect to a new Eurodollar
Loan effected by a continuation or conversion shall commence on the date of such
continuation or conversion;
(i) if a Eurodollar Loan is converted to an Alternate
Base Rate Loan or a Canadian Prime Rate Loan, as applicable, other than on the
last day of the Interest Period with respect thereto, the amounts required by
Section 2.12 shall be paid upon such conversion;
(j) accrued interest on a Eurodollar Loan (or portion
thereof) being converted to an Alternate Base Rate Loan or a Canadian Prime Rate
Loan, as applicable, shall be paid by the Borrowers at the time of conversion;
and
(k) each request for a continuation as, or conversion to,
a Eurodollar Loan which fails to state an applicable Interest Period shall be
deemed to be a request for an Interest Period of one month.
(l) in the case of a rollover of a maturing Bankers'
Acceptance pursuant to Section 2.3.(e), each Canadian Dollar Lender, in order to
satisfy the continuing liability of LGEC to each Lender for the face amount of
the maturing Bankers' Acceptances, shall retain for its own account the Discount
Proceeds of each new Bankers' Acceptance issued by it in connection with such
rollover and LGEC shall, on the maturity date of the maturing Bankers'
Acceptances, pay to the Canadian Agent, as agent for and on behalf of the
Canadian Dollar Lenders, an amount equal to the difference between the face
amount of the maturing Bankers' Acceptances and the aggregate Discount Proceeds
of the new Bankers' Acceptances;
(m) in the case of a conversion from a Canadian Prime
Rate Loan into a Bankers' Acceptance, each Canadian Dollar Lender, in order to
satisfy the continuing liability of LGEC to each Canadian Dollar Lender for the
principal amount of the Canadian Prime Rate Loan being converted, shall retain
for its own account the Discount Proceeds of each new Bankers' Acceptance issued
by it in connection with such conversion and LGEC shall, on the date of issuance
of the Bankers' Acceptances pay to the Canadian Agent (for the benefit of the
Canadian Dollar Lenders) an amount equal to the difference between the aggregate
principal amount of the Canadian Prime Rate Loan being converted, including any
accrued interest
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thereon, owing to the Lenders and the aggregate Discount Proceeds of such
Bankers' Acceptances; and
(n) in the case of a conversion of Bankers' Acceptances
into a Canadian Prime Rate Loan, each Canadian Dollar Lender, in order to
satisfy the liability of LGEC to each Canadian Dollar Lender for the face amount
of the maturing Bankers' Acceptances, shall record the obligation of LGEC to it
as a Canadian Prime Rate Loan, unless LGEC provides for payment to the Canadian
Agent (for the benefit of the Lenders) of the face amount of the maturing
Bankers' Acceptance in some other manner acceptable to the Canadian Dollar
Lenders.
In the event that the Borrowers shall not give notice to (I) rollover or convert
any Bankers' Acceptance or (II) continue or convert any Eurodollar Loan, as
provided above, such Loan or Bankers' Acceptance (unless repaid) shall
automatically be (x) in the case of a Canadian Dollar Loan or a Bankers'
Acceptance, converted to a Canadian Prime Rate Loan in the Canadian Agent's
discretion and (y) in the case of a U.S. Dollar Loan, (i) continued as a
Eurodollar Loan with an Interest Period of one month or (ii) converted to an
Alternate Base Rate Loan, at the expiration of the then current Interest Period
or maturity date, as applicable, at the Administrative Agent's discretion. The
Administrative Agent or the Canadian Agent as applicable shall, after it
receives notice from either of the Borrowers, promptly give the U.S. Dollar
Lenders or the Canadian Dollar Lenders, as applicable, notice of any
continuation, rollover or conversion.
SECTION 2.12 Prepayment of Loans and Bankers' Acceptances;
Reimbursement of Lenders.
(a) Subject to the terms of Section 2.12(e), LGEC shall
have the right at its option at any time and from time to time to prepay any
Canadian Prime Rate Loan, Eurodollar Loan or Bankers' Acceptance, in each case
in whole or in part, upon at least three Business Day's written, telephonic
(promptly confirmed in writing) or telegraphic notice; provided, however, that
(i) if LGEC elects to prepay any Canadian Prime Rate Loan, Eurodollar Loan or
Bankers' Acceptance in part, each such prepayment shall be in a minimum
principal amount of C$500,000, or in the amount of the Canadian Dollar Notes
representing Loans made to LGEC, and (ii) if LGEC elects to prepay a Bankers'
Acceptance and such Bankers' Acceptance has not yet matured, LGEC shall, at such
time, deposit in the Canadian Dollar Cash Collateral account, an amount equal to
the aggregate face amount of such instruments. Each notice of prepayment shall
specify the prepayment date, each Canadian Dollar Loan or Bankers' Acceptance to
be prepaid and the principal amount thereof, shall be irrevocable and shall
commit the Borrower to prepay such Loan or Bankers' Acceptance in the amount and
on the date stated therein.
(b) Subject to the terms of Section 2.12(e), LGEI shall
have the right at its option at any time and from time to time to prepay (i) any
Alternate Base Rate Loan, in whole or in part, upon at least one Business Day's
written, telephonic (promptly confirmed in writing) or telegraphic notice, in
the principal amount of U.S.$1,000,000 or such greater amount which is an
integral multiple of U.S.$100,000 and (ii) any Eurodollar Loan, in whole or in
part, upon at least three Business Days' written, telephonic (promptly confirmed
in writing) or telegraphic notice, in the principal amount of U.S.$1,000,000 or
such greater amount which is an integral multiple of U.S.$500,000. Each notice
of prepayment shall specify the prepayment date, each U.S. Dollar
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Loan to be prepaid and the principal amount thereof, shall be irrevocable and
shall commit the Borrower to prepay such Loan in the amount and on the date
stated therein. Such notice shall also specify the expected principal amount of
U.S. Dollar Loans to be outstanding after giving effect to such prepayment.
(c) The Borrowers shall pay to the Administrative Agent
for the pro rata account of each Lender as a mandatory prepayment first on the
Term Loans to be applied to annual payments in inverse order of maturity, and
after the Term Loans are repaid in full, then on the Revolving Credit Loans, an
amount equal to one hundred percent (100%) of any Net Cash Proceeds received by
any Credit Party from any sale or other disposition of any asset pursuant to
Section 6.7(a) (iv) hereof other than the sale of (i) LGEC's equity interest in
any business incorporated and primarily operating in Canada, (ii) the Lions Gate
Vancouver studio listed on Schedule 3.24 hereto, (iii) the first US$20,000,000
of any Net Cash Proceeds received in connection with the sale of LGEC's equity
interest in any business which is engaged in business activities that are
substantially the same as another business of LGEC's in which LGEC retains all
of its investment (but not including Net Cash Proceeds received from the sale of
LGEC's equity interests contemplated by clause (i) of this paragraph) and (iv)
CinemaNow.
(d) All such mandatory prepayments pursuant to Section
2.12(c) shall be (i) made by the Borrower substantially simultaneously with
receipt of such Net Cash Proceeds, but in any event within three (3) Business
Days of receipt thereof, and (ii) applied first to the Term Loans, and second,
if any Net Cash Proceeds remain outstanding after payment in full of the Term
Loans, applied to the outstanding Revolving Credit Loans.
(e) The Borrowers shall reimburse each Lender on demand
for any loss (excluding any loss of the Applicable Margin) incurred or to be
incurred by it in the reemployment of the funds released (i) by any prepayment
or conversion (for any reason) of any Bankers' Acceptance and/or Eurodollar Loan
if such Loan or Bankers' Acceptance is repaid other than on its last day of the
Interest Period for such Loan or the maturity date of such Bankers' Acceptance
or (ii) in the event that after the Borrowers deliver a notice of Borrowing
under Sections 2.1(a) or 2.3(a) or a notice of conversion or continuation under
Section 2.11(a) in respect of Bankers' Acceptances and/or Eurodollar Loans, such
Loan or Bankers' Acceptance is not made on the first day of the Interest Period
(or date of acceptance with respect to a Bankers' Acceptance) specified in such
notice of Borrowing for any reason other than (I) a suspension or limitation
under Section 2.10(b) or (c) of the right of the Borrowers to select a Bankers'
Acceptance and/or Eurodollar Loan or (II) a breach by the Lenders of their
obligation hereunder. Such loss shall be the amount as reasonably determined by
such Lender as the excess, if any, of (A) the amount of interest which would
have accrued to such Lender on the amount so paid or not borrowed, continued or
converted at a rate of interest equal to (1) the interest rate applicable to
such Loan pursuant to Section 2.7 hereof (but excluding the Applicable Margin)
or (2) the Bankers' Acceptance Rate applicable to such Bankers' Acceptance
pursuant to Section 2.4 hereof, for the period from the date of such payment or
failure to borrow, continue or convert to the last day (x) in the case of a
payment other than on the last day of the Interest Period for such Loan or the
maturity date of such Bankers' Acceptance, of the then current Interest Period
for such Loan or the maturity date of such Bankers' Acceptance or (y) in the
case of such failure to borrow, continue or convert, of the Interest Period for
such Loan or in the case of such failure to borrow, rollover or convert such
Bankers' Acceptance which would have commenced on the
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date of such failure to borrow, continue, rollover or convert, over (B) the
amount realized by such Lender in reemploying the funds not advanced or the
funds received in prepayment or realized from the Loan or Bankers' Acceptance so
continued or converted during the period referred to above. Each Lender shall
deliver to the Borrowers from time to time one or more certificates setting
forth the amount of such loss (and in reasonable detail the manner of
computation thereof) as determined by such Lender, which certificates shall be
conclusive absent manifest error. The Borrowers shall pay the Administrative
Agent or the Canadian Agent, as applicable, for the account of such Lender the
amount shown or such Certificate with 10 (ten) days of the Borrowers' receipt of
such Certificate.
(f) In the event the Borrowers fail to prepay any Loan or
Bankers' Acceptance on the date specified in any prepayment notice delivered
pursuant to this Section, the Borrowers on demand by any Lender, shall pay to
the Administrative Agent or the Canadian Agent, as applicable, for the account
of such Lender any amounts required to compensate such Lender for any loss
incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Each Lender shall
deliver to the Borrowers, the Administrative Agent and the Canadian Agent from
time to time one or more certificates setting forth the amount of such loss (and
in reasonable detail the manner of computation thereof) as determined by such
Lender, which certificates shall be conclusive absent manifest error.
(g) If at any time the sum of the aggregate principal
amount of all U.S. Dollar Loans then outstanding plus the then current L/C
Exposure plus the U.S. Dollar Equivalent of the aggregate principal amount of
all Canadian Dollar Loans then outstanding plus the U.S. Dollar Equivalent of
the then current BA Exposure plus all amounts reserved under the Special
Production Tranche, exceeds the Borrowing Base as set forth on such Borrowing
Base Certificate, the Borrowers shall within ten (10) days after the due date of
such Borrowing Base Certificate prepay outstanding Revolving Credit Loans or
deposit Cash Equivalents in the Cash Collateral Accounts to the extent necessary
to eliminate such excess or pay down the Term Loan to the extent there are no
Revolving Credit Loans then outstanding.
(h) Simultaneously with each termination and/or mandatory
or optional reduction of the Total Canadian Dollar Credit Commitment and/or the
Total U.S. Dollar Revolving Credit Commitment pursuant to Section 2.9, the
Borrowers shall pay to the Administrative Agent or the Canadian Agent, as
applicable, (for the benefit of the Lenders) the amount, if any, by which either
(x) the sum of the aggregate outstanding principal amount of the U.S. Dollar
Loans plus the U.S. L/C Exposure plus the unused portion of the Special
Production Tranche for all Designated Pictures for which Loans have been made to
LGEI which have not yet been Completed exceeds the reduced Total U.S. Dollar
Credit Commitments or (y) the sum of the aggregate outstanding principal amount
of the Canadian Dollar Loans plus the BA Exposure plus the Canadian L/C Exposure
plus the unused portion of the Special Production Tranche for all Designated
Pictures for which Loans have been made to LGEC which have not been Completed
exceeds the reduced Total Canadian Dollar Credit Commitment, all accrued and
unpaid interest thereon and the Commitment Fees on the amount of the Total
Canadian Dollar Credit Commitment or the Total U.S. Dollar Credit Commitment so
terminated or reduced through the date thereof. To the extent there is
outstanding U.S. L/C Exposure at the time of any
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optional or mandatory termination of the Total U.S. Dollar Revolving Credit
Commitment, the Borrowers shall deliver to the Administrative Agent Cash
Equivalents in an amount equal to the full amount of the U.S. L/C Exposure or
furnish other security acceptable to the Required Revolving Credit Lenders and
to the extent there is outstanding Canadian L/C Exposure at the time of any
optional or mandatory termination of the Total Canadian Dollar Credit
Commitment, the Borrowers shall deliver to the Canadian Agent Cash Equivalents
in an amount equal to the full amount of the Canadian L/C Exposure or furnish
other security acceptable to the Required Revolving Credit Lenders.
(i) If on any day on which the Loans or the Bankers'
Acceptances would otherwise be required to be prepaid but for the operation of
this Section 2.12(h) (each a "Prepayment Date"), the amount of such required
prepayment exceeds the then outstanding aggregate principal amount of the
Canadian Dollar Loans which consist of Canadian Prime Rate Loans or U.S. Dollar
Loans that constitute Alternate Base Rate Loans, and no Default or Event of
Default is then continuing, then on such Prepayment Date the Borrowers may, at
their option, deposit Canadian Dollars or U.S. Dollars, as the case may be, into
the appropriate Cash Collateral Account in an amount equal to such excess. If
the Borrowers make such deposit then (i) only the outstanding Canadian Prime
Rate Loans or Alternate Base Rate Loans shall be required to be prepaid on such
Prepayment Date and (ii) on the last day of each Interest Period with respect to
any Eurodollar Loan, and on the maturity date with respect to any Bankers'
Acceptance, in effect after such Prepayment Date, the Administrative Agent or
the Canadian Agent, as applicable, is irrevocably authorized and directed to
apply funds from the appropriate Cash Collateral Account, if any, (and liquidate
investments held in such cash collateral account as necessary) to prepay
maturing Bankers' Acceptances on their respective maturity dates or Eurodollar
Loans for which the Interest Period is then ending until the aggregate of such
prepayments equals the prepayment which would have been required on such
Prepayment Date but for the operation of this Section 2.12(g).
(j) Unless otherwise designated in writing by the
Borrowers, all prepayments shall be applied to the applicable principal payment
set forth in this Section 2.12, (A) if under the Canadian Dollar Facility, first
to Canadian Prime Rate Loans, and then to Bankers' Acceptances in order of the
scheduled maturity dates and (B) if made under the U.S. Dollar Facility, first
to that amount of such applicable principal payment then maintained as Alternate
Base Rate Loans, and then to that amount of such applicable principal payment
maintained as Eurodollar Loans in order of the scheduled expiry of Interest
Periods with respect thereto.
SECTION 2.13 Change in Circumstances.
(a) In the event that after the Closing Date, any change
in Applicable Law or in the interpretation or administration thereof (including,
without limitation, any request, guideline or policy not having the force of
law) by any Governmental Authority charged with the administration or
interpretation thereof or, with respect to clauses (ii), (iii) or (iv) below any
changes in conditions, shall occur which shall:
(i) subject any U.S. Dollar Lender to, or
increase the net amount of, any tax, levy, impost, duty, charge, fee, deduction
or withholding with respect to any Eurodollar Loan (other than withholding tax
imposed by the United States of America or any political
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subdivision or taxing authority thereof or therein or any other tax, levy,
impost, duty, charge, fee, deduction or withholding (x) that is measured with
respect to the overall net income of such Lender or of a Lending Office of such
Lender, and that is imposed by the United States of America or by the
jurisdiction in which such Lender or Lending Office is incorporated or carries
on business, in which such Lending Office is located, managed or controlled or
in which such Lender has its principal office or a presence not otherwise
connected with, or required by, this transaction (or any political subdivision
or taxing authority thereof or therein), or (y) that is imposed solely by reason
of any Lender failing to make a declaration of, or otherwise to establish,
nonresidence, or to make any other claim for exemption, or otherwise to comply
with any certification, identification, information, documentation or reporting
requirements prescribed under the laws of the relevant jurisdiction, in those
cases where a Lender may properly make such declaration or claim or so establish
nonresidence or otherwise comply); or
(ii) change the basis of taxation of any payment
to any U.S. Dollar Lender of principal of or interest on any Eurodollar Loan or
other fees and amounts payable to any Lender hereunder, or any combination of
the foregoing, other than withholding tax imposed by the United States of
America as applicable, or any political subdivision or taxing authority thereof
or therein or any other tax, levy, impost, duty, charge, fee, deduction or
withholding that is measured with respect to the overall net income of such
Lender or of a Lending Office of such Lender, and that is imposed by the United
States of America or by the jurisdiction in which such Lender or Lending Office
is incorporated or carries on business, in which such Lending Office is located,
managed or controlled or in which such Lender has its principal office or a
presence not otherwise connected with, or required by, this transaction (or any
political subdivision or taxing authority thereof or therein); or
(iii) impose, modify or deem applicable any
reserve, deposit or similar requirement against any assets held by, deposits
with or for the account of, or loans or commitments by, an office of such Lender
with respect to any Eurodollar Loan; or
(iv) impose upon such Lender or the London
Interbank Market any other condition with respect to the Eurodollar Loans or
this Credit Agreement;
and the result of any of the foregoing shall be to increase the actual cost to
such Lender of making or maintaining any Eurodollar Loan hereunder or to reduce
the amount of any payment (whether of principal, interest or otherwise) received
or receivable by such Lender in connection with any Eurodollar Loan hereunder,
or to require such Lender to make any payment in connection with any Eurodollar
Loan hereunder, in each case by or in an amount which such Lender in its sole
judgment shall deem material, then and in each case, the Borrowers agree to pay
to the Administrative Agent for the account of such Lender, as provided in
paragraph (c) below, such amounts as shall be necessary to compensate such
Lender for such cost, reduction or payment.
(b) If at any time and from time to time after the
Initial Date, any Lender shall have determined that the applicability of any
law, rule, regulation or guideline regarding capital adequacy which is adopted
after the Initial Date, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or the
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compliance by any Lender (or any Lending Office of such Lender) or any Lender's
holding company with any request or directive issued after the Initial Date
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Credit Agreement or
the Loans made or Letters of Credit issued or participated in or Bankers'
Acceptances accepted by such Lender pursuant hereto to a level below that which
such Lender or such Lender's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into consideration such
Lender's policies and the policies of such Lender's holding company with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time the Borrowers agree to pay to the Administrative Agent and/or
the Canadian Agent, as applicable, for the account of such Lender, as provided
in paragraph (c) below, such additional amount or amounts as will compensate
such Lender or such Lender's holding company for any such reduction suffered to
the extent attributable to this Credit Agreement or the Loans made or Letters of
Credit issued or participated in or Bankers' Acceptances accepted pursuant
hereto.
(c) Each U.S. Dollar Lender shall deliver to LGEI and to
the Administrative Agent, and each Canadian Dollar Lender hereunder shall
deliver to the Canadian Agent from time to time one or more certificates setting
forth the amounts due to such Lender under paragraphs (a) or (b) above, the
changes as a result of which such amounts are due and the manner of computing
such amounts. Each such certificate shall be conclusive in the absence of
manifest error. The Borrowers shall pay to the Administrative Agent for the
account of each such Lender the amounts shown as due on any such certificate
within ten (10) business days after the Borrowers' receipt of the same. No
failure on the part of any Lender to demand compensation under paragraph (a) or
(b) above on any one occasion shall constitute a waiver of its right to demand
such compensation on any other occasion. The protection of this Section 2.13
shall be available to each Lender regardless of any possible contention of the
invalidity or inapplicability of any law, regulation or other condition which
shall give rise to any demand by such Lender for compensation hereunder.
(d) Each Lender agrees that after it becomes aware of the
occurrence of an event or the existence of a condition that (i) would cause it
to incur any increased cost hereunder or render it unable to perform its
agreements hereunder for the reasons specifically set forth in Section 2.6(j),
Section 2.10(b), this Section 2.13 or Section 2.18 or (ii) would require the
Borrowers to pay an increased amount under Section 2.6(j), Section 2.10(b), this
Section 2.13 or Section 2.18, to the extent not inconsistent with such Lender's
internal policies it will use reasonable efforts to make, fund or maintain the
affected Loans of such Lender, or, if applicable, to participate in Letters of
Credit as required by Section 2.6 through another Lending Office of such Lender
if as a result thereof the additional monies which would otherwise be required
to be paid or the reduction of amounts receivable by such Lender thereunder in
respect of such Loans, Letters of Credit or participations therein would be
materially reduced, or such inability to perform would cease to exist, or the
increased costs which would otherwise be required to be paid in respect of such
Loans, Letters of Credit or participations therein pursuant to Section 2.6(j),
Section 2.10(b), this Section 2.13 or Section 2.18 would be materially reduced
or the taxes or other amounts otherwise payable under Section 2.6(j), Section
2.10(b), this Section 2.13 or Section 2.18 would be materially reduced, and if,
as determined by such Lender, in its sole
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discretion, the making, funding or maintaining of such Loans, Letters of Credit
or participations therein through such other Lending Office would not otherwise
materially adversely affect such Loans, Letters of Credit or participations
therein or such Lender.
(e) Each Lender will use reasonable efforts to notify the
Borrowers, through the Administrative Agent, of any event of which it has
knowledge that will entitle such Lender to compensation pursuant to subsections
2.6(j), 2.10(b), this Section 2.13 or Section 2.18. No failure by any Lender to
give (or delay in giving) such notice shall adversely affect such Lender's
rights to such compensation.
(f) If the Borrowers shall receive notice from any Lender
that amounts are due to such Lender pursuant to paragraph (c) hereof or that any
of the events designated in paragraph (d) hereof have occurred, the Borrowers
may (but subject in any such case to the payments required by Sections 2.12(b)
and 2.14(d)), upon at least five Business Days' prior written or telecopier
notice to such Lender and the Administrative Agent, but not more than 60 days
after receipt of written notice from such Lender, identify to the Administrative
Agent a lending institution acceptable to the Borrowers and the Administrative
Agent, which will purchase the Commitments, the amount of outstanding Loans and
any participations in Letters of Credit from the Lender providing such notice,
and such Lender shall thereupon assign its Commitment, any Loans owing to such
Lender, any participations in Letters of Credit and the Notes held by such
Lender to such replacement lending institution pursuant to Section 13.3.
SECTION 2.14 Change in Legality.
(a) Notwithstanding anything to the contrary contained
elsewhere in this Credit Agreement, if any change after the date hereof in
Applicable Law, guideline or order, or in the interpretation thereof by any
Governmental Authority charged with the administration thereof, shall make it
unlawful for any Lender to make or maintain any Bankers' Acceptances or
Eurodollar Loan or to give effect to its obligations as contemplated hereby with
respect to a Eurodollar Loan or Bankers' Acceptances, then, by written notice to
the Borrowers and the Administrative Agent or the Canadian Agent, as applicable,
such Lender may (i) declare that Eurodollar Loans will not thereafter be made or
Bankers' Acceptances accepted, as applicable, by such Lender hereunder and/or
(ii) require that, subject to Section 2.11 all outstanding Bankers' Acceptances
or Eurodollar Loans made by it be converted to Canadian Prime Rate Loans or
Alternate Base Rate Loans, as applicable, whereupon all of such Bankers'
Acceptances or Eurodollar Loans shall automatically be converted to Canadian
Prime Rate Loans or Alternate Base Rate Loans, as applicable, as of the
effective date of such notice as provided in paragraph (b) below. Such Lender's
Pro Rata Share of any subsequent Bankers' Acceptance or Eurodollar Loan shall,
instead, be a Canadian Prime Rate Loan or an Alternate Base Rate Loan, as
applicable, unless such declaration is subsequently withdrawn.
(b) A notice to the Borrowers by any Lender pursuant to
paragraph (a) above shall be effective for purposes of clause (ii) thereof, if
lawful, on the last day of the current Interest Period for each outstanding
Eurodollar Loan; and in all other cases, on the date of receipt of such notice
by the Borrowers.
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SECTION 2.15 United States Withholding.
(a) Prior to the date of the initial Loans hereunder, and
prior to the effective date set forth in the Assignment and Acceptance with
respect to any U.S. Dollar Lender becoming a U.S. Dollar Lender after the date
hereof, and from time to time thereafter if requested by LGEI or the
Administrative Agent or required because, as a result of a change in law or a
change in circumstances or otherwise, a previously delivered form or statement
becomes incomplete or incorrect in any material respect, each U.S. Dollar Lender
organized under the laws of a jurisdiction outside the United States shall
provide, if applicable, the Administrative Agent and LGEI with complete,
accurate and duly executed forms or other statements prescribed by the Internal
Revenue Service of the United States certifying such Lender's exemption from, or
entitlement to a reduced rate of, United States withholding taxes (including
backup withholding taxes) with respect to all payments to be made to such Lender
hereunder and under any other Fundamental Document.
(b) LGEI and the Administrative Agent shall be entitled
to deduct and withhold any and all present or future taxes or withholdings, and
all liabilities with respect thereto, from payments to a U.S. Dollar Lender
hereunder or under any other Fundamental Document, if and to the extent that
LGEI or the Administrative Agent in good faith determines that such deduction or
withholding is required by the law of the United States, including, without
limitation, any applicable treaty of the United States. In the event LGEI or the
Administrative Agent shall so determine that deduction or withholding of taxes
is required, they shall advise the affected U.S. Dollar Lender as to the basis
of such determination prior to actually deducting and withholding such taxes. In
the event LGEI or the Administrative Agent shall so deduct or withhold taxes
from amounts payable hereunder, they (i) shall pay to, or deposit with, the
appropriate taxing authority in a timely manner the full amount of taxes it has
deducted or withheld; (ii) shall provide to each U.S. Dollar Lender from whom
taxes were deducted or withheld, evidence of payment of such taxes to, or the
deposit thereof with, the appropriate taxing authority and a statement setting
forth the amount of taxes deducted or withheld, the applicable rate, and any
other information or documentation reasonably requested by such Lender; and
(iii) shall forward to each such Lender any official tax receipts or other
documentation with respect to the payment or deposit of the deducted or withheld
taxes as may be issued from time to time by the appropriate taxing authority.
Unless LGEI and the Administrative Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under any Note are
not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Borrowers or the Administrative
Agent may withhold taxes from such payments at the applicable statutory rate in
the case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.
(c) Each U.S. Dollar Lender agrees (i) that as between it
and LGEI or the Administrative Agent, such Lender shall be the Person to deduct
and withhold taxes, and to the extent required by law, it shall deduct and
withhold taxes on amounts that such Lender may remit to any other Person(s) by
reason of any undisclosed transfer or assignment of an interest in this Credit
Agreement to such other Person(s) pursuant to Section 13.3; and (ii) to
indemnify LGEI and the Administrative Agent and any officers, directors, agents,
employees or representatives of the Borrowers or the Administrative Agent
against, and to hold them harmless
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from, any tax, interest, additions to tax, penalties, reasonable counsel and
accountants' fees, disbursements or payments arising from the assertion by any
appropriate taxing authority of any claim against them relating to a failure to
withhold taxes as required by law with respect to amounts described in clause
(i) of this paragraph (c) or arising from the reliance by the Borrowers or the
Administrative Agent on any form or other document furnished by such Lender and
purporting to establish a basis for not withholding, or for withholding at a
reduced rate, taxes with respect to payments hereunder or under any other
Fundamental Document.
(d) Each assignee of a U.S. Dollar Lender's interest in
this Credit Agreement in conformity with Section 13.3 shall be bound by this
Section 2.15, so that such assignee will have all of the obligations and provide
all of the forms and statements and all indemnities, representations and
warranties required to be given under this Section 2.15.
(e) Notwithstanding the foregoing, in the event that any
withholding taxes or additional withholding taxes shall become payable solely as
a result of any change in any statute, treaty, ruling, determination or
regulation occurring after the Initial Date in respect of any sum payable
hereunder or under any other Fundamental Document to any Lender or the
Administrative Agent (i) the sum payable by LGEI shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.15) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) LGEI shall
make such deductions, (iii) LGEI shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with Applicable Law
and (iv) LGEI shall forward to such Lender or the Administrative Agent (as the
case may be) the official tax receipts or other documentation pursuant to
Section 2.15(b). In addition, LGEI shall indemnify each U.S. Dollar Lender and
the Administrative Agent for any additional withholding taxes paid by such
Lender or the Administrative Agent, as the case may be, or any liability
(including penalties and interest) arising therefrom or with respect thereto,
whether or not such additional withholding taxes were correctly or legally
asserted.
(f) In the event that a U.S. Dollar Lender receives a
refund of or credit for taxes withheld or paid pursuant to clause (e) of this
Section, which credit or refund is identifiable by such Lender as being a result
of taxes withheld or paid in connection with sums payable hereunder or under any
other Fundamental Document, such Lender shall promptly notify the Administrative
Agent and the Borrowers and shall, if no Event of Default has occurred and is
continuing, remit to the Borrowers the amount of such refund or credit allocable
to payments made hereunder or under any other Fundamental Document.
(g) Each U.S. Dollar Lender agrees that after it becomes
aware of the occurrence of an event that would cause the Borrowers to pay any
amount pursuant to clause (e) of this Section 2.15, it will use reasonable
efforts to notify LGEI of such event and, to the extent not inconsistent with
such Lender's internal policies, will use its reasonable efforts to make, fund
or maintain the affected U.S. Dollar Loans of such Lender, or, if applicable, to
participate in Letters of Credit through another Lending Office of such Lender
if as a result thereof the additional monies which would otherwise be required
to be paid by reason of Section 2.18(e) in respect of such Loans, Letters of
Credit or participations therein would be materially reduced, and if, as
determined by such Lender, in its discretion, the making, funding or maintaining
of
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such Loans, Letters of Credit or participations therein through such other
Lending Office would not otherwise materially adversely affect such Loans,
Letters of Credit or participations therein or such Lender.
(h) Notwithstanding anything to the contrary herein, each
U.S. Dollar Lender represents and warrants that, as of the Closing Date, each
such U.S. Dollar Lender is entitled to receive any payments under this Agreement
without deduction or withholding of any United States Federal income taxes.
SECTION 2.16 Foreign Currency Conversion; Withholding.
(a) If the net amount of any payment received by the
Canadian Agent hereunder, after such amount has (in the case of an amount
received in a currency other than Canadian Dollars and/or received outside
Canada) been converted into Canadian Dollars and transferred to Toronto in
accordance with normal banking procedures, is less than the amount otherwise
then due and owing by LGEC to the Canadian Dollar Lenders hereunder, or if the
Canadian Agent is unable to immediately convert and transfer any such amount as
aforesaid, then LGEC agrees as a separate obligation to the Canadian Dollar
Lenders to indemnify the Canadian Dollar Lenders against the loss incurred by
reason of such shortfall or delay to the extent but only to the extent such
shortfall or delay is due to (i) the application of any exchange controls or
similar laws and regulations or (ii) the fact that such amount was received in a
currency other than Canadian Dollars; and if the amount of Canadian Dollars thus
received by the Canadian Agent, after such conversion, exceeds the amount
otherwise then due and owing, the Canadian Agent shall apply such excess to
prepay any Loans and provide cash collateral for Bankers' Acceptances then
outstanding until the Canadian Dollar Loans, the Bankers' Acceptances and the
Letters of Credit issued to LGEC shall have been reduced to zero, and thereafter
shall remit any further excess to LGEC.
(b) If the net amount of any payment received by the
Administrative Agent hereunder, after such amount has (in the case of an amount
received in a currency other than U.S. Dollars and/or received outside of the
United States) been converted into U.S. Dollars and transferred to New York in
accordance with normal banking procedures, is less than the amount otherwise
then due and owing by LGEI to the U.S. Dollar Lenders hereunder, or if the
Administrative Agent is unable to immediately convert and transfer any such
amount as aforesaid, then LGEI agrees as a separate obligation to the U.S.
Dollar Lenders to indemnify the U.S. Dollar Lenders against the loss incurred by
reason of such shortfall or delay to the extent but only to the extent such
shortfall or delay is due to (i) the application of any exchange controls or
similar laws and regulations or (ii) the fact that such amount was received in a
currency other than U.S. Dollars; and if the amount of U.S. Dollars thus
received by the Administrative Agent, after such conversion, exceeds the amount
otherwise then due and owing, the Administrative Agent shall apply such excess
to prepay any Loans and provide cash collateral for Letters of Credit then
outstanding until the U.S. Dollar Loans shall have been reduced to zero and all
outstanding Letters of Credit have been fully cash collateralized, and
thereafter shall remit any further excess to LGEI.
(c) If any amount is withheld or any deduction is made or
if under Applicable Law any amount is required to be withheld or any deduction
is required to be made from any
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payment by or on behalf of LGEC to the Canadian Agent by any taxing authority or
Governmental Authority of any jurisdiction inside or outside Canada in
connection with any stamp tax, withholding tax, deposit requirement, duty or
otherwise imposed under any Applicable Law, guideline or order in effect in such
jurisdiction, or if any Canadian Dollar Lender becomes liable for any other tax
imposed under the Applicable Law of any jurisdiction in connection with the
Canadian Dollar Loans, the Letters of Credit issued to LGEC or the Bankers'
Acceptances being accepted or discounted hereunder (other than any tax payable
in respect of the income of the Canadian Dollar Lender), (i) LGEC agrees, as a
separate obligation to such Lender, that it will pay such additional amounts as
may be necessary so that after making all required withholdings and deductions
(including withholdings and deductions applicable to additional sums payable
under this Section), and after the payment of any required taxes, such Lender
receives an amount equal to the sum it would have received had no such amounts
been required to be deducted or withheld and no such taxes required to be paid;
(ii) LGEC shall make all such required withholdings and deductions; (iii) LGEC
shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with Applicable Law; and (iv) LGEC
shall forward to such Canadian Dollar Lender or the Canadian Agent (as the case
may be) the official tax receipts or other documentation in respect of the
amounts withheld or deducted. In addition, LGEC shall indemnify each Canadian
Dollar Lender and the Canadian Agent for any additional withholding taxes or
deductions paid by such Canadian Dollar Lender or the Canadian Agent, as the
case may be, or any liability (including penalties and interest) arising
therefrom or with respect thereto, whether or not such additional withholding
taxes or deductions were correctly or legally asserted.
(d) In the event that a Canadian Dollar Lender receives a
refund of or credit for taxes withheld or paid pursuant to clause (b) of this
Section, which credit or refund is identifiable by such Lender as being a result
of taxes withheld or paid in connection with sums payable hereunder or under any
other Fundamental Document, such Lender shall promptly notify the Administrative
Agent and the Borrowers and shall remit, if no Event of Default has occurred and
is continuing, to the Borrowers the amount of such refund or credit allocable to
payments made hereunder or under any other Fundamental Document.
(e) Notwithstanding anything to the contrary herein, each
Canadian Dollar Lender represents and warrants that, as of the Closing Date,
each such Canadian Dollar Lender is entitled to receive any payments under this
Agreement without deduction or withholding of any Canadian income taxes.
SECTION 2.17 Interest Act (Canada). For the purposes of this Credit
Agreement, whenever interest on a Canadian Dollar Loan or Bankers' Acceptance is
calculated on the basis of a period which is less than the actual number of days
in a calendar year, the yearly rate to which each rate of interest determined
pursuant to such calculation is, for the purposes of the Interest Act (Canada),
equivalent is each such rate multiplied by the actual number of days in the
calendar year in which such rate is to be ascertained and divided by the number
of days used as the basis of such calculation.
SECTION 2.18 Interest Adjustments. If the provisions of this Credit
Agreement or any Note would at any time require payment by the Borrowers to a
Lender of any amount of interest in excess of the maximum amount then permitted
by Applicable Law with
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respect to any Loan, the interest payments to that Lender shall be reduced to
the extent necessary in order that such Lender shall not receive interest in
excess of such maximum amount. If, as a result of the foregoing, a Lender shall
receive interest payments hereunder or under a Note in an amount less than the
amount otherwise provided hereunder, such deficit (hereinafter called the
"Interest Deficit") will, to the fullest extent permitted by Applicable Law,
cumulate and will be carried forward (without interest) until the termination of
this Credit Agreement. Interest otherwise payable to a Lender hereunder and
under a Note for any subsequent period shall be increased by the maximum amount
of the Interest Deficit that may be so added without causing such Lender to
receive interest in excess of the maximum amount then permitted by Applicable
Law with respect to the Loans.
The amount of any Interest Deficit relating to a Loan and any
Note shall be treated as a prepayment penalty and shall, to the fullest extent
permitted by Applicable Law, be paid in full at the time of any optional
prepayment by the Borrowers to the Lenders of all the Loans at that time
outstanding pursuant to Section 2.12(a) hereof and a termination of the
Commitments under Section 2.8. The amount of any Interest Deficit relating to a
particular Loan and Note at the time of any complete payment of the Loans at
that time outstanding (other than an optional prepayment thereof pursuant to
Section 2.12(a) hereof and a termination of the Commitments under Section 2.8)
shall be canceled and not paid.
SECTION 2.19 Manner of Payments. (a) All payments of principal and
interest by LGEI in respect of any U.S. Dollar Loans shall be pro rata among the
U.S. Dollar Lenders in accordance with their Percentage. All payments by LGEI
hereunder and under the U.S. Dollar Notes shall be made without offset or
counterclaim in U.S. Dollars, in immediately available funds, at the office of
JPMorgan Chase Bank, Loan and Agency Services Group, 0000 Xxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxx 00000, Attention: Xxxxx Xxxxxxx, for credit to the Chase Clearing
Account, no later than 12:00 noon, New York City time, on the date on which such
payment shall be due. Any payment received at such office after such time shall
be deemed received on the following Business Day.
(b) All payments of principal and interest by LGEC in
respect of any Canadian Dollar Loans shall be Pro Rata among the Canadian Dollar
Lenders in accordance with their Percentage. All payments by LGEC hereunder and
under the Canadian Dollar Notes shall be made without offset or counterclaim in
Canadian Dollars in immediately available funds to the Canadian Agent at its
account for Canadian Dollars for credit to the Canadian Clearing Account no
later than 12:00 noon, New York City time, on the date on which such payment
shall be due. Any payment received at such office after such time shall be
deemed received on the following Business Day.
SECTION 2.20 Provisions Relating to the Borrowing Base.
(a) The Administrative Agent or the Required Lenders may
from time to time by written notice to the Borrowers (i) delete any Person or
Affiliated Group from the schedule of Acceptable Obligors or (ii) decrease the
Allowable Amount for any Acceptable Obligor, in each case, as the Administrative
Agent or the Required Lenders, as the case may be, acting in good faith may deem
appropriate as a result of a change in the circumstances of such Person or
Affiliated Group. Any such notice shall be prospective only, i.e., to the extent
that giving effect
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to such notice would otherwise result in a mandatory prepayment by the Borrowers
under Section 2.12(d), such notice shall not be given effect for purposes of
such mandatory prepayment, but shall nevertheless be effective for all other
purposes under this Credit Agreement immediately upon the Borrowers' receipt of
such notice.
(b) The Required Lenders may (either independently or
after a request has been received from the Borrowers) from time to time by
written notice to the Borrowers add or reinstate a Person or Affiliated Group to
the schedule of Acceptable Obligors or increase the Allowable Amount for any
Acceptable Obligor, as they may in their discretion deem appropriate.
(c) In the event the Administrative Agent or the Required
Lenders notifies the Borrowers that a Person or Affiliated Group is to be
deleted as an Acceptable Obligor in accordance with Section 2.19(a), no
additional Eligible Receivables from such Person or Affiliated Group may be
included in the Borrowing Base subsequent to such notice unless the Required
Lenders thereafter notify the Borrowers that such Person or Affiliated Group is
reinstated as an Acceptable Obligor in accordance with Section 2.19(b). In the
event the Required Lenders notify the Borrowers that the Allowable Amount with
respect to an Acceptable Obligor is to be reduced in accordance with Section
2.19(a), no additional Eligible Receivables from such Acceptable Obligor may be
included in the Borrowing Base subsequent to such notice if such inclusion would
result in the aggregate amount of Eligible Receivables from such Acceptable
Obligor being in excess of the Allowable Amount for such Acceptable Obligor
after giving effect to such reduction unless the Required Lenders thereafter
notify the Borrowers that the Allowable Amount for such Acceptable Obligor is
increased in accordance with Section 2.19(b); provided, however, that the
Allowable Amount for such Acceptable Obligor shall automatically be restored to
its former amount upon request of the Borrowers if the Administrative Agent is
satisfied in good faith that the circumstances which caused the Administrative
Agent or the Required Lenders, as the case may be, to reduce such Allowable
Amount are no longer continuing.
3. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES
In order to induce the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders to enter into this Credit Agreement and
to make the Loans, accept and discount Bankers' Acceptances and issue or
purchase participations in the Letters of Credit provided for herein, the Credit
Parties, jointly and severally, make the following representations and
warranties to, and agreements with, the Administrative Agent, the Issuing Bank
and the Lenders, all of which shall survive the execution and delivery of this
Credit Agreement, the issuance of the Notes, the making of the Loans, the
acceptance and discounting of Bankers' Acceptances and the issuance of the
Letters of Credit:
SECTION 3.1 Existence and Power. (a) Each of the Credit Parties is a
corporation, limited liability company or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of organization
and is qualified to do business and in good standing in all jurisdictions where
(i) the nature of its properties or business so requires and (ii) the failure to
be in good standing would render any Eligible Receivable unenforceable or
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would give rise to a material liability of such Credit Party (a list of such
jurisdictions as of the date hereof is attached hereto as Schedule 3.1(a)).
(b) Each of the Credit Parties has the power and
authority (i) to own its respective properties and carry on its respective
business as now being conducted, (ii) to execute, deliver and perform, as
applicable, its obligations under the Fundamental Documents and any other
documents contemplated thereby to which it is or will be a party, (iii) in the
case of the Borrowers, to borrow hereunder, and (iv) to grant to the
Administrative Agent, for the benefit of itself, the Canadian Agent, the Issuing
Bank and the Lenders, a security interest in the Collateral including the
Pledged Securities, as contemplated by this Credit Agreement and the other
Fundamental Documents to which it is or will be a party; and in the case of the
Guarantors, to guarantee the Obligations as contemplated by Article 9 hereof.
SECTION 3.2 Authority and No Violation. (a) The consummation of the
Acquisition, the execution, delivery and performance of this Credit Agreement
and the other Fundamental Documents to which it is a party, by each Credit
Party, the grant to the Administrative Agent for the benefit of the
Administrative Agent, the Canadian Agent, the Issuing Bank and the Lenders of
the security interest in the Collateral and the Pledged Securities as
contemplated herein and by the other Fundamental Documents and, in the case of
the Borrowers, the Borrowings hereunder and the execution, delivery and
performance of the Notes and, in the case of each Guarantor, the guaranty of the
Obligations as contemplated in Article 9 hereof, (i) have been duly authorized
by all necessary corporate or company (as applicable) action on the part of each
such Credit Party, (ii) will not constitute a violation of any provision of
Applicable Law in any material respect or any order of any Governmental
Authority applicable to such Credit Party, or any of its properties or assets in
any material respect, (iii) will not violate any provision of the Certificate of
Incorporation, By-Laws, limited liability company agreement or any other
organizational document of any Credit Party, (iv) will not violate any provision
of any Distribution Agreement, indenture, agreement, bond, note or other similar
instrument to which such Credit Party is a party or by which such Credit Party
or any of its properties or assets are bound in any material respect, (v) will
not be in conflict with, result in a breach of, or constitute (with due notice
or lapse of time or both) a material default under, or create any right to
terminate, any such Distribution Agreement, indenture, agreement, bond, note or
other instrument, and (vi) will not result in the creation or imposition of any
Lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of any of the Credit Parties other than pursuant to this Credit
Agreement or the other Fundamental Documents.
(b) There are no restrictions on the transfer of any of
the Pledged Securities other than as a result of this Credit Agreement or
applicable securities laws and the regulations promulgated thereunder.
SECTION 3.3 Governmental Approval. All material authorizations,
approvals, registrations or filings from or with any Governmental Authority
(other than UCC-1 and PPSA financing statements, the Hypothec, the Copyright
Security Agreement and the Trademark Security Agreement which will be delivered
to the Administrative Agent on or prior to the Closing Date, in form suitable
for recording or filing with the appropriate filing office) required for the
consummation of the Acquisition, the execution, delivery and performance by any
Credit Party of this Credit Agreement and the other Fundamental Documents to
which it is a
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party, and the execution and delivery by the Borrowers of the Notes, have been
duly obtained or made, and are in full force and effect, and if any further
authorizations, approvals, registrations or filings should hereafter become
necessary, the Credit Parties shall obtain or make all such authorizations,
approvals, registrations or filings.
SECTION 3.4 Binding Agreements. This Credit Agreement and the other
Fundamental Documents when executed, will constitute the legal, valid and
binding obligations of each Credit Party that is a party thereto, enforceable
against such Credit Party in accordance with their respective terms, subject, as
to the enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization and similar laws affecting creditors' rights generally and to
general principles of equity.
SECTION 3.5 Financial Statements. The audited consolidated balance
sheets of LGEC and its Consolidated Subsidiaries at the fiscal years ended March
31, 2002 and March 31, 2003 and the unaudited consolidated balance sheet of LGEC
and its Consolidated Subsidiaries, together with the related statements of
income and the related notes and supplemental information for the audited
statements, have been prepared in accordance with GAAP in effect as of such date
consistently applied, except as otherwise indicated in the notes to such
financial statements and subject in the case of unaudited statements to changes
resulting from year-end and audit adjustments. All of such financial statements
fairly present the financial position or the results of operations of LGEC and
its Consolidated Subsidiaries on a consolidated basis at the dates or for the
periods indicated, subject to year-end and audit adjustments in the case of
unaudited statements, and reflect all known liabilities, contingent or
otherwise, that GAAP require, as of such dates, to be shown or reserved against.
SECTION 3.6 No Material Adverse Change. (a) There has been no material
adverse change with respect to the business, operations, performance, assets,
properties, condition (financial or otherwise) or prospects of the Credit
Parties taken as a whole from March 31, 2003.
(b) No Credit Party has entered or is entering into the
arrangements contemplated hereby and by the other Fundamental Documents, or
intends to make any transfer or incur any obligations hereunder or thereunder,
with actual intent to hinder, delay or defraud either present or future
creditors. On and as of the Closing Date, on a pro forma basis after giving
effect to all Indebtedness (including the Loans) expected to be borrowed or
repaid on the Closing Date (i) each Credit Party expects the cash available to
such Credit Party, after taking into account all other anticipated uses of the
cash of such Credit Party (including the payments on or in respect of debt
referred to in clause (iii) of this Section 3.6(b)), will be sufficient to
satisfy all final judgments for money damages which have been docketed against
such Credit Party or which may be rendered against such Credit Party in any
action in which such Credit Party is a defendant (taking into account the
reasonably anticipated maximum amount of any such judgment and the earliest time
at which such judgment might be entered); (ii) the sum of the present fair
saleable value of the assets of each Credit Party will exceed the probable
liability of such Credit Party on its debts (including its Guaranties); (iii) no
Credit Party will have incurred or intends to, or believes that it will, incur
debts beyond its ability to pay such debts as such debts mature (taking into
account the timing and amounts of cash to be received by such Credit Party from
any source, and of amounts to be payable on or in respect of debts of such
Credit
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Party and the amounts referred to in clause (i)); and (iv) each Credit Party
believes it will have sufficient capital with which to conduct its present and
proposed business and the property of such Credit Party does not constitute
unreasonably small capital with which to conduct its present or proposed
business. For purposes of this Section 3.6, "debt" means any liability or a
claim, and "claim" means (y) right to payment whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (z)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured.
SECTION 3.7 Ownership of Pledged Securities, Subsidiaries, etc.
(a) annexed hereto as Schedule 3.7(a) is a correct and complete list as of
the date hereof and after giving effect to the Acquisition, of each Credit Party
showing, as to each, (i) its name, (ii) the jurisdiction in which it was
incorporated or otherwise organized, (iii) in the case of each Credit Party
which is a corporation, its authorized capitalization, the number of shares of
its capital stock outstanding and the ownership of its capital stock and (iv) in
the case of each Credit Party which is a limited liability company, the
ownership of its membership interests.
(b) Except as noted on Schedule 3.7(b), as of the date
hereof and after giving effect to the Acquisition, no Credit Party holds any
Equity Interest or other Investment, either directly or indirectly, in any
Person other than another Credit Party, an Unrestricted Subsidiary or an
Inactive Subsidiary and no Credit Party is a general or limited partner in any
joint venture or partnership.
(c) Annexed hereto as Schedule 3.7(c) is a correct and
complete list of all Inactive Subsidiaries as of the date hereof.
(d) Annexed hereto as Schedule 3.7(d) is a correct and
complete list of all Unrestricted Subsidiaries.
SECTION 3.8 Copyrights, Trademarks and Other Rights. (a) On the date
hereof and after giving effect to the Acquisition, the items of Product listed
on Schedule 3.8(a)(i) hereto comprise all of the Product in which any Credit
Party has any right, title or interest (either directly, through a joint venture
or partnership or otherwise). Schedule 3.8(a)(ii) sets out a true and complete
record of the copyright registration numbers and the character of the interests
held by the relevant Credit Party for the items of Product listed on Schedule
3.8(a)(ii) are which have been duly recorded in the United States Copyright
Office and the Canadian Intellectual Property Office and copies of all such
recordations have been delivered to the Administrative Agent. Schedule
3.8(a)(ii) also identifies the location of the best available Physical Materials
related to each item of Product owned by any Credit Party or to which any Credit
Party has rights of access. To the best of each Credit Party's knowledge, all
items of Product and all component parts thereof do not and will not violate or
infringe upon any copyright, right of privacy, trademark, patent, trade name,
performing right or any literary, dramatic, musical, artistic, personal,
private, several, care, contract, property or copyright right or any other right
of any Person, in any material respect or contain any libelous or slanderous
material. There is no claim, suit, action or proceeding pending or, to the best
of each Credit Party's knowledge, threatened
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against any Credit Party that involves a claim of infringement of any copyright
with respect to any item of Product listed on Schedule 3.8(a)(i), and no Credit
Party has any knowledge of any existing infringement by any other Person of any
copyright held by any Credit Party with respect to any item of Product listed on
Schedule 3.8(a)(i).
(b) Schedule 3.8(b) hereto (i) lists all the trademarks
registered by any Credit Party on the date hereof and identifies the Credit
Party which registered each such trademark and (ii) specifies as to each, the
jurisdictions in which such trademark has been issued or registered (or, if
applicable, in which an application for such issuance or registration has been
filed), including the respective registration or application numbers and
applicable dates of registration or application and (iii) specifies as to each,
as applicable, material licenses, sublicenses and other material agreements as
of the date hereof (other than any agreements which relate to the exploitation
of an item of Product), to which any Credit Party is a party and pursuant to
which any Person, other than a Credit Party, is authorized to use such
trademark. Each trademark set forth on Schedule 3.8(b) will be included on
Schedule A to the Trademark Security Agreement to be delivered to the
Administrative Agent on or prior to the Closing Date pursuant to Section 4.1(h).
(c) All applications and registrations for all
copyrights, trademarks, service marks, trade names and service names in which
any Credit Party has any right, title or interest are valid and in full force
and effect (other than (i) items of Product that, in the aggregate, account for
no more than 10% of the total value of all items of Product listed on Schedule
3.8(a) and (ii) trademarks, service marks, trade names and service names that in
the aggregate are not material) and are not subject to the payment of any taxes
or maintenance fees or the taking of any other actions by the Credit Parties to
maintain their validity or effectiveness.
SECTION 3.9 Fictitious Names. Except as disclosed on Schedule 3.9, none
of the Credit Parties has done business, is doing business or intends to do
business other than under its full corporate or company (as applicable) name,
including, without limitation, under any trade name or other doing business
name.
SECTION 3.10 Title to Properties. The Credit Parties have good title to
each of the properties and assets reflected on the most recent financial
statements referred to in Section 3.5 or delivered pursuant to Section 5.1(a)
hereof (other than such properties or assets disposed of in the ordinary course
of business since the date of such financial statements) and all such properties
and assets are free and clear of Liens, except Permitted Encumbrances.
SECTION 3.11 Places of Business. The chief executive office of each
Credit Party is, on the date hereof, as set forth on Schedule 3.11 hereto, in
which any Credit Party maintains an office or regularly keeps any goods. All of
the places where each Credit Party keeps the records concerning the Collateral
on the date hereof or regularly keeps any goods included in the Collateral on
the date hereof are also listed on Schedule 3.11 hereto.
SECTION 3.12 Litigation. Except as set forth in Schedule 3.12, there
are no actions, suits or other proceedings at law or in equity by or before any
arbitrator or arbitration panel, or any Governmental Authority (including, but
not limited to, matters relating to environmental liability) or any
investigation by any Governmental Authority of the affairs of, or
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to the best of each Credit Party's knowledge, threatened action, suit or other
proceeding against or affecting, any Credit Party or of any of their respective
properties or rights which either (A) if adversely determined, could reasonably
be expected to have a Material Adverse Effect, (B) relate to this Credit
Agreement or any of the transactions contemplated hereby or (C) involve the
Acquisition. No Credit Party is in default with respect to any order, writ,
injunction, decree, rule or regulation of any Governmental Authority binding
upon such Person, which default could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.13 Federal Reserve Regulations. No Credit Party is engaged
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Loans will be used, directly or indirectly, whether
immediately, incidentally or ultimately (i) to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock, or (ii) for any other purpose, in each case, violative of or
inconsistent with any of the provisions of any regulation of the Board,
including, without limitation, Regulations T, U and X thereto.
SECTION 3.14 Investment Company Act. No Credit Party is, or will during
the term of this Credit Agreement be, (i) an "investment company", within the
meaning of the Investment Company Act of 1940, as amended, or (ii) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or any foreign, federal or local statute or any other Applicable Law
of the United States of America, Canada or any other jurisdiction, in each case
limiting its ability to incur indebtedness for money borrowed as contemplated
hereby or by any other Fundamental Document.
SECTION 3.15 Taxes. Each Credit Party has filed or caused to be filed
all federal, state, local and foreign tax returns which are required to be filed
with any Governmental Authority after giving effect to applicable extensions,
and has paid or has caused to be paid all taxes as shown on said returns or on
any assessment received by them in writing, to the extent that such taxes have
become due, except as permitted by Section 5.13 hereof. No Credit Party knows of
any material additional assessments or any basis therefor. The Credit Parties
believe that the charges, accrual and reserves on its books in respect of taxes
or other governmental charges are accurate.
SECTION 3.16 Compliance with ERISA. (a) Each U.S. Plan has been
maintained and operated in all material respects in accordance with all
applicable laws, including ERISA and the Code, and each U.S. Plan intended to
qualify under section 401(a) of the Code so qualifies. No Reportable Event has
occurred in the last five years as to any U.S. Plan, and the present value of
all benefits under all U.S. Plans subject to Title IV of ERISA (based on those
assumptions used to fund such U.S. Plans) did not, in the aggregate, as of the
last annual valuation date applicable thereto, exceed the actuarial value of the
assets of such U.S. Plans allocable to such benefits. No material liability has
been, and no circumstances exist pursuant to which any material liability could
be, imposed upon any Credit Party or ERISA Affiliate (i) under sections 4971
through 4980B of the Code, sections 502(i) or 502(l) of ERISA, or under Title IV
of ERISA with respect to any U.S. Plan or Multiemployer Plan, or with respect to
any plan heretofore maintained by any Credit Party or ERISA Affiliate, or any
entity that heretofore was an ERISA Affiliate, (ii) for the failure to fulfill
any obligation to contribute to any
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Multiemployer Plan, or (iii) with respect to any U.S. Plan that provides
post-retirement welfare coverage (other than as required pursuant to Section
4980B of the Code). Neither any Credit Party nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and no
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated.
(b) The execution, delivery and performance of the
Fundamental Documents and the consummation of the transactions contemplated
hereby and thereby will not involve any "prohibited transaction" within the
meaning of ERISA or the Code.
SECTION 3.17 Agreements. (a) No Credit Party is (or after giving effect
to the Acquisition, will be) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument (including, without limitation, any Distribution
Agreement) to which it is a party which could reasonably be expected to result
in a Material Adverse Effect.
(b) Schedule 3.17 is a true and complete listing as of
the date hereof and after giving effect to the Acquisition of (i) all credit
agreements, indentures, and other agreements related to any indebtedness for
borrowed money of any Credit Party, other than the Fundamental Documents, (ii)
all joint venture agreements to which any Credit Party is a party, (iii) all
material Distribution Agreements, (iv) all agreements or other arrangements
pursuant to which a Credit Party has granted a Lien to any Person and (v) all
other contractual arrangements entered into by a Credit Party or by which any
Credit Party is bound which arrangements are material to any Credit Party,
including but not limited to, Guaranties and employment agreements. The Credit
Parties have delivered or made available to the Administrative Agent a true and
complete copy of each agreement described on Schedule 3.17, including all
exhibits and schedules. For purposes of this Section 3.17, a Distribution
Agreement or other contract, agreement or arrangement shall be deemed "material"
if the Credit Parties reasonably expect that any Credit Party would, pursuant to
the terms thereof, (A) recognize future revenues in excess of US$6,000,000, (B)
incur liabilities or obligations in excess of US$6,000,000 or (C) likely suffer
damages or losses in excess of US$6,000,000 by reason of the breach or
termination thereof.
SECTION 3.18 Security Interest. This Credit Agreement and the other
Fundamental Documents, when executed and delivered and, upon the making of the
initial Loan hereunder, will create and grant to the Administrative Agent for
the benefit of the Administrative Agent, the Canadian Agent, the Issuing Bank
and the Lenders (upon (i) the filing of the appropriate UCC-1 and PPSA financing
statements and the registration of the Hypothec with the filing offices listed
on Schedule 3.18, (ii) the filing of the Copyright Security Agreement with the
U.S. Copyright Office and the Canadian Intellectual Property Office, (iii) the
filing of the Trademark Security Agreement with the U.S. Patent and Trademark
Office and (iv) the delivery of the Pledged Securities with appropriate stock
powers to the Administrative Agent) valid and first priority perfected security
interests and hypothecs in the Collateral, (subject only to Permitted
Encumbrances) and in the Pledged Securities.
SECTION 3.19 Disclosure. Neither this Credit Agreement nor any other
Fundamental Document nor any agreement, document, certificate or statement
furnished to the Administrative Agent for the benefit of the Administrative
Agent, the Canadian Agent, the
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Issuing Bank and the Lenders by any Credit Party in connection with the
transactions contemplated hereby, at the time it was furnished or delivered,
contained any untrue statement of a material fact regarding the Credit Parties
or, when taken together with all such other agreements, documents, certificates
and statements, omitted to state a material fact necessary under the
circumstances under which it was made in order to make the statements contained
herein or therein not misleading. There is no fact known to any Credit Party
(other than general industry conditions or facts which have been disclosed to
the Lenders in writing) which would have or could reasonably be expected in the
future to have a Material Adverse Effect.
SECTION 3.20 Distribution Rights. Each Credit Party has sufficient
right, title and interest in each item of Product (including both rights under
copyright and ownership of or access to Physical Materials) to enable it (i) to
enter into and perform all of the Distribution Agreements to which it is a party
and other agreements generating Eligible Receivables and accounts receivable
reflected on the most recent balance sheet and the most recent Borrowing Base
Certificate delivered to the Lenders pursuant hereto, and (ii) to charge, earn,
realize and retain all fees and profits to which such Credit Party is entitled
thereunder, and is not in breach of any of its obligations under such
agreements, nor does any Credit Party have any knowledge of any breach or
anticipated breach by any other parties thereto, which breach in either case
either individually or when aggregated with all other such breaches could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.21 Environmental Liabilities. (a) No Credit Party has used,
stored, treated, transported, manufactured, refined, handled, produced or
disposed of any Hazardous Materials on, under, at, from or in any way affecting,
any of its properties or assets owned or leased by a Credit Party, in any manner
which at the time of the action in question violated any Environmental Law
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials and to the best of each
Credit Party's knowledge, no prior owner of such property or asset or any
tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous
Materials on or affecting such property or asset, or otherwise, in any manner
which at the time of the action in question violated any Environmental Law
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials.
(b) To the best of each Credit Party's knowledge (i) no
Credit Party has any obligations or liabilities, known or unknown, matured or
not matured, absolute or contingent, assessed or unassessed, which could
reasonably be expected to have a Material Adverse Effect and (ii) no claims have
been made against any of the Credit Parties in the past five years and no
presently outstanding citations or notices have been issued against any of the
Credit Parties, which could reasonably be expected to have a Material Adverse
Effect which in either case have been or are imposed by reason of or based upon
any provision of any Environmental Law, including, without limitation, any such
obligations or liabilities relating to or arising out of or attributable, in
whole or in part, to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation or handling of any Hazardous Materials by any
Credit Party, or any of its employees, agents, representatives or predecessors
in interest in connection with or in any way arising from or relating to any of
the Credit Parties or any of their respective owned or leased properties, or
relating to or arising from or attributable, in whole or in part, to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or
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handling of any such substance, by any other Person at or on or under any of the
real properties owned or used by any of the Credit Parties or any other location
where such could reasonably be expected to have a Material Adverse Effect.
SECTION 3.22 Pledged Securities. (a) Annexed hereto as Schedule 3.22 is
a correct and complete list as of the date hereof and after giving effect to the
Acquisition, of all the Pledged Securities hereunder showing, as to each, the
entity whose stock or other Equity Interests are being pledged, the Pledgor of
such stock or other Equity Interests, the stock certificate number (as
applicable) and the number of shares or amount of the capital stock or other
Equity Interests being pledged hereunder. Each Pledgor (i) is the legal and
beneficial owner of, and has sole right, title and interest to, the Pledged
Securities owned by such Pledgor, free and clear of all Liens, security
interests or other encumbrances whatsoever, except the security interests
created by this Credit Agreement and the other Fundamental Documents and (ii)
has sole right and power to pledge, and grant the security interest in, and Lien
upon, such Pledged Securities pursuant to this Credit Agreement without the
consent of any Person or Governmental Authority whatsoever.
(b) All of the Pledged Securities are duly authorized,
validly issued, fully paid and non-assessable.
(c) Except for contractual restrictions disclosed on
Schedule 3.22 and restrictions created herein or under applicable securities
laws and the regulations promulgated thereunder, there are no restrictions on
the transfer of any of the Pledged Securities. Except for restrictions under
applicable securities laws and the regulations promulgated thereunder, there are
no restrictions on the transfer of any of the Pledged Securities which would
limit the ability of the Administrative Agent to foreclose upon and dispose of
any of the Pledged Securities upon the occurrence of an Event of Default.
(d) Except as set forth on Schedule 3.22, there are no
warrants, options, conversion or similar rights currently outstanding with
respect to, and no agreements to purchase or otherwise acquire, any shares of
the capital stock or other Equity Interests of any issuer of any of the Pledged
Securities; and there are no securities or obligations of any kind convertible
into any shares of the capital stock or other Equity Interests of any issuer of
any of the Pledged Securities.
(e) Article 10 of this Credit Agreement creates in favor
of the Administrative Agent (on behalf of the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders) a valid, binding and enforceable
security interest in, and Lien upon, all right, title and interest of the
Pledgors in the Pledged Securities and constitutes a fully perfected first and
prior security interest and Lien upon all right, title and interest of the
Pledgors in such Pledged Securities subject, as to the enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization and similar laws affecting
creditors' rights generally and to general principles of equity.
SECTION 3.23 Compliance with Laws. No Credit Party is in violation of
any Applicable Law except for such violations in the aggregate which would not
have a Material Adverse Effect. The Borrowings hereunder, the Acquisition, the
intended use of the proceeds of
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the Loans as described in the preamble hereto and as contemplated by Section
5.19 hereof and any other transactions contemplated hereby will not violate any
Applicable Law.
SECTION 3.24 Canadian Plans. Each Canadian Plan is, and has been,
established, registered, qualified, administered and invested, in compliance
with the terms thereof and all Applicable Law; and no Credit Party has received,
within the last seven years, any notice from any Person questioning or
challenging such compliance (other than in respect of any claim related solely
to that Person), and no Credit Party has knowledge of any such notice from any
Person questioning or challenging such compliance beyond the last seven years.
All obligations under a Canadian Plan (whether pursuant to the terms thereof or
Applicable Law) have been satisfied, and there are no outstanding defaults or
violations thereunder by any Credit Party or any Subsidiary of any Credit Party
nor does any Credit Party or any Subsidiary of any Credit Party have knowledge
of any default or violation by any other party to any Canadian Plan. All
contributions or premiums required to be paid to or in respect of each Canadian
Plan have been paid in a timely fashion in accordance with the terms thereof and
all Applicable Law, and no taxes, penalties or fees are owing or exigible under
any Canadian Plan. There is no proceeding, action, suit or claim (other than
routine claims for benefits) pending or threatened involving any Canadian Plan
or its assets, and no facts exist which could reasonably be expected to give
rise to any such proceeding, action, suit or claim (other than routine claims
for benefits). No event has occurred respecting any Canadian Plan which would
entitle any Person (without the consent of the Borrower) to wind-up or terminate
any Canadian Plan, in whole or in part, or which could, reasonably be expected
to adversely affect the tax status thereof. There are no going concern unfunded
actuarial liabilities, past service unfunded liabilities or solvency
deficiencies respecting any Canadian Plan. Any prior withdrawals or transfers of
assets from any Canadian Plan have complied with the terms of the relevant
Canadian Plan, any funding arrangement in respect of the Canadian Plan
(including all predecessor documents thereto) and any Applicable Law or
regulatory requirement.
4. CONDITIONS OF LENDING
SECTION 4.1 Conditions Precedent to Initial Loan or Letter of Credit.
The effectiveness of this amendment and restatement of the Existing Credit
Agreement and the making of the Term Loan and the initial Revolving Credit Loan
are subject to the satisfaction in full of the following conditions precedent:
(a) Corporate Documents. The Administrative Agent shall
have received, with copies for each of the Lenders:
(i) a copy of the articles or certificate of
incorporation or other organizational document of each Credit Party, certified
on a recent date by the Secretary of State (or other appropriate governmental
official if such party is organized outside the United States) of such Credit
Party's jurisdiction of incorporation or organization, as the case may be;
(ii) a certificate of the Secretary of State or
other appropriate governmental official of such jurisdiction of incorporation or
organization, dated as of a recent date as to the good standing of, and (to the
extent available) payment of taxes by, each Credit
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Party which certificate lists the charter documents on file in the office of
such Secretary of State or other appropriate governmental official;
(iii) a certificate dated as of a recent date as
to the good standing of each Credit Party issued by the Secretary of State or
other appropriate governmental official of each jurisdiction in which such
Credit Party is qualified as a foreign corporation or foreign limited liability
company as listed in Schedule 3.1(a) hereto;
(iv) a certificate of the Secretary of each
Credit Party, dated the Closing Date and certifying (A) that attached thereto is
a true and complete copy of the by-laws or limited liability company agreement,
as the case may be, of such party as in effect on the date of such
certification; (B) that attached thereto is a true and complete copy of the
resolutions adopted by the Board of Directors of such party authorizing the
execution, delivery and performance in accordance with their respective terms of
the Fundamental Documents executed by such Credit Party and any other documents
required or contemplated hereunder or thereunder, the grant of the security
interests in the Collateral and the Pledged Securities, and in the case of the
Borrowers, the borrowings hereunder, and that such resolutions have not been
amended, rescinded or supplemented and are currently in effect; (C) that the
certificate of incorporation or organization of such party has not been amended
since the date of the last amendment thereto indicated on the certificates of
the Secretary of State or other appropriate governmental official furnished
pursuant to clause (i) above; and (D) as to the incumbency and specimen
signature of each officer of such party executing any Fundamental Document (such
certificate to contain a certification by another officer of such party as to
the incumbency and signature of the officer signing the certificate referred to
in this clause (iv)); and
(v) such additional supporting documents as the
Administrative Agent or its counsel or any Lender may reasonably request.
(b) Credit Agreement; Notes. The Administrative Agent
shall have received (i) executed counterparts of this Credit Agreement, which,
when taken together, bear the signatures of the Administrative Agent, the
Issuing Bank, the Canadian Agent, all of the Credit Parties and all of the
Lenders and (ii) the Notes executed by the Borrowers.
(c) Opinion of Counsel. The Administrative Agent shall
have received the written opinions of Xxxxxx Xxxxxxx LLP, Canadian counsel to
the Credit Parties and O'Melveny & Xxxxxx LLP, United States counsel to the
Credit Parties, dated the Closing Date and addressed to the Administrative Agent
and the Lenders which opinion shall be substantially in the forms attached
hereto as Exhibits B-1 and B-2, respectively, and otherwise in form and
substance satisfactory to the Administrative Agent and to Xxxxxx, Xxxxx &
Xxxxxxx LLP, counsel to the Administrative Agent and Fraser Xxxxxx Casgrain LLP,
special Canadian counsel to the Administrative Agent.
(d) Acquisition. The Acquisition shall be consummated
concurrently with the funding of the Term Loan in accordance with (i) Applicable
Law and (ii) the terms and conditions of the Merger Agreement, without any
material amendment or waiver, except as may be approved by the Administrative
Agent.
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(e) Merger Agreement. The Merger Agreement (including
without limitation, all disclosure schedules), in the form previously approved
by the Administrative Agent shall not have been amended or modified without the
consent of the Administrative Agent and each of the conditions to purchase
contained in the Merger Agreement shall have been satisfied to the reasonable
satisfaction of the Administrative Agent (or waived with the consent of the
Administrative Agent). The Administrative Agent shall have received copies of
all certificates, documents and opinions delivered under the Merger Agreement
with letters addressed to the Lenders stating that the Lenders may rely on such
certificates and opinions as if they had been addressed to the Administrative
Agent on behalf of the Lenders.
(f) No Material Adverse Change. No material adverse
change shall have occurred with respect to the business, operations,
performance, assets, properties, condition (financial or otherwise) or prospects
of the Credit Parties taken as a whole from March 31, 2002.
(g) Insurance. The Borrowers shall have furnished the
Administrative Agent with (i) a summary of all existing insurance coverage, (ii)
evidence acceptable to the Administrative Agent that the insurance policies
required by Section 5.5 have been obtained and are in full force and effect and
(iii) Certificates of Insurance with respect to all existing insurance coverage
which certificates shall name JPMorgan Chase Bank, as Administrative Agent, as
the certificate holder and shall evidence the Credit Parties' compliance with
Section 5.5(e) with respect to all insurance coverage existing as of the Closing
Date.
(h) Borrowing Base Certificate. The Administrative Agent
shall have received an initial Borrowing Base Certificate substantially in the
form of Exhibit I hereto, signed by an Authorized Officer and the Administrative
Agent shall be satisfied that with the initial Borrowing Base.
(i) Security and Other Documentation. The Administrative
Agent shall have received fully executed copies of (i) Pledgeholder Agreements
for each item of Product for which a Credit Party has control over any physical
elements thereof as listed on Schedule 3.8(a)(ii) hereto; (ii) a Copyright
Security Agreement Supplement listing each item of Product in which any Credit
Party has a copyrightable interest (as listed on Schedule 3.8(a) hereto) and for
which the Administrative Agent has not previously recorded its security interest
with the Copyright Office executed by each such Credit Party; (iii) a Trademark
Security Agreement for each trademark in which any Credit Party has any interest
(as listed on Schedule 3.8(b) hereto) executed by each such Credit Party; (iv) a
Hypothec executed by each Credit Party domiciled or located in the Province of
Quebec for purposes of any applicable PPSA and each Credit Party where
Collateral with respect to such Credit Party is located in, or perfection of a
Lien in such Collateral is required under the Applicable Laws of the Province of
Quebec or under any applicable PPSA; (v) Laboratory Access Letters for each item
of Product where any Credit Party has access rights to any physical elements of
such item of Product listed on Schedule 3.8(a)(ii) hereto; (vi) appropriate
UCC-1 and PPSA financing statements relating to the Collateral; (vii) all
certificates evidencing any of the Pledged Securities with appropriate undated
stock powers executed in blank; (viii) the Xxxxxxx Pledge Agreement executed by
each of the parties thereto; and (ix) deeds of hypothec, debentures and
debenture pledge agreements in form and substance satisfactory to the
Administrative Agent.
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(j) Security Interests in Copyrights and other
Collateral. The Administrative Agent shall have received evidence satisfactory
to it that each Credit Party, has sufficient right, title and interest in and to
the Collateral and other assets which it purports to own (including appropriate
licenses under copyright), as set forth in the documents and other materials
presented to the Lenders, to enable such Credit Party to perform the
Distribution Agreements to which such Credit Party is a party and as to each
Credit Party, to grant to the Administrative Agent for the benefit of the
Administrative Agent, the Issuing Bank and the Lenders the security interests
contemplated by the Fundamental Documents, and that all financing statements,
copyright filings and other filings under Applicable Law necessary to provide
the Administrative Agent for the benefit of itself, the Issuing Bank and the
Lenders with a first priority perfected security interest in the Pledged
Securities and Collateral (subject in the case of the Collateral, to Permitted
Encumbrances) have been filed or delivered to the Administrative Agent in
satisfactory form for filing.
(k) Payment of Fees. All fees and expenses then due and
payable by any Credit Party to the Administrative Agent and/or the Canadian
Agent and/or the Lenders in connection with the transactions contemplated hereby
or as required by the Fee Letter shall have been paid.
(l) Due Diligence Investigation. The Administrative Agent
shall have satisfactorily completed a due diligence investigation of the Credit
Parties and shall have reviewed and be satisfied with the proposed structure of
the transaction and shall be satisfied there is no material tax, currency or
litigation exposure.
(m) Existing Indebtedness. Simultaneously with the making
of the initial Loan, the Administrative Agent shall be satisfied that all
existing Indebtedness of LGEC and its Subsidiaries, other than as identified on
Schedule 6.1, shall have been paid in full, the commitments of the lenders
thereunder shall have been terminated and all security interests, Liens and
other encumbrances granted thereunder shall have been released.
(n) Notices of Assignment and Irrevocable Instructions.
The Administrative Agent shall have received with respect to each Eligible
Receivable or Acceptable Tax Credit included in the initial Borrowing Base
Certificate, a Notice of Assignment and Irrevocable Instructions executed by the
appropriate Credit Party.
(o) Chain of Title. The Administrative Agent shall have
received copies of all agreements, instruments of transfer or other instruments
(in recordable form) (including, without limitation, the rights agreements)
necessary to establish, to the satisfaction of the Administrative Agent, with
respect to a sufficient number of items of Product included in the Borrowing
Base as determined in the Administrative Agent's sole discretion, the applicable
Credit Party's ownership of sufficient copyright rights in each Completed item
of Product and in the literary properties upon which each Uncompleted item of
Product is to be based to enable such Credit Party to produce and/or distribute
such item of Product and to grant to the Administrative Agent for the benefit of
the Lenders the security interests which are contemplated by this Credit
Agreement.
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(p) Litigation. No litigation, governmental or
administrative inquiry, inquiry from any stock exchange on which LGEC is listed,
injunction or restraining order shall be pending, entered or threatened which
involves this Credit Agreement or which in the Administrative Agent's good faith
judgment could reasonably be expected to have a Material Adverse Effect.
(q) UCC/PPSA Searches. The Administrative Agent shall
have received UCC, PPSA, copyright office and other searches satisfactory to it
indicating that no other filings, encumbrances or transfers (other than in
connection with Permitted Encumbrances) with regard to the Collateral are of
record in any jurisdiction in which it shall be necessary or desirable for the
Administrative Agent to make a UCC or PPSA filing in order to provide the
Administrative Agent (for the benefit of the Administrative Agent, the Issuing
Bank or the Lenders) with a perfected security interest in the Collateral.
(r) ERISA. The Administrative Agent shall have received
copies of all U.S. Plans and Canadian Plans of the Credit Parties that are in
existence on the Closing Date, and descriptions of those that are committed to
on the Closing Date.
(s) Contribution Agreement. The Administrative Agent
shall have received a fully executed Contribution Agreement duly executed by
each of the Credit Parties.
(t) Delivery of Agreements. The Administrative Agent
shall have received and be satisfied with the terms and provisions of all
existing output and distribution agreements, (ii) all material agreements listed
on Schedule 3.17 and (iii) all other agreements to the extent requested by the
Administrative Agent.
(u) Release of Escrow Funds. The Administrative Agent
shall have received evidence that the escrow agent for the Convertible Senior
Subordinated Notes has received prior written notice to release the funds held
in escrow to the Borrowers.
(v) Required Consents and Approvals. The Administrative
Agent shall be satisfied that all required consents and approvals have been
obtained with respect to the Merger and the other transactions contemplated
hereby from all Governmental Authorities with jurisdiction over the business and
activities of Artisan or any Credit Party and from any other entity whose
consent or approval the Administrative Agent in its reasonable discretion deems
necessary to the transactions contemplated hereby and (ii) all related waiting
periods shall have been satisfied (including waiting periods under the
Xxxx-Xxxxx-Xxxxxx Act), if applicable.
(w) Federal Reserve Regulations. The Administrative Agent
shall be satisfied that the provisions of Regulations T, U and X of the Board
will not be violated by the transactions contemplated hereby.
(x) Compliance with Laws. The Administrative Agent shall
be satisfied that the transactions contemplated hereby will not violate any
provision of Applicable Law, or any order of any court or other agency of the
United States or Canada or any state or province thereof applicable to any of
the Credit Parties or any of their respective properties or assets.
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(y) Approval of Counsel to the Administrative Agent. All
legal matters incident to this Credit Agreement and the transactions
contemplated hereby shall be reasonably satisfactory to Xxxxxx, Xxxxx & Bockius
LLP, counsel to the Administrative Agent and Fraser Xxxxxx Casgrain, special
Canadian counsel to the Administrative Agent.
(z) Other Documents. The Administrative Agent shall have
received such other documentation as the Administrative Agent may reasonably
request.
SECTION 4.2 Conditions Precedent to Each Loan, Bankers' Acceptance and
Letter of Credit. The obligation of the Issuing Bank to issue each Letter of
Credit and of the Lenders to make each Loan, to accept and discount each
Bankers' Acceptance and to participate in each Letter of Credit (including the
initial Loan, Bankers' Acceptance and/or Letter of Credit) are subject to the
following conditions precedent:
(a) Notice. The Administrative Agent and/or the Canadian
Agent, as applicable, shall have received a notice with respect to such
Borrowing, or Bankers' Acceptance or the Issuing Bank shall have received a
notice with respect to such Letter of Credit as required by Article 2 hereof.
(b) Borrowing Certificate. The Administrative Agent shall
have received a Borrowing Certificate, duly executed by an Authorized Officer on
behalf of the Borrowers.
(c) Representations and Warranties. The representations
and warranties set forth in Article 3 hereof and in the other Fundamental
Documents shall be true and correct in all material respects on and as of the
date of each Borrowing, acceptance and discounting of each Bankers' Acceptance
and/or issuance of each Letter of Credit hereunder (except to the extent that
such representations and warranties expressly relate to an earlier date) with
the same effect as if made on and as of such date.
(d) No Event of Default. On the date of each Borrowing ,
acceptance and discounting of each Bankers' Acceptance or issuance of each
Letter of Credit, no Default or Event of Default shall have occurred and be
continuing, nor shall any such event occur by reason of the making of such Loan,
or the acceptance and discounting of each Bankers' Acceptance or the issuance of
such Letter of Credit.
Each request for a Borrowing or for acceptance and discounting of a Bankers'
Acceptance or for issuance of a Letter of Credit shall be deemed to be a
representation and warranty by the Borrowers on the date of such Borrowing or
the acceptance and discounting of each Bankers' Acceptance or issuance of such
Letter of Credit as to the matters specified in paragraphs (c) and (d) of this
Section 4.2.
SECTION 4.3 Conditions Precedent to Loans and/or Letters of Credit
under the Special Production Tranche. The obligations of the Issuing Bank to
issue Letters of Credit as part of the Special Production Tranche and of each
Lender to make Loans as part of the Special Production Tranche and/or
participate in such Letters of Credit is subject to the following conditions
precedent (in addition to those conditions precedent set forth in Section 4.2):
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(a) Declaration. The Administrative Agent and/or the
Canadian Agent, as applicable, shall have received from the Borrowers a written
notice specifying the details of the Designated Picture involved, whether the
producer of the Designated Picture is a Credit Party or a Special Purpose
Producer and declaring an appropriate portion of the U.S. Dollar Revolving
Credit Commitments or Canadian Dollar Credit Commitments, as applicable, as
being reserved as part of the Special Production Tranche for such Designated
Picture and specifying whether the Loans to finance the production of such
Designated Picture are to be made to LGEI, LGEC, another Credit Party or
directly to a Special Purpose Producer.
(b) Special Purpose Producer Credit Agreement. If the
Designated Picture is being produced by a Special Purpose Producer that is not a
Credit Party, the Administrative Agent shall have received a fully executed
Special Purpose Producer Credit Agreement and all other conditions precedent
thereunder shall have been satisfied.
(c) Supporting Documentation. The Administrative Agent
shall have received such additional supporting documentation as it normally
requires in connection with single picture financing relating to the Designated
Picture (including, but not limited to, Chain of Title, budget, cash flows, the
negative pickup or other payment obligation from the applicable Credit Party or
a guarantee from the applicable Credit Party) in form and substance reasonably
satisfactory to the Administrative Agent.
(d) Completion Guaranty. The Administrative Agent shall
have received a Completion Guaranty from an Approved Completion Guarantor.
(e) Co-Productions, etc. If any portion of the Designated
Picture is to be financed by a third party or if a third party is to have any
ownership interest in such Designated Picture or its copyright, then such third
party shall have been approved by the Administrative Agent and the
Administrative Agent shall have received and be satisfied with the co-financing
agreement, an intercreditor agreement and such other documentation as it shall
deem appropriate.
(f) Security Documentation. If the Designated Picture is
being produced by a Credit Party, the Administrative Agent shall have received
all appropriate security documentation and proof of filings, required by it, in
connection with the creation of a first perfected lien in favor of the
Administrative Agent for the benefit of the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders.
(g) Borrowing Base Certificate. The Administrative Agent
shall have received a Borrowing Base Certificate which sets forth the Borrowing
Base as of the date no more than seven (7) Business Days before the notice of
Borrowing is made in connection herewith and which reflects the reserves for the
Designated Picture involved.
5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as the Commitments shall
be in effect, any amount shall remain outstanding under the Notes, any Bankers'
Acceptance or L/C Exposure shall remain outstanding or any monetary Obligation
then due and payable shall remain unpaid
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or unsatisfied, each Credit Party agrees that, unless the Required Lenders shall
otherwise consent in writing, each of them will, and will cause each of its
Subsidiaries (other than the Unrestricted Subsidiaries) to:
SECTION 5.1 Financial Statements and Reports. Furnish or cause to be
furnished to the Administrative Agent and the Canadian Agent in sufficient
numbers for distribution to the Issuing Bank and the Lenders:
(a) Within one hundred (100) days after the end of each
fiscal year of LGEC (commencing with fiscal year 2003), the audited consolidated
balance sheet of LGEC and its Consolidated Subsidiaries, in each case as at the
end of, and the related statements of income, stockholders' equity and cash
flows for, such year, and the corresponding figures as at the end of, and for,
the preceding fiscal year, accompanied by an unqualified report and opinion of
Ernst & Young or such other independent public accountant of nationally
recognized standing as shall be retained by LGEC and be satisfactory to the
Required Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards relating to reporting and which report and
opinion shall contain no material exceptions or qualifications except for
qualifications relating to accounting changes (with which such independent
public accountants concur) in response to FASB releases, Canadian Institute of
Chartered Accountants or other authoritative pronouncements, together with a
certificate signed by an Authorized Officer, to the effect that such financial
statements fairly present the financial position of LGEC and its Consolidated
Subsidiaries as at the dates indicated and the results of their operations for
the periods indicated in conformity with GAAP and with a note explaining any
material difference from the statement of operations and shareholders equity
prepared under generally accepted accounting principals in the United States;
(b) Within fifty-five (55) days after the end of each of
the first three fiscal quarters of each of its fiscal years, the unaudited
consolidated balance sheets of LGEC and its Consolidated Subsidiaries as at the
end of, and the related unaudited consolidated statements of operations and
deficit and cash flow for, such quarter, and for the portion of the fiscal year
through the end of such quarter, and the corresponding figures as at the end of
such quarter, and for the corresponding period, in the preceding fiscal year,
together with a certificate signed by an Authorized Officer, to the effect that
such financial statements, while not examined by independent public accountants,
reflect, in the opinion of LGEC, all adjustments necessary to present fairly the
financial position of LGEC and its Consolidated Subsidiaries as at the end of
the fiscal quarter and the results of operations for the quarter then ended in
conformity with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) Simultaneously with the delivery of the statements
referred to in paragraphs (a) and (b) of this Section 5.1, a certificate of an
Authorized Officer in form and substance reasonably satisfactory to the
Administrative Agent (i) stating whether or not such Authorized Officer has
knowledge, after due inquiry, of any condition or event which would constitute
an Event of Default or Default and, if so, specifying each such condition or
event and the nature thereof, (ii) demonstrating in reasonable detail compliance
with the provisions of Sections 6.11, 6.15, 6.16, 6.17, 6.18, 6.19 and 6.22
hereof and including supporting schedules, (iii) certifying that all filings
required under Section 5.8 hereof have been made and listing each such filing
that has been made since the date of the last certificate delivered in
accordance with
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this Section 5.1(c), (iv) setting forth for each of the next four quarters all
projected payments to be made by any Credit Parties of minimum guarantees and
other Off-Balance Sheet Commitments and (v) setting forth a schedule of all
feature film, television and video product released during the reporting period
covered by such statements with actual print and advertising expenses and budget
for each such feature film, television and video product, to the extent
applicable;
(d) (i) On or prior to the last Business Day of each
month, a certificate ("Borrowing Base Certificate") substantially in the form of
Exhibit I hereto, setting forth the amount of each component included in the
Borrowing Base as of the last Business Day of the preceding month, attached to
which shall be detailed information as required by such certificate including,
without limitation, supporting schedules showing the calculation of each
component of the Borrowing Base (LGEC, at its option, may furnish additional
Borrowing Base Certificates setting forth such information as of such other
dates as it may deem appropriate);
(e) Promptly upon their becoming available, copies of all
significant audits prepared for or submitted to any of the Credit Parties by any
outside professional firm or service, including, without limitation, any comment
letter submitted by the Credit Parties' accountants to management in connection
with their annual audit;
(f) Within ten (10) days of receipt thereof by each
Borrower, copies of all management letters issued to such Borrower by its
auditors;
(g) Promptly upon their becoming available, copies of (i)
all registration statements, proxy statements, notices and reports which LGEC or
any other Credit Party shall file with any securities exchange or with the
United States Securities and Exchange Commission or any Canadian securities
commission or any successor agency and (ii) all reports, financial statements,
press releases and other information which LGEC or any other Credit Party shall
release, send or make available to its common stockholders generally;
(h) Not later than April 30, 2004 and thereafter each
April 30th, the calculation of the Eligible Library Amount computed as of the
last Business Day of December of the prior calendar year together with a
variance analysis of the actual versus projected value of such calculation;
(i) At least annually and not later than May 1 of each
year, forecasted financial statements consisting of balance sheets, cash flow
statements, income statements, and Borrowing Base with supporting detail and
underlying assumptions, covering the next four fiscal quarters;
(j) At the reasonable request of the Administrative
Agent, provide third-party verification/support for any distributor estimates
which are included in the Borrowing Base in a manner satisfactory to the Agent;
(k) From time to time such additional information
regarding the financial condition or business of any of the Credit Parties, any
item of Product, any Distribution Agreement, any Eligible Receivable or the
Collateral, as the Administrative Agent or any Lender acting through the
Administrative Agent may reasonably request.
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SECTION 5.2 Corporate Existence; Compliance with Laws. Do or cause to
be done all things necessary (i) to preserve, renew and keep in full force and
effect its corporate existence, rights, licenses, permits and franchises and
(ii) to comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, any Governmental Authority, except as
otherwise permitted under Section 6.7.
SECTION 5.3 Maintenance of Properties. Keep its tangible properties
which are material to its business in good repair, working order and condition
(ordinary wear and tear excepted) unless the Borrowers determine in good faith
that the continued maintenance of such properties are not economically desirable
(after consultation with the Administrative Agent) and, from time to time (i)
make all necessary and proper repairs, renewals, replacements, additions and
improvements thereto and (ii) comply at all times with the provisions of all
material leases and other material agreements to which it is a party so as to
prevent any loss or forfeiture thereof or thereunder unless compliance therewith
is being currently contested in good faith by appropriate proceedings and
appropriate reserves have been established in accordance with GAAP.
SECTION 5.4 Notice of Material Events. (a) Promptly upon any executive
officer of any Credit Party obtaining knowledge of (i) any Default or Event of
Default, (ii) any material adverse change in the condition (financial or
otherwise) or operations of any Credit Party, (iii) any action or event which
could reasonably be expected to materially and adversely affect the performance
of the Credit Parties' obligations under this Credit Agreement or any other
Fundamental Document, the repayment of the Notes or the security interests
granted to the Administrative Agent for the benefit of the Administrative Agent,
the Canadian Agent, the Issuing Bank or the Lenders under this Credit Agreement
or any other Fundamental Document, (iv) any other event which could reasonably
be expected to result in a Material Adverse Effect, (v) the opening of any
office of any Credit Party or the change of the chief executive office or the
principal place of business of any Credit Party or of the location of any Credit
Party's books and records with respect to the Collateral, (vi) any change in the
name of any Credit Party, (vii) any other event which could reasonably be
expected to materially and adversely impact upon the amount or collectibility of
accounts receivable of the Credit Parties or otherwise materially decrease the
value of the Collateral or the Pledged Securities, (viii) any proposed material
amendment to any agreements that are part of the Collateral or (ix) any Person
giving any notice to any Credit Party or taking any other action to enforce
remedies with respect to a claimed default or event or condition of the type
referred to in paragraph (g) or (h) of Article 7, such Credit Party shall
promptly give written notice thereof to the Administrative Agent specifying the
nature and period of existence of any such condition or event, or specifying the
notice given or action taken by such Person and the nature of such claimed Event
of Default or condition and what action any Credit Party has taken, is taking
and proposes to take with respect thereto.
(b) Promptly upon any executive officer of any Credit
Party obtaining knowledge of (i) the institution of, or threat of, any action,
suit, proceeding, investigation or arbitration by any Governmental Authority or
other Person against or affecting any Credit Party or any of its assets or any
item of Product, or (ii) any material development in any such action, suit,
proceeding, investigation or arbitration (whether or not previously disclosed to
the Lenders), which, in the case of (i) or (ii), if adversely determined could
reasonably be expected to have a
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Material Adverse Effect, such Credit Party shall promptly give written notice
thereof to the Administrative Agent and provide such other information as may be
available to it to enable the Lenders to evaluate such matters; and, in addition
to the requirements set forth in clauses (i) and (ii) of this subsection (b),
such Credit Party upon request shall promptly give notice of the status of any
action, suit, proceeding, investigation or arbitration covered by a report
delivered to the Lenders pursuant to clause (i) and (ii) above to the Lenders
and provide such other information as may be reasonably available to it to
enable the Lenders to evaluate such matters.
SECTION 5.5 Insurance. (a) Keep its assets which are of an insurable
character insured (to the extent and for the time periods consistent or greater
than normal industry standards) by financially sound and reputable insurers
against loss or damage by fire, explosion, theft or other hazards which are
included under extended coverage in amounts not less than the insurable value of
the property insured or such lesser amounts, and with such self-insured
retention or deductible levels, as are consistent with normal industry
standards.
(b) Maintain with financially sound and reputable
insurers, insurance against other hazards and risks and liability to Persons and
property to the extent and in the manner consistent or greater than normal
industry standards.
(c) Maintain, or cause to be maintained, in effect during
the period from the commencement of principal photography of each item of
Product produced by any Credit Party or from the date of acquisition of each
item of Product acquired by any Credit Party, through the third anniversary of
the date on which such item of Product is Completed and as otherwise required by
applicable contracts, a so-called "Errors and Omissions" policy covering all
such items of Product, and cause such Errors and Omissions policy to provide
coverage to the extent and in such manner as is customary for items of Product
of like type but, at minimum, to the extent and in such manner as is required
under all applicable contracts relating thereto (including, without limitation,
any Distribution Agreement relating to such item of Product).
(d) Maintain, or cause to be maintained, in effect during
the period from the commencement of principal photography of each item of
Product produced by any Credit Party, or from the date of acquisition of each
item of Product acquired by any Credit Party (i) until such time as the
Administrative Agent shall have been provided with satisfactory evidence of the
existence of one negative or master tape in one location and an interpositive,
internegative or duplicate master tape in another location of the final version
of the Completed Product, insurance on the negatives and sound tracks or master
tapes of such item of Product in an amount not less than the cost of re-shooting
the principal photography of the item of Product and otherwise re-creating such
item of Product, and (ii) until principal photography of such item of Product
has been concluded, a cast insurance policy with respect to such item of
Product, which provides coverage to the extent and in such manner as is
customary for items of Product of a like type, but at minimum, to the extent
required under all applicable contracts relating thereto.
(e) Maintain, or cause to be maintained, in effect
distributor's "Errors and Omissions" insurance to the extent and in amounts
consistent or greater than normal industry standards.
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(f) Cause all such above-described insurance (excluding
worker's compensation insurance) to (i) provide for the benefit of the Lenders
that 30 days' prior written notice of cancellation, termination, non-renewal or
lapse or material change of coverage shall be given to the Administrative Agent;
(ii) name the Administrative Agent for the benefit of the Administrative Agent,
the Canadian Agent, the Issuing Bank and the Lenders as a loss payee (except for
"Errors and Omissions" insurance and other third party liability insurance),
provided, however, that so long as no Event of Default has occurred or is
continuing, production insurance recoveries received prior to Completion or
abandonment of an item of Product may be utilized to finance the production of
such an item of Product, and property insurance proceeds may be used to repair
damage in respect of which such proceeds were received or so long as no Default
or Event of Default has occurred and is then continuing, to reimburse a Credit
Party for its own funds expended to repair the applicable damage; and (iii) to
the extent that none of the Administrative Agent, the Canadian Agent, the
Issuing Bank or the Lenders shall be liable for premiums or calls, name the
Administrative Agent (for the benefit of the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders) as additional insureds including,
without limitation, under any "Errors and Omissions" policy.
(g) Render to the Administrative Agent upon the request
of the Administrative Agent a broker's report in form and substance satisfactory
to the Administrative Agent as to all such insurance coverage including such
detail as the Administrative Agent may request.
SECTION 5.6 Production and Distribution. Cause each item of Product
being produced by any Credit Party (i) to be produced in accordance with the
standards set forth in, and within the time period established in, all
agreements with respect to such item of Product to which such Credit Party is a
party, subject to the terms and conditions of such agreements and (ii) to be
Completed at least one (1) month prior to the earliest expiration date of any
Acceptable L/C supporting an Eligible Receivable relating to such item of
Product which Eligible Receivable is included in the Borrowing Base and in any
event, no later than the Maturity Date.
SECTION 5.7 Music. When an item of Product has been scored, if
requested by the Administrative Agent, deliver to the Administrative Agent
within a reasonable period of time after such request (i) written evidence of
the music synchronization rights, if any, obtained from the composer or the
licensor of the music and (ii) copies of all music cue sheets with respect to
such item of Product.
SECTION 5.8 Copyrights and Trademarks. (a) As soon as practicable (but
in the case of an item of Product, in no event later than 60 days after the
initial release or broadcast of such item of Product and in the case of a
screenplay, in no event later than the date on which the Credit Parties must
comply with Section 5.20 hereof with respect to the item of Product to be based
on such screenplay), to the extent (i) any Credit Party is or becomes the
copyright proprietor thereof or otherwise acquires a copyrightable interest and
(ii) any Credit Party acquires any trademark, service xxxx, trade name or
service name, take any and all actions necessary to register the copyright for
such item of Product or such trademark, service xxxx, trade name or service
name, in the name of such Credit Party (subject to a Lien in favor of the
Administrative Agent for the benefit of itself, the Canadian Agent, the Issuing
Bank and the Lenders pursuant to the Copyright Security Agreement and the
Trademark Security Agreement) in conformity with the laws of the United States,
Canada and such other jurisdictions as the
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Administrative Agent may reasonably specify, and immediately deliver to the
Administrative Agent (i) written evidence of the registration of any and all
such copyrights for inclusion in the Collateral under this Credit Agreement and
(ii) a Copyright Security Agreement Supplement or a Trademark Security Agreement
relating to such item or such trademark, service xxxx, trade name or service
name, executed by such Credit Party.
(b) Obtain instruments of transfer or other documents
evidencing the interest of any Credit Party with respect to the copyright
relating to items of Product in which such Credit Party is not entitled to be
the initial copyright proprietor and any trademark, service xxxx, trade name or
service name which such Credit Party acquires, and promptly record such
instruments of transfer on the United States Copyright Register or the United
States Trademark Register and such other jurisdictions as the Administrative
Agent may specify.
SECTION 5.9 Books and Records. (a) Maintain or cause to be maintained
at all times true and complete books and records of its financial operations and
provide the Administrative Agent and its representatives access to such books
and records and to any of its properties or assets upon reasonable notice and
during regular business hours in order that the Administrative Agent may make
such audits and examinations and make abstracts from such books, accounts,
records and other papers pertaining to the Collateral (including, but not
limited to, Eligible Receivables included in the Borrowing Base) and upon
notification to the Credit Parties, permit the Administrative Agent or its
representatives to discuss the affairs, finances and accounts with, and be
advised as to the same by the Credit Parties' officers and independent
accountants, all as the Administrative Agent may deem appropriate for the
purpose of verifying the accuracy of the Borrowing Base Certificates and the
various other reports delivered by any Credit Party to the Administrative Agent,
the Canadian Agent, the Issuing Bank and/or the Lenders pursuant to this Credit
Agreement or for otherwise ascertaining compliance with this Credit Agreement or
any other Fundamental Document.
(b) If, prior to an Event of Default, the Administrative
Agent wishes to confirm with account debtors and other payors the amounts and
terms of any or all Eligible Receivables, Other Domestic Receivables or Other
Foreign Receivables (in each case, both on and off balance sheet) included in
the Borrowing Base, the Administrative Agent will so notify the Credit Parties.
The Administrative Agent agrees to have such confirmation made through the
Credit Parties' auditors. If for any reason such auditors fail to proceed with
the confirmations in a timely matter, the Administrative Agent may, upon notice
to the Credit Parties of such failure, proceed to make such confirmations
directly with account debtors and other payors unless the Credit Parties cure
such failure within ten (10) Business Days of such notice. Each of the Credit
Parties hereby agrees that, upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent shall be entitled to confirm directly
with account debtors and other payors, the amounts and terms of all accounts
receivable and/or Eligible Receivables.
SECTION 5.10 Third Party Audit Rights. On a quarterly basis, notify the
Administrative Agent of, and at all times allow the Administrative Agent access
to the results of, all audits conducted by any Credit Party of any third party
licensee under any agreement with respect to any item of Product included in the
Collateral or of any partnership, or joint venture. The Credit Parties will
exercise their audit rights with respect to any such third party licensees,
partnerships and joint ventures upon the reasonable request of the
Administrative Agent to the
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extent that the Credit Parties shall have the right to conduct such audits.
After an Event of Default has occurred and is continuing, the Administrative
Agent shall have the right to exercise through any Credit Party, such Credit
Party's right to audit any obligor under an agreement with respect to any item
of Product included in the Collateral.
SECTION 5.11 Observance of Agreements. Duly observe and perform all
material terms and conditions of all material agreements with respect to the
production, distribution and/or exploitation of items of Product and diligently
protect and enforce the rights of the Credit Parties under all such agreements
in a manner consistent with prudent business judgment and subject to the terms
and conditions of such agreements.
SECTION 5.12 Laboratories; No Removal. To the extent any Credit Party
has control over, or rights to receive, any of the Physical Materials relating
to any item of Product, deliver or cause to be delivered to a Laboratory or
Laboratories all negative and preprint material, master tapes and all sound
track materials with respect to each such item of Product and deliver to the
Administrative Agent a fully executed Pledgeholder Agreement with respect to
such materials. To the extent that any Credit Party has only rights of access to
preprint material or master tapes and has not created duplicate materials
sufficient to exploit its rights and has not stored such duplicate materials at
a Laboratory that has delivered a Pledgeholder Agreement to the Administrative
Agent, then the Credit Parties will deliver to the Administrative Agent a fully
executed Laboratory Access Letter covering such materials. Prior to requesting
any such Laboratory to deliver such negative or other preprint or sound track
material or master tapes to another Laboratory, any such Credit Party shall
provide the Administrative Agent with a Pledgeholder Agreement or Laboratory
Access Letter, as appropriate, executed by such other Laboratory and all other
parties to such Pledgeholder Agreement (including the Administrative Agent).
Each Credit Party hereby agrees not to deliver or remove or cause the delivery
or removal of the original negative and film or sound materials or master tapes
with respect to any item of Product owned by such Credit Party or in which such
Credit Party has an interest (i) to a location outside the United States or
Canada or such other jurisdiction as may be approved by the Administrative Agent
in its discretion or (ii) to any state or jurisdiction where UCC-1, CCQ or PPSA
financing statements (or in the case of jurisdictions outside the United States
and Canada, documentation similar in purpose and effect satisfactory to the
Administrative Agent) have not been filed against such Credit Party.
(a) During production of any item of Product produced by
any Credit Party, such Credit Party shall promptly deliver the daily rushes for
such item of Product to the appropriate Laboratory.
(b) With respect to items of Product Completed after the
Closing Date, on at least a quarterly basis, deliver to the Administrative Agent
and the Laboratories which are signatories to Pledgeholder Agreements a revised
schedule of Product on deposit with such Laboratories.
SECTION 5.13 Taxes and Charges; Indebtedness in Ordinary Course of
Business. Duly pay and discharge, or cause to be paid and discharged, before the
same shall become in arrears (after giving effect to applicable extensions), all
taxes, assessments, levies and other governmental charges, imposed upon any
Credit Party or its properties, sales and activities,
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or any part thereof, or upon the income or profits therefrom, as well as all
claims for labor, materials, or supplies which if unpaid might by law become a
Lien upon any property of any Credit Party; provided, however, that any such
tax, assessment, levy or charge need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if such Credit Party shall have set aside on its books reserves (the
presentation of which is segregated to the extent required by GAAP) adequate
with respect thereto if reserves shall be deemed necessary; and provided,
further, that such Credit Party will pay all such taxes, assessments, levies or
other governmental charges forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security therefor. Each of the
Credit Parties will promptly pay when due, or in conformance with customary
trade terms, all other obligations incident to its operations.
SECTION 5.14 Liens. Defend the Collateral (including, without
limitation, the Pledged Securities) against any and all Liens howsoever arising,
other than Permitted Encumbrances, and in any event defend against any attempted
foreclosure.
SECTION 5.15 Further Assurances; Security Interests. (a) Upon the
request of the Administrative Agent, duly execute and deliver, or cause to be
duly executed and delivered, at the cost and expense of the Credit Parties, such
further instruments as may be necessary or desirable in the reasonable judgment
of the Administrative Agent to carry out the provisions and purposes of this
Credit Agreement and the other Fundamental Documents.
(b) Upon the request of the Administrative Agent,
promptly execute and deliver or cause to be executed and delivered, at the cost
and expense of the Credit Parties, such further instruments as may be
appropriate in the reasonable judgment of the Administrative Agent, to provide
the Administrative Agent for the benefit of the Administrative Agent, the
Canadian Agent, the Issuing Bank and the Lenders a first perfected Lien in the
Collateral and any and all documents (including, without limitation, the
execution, amendment or supplementation of any financing statement and
continuation statement or other statement and the filing of termination
statements for each of the Liens indicated on Schedule 6.2 hereof for which the
underlying obligation is no longer outstanding) for filing under the provisions
of the UCC, the PPSA and the rules and regulations thereunder, or any other
Applicable Law, and perform or cause to be performed such other ministerial acts
which are reasonably necessary or advisable, from time to time, in order to
grant and maintain in favor of the Administrative Agent for the benefit of
itself, the Canadian Agent, the Issuing Bank and the Lenders the security
interest in the Collateral contemplated hereunder and under the other
Fundamental Documents, subject only to Permitted Encumbrances.
(c) Promptly undertake to deliver or cause to be
delivered to the Administrative Agent and the Lenders from time to time such
other documentation, consents, authorizations and approvals in form and
substance reasonably satisfactory to the Administrative Agent, as the
Administrative Agent shall deem reasonably necessary or advisable to perfect or
maintain the Liens of the Administrative Agent for the benefit of itself, the
Canadian Agent, the Issuing Bank and the Lenders.
SECTION 5.16 ERISA and Canadian Plan Compliance and Reports. (a)
Furnish to the Administrative Agent (i) as soon as possible, and in any event
within thirty (30)
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days after any executive officer of a Credit Party has knowledge that (A) any
Reportable Event with respect to any U.S. Plan has occurred, a statement of an
executive officer of the Credit Party, setting forth on behalf of such Credit
Party details as to such Reportable Event and the action which it proposes to
take with respect thereto, together with a copy of the notice, if any, required
to be filed of such Reportable Event given to the PBGC or (B) an accumulated
funding deficiency has been incurred or an application has been made to the
Secretary of the Treasury for a waiver or modification of the minimum funding
standard or an extension of any amortization period under Section 412 of the
Code with respect to a U.S. Plan or Multiemployer Plan has been or is proposed
to be terminated, reorganized, partitioned or declared insolvent under Title IV
of ERISA, proceedings have been instituted to terminate a U.S. Plan if such U.S.
Plan is subject to Title IV of ERISA, a proceeding has been instituted pursuant
to Section 515 of ERISA to collect a delinquent contribution to a Multiemployer
Plan, or any such Credit Party or ERISA Affiliate will incur any liability
(including any contingent or secondary liability) to or on account of the
termination of or withdrawal from a U.S. Plan subject to Title IV of ERISA or
Multiemployer Plan under Sections 4062, 4063, 4201 or 4204 of ERISA, a statement
of an executive officer of the Credit Party, setting forth details as to such
event and the action the applicable Credit Party proposes to take with respect
thereto, (ii) promptly upon reasonable request of the Administrative Agent,
copies of each annual and other report with respect to each U.S. Plan and (iii)
promptly after receipt thereof, a copy of any notice any Credit Party or ERISA
Affiliate may receive from the PBGC relating to the PBGC's intention to
terminate any U.S. Plan subject to Title IV of ERISA or to appoint a trustee to
administer any U.S. Plan subject to Title IV of ERISA.
(b) Furnish to the Administrative Agent (i) as soon as
possible, and in any event within thirty (30) days after any executive officer
of a Credit Party has knowledge that (A) any default or violation under a
Canadian Plan by any Credit Party or any Subsidiary of any Credit Party or by
any other party to any Canadian Plan has occurred or any contribution or premium
required to be paid to or in respect of any Canadian Plan has not been paid in a
timely fashion in accordance with the terms thereof and all Applicable Law or
any taxes, penalties or fees are owing or exigible under any Canadian Plan
beyond the date permitted for payment of same, a statement of an executive
officer of the Credit Party, setting forth on behalf of such Credit Party
details as to such default or violation and the action which it proposes to take
with respect thereto, together with a copy of the notice, if any, required to be
filed with respect thereto given to any Governmental Authority under Applicable
Law, or (B) a Credit Party has received any notice from any Person questioning
or challenging the establishment, registration, qualification, administration or
investment of a Canadian Plan in compliance with the terms thereof and all
Applicable Law (other than in respect of any claim related solely to that
Person), there is any proceeding, action, suit or claim (other than routine
claims for benefits) pending or threatened involving any Canadian Plan or its
assets, or facts exist which could reasonably be expected to give rise to any
such proceeding, action, suit or claim (other than routine claims for benefits),
an event has occurred respecting any Canadian Plan which would entitle any
Person (without the consent of the Borrowers) to wind-up or terminate any
Canadian Plan, in whole or in part, or which could reasonably be expected to
adversely affect the tax status thereof, a going concern unfunded actuarial
liability, past service unfunded liability or solvency deficiency exists with
respect to any Canadian Plan, or there has been an improper withdrawal or
transfer of assets from any Canadian Plan, a statement of an executive officer
of the Credit Party, setting forth details as to such event and the action the
applicable Credit Party proposes to take with respect thereto, (ii) promptly
upon reasonable request of the Administrative Agent, copies of each annual
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and other report with respect to each Canadian Plan and any and all amendments
to each Canadian Plan, and (iii) promptly after receipt thereof, a copy of any
notice any Credit Party may receive from any Governmental Authority relating to
such Governmental Authority's intention to terminate or wind-up any Canadian
Plan.
SECTION 5.17 Subsidiaries. Prior to any (i) Inactive Subsidiary
becoming active or (ii) Unrestricted Subsidiary becoming a Credit Party after
the date hereof and promptly after formation or acquisition of any new
Subsidiary other than an Inactive Subsidiary (but in any event prior to
commencement of operations by such Subsidiary), the Credit Parties shall cause
such Inactive Subsidiary, former Unrestricted Subsidiary or new Subsidiary, as
applicable, to deliver to the Administrative Agent an Instrument of Assumption
and Joinder duly executed by such Subsidiary, appropriate UCC-1 or PPSA
financing statements or Hypothec executed by such Subsidiary, and to the extent
the stock of such Subsidiary has not previously been pledged to the
Administrative Agent (for the benefit of the Lenders), the stock certificates of
such Subsidiary together with undated stock powers executed in blank and
organizational documents to the extent set forth in Section 4.1 hereof, and
written opinions of counsel in form and substance reasonably satisfactory to the
Administrative Agent.
SECTION 5.18 Environmental Laws. Promptly notify the Administrative
Agent upon any Credit Party becoming aware of any violation or potential
violation or non-compliance with, or liability or potential liability under any
Environmental Laws which, when taken together with all other pending violations
would reasonably be expected to have a Material Adverse Effect, and promptly
furnish to the Administrative Agent all notices of any nature which any Credit
Party may receive from any Governmental Authority or other Person with respect
to any violation, or potential violation or non-compliance with, or liability or
potential liability under any Environmental Laws which, in any case or when
taken together with all such other notices, could reasonably be expected to have
a Material Adverse Effect.
(a) Comply with and use reasonable efforts to ensure
compliance by all tenants and subtenants with all Environmental Laws, and obtain
and comply in all respects with and maintain and use best efforts to ensure that
all tenants and subtenants obtain and comply in all respects with and maintain
any and all licenses, approvals, registrations or permits required by
Environmental Laws, except where failure to do so would not have a Material
Adverse Effect.
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required under
all Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities, except where
failure to do so would not have a Material Adverse Effect. Any order or
directive whose lawfulness is being contested in good faith by appropriate
proceedings shall be considered a lawful order or directive when such
proceedings, including any judicial review of such proceedings, have been
finally concluded by the issuance of a final non-appealable order; provided,
however, that the appropriate Credit Party shall have set aside on its books
reserves (the presentation of which is segregated to the extent required by
GAAP) adequate with respect thereto if reserves shall be deemed necessary.
(c) Defend, indemnify and hold harmless the
Administrative Agent, the Canadian Agent, the Issuing Bank and the Lenders, and
their respective employees, agents,
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officers and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, known or unknown, contingent or otherwise, arising out of, or in any way
related to the violation of or non-compliance by any Credit Party with any
Environmental Laws, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable external
attorney and consultant fees, investigation and laboratory fees, court costs and
litigation expenses, but excluding therefrom all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses arising out of or
resulting from (i) the gross negligence or willful acts or willful misconduct of
any indemnified party or (ii) any acts or omissions of any indemnified party
occurring after any indemnified party is in possession of, or controls the
operation of, any property or asset.
SECTION 5.19 Use of Proceeds. Use the proceeds of (a) the Term Loans to
(i) finance, in part, the Acquisition and (ii) refinance indebtedness of the
Borrowers and Artisan in connection with the Acquisition and (b) the Revolving
Credit Loans to (i) finance in part, the Acquisition, (ii) refinance existing
indebtedness of the Borrowers and Artisan in connection with the Acquisition,
(iii) finance the development, production, distribution or acquisition of
intellectual properties including feature films, television and video product
and/or rights therein or thereto and (iii) for other general corporate purposes,
including acquisitions.
SECTION 5.20 Uncompleted Items of Product. With respect to each item of
Product or seasonal order of a television series for which any Credit Party has
Production Exposure in the amount of US$3,000,000 or more and for each
Designated Picture (regardless of budget size), deliver to the Administrative
Agent, not later than (A) in the case of an item of Product being produced by or
under the control of any Credit Party, five (5) days prior to the commencement
of principal photography of such item of Product or such earlier date on which
the first Borrowing is made with respect to such item of Product under a Special
Production Tranche and (B) in the case of an item of Product being acquired from
a third party or through a co-production which is not controlled by a Credit
Party, five (5) days prior to payment by any Credit Party of any portion of the
cost of such item of Product (other than a down payment of 10% or less of the
Production Exposure for an item of Product), each of the following to the extent
applicable (it being understood that for purposes of clause (B) clause (1) below
shall not be applicable.
(1) the budget and cash flow schedule
for such item of Product,
(2) a schedule identifying all
agreements executed in connection with such item of Product, which provide for
deferments of compensation or participations (as distinguished from residuals),
in either case, payable by any Credit Party from its share of revenues,
(3) copies of such of the foregoing
agreements as the Lenders may reasonably request,
(4) certificates or binders of
insurance with respect to such item of Product (and policies of insurance if
requested by the Administrative Agent and
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provided such policies are in the Credit Parties' possession or are otherwise
available to the Credit Parties), including all forms of insurance coverage
required by Section 5.5 hereof,
(5) copies of all instruments of
transfer or other instruments (in recordable form) ("Chain of Title" documents)
necessary to establish, to the reasonable satisfaction of the Administrative
Agent, in the appropriate Credit Party ownership of sufficient rights under
copyright in the literary properties upon which such item of Product is to be
based to enable such Credit Party to produce and/or distribute such item of
Product and to grant the Administrative Agent the security interests therein
which are contemplated by this Credit Agreement and the other Fundamental
Documents which Chain of Title documents shall evidence to the Administrative
Agent's satisfaction the Credit Party's rights in, and with respect to, such
item of Product,
(6) evidence of the registration in the
name of, or the transfer to, a Credit Party of the copyright in the item of
Product and/or the literary and other properties upon which the item of Product
is to be based (all as required by Section 5.8 hereof) and an executed Copyright
Security Agreement Supplement with respect to such item of Product or such
literary and other properties (as applicable),
(7) in the case of: (a) an item of
Product being produced by or under the control of any Credit Party, to the
extent not already covered by an existing Pledgeholder Agreement, executed
Pledgeholder Agreement(s) with respect to such item of Product; provided,
however, that if a Credit Party has granted a Lien in such item of Product to
secure outside production financing in accordance with Section 6.2(n) hereof, no
Pledgeholder Agreement shall be required until such time as the outside
production financier has released such Lien; or (b) an item of Product being
acquired from a third party or through a co-production which is not controlled
by a Credit Party, to the extent not already covered by an existing Laboratory
Access Letter, executed Laboratory Access Letter(s) with respect to such item of
Product.
(8) a copy of any Notice of Assignment
and Irrevocable Instructions executed in connection with any receivable to which
the Credit Party is entitled with respect to such item of Product.
SECTION 5.21 Negative Cost Statements. If requested by the
Administrative Agent, with respect to each item of Product having a Production
Exposure of US$3,000,000 or more which is produced by or under the control of
any Credit Party and each Designated Picture deliver to the Administrative
Agent, within thirty (30) days after each such item of Product is Completed (and
after the last episode of the season for a television series has been
Completed), a tentative negative cost statement, and within 120 days after each
such item of Product is Completed (and after the last episode of the season for
a television series has been Completed), a final negative cost statement.
SECTION 5.22 Distribution Agreements, Acceptable L/C's, Etc.
(a) Deliver to the Administrative Agent to be held as
part of the Collateral, promptly upon receipt thereof, the originals of all
Acceptable L/C's (including any amendments
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thereto) which are received by a Credit Party (whether pursuant to a
Distribution Agreement or otherwise) after the date hereof.
(b) Furnish to the Administrative Agent quarterly (i) a
list in the form of Schedule 3.17 hereto of all material Distribution Agreements
executed during the preceding quarter and all material amendments to existing
Distribution Agreements which amendments were executed during the preceding
quarter and (ii) copies of all Notices of Assignment and Irrevocable
Instructions (to the extent at the time required by Section 8.3 hereof) executed
during the preceding quarter.
(c) From time to time (i) furnish to the Administrative
Agent such information and reports regarding the Distribution Agreements to
which any Credit Party is a party as the Administrative Agent may reasonably
request and (ii) upon the occurrence and continuation of an Event of Default and
the reasonable request of the Administrative Agent, make to the other parties to
a Distribution Agreement to which any Credit Party is a party such demands and
requests for information and reports or for action as the Credit Party is
entitled to make under each such Distribution Agreement.
(d) Take all action on its part to be performed necessary
to effect timely payments under all Acceptable L/C's, including, without
limitation, timely preparation, acquisition and presentation of all documents,
drafts or other instruments required to effect payment thereunder.
SECTION 5.23 Completion Guaranty. Obtain a Completion Guaranty for (a)
any item of Product (other than a made-for-television Product) for which any
Credit Party has a current financial exposure (as opposed to a Negative Pick-up
Obligation) or is otherwise subject to the economic risk of Completion if the
Production Exposure exceeds US$5,000,000 for any individual item of Product or
which would result in the aggregate Production Exposure exceeding US$15,000,000
for all such items of Product which are not covered by a Completion Guaranty and
(b) any made-for-television movie for which any Credit Party has direct
production funding responsibility (and excluding game shows, reality shows and
talk shows) for which the Production Exposure exceeds US$5,000,000 or is
otherwise required by the Administrative Agent in its discretion.
SECTION 5.24 Security Agreements with the Guilds. Furnish to the
Administrative Agent duly executed copies of (i) each security agreement
relating to an item of Product entered into by a Credit Party with any guild and
(ii) an intercreditor agreement (in form and substance satisfactory to the
Administrative Agent) from the applicable guild with respect to the security
interest and other rights granted to it pursuant to each such security agreement
delivered to the Administrative Agent pursuant to clause (i) above.
6. NEGATIVE COVENANTS
From the date hereof and for so long as the Commitments shall
be in effect, any amount shall remain outstanding under the Notes, any Bankers'
Acceptance or Letter of Credit shall remain outstanding or any monetary
Obligation then due and payable shall remain unpaid
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or unsatisfied, each Credit Party agrees that, unless the Required Lenders shall
otherwise consent in writing, it will not and will not allow any of its
Subsidiaries (other than the Unrestricted Subsidiaries) to:
SECTION 6.1 Limitations on Indebtedness and Preferred Equity Interests.
Incur, create, assume or suffer to exist any preferred stock, preferred
membership interest or Indebtedness or permit any partnership or joint venture
in which any Credit Party is a general partner to incur, create, assume or
suffer to exist any Indebtedness or preferred partnership interest other than:
(a) the Indebtedness represented by the Notes and the
other Obligations;
(b) Guaranties permitted pursuant to Section 6.3 hereof;
(c) Indebtedness in respect of secured purchase money
financing (or its Quebec equivalent), including Capital Leases, to the extent
permitted by Section 6.2(d) not to exceed US$3,000,000 at any one time
outstanding;
(d) Indebtedness in respect of inter-company advances
constituting Investments permitted under Section 6.4(v); and
(e) existing Indebtedness listed on Schedule 6.1 hereto
which is not required to be repaid pursuant to Section 4.1(m), but no increases,
extensions or renewals thereof;
(f) Indebtedness incurred by a Credit Party that is a
Special Purpose Producer which is non-recourse to any other Credit Party except
to the extent of a Negative Pick-up Obligation, Program Acquisition Guarantee or
short-fall guarantee; provided, however that the Borrowers may seek such outside
production financing only if the Lenders have first been offered, for a period
of not less than 15 days from notice to the Administrative Agent of such
production financing, the opportunity to provide such financing and none of the
Lenders shall have agreed to provide such financing on market terms and
provided, further that the applicable Credit Party shall provide the
Administrative Agent a description of the terms of such production financing
within a reasonable time after entering into such production financing;
(g) liabilities relating to profit participations
(including payments to the Sellers of the Box Office Contingent Payments on the
terms set forth in the Merger Agreement), deferments and guild residuals arising
in the ordinary course of business in connection with the production or
acquisition of Product;
(h) Subordinated Debt;
(i) unsecured liabilities for acquisitions of rights or
Product incurred in the ordinary course of business, which are not otherwise
prohibited hereunder;
(j) Indebtedness of a Person which becomes a Subsidiary
of LGEC after the Closing Date provided (i) such Indebtedness existed at the
time the Person became a Subsidiary and was not created in anticipation of the
acquisition of such Person, (ii) immediately after giving effect to the
acquisition of such Person by a Credit Party, no Default or Event of Default
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shall have occurred and be continuing and (iii) such Indebtedness is
non-recourse to the Borrowers or any other Credit Party (other than such
Person);
(k) Permitted Preferred Stock;
(l) Indebtedness to the Bank of Montreal in an amount no
greater than C$30,000,000 provided, that (i) either (x) such Indebtedness is
recourse only to the Lions Gate Vancouver studio listed on Schedule 3.24 hereto
or (y) the Credit Party who is the borrower of such Indebtedness is treated as
an Unrestricted Subsidiary for purposes of Sections 6.4, 6.5, 6.7 and 6.12
hereof and (ii) any additional proceeds of such Indebtedness remaining after the
existing Indebtedness to the Bank of Montreal is refinanced is paid to a Credit
Party;
(m) Replication Advances not to exceed $55,000,000 in the
aggregate at any one time outstanding, which may be secured on a subordinated
basis and which are otherwise on terms and conditions acceptable to the
Administrative Agent in its discretion, or bridge financing related thereto;
(n) Indebtedness secured solely by liens on Acceptable
Tax Credits which is non-recourse to any Credit Party other than customary
representations and warranties pursuant to documentation satisfactory to the
Administrative Agent;
(o) liabilities related to contingent payments in respect
of the Excluded Assets to the Sellers on the terms set forth in the Merger
Agreement; and
(p) other Indebtedness not to exceed US$5,000,000 in the
aggregate at any one time outstanding.
SECTION 6.2 Limitations on Liens. Incur, create, assume or suffer to
exist any Lien on any of the Collateral, whether now owned or hereafter
acquired, except:
(a) the Liens of the Administrative Agent (for the
benefit of the Administrative Agent, the Canadian Agent the Issuing Bank and the
Lenders) under this Credit Agreement, the other Fundamental Documents and any
other document contemplated hereby or thereby;
(b) Liens to secure any Subordinated Debt on terms and
conditions satisfactory to the Administrative Agent;
(c) existing Liens listed on Schedule 6.2 hereof;
(d) Liens securing Indebtedness not to exceed
US$3,000,000 at any one time outstanding granted to the vendor or Person
financing the acquisition of property, plant or equipment if (i) the Lien is
limited to the particular assets acquired; (ii) the Indebtedness secured by the
Lien does not exceed the acquisition cost of the particular assets acquired and
(iii) such transaction does not otherwise violate this Credit Agreement;
(e) Liens pursuant to written security agreements (in
form and substance acceptable to the Administrative Agent) in favor of guilds or
unions which are required pursuant
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to collective bargaining agreements; provided, however, that either (i) each
such guild has entered into an intercreditor agreement with the Administrative
Agent reasonably satisfactory to the Administrative Agent in all respects or
(ii) the Administrative Agent has perfected its security interest in the
applicable Credit Party's rights in the item of Product to which such Liens
relate prior to any guilds or unions perfecting its security interest and the
Borrowers have used their best efforts to obtain an intercreditor agreement;
(f) Liens to secure distribution, exhibition and/or
exploitation rights of licensees pursuant to Distribution Agreements or of
licensors from whom any Credit Party has obtained any distribution rights or
other exploitation rights to any item of Product or Liens to secure production
advances on an item of Product which Liens, in each case, are on terms
satisfactory to the Administrative Agent; provided, however, that each such
licensee has entered into an intercreditor agreement with the Administrative
Agent reasonably satisfactory to the Administrative Agent in all respects;
(g) deposits under worker's compensation, unemployment
insurance and social security and similar laws or to secure statutory
obligations or surety, appeal, performance or other similar bonds incurred in
the ordinary course of business (other than completion guaranties) or to secure
performance as lessee under leases of real or personal property and other
obligations of a like nature, in each case incurred in the ordinary course of
business;
(h) Liens customarily granted or incurred in the ordinary
course of business with regard to services rendered by laboratories and
post-production houses, record warehouses and suppliers of materials and
equipment which secure outstanding trade payables in amounts not exceeding
US$10,000,000 in the aggregate;
(i) Liens arising out of attachments, judgments or awards
as to which an appeal or other appropriate proceedings for contest or review are
timely commenced (and as to which foreclosure and other enforcement proceedings
shall not have been commenced (unless fully bonded or otherwise effectively
stayed)) and as to which appropriate reserves have been established in
accordance with GAAP;
(j) Liens for taxes, assessments or other governmental
charges or levies (i) not yet due or (ii) due and payable, the validity or
amount of which is currently being contested in good faith by appropriate
proceedings pursuant to the terms of Section 5.13 hereof;
(k) possessory Liens (other than those of laboratories
and production houses) which (i) occur in the ordinary course of business, (ii)
secure normal trade debt which is not yet due and payable and (iii) do not
secure Indebtedness;
(l) customary Liens in favor of Approved Completion
Guarantors granted in connection with Completion Guaranties;
(m) Liens arising by virtue of any statutory or common
law provision relating to banker's liens, rights of setoff or similar rights
with respect to deposit accounts of the Credit Parties;
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(n) Liens granted by a Credit Party that is a Special
Purpose Producer to secure outside production financing otherwise permitted
hereunder;
(o) Liens on the property or assets of a Person which
becomes a Subsidiary of a Credit Party after the Closing Date securing
Indebtedness permitted under Section 6.1 hereof provided that (i) such Liens
existed at the time such Person became a Subsidiary and were not created in
anticipation of the acquisition of such Person, (ii) any such Lien does not by
its terms cover any property or assets after the time such Person becomes a
Subsidiary which were not covered immediately prior thereto, and (iii) any such
Lien does not by its terms secure any Indebtedness other than Indebtedness
existing immediately prior to the time such Person becomes a Subsidiary;
(p) reversion or turnaround rights with respect to a
project in development provided, that any such right terminates by the date on
which the Credit Parties must comply with Section 5.20 hereof with respect to
the item of Product to be based, in whole or in part, on such development
project;
(q) easements, servitudes, rights of way, restrictions,
minor defects or irregularities in title and other similar encumbrances on real
property which do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of business of the Credit
Parties;
(r) Liens to secure the Indebtedness permitted by Section
6.1(l) hereof provided that such Liens are limited solely to the Lions Gate
Vancouver studio listed on Schedule 3.24 hereto;
(s) Liens to secure Replication Advances permitted by
Section 6.1(m) on terms and conditions satisfactory to the Administrative Agent;
(t) Liens securing the obligations of certain
subsidiaries of Artisan in connection with the AFI Facility provided that the
secured party of such Liens shall have entered into an intercreditor agreement
in form and substance satisfactory to the Agent;
(u) Liens on Acceptable Tax Credits to secure
indebtedness permitted by Section 6.1(n) hereof; and
(v) other Liens securing other Indebtedness not to exceed
US$2,000,000 in the aggregate at any one time outstanding.
SECTION 6.3 Limitation on Guarantees. Provide any Guaranty, either
directly or indirectly, except (i) Negative Pickup Obligations and minimum
guarantees to acquire items of Product in the ordinary course of business to the
extent otherwise permitted under Section 6.26, (ii) Guarantees of the
obligations of Special Purpose Producers under talent agreements for the
provision of services related to the production of items of Product, provided
that such obligations are included within the Credit Party's Production Exposure
for each such item of Product, (iii) Guarantees to the Administrative Agent, the
Canadian Agent, the Issuing Bank and the Lenders in accordance with Article 9
hereof, (iv) existing Guarantees listed on Schedule 6.3 hereto, (v) Guarantees
by one Credit Party of the obligations of another Credit
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Party to the extent otherwise permitted hereunder, including short-fall
guarantees in connection with outside production financing permitted pursuant to
Section 6.1(f) hereof, (vi) a Guarantee by Lions Gate Entertainment Corp.
guaranteeing the Indebtedness permitted by Section 6.1(l) hereof provided that
such Guarantee is limited to an amount no greater than C$15,000,000 and is
otherwise on terms and conditions acceptable to the Administrative Agent, (vii)
subordinated guarantees of Replication Advances permitted hereunder, (viii)
guarantees of the obligations of Artisan in connection with the AFI Facility;
(ix) LGEC's guarantee of the obligations of LGEI pursuant to the Convertible
Senior Subordinated Notes and (x) other guarantees not to exceed US$2,000,000 in
the aggregate outstanding at any one time.
SECTION 6.4 Limitations on Investments. Create, make or incur any
Investment other than (i) as part of the Special Production Tranche, (ii) to
acquire Product in the ordinary course of business to the extent otherwise
permitted under Section 6.26 and the other provisions hereof, (iii) nominal
investments in Special Purpose Producers, (iv) purchase of Cash Equivalents, (v)
inter-company advances among Credit Parties, (vi) Investments as of the Closing
Date set forth on Schedule 6.4, (vii) Guarantees permitted pursuant to Section
6.3, (viii) Investments of any Credit Party in its existing Subsidiaries that
are Credit Parties and the acquisition or creation of new Subsidiaries in
accordance with Section 6.32 hereof, (ix) Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
suppliers, customers or other debtors or in settlement of delinquent obligations
arising in the ordinary course of business, (x) loans or advances to employees
in the ordinary course of business (such as travel advances), (xi) promissory
notes or other debt obligations received in connection with asset dispositions
permitted hereunder, (xii) Investments in connection with co-production
otherwise permissible hereunder, (xiii) loans or other advances to officers or
employees of the Credit Parties for the purpose of purchasing Equity Interests
in the Credit Parties in an amount not to exceed US$1,000,000 in the aggregate,
(xiv) Investments of up to US$10,000,000 in a joint venture formed for the
purpose of acquiring and licensing music publishing rights, (xv) other
Investments not to exceed US$3,000,000 in the aggregate outstanding at any one
time; provided, however, that the Borrowers may increase the amount of such
additional permitted Investments by up to $25 million at any such time as the
Leverage Ratio is less than 1.5 to 1, provided that (x) no Default or Event of
Default shall be continuing after giving effect on a pro forma basis to any such
Investments and (y) the additional $25 million available for such Investments
shall be reduced by any amounts used by the Borrowers to buy-back stock to the
extent permitted under Section 6.5(xiv) hereof or to increase the amount of
acquisitions permitted under Section 6.7(b) hereof and (xvi) Investments in AFI
to the extent permitted under Section 6.5 (xi) hereof.
SECTION 6.5 Restricted Payments. Pay or declare or enter into any
agreement to pay or otherwise become obligated to make any Restricted Payment,
other than (i) dividends or distributions payable solely in additional shares of
common stock of LGEC, (ii) conversion of Permitted Preferred Stock into common
stock of LGEC, (iii) dividends on Permitted Preferred Stock which are paid
solely in additional shares of Permitted Preferred Stock, provided that cash
dividends on Permitted Preferred Stock that was issued prior to the execution of
the Merger Agreement will be permitted so long as at the time of such payment
and after giving effect thereto no Default or Event of Default shall have
occurred and be continuing, (iv) payments (a) for the repurchase, redemption,
acquisition, cancellation or other retirement for value of the Equity Interests
of LGEC held by former managers and employees of a Credit Party
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or its Subsidiaries (or their estates or beneficiaries under their estates) upon
the death, disability, retirement or termination of employment of any such
former managers or former employees, (b) to terminate options to purchase stock
of LGEC owned by former managers and employees of a Credit Party or its
Subsidiaries (or their estate or beneficiaries under their estates) upon the
death, disability, retirement or termination of employment of any such former
manager or former employee of such Credit Party or its Subsidiaries or (c) on
promissory notes or other obligations representing the unpaid repurchase,
redemption, acquisition or cancellation price for Equity Interests of LGEC owned
by such former managers and employees of such Credit Party and its Subsidiaries,
in an amount not to exceed US$1,000,000 in the aggregate for (a),(b) and (c),
but, in each case, only if no Default or Event of Default is in existence or
would be caused thereby, (v) payments to a Credit Party by another Credit Party
which is not a Borrower, (vi) payments to the Borrowers from any other Credit
Party, (vii) stock buy-backs (a) in an amount not to exceed $25,000,000 in the
aggregate at any such time as the Leverage is less than 1.5 to 1; provided, that
(x) no Default or Event of Default shall be continuing after giving effect on a
pro forma basis to such stock buy-backs and (y) the maximum amount of permitted
stock buy-backs shall be reduced by the portion, if any, of such $25,000,000
used by the Borrowers to increase the amount of additional Investments permitted
under Section 6.4(xv) hereof or acquisitions permitted under Section 6.7(b)
hereof and (b) in addition to amounts permitted under clause (vii)(a) of this
paragraph, in an amount not to exceed $10 million provided that the Borrowers
use such additional $10 million to buy back stock within 4 and a half months of
the Closing Date and provided further that no Default or Event of Default shall
be continuing after giving effect on a pro forma basis to such stock buy-backs,
(viii) payments but not prepayments of interest and principal on the Convertible
Senior Subordinated Notes and payments and/or prepayments of interest and
principal on the Vialta Note, in each case on the terms set forth in the
applicable documents and that no Default or Event of Default shall be continuing
after giving effect on a pro forma basis to such payments, (ix) repayment of any
Replication Advance by way of application of a specified portion of the per unit
replication or processing charges or by reason of the Credit Parties' failure to
fulfill minimum replication commitments as specified in the governing terms and
conditions as approved in accordance with Section 6.1(m) hereof, (x) repayment
of a Replication Advance with proceeds of another Replication Advance obtained
in accordance with Section 6.1(m) hereof and (xi) payments to the equity holders
of AFI to retire the certificates provided that the amount of such payment
(which in no event shall exceed US$1,600,000) and the terms thereof shall be
acceptable to the Administrative Agent.
SECTION 6.6 Limitation on Leases. Create, incur or assume any
commitment to make, any direct or indirect payment, whether as rent or
otherwise, under any lease, rental or other arrangement for the use of real
and/or personal property (excluding Capital Leases and amounts properly included
in the Budgeted Negative Cost of an item of Product) if immediately thereafter
the aggregate of all such payments that shall be payable by a Credit Party and
any of their Subsidiaries during any twelve consecutive months would exceed
US$5,000,000.
SECTION 6.7 Consolidation, Merger, Sale or Purchase of Assets, etc.
(a) Whether in one transaction or a series of
transactions, wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, or sell or otherwise dispose of any item
of Product, or any capital stock of any Subsidiary or any of its
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other property, stock or assets or agree to do or suffer any of the foregoing,
except for: (i) the merger by any solvent Guarantor (other than the Borrowers)
into or the transfer of all of its assets to the Borrowers or another Guarantor
if after such merger no Default or Event of Default exists; (ii) licenses for
the distribution, exhibition or other exploitation of Product pursuant to
Distribution Agreements entered into in the ordinary course of business; (iii)
outright sales of Product within the ordinary course of business (i.e., no
library sales); (iv) outright sales of non-film assets sold for fair market
value, provided that the value of the assets sold represents no more than 5% of
the Consolidated Capital Base in any one year and no more than 10% of the
Consolidated Capital Base during the term of this Agreement provided that any
Net Cash Proceeds received by any Credit Party pursuant to this clause (iv)
hereof shall be used to prepay the Loans in accordance with Section 2.12(c); (v)
sales or other dispositions of equipment in the ordinary course of business
which are obsolete or no longer useful in the operation of the businesses of the
Borrowers or their Subsidiaries; and (vi) sales of Product to Xxxxxxxx Films
Distribution Inc. which have been produced using subsidies provided by Telefilm
Canada, provided that the value of such Product does not exceed $2,000,000 in
the aggregate; provided, however, that nothing in this Agreement shall prevent
LGEC from performing a stock split or a reverse stock split or issuing new
common shares; and
(b) Purchase or otherwise acquire any film or television
library or all or substantially all of the stock or assets of any Person, other
than (i) if any such transaction involves a Credit Party that is a Subsidiary of
LGEI but does not involve LGEI, then such Subsidiary must be the surviving
entity in any such transaction, and (ii) acquisitions for which the cash
consideration does not exceed the lesser of (A) US$15,000,000 and (B) the amount
of the Borrowing Base which would be attributable to the acquired assets upon
closing of such acquisition; provided, however that (x) no Default or Event of
Default shall be continuing upon giving effect on a pro forma basis to any such
acquisition and (y) the aggregate cash consideration paid for all acquisitions
made in reliance on the exception set forth in clause (iii) above shall not
exceed US$30,000,000; provided, however, that the Borrowers may increase the
amounts permitted to be used for acquisitions hereunder by up to $25,000,000 at
any such time as the Leverage Ratio is less than 1.5 to 1; provided, that (x) no
Default or Event of Default shall be continuing after giving effect on a pro
forma basis to any such acquisition and (y) the additional $25,000,000 available
for such acquisitions shall be reduced by any amounts used by the Borrowers to
buy-back stock to the extent permitted under Section 6.5(vii) hereof or to
increase the Investments permitted under Section 6.4(xv) hereof.
SECTION 6.8 Receivables. Sell, discount or otherwise dispose of notes,
accounts receivable or other obligations owing to any Credit Party except for
the purpose of collection in the ordinary course of business.
SECTION 6.9 Sale and Leaseback. Except in connection with the AFI
Facility, enter into any arrangement with any Person or Persons, whereby in
contemporaneous transactions any Credit Party sells essentially all of its
right, title and interest in an item of Product and acquires or licenses the
right to distribute or exploit such item of Product in media and markets
accounting for substantially all the value of such item of Product, other than
(i) any such arrangement involving an item of Product which does not impair the
collateral position of the Administrative Agent, the Canadian Agent, the Issuing
Bank and the Lenders and is evidenced by documentation acceptable to the
Administrative Agent and (ii) a sale-leaseback of
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the Borrower's physical studio facilities which (w) generates net proceeds of at
least US$25,000,000, (x) has a minimum lease term of at least seven (7) years,
(y) requires lease payments of no more than US$2,500,000 in any year, and (z) is
otherwise on terms and conditions satisfactory to the Administrative Agent.
SECTION 6.10 Places of Business; Change of Name. Change the location of
its chief executive office or principal place of business or any of the
locations where it keeps any portion of the Collateral or its books and records
with respect to the Collateral or change its name without in each case (i)
giving the Administrative Agent ten (10) days written notice following such
change and (ii) filing any additional Uniform Commercial Code financing
statements, and such other documents requested by the Administrative Agent to
maintain perfection of the security interest of the Administrative Agent for the
benefit of the Administrative Agent, the Canadian Agent, the Issuing Bank and
the Lenders in the Collateral.
SECTION 6.11 Limitations on Capital Expenditures. Make, or incur any
obligation to make, Capital Expenditures (excluding expenditures to produce or
acquire items of Product) for all Credit Parties and their Subsidiaries in
excess of (x) US$5,000,000 for any fiscal year which to the extent unused may be
carried over to subsequent fiscal years and (y) US$15,000,000 in the aggregate
from and after the Closing Date.
SECTION 6.12 Transactions with Affiliates. Enter into any transaction
with any of its Affiliates (other than any transaction which is solely among
Credit Parties or with Cinegroup Corporation, Xxxxxxxx Films Distribution Inc.,
Xxxxxxxx Films Productions Inc. or CinemaNow) other than the loan evidenced by
the promissory note between FHCL, LLC and Artisan unless such transaction occurs
in the ordinary course of business on an arms'-length basis (and if involving
more than US$500,000, is specifically approved by adoption of a resolution
approving each such transaction adopted by the Board of Directors of each Credit
Party involved).
SECTION 6.13 Business Activities. The Credit Parties will not engage in
any business activities other than (i) development, production, distribution and
acquisition of theatrical motion pictures, video product and television
programming and other specialized entertainment product, (ii) operation of
physical production facilities and (iii) other entertainment and media-related
business activities that involve aggregate expenditures of no more than
US$10,000,000 from and after the Closing Date.
SECTION 6.14 Fiscal Year End. Change its fiscal year end to other than
March 31, in each year.
SECTION 6.15 Overhead Expense. Permit the sum of all aggregate
allocated and unallocated overhead expenses of LGEC and its Consolidated
Subsidiaries in any fiscal year less any overhead expenses allocated to
restructuring costs (including, without limitation, costs in connection with
severance payments) incurred within the first twelve months following the
Acquisition to exceed (w) US$50,000,000 for the fiscal year ending March 31,
2004, (x) US$50,000,000 for the fiscal year ending March 31, 2005 and (y)
thereafter, 110% of the maximum amount permitted for the immediately preceding
fiscal year.
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SECTION 6.16 Consolidated Capital Base. Permit Consolidated Capital
Base at the end of any quarter to be less than the sum of (i) 85% of the
Consolidated Capital Base as of the Closing Date after giving effect to the
Acquisition, plus (ii) 75% of all net new equity invested in LGEC after the
Closing Date, plus (iii) 50% of Consolidated Net Income, if positive, for each
fiscal year ending after the Closing Date and prior to the date at which
compliance is being determined.
SECTION 6.17 Leverage Ratio. Permit the ratio (the "Leverage Ratio") of
(i) the sum, determined as of the end of each rolling four-quarter period
indicated to below, of Consolidated Senior Debt plus Subordinated Debt plus
Off-Balance Sheet Commitments plus the remaining estimated cost to Complete all
items of Product in production (without double-counting any amounts included in
Off Balance Sheet Commitment) less all Off-Balance Sheet Receivables and
Borrowing Base credits which relate to items of Product which are the subject of
such Off-Balance Sheet Commitments or estimated cost to Complete for items of
Product in production (but not more with respect to any particular Picture than
the related amount of Off-Balance Sheet Commitments) and/or estimated cost to
complete to (ii) Consolidated Net Income plus non-cash charges (e.g.,
amortization of capitalized film costs and financing costs), for each such
rolling four-quarter period, to be above 3.5 to 1 for the rolling four-quarter
period ending September 30, 2004, 2 to 1 for the rolling four-quarter periods
ending December 31, 2004, March 31, 2005, June 30, 2005, September 30, 2005 and
December 31, 2005, and 1.5 to 1 for the rolling four-quarter periods ending
March 31, 2006 and the end of each period thereafter provided, that for the
quarters ending December 31, 2003 through June 30, 2004, the Borrowers shall not
be required to maintain any Leverage Ratio.
SECTION 6.18 Unused Availability. For the quarters ending December 31,
2003 through June 30, 2004, permit the Unused Availability to be less than
US$25,000,000, where "Unused Availability" means the lesser of (i) the Total
U.S. Dollar Revolving Credit Commitment plus the Total Canadian Dollar Credit
Commitment and (ii) the amount by which the Borrowing Base exceeds the aggregate
principal amount of all U.S. Dollar Loans then outstanding plus the then-current
L/C Exposure plus the U.S. Dollar Equivalent of the aggregate principal amount
of all Canadian Dollar Loans then outstanding plus the U.S. Dollar Equivalent of
the then-current BA Exposure plus the unused portion of the Special Tranche for
all Designated Picture that have not yet been Completed.
SECTION 6.19 Liquidity Ratio. Permit the ratio (the "Liquidity Ratio")
of (i) all projected known cash sources (including cash on hand and borrowings
under the Credit Agreement (taking into account projected Borrowing Base
availability), cash receipts from operations and overhead reimbursements) to
(ii) all projected known cash uses (including debt service, amounts to be spent
to acquire film inventory, print and advertising expenses, overhead, and all
other cash expenditures), all as determined as of each quarter end and as
projected in good faith for the ensuing 12 months, to be less than 1.1 to 1.
SECTION 6.20 Fixed Charges Coverage Ratio. Permit the ratio (the "Fixed
Charges Coverage Ratio"), determined as of the end of each rolling four-quarter
period, of (i) Library Revenue to (ii) the sum of Total Interest (excluding
non-cash interest expense) plus dividends actually paid (other than dividends
consisting of shares of common stock in LGEC or Permitted Preferred Stock) plus
all required payments of principal (other than payments to
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Cinerenta GmbH or its affiliates in connection with films produced by Cinerenta
GmbH or its affiliates for the Borrowers or their subsidiaries as distributor)
plus capital expenditures plus overhead, to be below 1.5 to 1 beginning with the
period ending September 30, 2004 and the end of each period thereafter.
SECTION 6.21 Film Spending Ratio. Permit the ratio (the "Film Spending
Ratio") of (i) the sum of all revenue (to be determined on an ultimate basis)
payable to a Credit Party and attributable to items of Product in their first
exploitation cycle and that have prints and advertising expenses of at least
$2,000,000 to (ii) the aggregate negative cost and print and advertising
expenditures attributable to such items of Product and incurred by a Credit
Party (other than financing charges and overhead charges), all as determined on
a rolling basis for the last ten Completed items of Product which have completed
their initial theatrical exhibition cycle, to be less than 1 to 1.
SECTION 6.22 Prohibitions of Amendments and Waivers. Amend, alter,
modify, terminate or waive, or consent to any amendment, alteration,
modification or waiver of the terms of LGEC's Series A Preferred Shares or any
material agreement to which any Credit Party is a party in any material respect
or in any manner adverse to the Lenders.
SECTION 6.23 Amortization Method. Permit the method of amortization of
film\television inventory currently used to be changed unless required under
GAAP.
SECTION 6.24 No Further Negative Pledge. Except with respect to
prohibitions against other encumbrances on specific property encumbered to
secure payment of particular Indebtedness (which Indebtedness relates solely to
such specific property, and improvements and accretions thereto, and is
otherwise permitted hereby), enter into any agreement (other than this
Agreement, the Fundamental Documents and the existing Indebtedness listed on
Schedule 6.1(b) and any refinancings thereof permitted pursuant to Section 6.1),
(i) prohibiting the creation or assumption of any Lien to secure the payment of
the Indebtedness and Obligations hereunder and any Indebtedness or obligation
incurred in connection with the refinancing of the Indebtedness hereunder, upon
the properties or assets of the Borrowers or any of their Subsidiaries (other
than the Unrestricted Subsidiaries), whether now owned or hereafter acquired or
(ii) requiring an obligation to be secured if obligations under this Agreement
(or any obligation incurred in connection with the refinancing of any obligation
hereunder) are secured.
SECTION 6.25 Development Costs. Permit development costs, including
pilots (which neither have been sold, written off nor allocated to an item of
Product for which active preproduction has commenced) to exceed U.S.$5,000,000
in the aggregate or U.S.$1,000,000 for any item of Product.
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SECTION 6.26 Additional Limitation on Production and Acquisition of
Product.
(a) Produce or acquire any item of Product (other than a
television series) after the Closing Date with a Production Exposure in excess
of US$20,000,000 without the Administrative Agent's approval.
(b) (i) Commence active preproduction for any television
series in respect of which a Credit Party has direct production funding
responsibility or (ii) incur any obligation to pay a Program Acquisition
Guarantee with respect to any television series, unless, in the case of both (i)
and (ii), Production Exposure for such item of Product does not exceed
US$1,750,000 per episode.
(c) Make any Program Acquisition Guarantees or commence
active preproduction for any made-for-television Product (other than game shows,
reality based shows and talk shows) in respect of which a Credit Party has
direct production funding responsibility, unless the total of (i) the license
fee payable (or previously paid) by an Acceptable Domestic Account Debtor or an
Acceptable Major Account Debtor and (ii) the fees payable (or previously paid)
in connection with foreign pre-sales for such item of Product (the terms of
which are acceptable to the Required Lenders), in each case payable no later
than delivery of such item of Product, is an amount equal to at least 70% of the
Production Exposure for such item of Product.
(d) Commence active preproduction for any
made-for-television Product (including both MOW's and television series) for
which a Credit Party has direct production funding responsibility or incur a
Program Acquisition Guaranty which would result in the cumulative aggregate
deficit on all made-for-television Product for which any Credit Party has begun
active preproduction or incurred a Program Acquisition Guaranty (other than
television series which have been picked up for at least a third full season by
an Acceptable Domestic Account Debtor or an Acceptable Major Account Debtor or
which have been completely written off) to exceed 10% of the Consolidated
Capital Base. For purposes of making the foregoing computation, the cumulative
deficit for any item of Product shall equal the actual cost of such programming
reduced by the gross amount of any cash sales (including pre-sales), license
fees and Canadian government subsidies.
(e) In connection with a game show, reality-based show or
talk show, no Credit Party shall incur a Program Acquisition Guaranty or
commence active preproduction for any such show for which a Credit Party has
direct production responsibility with a Production Exposure unless the aggregate
domestic and foreign pre-sales for such items of Product equals 90% of such
excess Production Exposure.
SECTION 6.27 Bank Accounts. After the date hereof, open or maintain any
bank account other than (a) accounts maintained at any of the Lenders, (b)
accounts maintained at financial institutions approved by the Administrative
Agent and listed on Schedule 6.26, or (c) a Production Account, as to which the
Administrative Agent shall have received notice.
SECTION 6.28 ERISA Compliance. Engage in a "prohibited transaction", as
defined in Section 406 of ERISA or Section 4975 of the Code, with respect to any
U.S. Plan or
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Multiemployer Plan or knowingly consent to any other "party in interest" or any
"disqualified person", as such terms are defined in Section 3(14) or ERISA and
Section 4975(e)(2) of the Code, respectively, engaging in any "prohibited
transaction", with respect to any U.S. Plan or Multiemployer Plan; or permit any
U.S. Plan to incur any "accumulated funding deficiency", as defined in Section
302 of ERISA or Section 412 of the Code, unless such incurrence shall have been
waived in advance by the Internal Revenue Service; or terminate any U.S. Plan
subject to Title IV of ERISA in a manner which could result in the imposition of
a Lien on any property of any Credit Party pursuant to Section 4068 of ERISA; or
breach or knowingly permit any employee or officer or any trustee or
administrator of any U.S. Plan to breach any fiduciary responsibility imposed
under Title I of ERISA with respect to any U.S. Plan; engage in any transaction
which would result in the incurrence of a liability under Section 4069 of ERISA;
or fail to make contributions to a U.S. Plan or Multiemployer Plan which could
result in the imposition of a Lien on any property of any Credit Party pursuant
to Section 302(f) of ERISA or Section 412(n) of the Code, if the occurrence of
any of the foregoing events (alone or in the aggregate) would result in a
liability which has a Material Adverse Effect.
SECTION 6.29 Hazardous Materials. Cause or permit any of its properties
or assets to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce or process Hazardous Materials, except in
compliance in all material respects with all applicable Environmental Laws, nor
release, discharge, dispose of or permit or suffer any release or disposal as a
result of any intentional act or omission on its part of Hazardous Materials
onto any such property or asset in violation of any Environmental Law.
SECTION 6.30 Use of Proceeds of Loans and Requests for Letters of
Credit. Use the proceeds of Loans or request any Letter of Credit hereunder
other than for the purposes set forth in, and as required by, Section 5.19
hereof.
SECTION 6.31 Interest Rate Protection Agreements, etc. Enter into any
Interest Rate Protection Agreement or Currency Agreement for other than bona
fide hedging purposes.
SECTION 6.32 Subsidiaries. Acquire or create any new direct or indirect
Subsidiary; provided, however, that a Credit Party may incorporate additional
Subsidiaries if each such Subsidiary executes an Instrument of Assumption and
Joinder in the form attached hereto as Exhibit L whereby such Subsidiary becomes
a Credit Party hereunder and the certificates representing 100% of the shares of
capital stock of such Subsidiary held by such Credit Party become part of the
Pledged Securities hereunder and are delivered to the Administrative Agent
together with stock powers for each such certificate executed in blank.
SECTION 6.33 AFI Facility. Until such time as all obligations under the
AFI Facility have been indefeasibly paid in full, release any of the collateral
securing the loans made thereunder.
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7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of any
of the following events (herein called "Events of Default"):
(a) any representation or warranty made by a Credit Party
in this Credit Agreement or any other Fundamental Document to which it is a
party or any statement or representation made by a Credit Party in any report,
financial statement, certificate or other document furnished to the
Administrative Agent or any Lender pursuant to this Credit Agreement or any
other Fundamental Document, shall prove to have been false or misleading in any
material respect when made or delivered;
(b) default shall be made in the payment of principal of
the Notes or any amounts due with respect to the Bankers' Acceptances as and
when due and payable, whether by reason of maturity, mandatory prepayment,
acceleration or otherwise;
(c) default shall be made in the payment of interest on
the Notes, Commitment Fees or other monetary Obligations, when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise and such default
shall continue unremedied for five (5) Business Days;
(d) default shall be made in the due observance or
performance of any covenant, condition or agreement contained in Sections 5.4 or
5.19 or Article 6 of this Agreement;
(e) failure to submit any financial statements and
reports as required pursuant to Section 5.1 hereof, including the Borrowing Base
Certificate, to the Administrative Agent within ten (10) Business Days of the
date such statement or report was due pursuant to the terms of this Credit
Agreement; provided, however, that a failure to deliver a Borrowing Base
Certificate when due shall not constitute an Event of Default if and for so long
as there are no Loans or Letters of Credit outstanding.
(f) default shall be made by any Credit Party in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms of this Credit Agreement or any
other Fundamental Document, and such default shall continue unremedied for
thirty (30) days after the applicable Credit Party or receives notice or obtains
knowledge of such occurrence;
(g) default shall be made with respect to any payment of
any Indebtedness of any Credit Party in excess of US$2,000,000 in the aggregate
(other than the Obligations) when due, or in the performance of any other
obligation incurred in connection with any such Indebtedness if the effect of
such non-payment default is to accelerate the maturity of such Indebtedness or
to permit the holder thereof to cause such Indebtedness to become due prior to
its stated maturity and such default shall not be remedied, cured, waived or
consented to within the period of grace with respect thereto; provided, however,
that in the case of a default in connection with Indebtedness incurred by a
Credit Party that is a Special Purpose Producer, there
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shall be no Event of Default hereunder unless such default continues unremedied
for ten (10) business days;
(h) any Credit Party shall generally not pay its debts as
they become due or shall admit in writing its inability to pay its debts, or
shall make a general assignment for the benefit of creditors; or any Credit
Party shall commence any case, proceeding or other action seeking to have an
order for relief entered on its behalf as a debtor or to adjudicate it a
bankrupt or insolvent or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors or
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its property or shall file an
answer or other pleading in any such case, proceeding or other action admitting
the material allegations of any petition, complaint or similar pleading filed
against it or consenting to the relief sought therein; or any Credit Party shall
take any action to authorize, or in contemplation of, any of the foregoing;
(i) any involuntary case, proceeding or other action
against any Credit Party shall be commenced seeking to have an order for relief
entered against it as debtor or to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its property, and such case, proceeding or other action (i)
results in the entry of any order for relief against it or (ii) shall remain
undismissed for a period of sixty (60) days;
(j) final judgment(s) for the payment of money in excess
of $1,000,000 in the aggregate shall be rendered against any Credit Party and
within thirty (30) days from the entry of such judgment shall not have been paid
or otherwise discharged or stayed pending appeal or shall not have been
discharged within thirty (30) days from the entry of a final order of affirmance
on appeal;
(k) (i) failure by any Credit Party or ERISA Affiliate to
make any contributions required to be made to a U.S. Plan subject to Title IV of
ERISA or Multiemployer Plan, (ii) any accumulated funding deficiency (within the
meaning of Section 4971 of the Code) shall exist with respect to any U.S. Plan
(whether or not waived), (iii) the present value of all benefits under all U.S.
Plans subject to Title IV of ERISA (based on those assumptions used to fund such
U.S. Plans) exceeds, in the aggregate, as of the last annual valuation date
applicable thereto, the actuarial value of the assets of such U.S. Plans
allocable to such benefits, (iv) any Credit Party or ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan, or that a Multiemployer Plan is
in reorganization or is being terminated, (v) a Reportable Event with respect to
a U.S. Plan shall have occurred, (vi) the withdrawal by any Credit Party or
ERISA Affiliate from a U.S. Plan during a plan year in which it was a
substantial employer (within the meaning of section 4001(a)(2) or 4062(e) of
ERISA), (vii) the termination of a U.S. Plan subject to Title IV of ERISA, or
the filing of a notice of intent to terminate a U.S. Plan under section 4041(c)
of ERISA, (viii) the institution of proceedings to terminate, or the appointment
of a trustee with respect to, a U.S. Plan subject to Title IV of ERISA by the
PBGC, (ix) any other event or condition which could constitute grounds under
section 4042(a) of ERISA for the termination of,
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or the appointment of a trustee to administer, any U.S. Plan subject to Title IV
of ERISA, or (x) the imposition of a Lien pursuant to section 412 of the Code or
section 302 of ERISA as to any Credit Party or ERISA Affiliate;
(l) A contribution or premium required to be paid to or
in respect of any Canadian Plan is not paid in a timely fashion in accordance
with the terms thereof and all Applicable Law, or taxes, penalties or fees are
owing or exigible under any Canadian Plan beyond the date permitted for payment
of same;
(m) A proceeding, action, suit or claim (other than
routine claims for benefits) is commenced or instituted involving any Canadian
Plan or its assets;
(n) An event with respect to any Canadian Plan which
would entitle any Person (without the consent of the applicable Credit Party) to
wind-up or terminate any Canadian Plan, in whole or in part, or which could
reasonably be expected to adversely affect the tax status thereof, shall occur;
(o) A going concern unfunded actuarial liability, past
service unfunded liability or solvency deficiency shall exist with respect to
any Canadian Plan;
(p) An improper withdrawal or transfer of assets from any
Canadian Plan shall occur; or
(q) this Credit Agreement, the Copyright Security
Agreement, any Copyright Security Agreement Supplement, any Trademark Security
Agreement or any Hypothec (each a "Security Document") shall, for any reason,
not be or shall cease to be in full force and effect or shall be declared null
and void or any of the Security Documents shall not give or shall cease to give
the Administrative Agent the Liens, rights, powers and privileges purported to
be created thereby in favor of the Administrative Agent for the benefit of the
Administrative Agent, the Canadian Agent, the Issuing Bank and the Lenders,
superior to and prior to the rights of all third Persons and subject to no other
Liens (other than Permitted Encumbrances), or the validity or enforceability of
the Liens granted, to be granted, or purported to be granted, by any of the
Security Documents shall be contested by any Credit Party or any of their
respective Affiliates, provided that no such defect in the Security Documents
shall give rise to an Event of Default under this paragraph (q) unless such
defect shall affect Collateral that is or should be subject to a Lien in favor
of the Administrative Agent having an aggregate value in excess of US$100,000;
(r) the occurrence of any "Retraction Event" as defined
in the prospectus dated December 20, 1999 relating to the Series A Preferred
Shares.
(s) a Change in Management shall occur;
(t) a Change in Control shall occur;
then, in every such event and at any time thereafter during the continuance of
such event, the Administrative Agent may, or if directed by the Required
Lenders, shall, take any or all of the following actions, at the same or
different times: (x) terminate forthwith the Commitments, (y) declare the
principal of and the interest on the Loans and the Notes and all other amounts
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payable hereunder or thereunder to be forthwith due and payable, whereupon the
same shall become and be forthwith due and payable, without presentment, demand,
protest, notice of acceleration or other notice of any kind, all of which are
hereby expressly waived, anything in this Credit Agreement or in the Notes to
the contrary notwithstanding and/or (z) require the Borrowers to deliver to the
Administrative Agent and the Canadian Agent, respectively, from time to time,
Cash Equivalents in an amount equal to the full amount of L/C Exposure and BA
Exposure or to furnish other security therefor acceptable to the Required
Lenders. If an Event of Default specified in paragraph (h) or (i) above shall
have occurred, the Commitments shall automatically terminate and the principal
of, and interest on, the Loans and the Notes and all other amounts payable
hereunder and thereunder shall automatically become due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, anything in this Credit Agreement or the Notes to the
contrary notwithstanding. Such remedies shall be in addition to any other remedy
available to the Administrative Agent, the Issuing Bank or the Lenders pursuant
to Applicable Law or otherwise.
8. GRANT OF SECURITY INTEREST; REMEDIES
SECTION 8.1 Security Interests. Each of the Borrowers, as security for
the due and punctual payment of the Obligations (including interest accruing on
and after the filing of any petition in bankruptcy or of reorganization of any
Borrower whether or not post filing interest is allowed in such proceeding) and
each of the Guarantors, as security for its obligations under Article 9 hereof,
hereby mortgages, pledges, assigns, transfers, sets over, conveys and delivers
to the Administrative Agent (for the benefit of the Administrative Agent, the
Canadian Agent, the Issuing Bank and the Lenders) and grant to the
Administrative Agent (for the benefit of the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders) a security interest in the Collateral.
SECTION 8.2 Use of Collateral. So long as no Event of Default shall
have occurred and be continuing, and subject to the various provisions of this
Credit Agreement and the other Fundamental Documents, a Credit Party may use the
Collateral in any lawful manner except as otherwise provided hereunder.
SECTION 8.3 Collection Accounts. The Credit Parties will establish a
lockbox arrangement and related bank accounts (each, a "Collection Account")
with any of the Lenders and will direct, by Notice of Assignment and Irrevocable
Instructions, all Persons (other than theatrical exhibitors) who become
licensees, buyers or account debtors under receivables with respect to any item
of Product included in the Collateral to make payments under or in connection
with the license agreements, sales agreements or receivables directly to the
appropriate lockbox or Collection Account. So long as no Event of Default is
continuing, the Borrowers shall have the right to withdraw any funds from time
to time on deposit in the Collection Accounts. Upon agreement between the
Administrative Agent and the Credit Parties, a Collection Account maintained at
the Administrative Agent may also serve as the Cash Collateral Account, provided
that such Collection Account is in the name of the Administrative Agent (for the
benefit of itself, the Canadian Agent, the Issuing Bank and the Lenders) and is
under the sole dominion and control of the Administrative Agent.
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(a) The Credit Parties will execute such documentation as
may be required by the Administrative Agent in order to effectuate the
provisions of this Section 8.3.
(b) In the event a Credit Party receives payment from any
Person or proceeds under an Acceptable L/C, which payment should have been
remitted directly to the appropriate lockbox or Collection Account, such Credit
Party shall promptly remit such payment or proceeds to the appropriate
Collection Account to be applied in accordance with the terms of this Credit
Agreement.
SECTION 8.4 Credit Parties to Hold in Trust. Upon the occurrence and
during the continuance of an Event of Default, each of the Credit Parties will,
upon receipt by it of any revenue, income, profits or other sums in which a
security interest is granted by this Article 8, payable pursuant to any
agreement or otherwise, or of any check, draft, note, trade acceptance or other
instrument evidencing an obligation to pay any such sum, hold the sum or
instrument in trust for the Administrative Agent (for the benefit of itself, the
Canadian Agent, the Issuing Bank and the Lenders), segregate such sum or
instrument from their own assets and forthwith, without any notice, demand or
other action whatsoever (all notices, demands, or other actions on the part of
the Administrative Agent, the Canadian Agent, the Issuing Bank or the Lenders
being expressly waived), endorse, transfer and deliver any such sums or
instruments or both, to the Administrative Agent to be applied to the repayment
of the Obligations in accordance with the provisions of Section 8.7 hereof.
SECTION 8.5 Collections, etc. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent may, in its sole
discretion, in its name (on behalf of the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders) or in the name of any Credit Party or
otherwise, demand, xxx for, collect or receive any money or property at any time
payable or receivable on account of or in exchange for, or make any compromise
or settlement deemed desirable with respect to, any of the Collateral, but shall
be under no obligation so to do, or the Administrative Agent may extend the time
of payment, arrange for payment in installments, or otherwise modify the terms
of, or release, any of the Collateral, without thereby incurring responsibility
to, or discharging or otherwise affecting any liability of, any Credit Party.
The Administrative Agent will not be required to take any steps to preserve any
rights against prior parties to the Collateral. If any Credit Party fails to
make any payment or take any action required hereunder, the Administrative Agent
may make such payments and take all such actions as the Administrative Agent
reasonably deems necessary to protect the Administrative Agent's (on behalf of
the Administrative Agent, the Canadian Agent, the Issuing Bank and the Lenders)
security interests in the Collateral and/or the value thereof, and the
Administrative Agent is hereby authorized (without limiting the general nature
of the authority herein above conferred) to pay, purchase, contest or compromise
any Liens that in the judgment of the Administrative Agent appear to be equal
to, prior to or superior to the security interests of the Administrative Agent
(on behalf of the Administrative Agent, the Canadian Agent, the Issuing Bank and
the Lenders) in the Collateral (other than Permitted Encumbrances) and any Liens
not expressly permitted by this Credit Agreement.
SECTION 8.6 Possession, Sale of Collateral, etc. Upon the occurrence
and during the continuance of an Event of Default, the Administrative Agent may
enter upon the premises of any Credit Party or wherever the Collateral may be,
and take possession of the
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Collateral, and may demand and receive such possession from any Person who has
possession thereof, and the Administrative Agent may take such measures as it
deems necessary or proper for the care or protection thereof, including the
right to remove all or any portion of the Collateral, and with or without taking
such possession may sell or cause to be sold, whenever the Administrative Agent,
shall decide, in one or more sales or parcels, at such prices as the
Administrative Agent may deem appropriate, and for cash or on credit or for
future delivery, without assumption of any credit risk, all or any portion of
the Collateral, at any broker's board or at public or private sale, without
demand of performance but with 10 days' written notice to the Credit Parties of
the time and place of any such public sale or sales (which notice the Credit
Parties hereby agree is reasonable) and with such other notices as may be
required by Applicable Law and cannot be waived, and none of the Administrative
Agent, the Canadian Agent, the Issuing Bank nor any of the Lenders shall have
any liability should the proceeds resulting from a private sale be less than the
proceeds realizable from a public sale, and the Administrative Agent, the
Canadian Agent, the Issuing Bank, the Lenders or any other Person may be the
purchaser of all or any portion of the Collateral so sold and thereafter hold
the same absolutely, free (to the fullest extent permitted by Applicable Law)
from any claim or right of whatever kind, including any equity of redemption, of
any Credit Party, any such demand, notice, claim, right or equity being hereby
expressly waived and released. At any sale or sales made pursuant to this
Article 8, the Administrative Agent, the Canadian Agent, the Issuing Bank and
the Lenders may bid for or purchase, free (to the fullest extent permitted by
Applicable Law) from any claim or right of whatever kind, including any equity
of redemption, of any Credit Party, any such demand, notice, claim, right or
equity being hereby expressly waived and released, any part of or all of the
Collateral offered for sale, and may make any payment on account thereof by
using any claim for moneys then due and payable to the Administrative Agent, the
Canadian Agent, the Issuing Bank and the Lenders by any Credit Party hereunder
as a credit against the purchase price. The Administrative Agent shall in any
such sale make no representations or warranties with respect to the Collateral
or any part thereof, and none of the Administrative Agent, the Canadian Agent,
the Issuing Bank nor any of the Lenders shall be chargeable with any of the
obligations or liabilities of any Credit Party. Each Credit Party hereby agrees
(i) that it will indemnify and hold the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders harmless from and against any and all
claims with respect to the Collateral asserted before the taking of actual
possession or control of the relevant Collateral by the Administrative Agent
pursuant to this Article 8, or arising out of any act of, or omission to act on
the part of, any Person (other than the Administrative Agent, the Canadian
Agent, the Issuing Bank or Lenders) prior to such taking of actual possession or
control by the Administrative Agent (whether asserted before or after such
taking of possession or control), or arising out of any act on the part of any
Credit Party or its Affiliates or agents before or after the commencement of
such actual possession or control by the Administrative Agent; and (ii) none of
the Administrative Agent, the Canadian Agent, the Issuing Bank nor any of the
Lenders shall have any liability or obligation to any Credit Party arising out
of any such claim except for acts of willful misconduct or gross negligence.
Subject only to the lawful rights of third parties, any laboratory which has
possession of any of the Collateral is hereby constituted and appointed by the
Credit Parties as pledgeholder for the Administrative Agent (for the benefit of
itself, the Canadian Agent, the Issuing Bank and the Lenders), and, upon the
occurrence of an Event of Default, each such pledgeholder is hereby authorized
(to the fullest extent permitted by Applicable Law) to sell all or any portion
of the Collateral upon the order and direction of the Administrative Agent and
each Credit Party hereby
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waives any and all claims, for damages or otherwise, for any action taken by
such pledgeholder in accordance with the terms of the UCC not otherwise waived
hereunder. In any action hereunder, the Administrative Agent shall be entitled
if permitted by Applicable Law to the appointment of a receiver without notice,
to take possession of all or any portion of the Collateral and to exercise such
powers as the court shall confer upon the receiver. Notwithstanding the
foregoing, upon the occurrence of an Event of Default, and during the
continuation of such Event of Default, the Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders shall be entitled to apply, without
prior notice to any of the Credit Parties, any cash or cash items constituting
Collateral in the possession of the Administrative Agent, the Canadian Agent,
the Issuing Bank and the Lenders to payment of the Obligations.
SECTION 8.7 Application of Proceeds on Default. Upon the occurrence and
during the continuance of an Event of Default, the balances in the Chase
Clearing Account, the Collection Account(s), the Cash Collateral Account(s) or
in any other account of any Credit Party with a Lender, all other income on the
Collateral, and all proceeds from any sale of the Collateral pursuant hereto
shall be applied first toward payment of the reasonable out-of-pocket costs and
expenses paid or incurred by the Administrative Agent in enforcing this Credit
Agreement, in realizing on or protecting any Collateral and in enforcing or
collecting any Obligations or any Guaranty thereof, including, without
limitation, court costs and the reasonable attorney's fees and expenses incurred
by the Administrative Agent, then to satisfy or provide cash collateral for all
Obligations relating to the Letters of Credit, and then to the indefeasible
payment in full of the Obligations in accordance with Section 12.2(b) hereof;
provided, however, that, the Administrative Agent may in its discretion and with
the consent of the Required Lenders, apply funds comprising the Collateral to
pay the cost (i) of completing any item of Product owned in whole or in part by
any Credit Party in any stage of production and (ii) of making delivery to the
distributors of such item of Product. Any amounts remaining after such
indefeasible payment in full shall be remitted to the appropriate Credit Party
or as a court of competent jurisdiction may otherwise direct.
SECTION 8.8 Power of Attorney. Upon the occurrence and during the
continuance of an Event of Default which is not waived in writing by the
Required Lenders, (a) each Credit Party does hereby irrevocably make, constitute
and appoint the Administrative Agent or any of its officers or designees its
true and lawful attorney-in-fact with full power in the name of the
Administrative Agent, such other Person or such Credit Party to receive, open
and dispose of all mail addressed to any Credit Party, and to endorse any notes,
checks, drafts, money orders or other evidences of payment relating to the
Collateral that may come into the possession of the Administrative Agent with
full power and right to cause the mail of such Persons to be transferred to the
Administrative Agent's own offices or otherwise, and to do any and all other
acts necessary or proper to carry out the intent of this Credit Agreement and
the grant of the security interests hereunder and under the Fundamental
Documents, and each Credit Party hereby ratifies and confirms all that the
Administrative Agent or its substitutes shall properly do by virtue hereof; (b)
each Credit Party does hereby further irrevocably make, constitute and appoint
the Administrative Agent or any of its officers or designees its true and lawful
attorney-in-fact in the name of the Administrative Agent or any Credit Party (i)
to enforce all of such Credit Party's rights under and pursuant to all
agreements with respect to the Collateral, all for the sole benefit of the
Administrative Agent for the benefit of the Administrative Agent, the Issuing
Bank and the Lenders and to enter into such other agreements as may be necessary
or
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appropriate in the judgment of the Administrative Agent to complete the
production, distribution or exploitation of any item of Product which is
included in the Collateral, (ii) to enter into and perform such agreements as
may be necessary in order to carry out the terms, covenants and conditions of
the Fundamental Documents that are required to be observed or performed by any
Credit Party, (iii) to execute such other and further mortgages, pledges and
assignments of the Collateral, and related instruments or agreements, as the
Administrative Agent may reasonably require for the purpose of perfecting,
protecting, maintaining or enforcing the security interests granted to the
Administrative Agent for the benefit of the Administrative Agent, the Issuing
Bank and the Lenders hereunder and under the other Fundamental Documents, and
(iv) to do any and all other things necessary or proper to carry out the
intention of this Credit Agreement and the grant of the security interests
hereunder and under the other Fundamental Documents. Each of the Credit Parties
hereby ratifies and confirms in advance all that the Administrative Agent as
such attorney-in-fact or its substitutes shall properly do by virtue of this
power of attorney.
SECTION 8.9 Financing Statements, Direct Payments. Each Credit Party
hereby authorizes the Administrative Agent to file UCC and PPSA financing
statements and any amendments thereto or continuations thereof, any Copyright
Security Agreement, any Copyright Security Agreement Supplement, any Trademark
Security Agreement, any Hypothec and any other appropriate security documents or
instruments and to give any notices necessary or desirable to perfect the Lien
of the Administrative Agent for the benefit of itself, the Issuing Bank and the
Lenders on the Collateral, in all cases without the signature of any Credit
Party or to execute such items as attorney-in-fact for any Credit Party;
provided, that the Administrative Agent shall provide copies of any such
documents or instruments to the Borrowers. Each Credit Party further authorizes
the Administrative Agent to notify any account debtors that all sums payable to
any Credit Party relating to the Collateral shall be paid directly to the
Administrative Agent.
SECTION 8.10 Further Assurances. Upon the request of the Administrative
Agent, each Credit Party hereby agrees to duly and promptly execute and deliver,
or cause to be duly executed and delivered, at the cost and expense of the
Credit Parties, such further instruments as may be necessary or proper, in the
reasonable judgment of the Administrative Agent, to carry out the provisions and
purposes of this Article 8 or to perfect and preserve the Liens of the
Administrative Agent for the benefit of itself, the Issuing Bank, Canadian Agent
and the Lenders hereunder and under the Fundamental Documents, in the Collateral
or any portion thereof.
SECTION 8.11 Termination and Release. The security interests granted
under this Article 8 shall terminate when all Obligations have been indefeasibly
fully paid and performed and the Commitments shall have terminated and all
Letters of Credit shall have expired or been terminated or canceled. Upon
request by the Credit Parties (and at the sole expense of the Credit Parties)
after such termination, the Administrative Agent will take all reasonable action
and do all things reasonably necessary, including, without limitation, executing
UCC termination statements, Pledgeholder Agreement terminations, termination
letters to account debtors and copyright releases, to terminate the security
interest granted to it (for the benefit of the Administrative Agent, the
Canadian Agent, the Issuing Bank and the Lenders) hereunder.
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SECTION 8.12 Remedies Not Exclusive. The remedies conferred upon or
reserved to the Administrative Agent in this Article 8 are intended to be in
addition to, and not in limitation of, any other remedy or remedies available to
the Administrative Agent. Without limiting the generality of the foregoing, the
Administrative Agent, the Issuing Bank and the Lenders shall have all rights and
remedies of a secured creditor under Article 9 of the UCC and under any other
Applicable Law.
SECTION 8.13 Quiet Enjoyment. The Administrative Agent, the Issuing
Bank and the Lenders acknowledge and agree that their security interest
hereunder is subject to the rights of Quiet Enjoyment (as defined below) of
parties (which are not Affiliates of any Credit Party) to Distribution
Agreements, whether existing on the date hereof or hereafter executed. For the
purpose hereof, "Quiet Enjoyment" shall mean in connection with the rights of a
licensee (which is not an Affiliate of any Credit Party) under a Distribution
Agreement, the Administrative Agent, the Issuing Bank and the Lenders' agreement
that their rights under this Credit Agreement and the other Fundamental
Documents and in the Collateral are subject to the rights of such licensee to
distribute, exhibit and/or to exploit the item of Product licensed to them under
such Distribution Agreement, and to receive prints or tapes or have access to
preprint material or master tapes in connection therewith and that even if the
Lenders shall become the owner of the Collateral in case of an Event of Default,
the Lenders' ownership rights shall be subject to the rights of said parties
under such agreement, provided, however, that no default under the relevant
Distribution Agreement shall be continuing which would entitle the licensor to
terminate such Distribution Agreement. The Administrative Agent agrees that,
upon the reasonable request of a Credit Party, it will provide written
confirmation (in form reasonably acceptable to the Administrative Agent) of such
rights of Quiet Enjoyment to licensees under the Distribution Agreements. None
of the foregoing constitutes an agreement by the Administrative Agent, the
Issuing Bank or the Lenders to the granting of any security interest to any
Person under any Distribution Agreement, except as otherwise permitted pursuant
to Section 6.2.
SECTION 8.14 Continuation and Reinstatement. Each Credit Party further
agrees that the security interest granted hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment or any
part thereof of any Obligation is rescinded or must otherwise be restored by the
Administrative Agent, the Issuing Bank or the Lenders upon the bankruptcy or
reorganization of any Credit Party or otherwise.
9. GUARANTY
SECTION 9.1 Guaranty. (a) Each Guarantor unconditionally and
irrevocably guarantees to the Administrative Agent, the Canadian Agent, Issuing
Bank and the Lenders the due and punctual payment by, and performance of, the
Obligations (including interest accruing on and after the filing of any petition
in bankruptcy or of reorganization of the obligor whether or not post filing
interest is allowed in such proceeding). Each Guarantor further agrees that the
Obligations may be increased, extended or renewed, in whole or in part, without
notice or further assent from it (except as may be otherwise required herein),
and it will remain bound upon this Guaranty notwithstanding any extension or
renewal of any Obligation. Notwithstanding the
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foregoing and for purposes of clarification, Cinepix Films Inc. does not
guarantee, in any manner, any obligations of, or in relation to, Lions Gate
Films Corp.
(b) Each Guarantor waives presentation to, demand for
payment from and protest to, as the case may be, any Credit Party or any other
guarantor of any of the Obligations, and also waives notice of protest for
nonpayment, notice of acceleration and notice of intent to accelerate. The
obligations of each Guarantor hereunder shall not be affected by (i) the failure
of the Administrative Agent, the Canadian Agent, the Issuing Bank or the Lenders
to assert any claim or demand or to enforce any right or remedy against any
Borrower or any Guarantor or any other guarantor under the provisions of this
Credit Agreement or any other agreement or otherwise; (ii) any extension or
renewal of any provision hereof or thereof; (iii) the failure of the
Administrative Agent, the Canadian Agent, the Issuing Bank or the Lenders to
obtain the consent of the Guarantor with respect to any rescission, waiver,
compromise, acceleration, amendment or modification of any of the terms or
provisions of this Credit Agreement, the Notes or of any other agreement; (iv)
the release, exchange, waiver or foreclosure of any security held by the
Administrative Agent for the Obligations or any of them; (v) the failure of the
Administrative Agent, the Canadian Agent, the Issuing Bank or the Lenders to
exercise any right or remedy against any other Guarantor or any other guarantor
of the Obligations; (vi) any bankruptcy, reorganization, liquidation,
dissolution or receivership proceeding or case by or against either Borrower or
other Credit Party, any change in the corporate existence, structure, ownership
or control of either Borrower or other Credit Party (including any of the
foregoing arising from any merger, consolidation, amalgamation, reorganization
or similar transaction); or (vii) the release or substitution of any Guarantor
or any other guarantor of the Obligations. Without limiting the generality of
the foregoing or any other provision hereof (including, without limitation,
Section 13.6 hereof), to the extent permitted by applicable law, each Guarantor
hereby expressly waives any and all benefits which might otherwise be available
to it under California Civil Code Sections 2799, 2809, 2810, 2815, 2819, 2820,
2821, 2822, 2838, 2839, 2845, 2848, 2849, 2850, 2899 and 3433.
(c) Each Guarantor further agrees that this Guaranty is a
continuing guaranty, shall secure the Obligations and any ultimate balance
thereof, notwithstanding that the Borrowers or others may from time to time
satisfy the Obligations in whole or in part and thereafter incur further
Obligations, and that this Guaranty constitutes a guaranty of performance and of
payment when due and not just of collection, and waives any right to require
that any resort be had by the Administrative Agent, the Canadian Agent, the
Issuing Bank or any Lender to any security held for payment of the Obligations
or to any balance of any deposit, account or credit on the books of the
Administrative Agent, the Canadian Agent, the Issuing Bank or any Lender in
favor of any Borrower or any Guarantor, or to any other Person.
(d) Each Guarantor hereby expressly assumes all
responsibilities to remain informed of the financial condition of the Borrowers,
the Guarantors and any other guarantors of the Obligations and any circumstances
affecting the Collateral or the Pledged Securities or the ability of the
Borrowers to perform under this Credit Agreement.
(e) Each Guarantor's obligations under the Guaranty shall
not be affected by the genuineness, validity, regularity or enforceability of
the Obligations, the Notes or any other instrument evidencing any Obligations,
or by the existence, validity, enforceability, perfection,
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or extent of any collateral therefor or by any other circumstance relating to
the Obligations which might otherwise constitute a defense to this Guaranty. The
Administrative Agent, the Canadian Agent, the Issuing Bank and the Lenders make
no representation or warranty with respect to any such circumstances and have no
duty or responsibility whatsoever to any Guarantor in respect to the management
and maintenance of the Obligations or any collateral security for the
Obligations.
SECTION 9.2 No Impairment of Guaranty, etc. The obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (except payment and performance in full
of the Obligations), including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent, the Canadian Agent, the
Issuing Bank or any Lender to assert any claim or demand or to enforce any
remedy under this Credit Agreement or any other agreement, by any waiver or
modification of any provision hereof or thereof, by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or thing or omission or delay to do any other act or thing which may
or might in any manner or to any extent vary the risk of such Guarantor or would
otherwise operate as a discharge of such Guarantor as a matter of law, unless
and until the Obligations are paid in full, the Commitments have terminated and
each outstanding Letter of Credit has expired or otherwise been terminated.
SECTION 9.3 Continuation and Reinstatement, etc. Each Guarantor further
agrees that its guaranty hereunder shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by the Administrative
Agent, the Canadian Agent, the Issuing Bank or the Lenders upon the bankruptcy
or reorganization of a Borrower or a Guarantor, or otherwise. In furtherance of
the provisions of this Article 9, and not in limitation of any other right which
the Administrative Agent, the Canadian Agent, the Issuing Bank or the Lenders
may have at law or in equity against a Borrower, a Guarantor or any other Person
by virtue hereof, upon failure of the Borrowers to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after notice
or otherwise, each Guarantor hereby promises to and will, upon receipt of
written demand by the Administrative Agent on behalf of itself, the Canadian
Agent, the Issuing Bank and/or the Lenders, forthwith pay or cause to be paid to
the Administrative Agent for the benefit of itself, the Canadian Agent, the
Issuing Bank and/or the Lenders (as applicable) in cash an amount equal to the
unpaid amount of all the Obligations with interest thereon at a rate of interest
equal to the rate specified in Section 2.9(a) hereof, and thereupon the
Administrative Agent shall assign such Obligation, together with all security
interests, if any, then held by the Administrative Agent in respect of such
Obligation, to the Guarantors making such payment; such assignment to be
subordinate and junior to the rights of the Administrative Agent on behalf of
itself, the Canadian Agent, the Issuing Bank and the Lenders with regard to
amounts payable by the Borrowers in connection with the remaining unpaid
Obligations and to be pro tanto to the extent to which the Obligation in
question was discharged by the Guarantor or Guarantors making such payments.
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(a) All rights of a Guarantor against the Borrowers,
arising as a result of the payment by such Guarantor of any sums to the
Administrative Agent for the benefit of the Administrative Agent, the Canadian
Agent, the Issuing Bank and/or the Lenders or directly to the Lenders hereunder
by way of right of subrogation or otherwise, shall in all respects be
subordinated and junior in right of payment to, and shall not be exercised by
such Guarantor until and unless, the prior final and indefeasible payment in
full of all the Obligations. If any amount shall be paid to such Guarantor for
the account of the Borrowers, such amount shall be held in trust for the benefit
of the Administrative Agent, the Canadian Agent, segregated from such
Guarantor's own assets, and shall forthwith be paid to the Administrative Agent
on behalf of the Administrative Agent, the Canadian Agent, the Issuing Bank
and/or the Lenders to be credited and applied to the Obligations, whether
matured or unmatured.
SECTION 9.4 Limitation on Guaranteed Amount etc. (a) Notwithstanding
any other provision of this Article 9, the amount guaranteed by each Guarantor
hereunder shall be limited to the extent, if any, required so that its
obligations under this Article 9 shall not be subject to avoidance under Section
548 of the Bankruptcy Code or to being set aside or annulled under any
Applicable Law relating to fraud on creditors. In determining the limitations,
if any, on the amount of any Guarantor's obligations hereunder pursuant to the
preceding sentence, it is the intention of the parties hereto that any rights of
subrogation or contribution which such Guarantor may have under this Article 9,
any other agreement or Applicable Law shall be taken into account.
(b) Notwithstanding anything to the contrary contained
herein, the Guaranty from any Credit Party that is a direct Subsidiary of LGEC
and is incorporated under the Canada Business Corporations Act shall be deemed
to be a Guaranty of the Obligations of LGEC.
10. PLEDGE
SECTION 10.1 Pledge. Each Pledgor, as security for the due and punctual
payment of the Obligations (including interest accruing on and after the filing
of any petition in bankruptcy or of reorganization of a Borrower whether or not
post filing interest is allowed in such proceeding) in the case of the Borrowers
and as security for its obligations under Article 9 hereof in the case of a
Pledgor which is a Guarantor, hereby pledges, hypothecates, assigns, transfers,
sets over and delivers unto the Administrative Agent for the benefit of itself,
the Canadian Agent, the Issuing Bank and the Lenders, a security interest in all
Pledged Collateral now owned or hereafter acquired by it. On the Closing Date,
the Pledgors shall deliver to the Administrative Agent the definitive
instruments (if any) representing all Pledged Securities, accompanied by undated
stock powers, duly endorsed or executed in blank by the appropriate Pledgor, and
such other instruments or documents as the Administrative Agent or its counsel
shall reasonably request.
SECTION 10.2 Covenant. Each Pledgor covenants that as a stockholder of
each of its respective Subsidiaries it will not take any action to allow any
additional shares of common stock, preferred stock or other equity securities of
any of its respective Subsidiaries or any securities convertible or exchangeable
into common or preferred stock of such Subsidiaries
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to be issued, or grant any options or warrants, unless such securities are
pledged to the Administrative Agent (for the benefit of itself, the Canadian
Agent, the Issuing Bank and the Lenders) as security for the Obligations.
SECTION 10.3 Registration in Nominee Name; Denominations. The
Administrative Agent shall have the right (in its sole and absolute discretion)
to hold the certificates representing any Pledged Securities (a) in its own name
(on behalf of the Administrative Agent, the Canadian Agent, the Issuing Bank and
the Lenders) or in the name of its nominee or (b) in the name of the appropriate
Pledgor, endorsed or assigned in blank or in favor of the Administrative Agent.
The Administrative Agent shall have the right to exchange the certificates
representing any of the Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Credit Agreement.
SECTION 10.4 Voting Rights; Dividends; etc. (a) The appropriate Pledgor
shall be entitled to exercise any and all voting and/or consensual rights and
powers accruing to an owner of the Pledged Securities being pledged by it
hereunder or any part thereof for any purpose not inconsistent with the terms
hereof, at all times, except as expressly provided in paragraph (c) below.
(a) All dividends or distributions of any kind whatsoever
(other than cash dividends or distributions paid while no Event of Default is
continuing) received by a Pledgor, whether resulting from a subdivision,
combination, or reclassification of the outstanding capital stock of the issuer
or received in exchange for Pledged Securities or any part thereof or as a
result of any merger, consolidation, acquisition, or other exchange of assets to
which the issuer may be a party, or otherwise, shall be and become part of the
Pledged Securities pledged hereunder and shall immediately be delivered to the
Administrative Agent to be held subject to the terms hereof. All dividends and
distributions which are received contrary to the provisions of this subsection
(b) shall be received in trust for the benefit of the Administrative Agent, the
Canadian Agent, the Issuing Bank and the Lenders, segregated from such Pledgor's
own assets, and shall be delivered to the Administrative Agent.
(b) Upon the occurrence and during the continuance of an
Event of Default and notice from the Administrative Agent of the transfer of
such rights to the Administrative Agent, all rights of a Pledgor (i) to exercise
the voting and/or consensual rights and powers which it is entitled to exercise
pursuant to this Section and (ii) to receive and retain cash dividends and
distributions shall cease, and all such rights shall thereupon become vested in
the Administrative Agent, which shall have the sole and exclusive right and
authority to exercise such voting and/or consensual rights and receive such cash
dividends and distributions until such time as such Event of Default has been
cured.
SECTION 10.5 Remedies Upon Default. If an Event of Default shall have
occurred and be continuing, the Administrative Agent, on behalf of itself, the
Canadian Agent, the Issuing Bank and the Lenders, may sell the Pledged
Securities, or any part thereof, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Administrative Agent shall deem appropriate subject to the terms
hereof or as otherwise provided in the UCC. The Administrative Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict to
the full extent permitted by Applicable Law
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the prospective bidders or purchasers to Persons who will represent and agree
that they are purchasing the Pledged Securities for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale, the Administrative Agent shall have the right to
assign, transfer, and deliver to the purchaser or purchasers thereof the Pledged
Securities so sold. Each such purchaser at any such sale shall hold the property
sold absolutely, free from any claim or right on the part of any Pledgor. The
Administrative Agent shall give the Pledgors ten (10) days' written notice of
any such public or private sale, or sale at any broker's board or on any such
securities exchange, or of any other disposition of the Pledged Securities. Such
notice, in the case of public sale, shall state the time and place for such sale
and, in the case of sale at a broker's board or on a securities exchange, shall
state the board or exchange at which such sale is to be made and the day on
which the Pledged Securities, or portion thereof, will first be offered for sale
at such board or exchange. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the
Administrative Agent may fix and shall state in the notice of such sale. At any
such sale, the Pledged Securities, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Administrative Agent may
(in its sole and absolute discretion) determine. The Administrative Agent shall
not be obligated to make any sale of the Pledged Securities if it shall
determine not to do so, regardless of the fact that notice of sale of the
Pledged Securities may have been given. The Administrative Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case the sale of all or any part of the
Pledged Securities is made on credit or for future delivery, the Pledged
Securities so sold shall be retained by the Administrative Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Administrative
Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Pledged Securities so sold and, in case of
any such failure, such Pledged Securities may be sold again upon like notice. At
any sale or sales made pursuant to this Section 10.5, the Administrative Agent
(on behalf of itself, the Canadian Agent, the Issuing Bank and/or the Lenders)
may bid for or purchase, free from any claim or right of whatever kind,
including any equity of redemption, of the Pledgors, any such demand, notice,
claim, right or equity being hereby expressly waived and released, any or all of
the Pledged Securities offered for sale, and may make any payment on the account
thereof by using any claim for moneys then due and payable to the Administrative
Agent, the Canadian Agent, the Issuing Bank (to the extent it consents) or any
consenting Lender by any Credit Party as a credit against the purchase price;
and the Administrative Agent, the Canadian Agent, upon compliance with the terms
of sale, may hold, retain and dispose of the Pledged Securities without further
accountability therefor to any Pledgor or any third party (other than the
Issuing Bank and/or the Canadian Agent and/or the Lenders). The Administrative
Agent shall in any such sale make no representations or warranties with respect
to the Pledged Securities or any part thereof, and shall not be chargeable with
any of the obligations or liabilities of the Pledgors with respect thereto. Each
Pledgor hereby agrees (i) it will indemnify and hold the Administrative Agent,
the Canadian Agent, the Issuing Bank and the Lenders harmless from and against
any and all claims with respect to the Pledged Securities asserted before the
taking of actual possession or control of the Pledged Securities by the
Administrative Agent pursuant to this Credit Agreement, or arising out of any
act of, or omission to act on the part of, any Person prior to such taking of
actual possession or control by the Administrative Agent (whether asserted
before or after such
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taking of possession or control), or arising out of any act on the part of any
Pledgor, its agents or Affiliates before or after the commencement of such
actual possession or control by the Administrative Agent and (ii) the
Administrative Agent, the Canadian Agent, the Issuing Bank and the Lenders shall
have no liability or obligation arising out of any such claim. As an alternative
to exercising the power of sale herein conferred upon it, the Administrative
Agent may proceed by a suit or suits at law or in equity to foreclose upon the
Collateral and Pledged Securities under this Credit Agreement and to sell the
Pledged Securities, or any portion thereof, pursuant to a judgment or decree of
a court or courts having competent jurisdiction.
SECTION 10.6 Application of Proceeds of Sale and Cash. The proceeds of
sale of the Pledged Securities sold pursuant to Section 10.5 hereof shall be
applied by the Administrative Agent on behalf of itself, the Issuing Bank and
the Lenders as follows:
(i) to the payment of all reasonable
out-of-pocket costs and expenses paid or incurred by the Administrative Agent in
connection with such sale, including, without limitation, all court costs and
the reasonable fees and expenses of counsel for the Administrative Agent in
connection therewith, and the payment of all reasonable out-of-pocket costs and
expenses paid or incurred by the Administrative Agent in enforcing this Credit
Agreement, in realizing or protecting any Collateral and in enforcing or
collecting any Obligations or any Guaranty thereof, including, without
limitation, court costs and the reasonable attorney's fees and expenses incurred
by the Administrative Agent in connection therewith;
(ii) to satisfy or provide cash collateral for
all Obligations relating to the Letters of Credit; and
(iii) to the indefeasible payment in full of the
Obligations in accordance with Section 12.2(b) hereof;
provided, however, that the Administrative Agent may in its discretion apply
funds comprising the Collateral to pay the cost (i) of completing any item of
Product owned in whole or in part by any Credit Party in any stage of production
and (ii) of making delivery to the distributors of such item of Product. Any
amounts remaining after such indefeasible payment in full shall be remitted to
the appropriate Pledgor, or as a court of competent jurisdiction may otherwise
direct.
SECTION 10.7 Securities Act, etc. In view of the position of each
Pledgor in relation to the Pledged Securities pledged by it, or because of other
present or future circumstances, a question may arise under the Securities Act
of 1933, as amended, as now or hereafter in effect, or any similar statute
hereafter enacted analogous in purpose or effect (such Act and any such similar
statute as from time to time in effect being hereinafter called the "Federal
Securities Laws"), with respect to any disposition of the Pledged Securities
permitted hereunder. Each Pledgor understands that compliance with the Federal
Securities Laws may very strictly limit the course of conduct of the
Administrative Agent if the Administrative Agent were to attempt to dispose of
all or any part of the Pledged Securities, and may also limit the extent to
which or the manner in which any subsequent transferee of any Pledged Securities
may dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Administrative Agent in any attempt to dispose of all
or any part of the Pledged Securities under applicable Blue Sky or other state
securities laws, or similar laws analogous in purpose or effect.
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Under Applicable Law, in the absence of an agreement to the contrary, the
Administrative Agent may perhaps be held to have certain general duties and
obligations to a Pledgor to make some effort towards obtaining a fair price even
though the Obligations may be discharged or reduced by the proceeds of a sale at
a lesser price. Each Pledgor waives to the fullest extent permitted by
Applicable Law any such general duty or obligation to it, and the Pledgors
and/or the Credit Parties will not attempt to hold the Administrative Agent
responsible for selling all or any part of the Pledged Securities at an
inadequate price, even if the Administrative Agent shall accept the first offer
received or does not approach more than one possible purchaser. Without limiting
the generality of the foregoing, the provisions of this Section 10.7 would apply
if, for example, the Administrative Agent were to place all or any part of the
Pledged Securities for private placement by an investment banking firm, or if
such investment banking firm purchased all or any part of the Pledged Securities
for its own account, or if the Administrative Agent placed all or any part of
the Pledged Securities privately with a purchaser or purchasers.
SECTION 10.8 Continuation and Reinstatement. Each Pledgor further
agrees that its pledge hereunder shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by the Administrative
Agent, the Issuing Bank or the Lenders upon the bankruptcy or reorganization of
any Pledgor or otherwise.
SECTION 10.9 Termination. The pledge referenced herein shall terminate
when all Obligations shall have been indefeasibly fully paid and performed and
the Commitments shall have terminated, and all L/C Exposure shall have expired
or been terminated or canceled, at which time the Administrative Agent shall
assign and deliver to the appropriate Pledgor, or to such Person or Persons as
such Pledgor shall designate, against receipt, such of the Pledged Securities
(if any) as shall not have been sold or otherwise applied by the Administrative
Agent pursuant to the terms hereof and shall still be held by it hereunder,
together with appropriate instruments of reassignment and release. Any such
reassignment shall be free and clear of all Liens, arising by, under or through
the Administrative Agent but shall otherwise be without recourse upon or
warranty by the Administrative Agent and at the expense of the Pledgors.
11. CASH COLLATERAL
SECTION 11.1 Cash Collateral Accounts. On or prior to the Closing Date,
there shall be established (i) with the Administrative Agent, a collateral
account in the name of the Administrative Agent (the "U.S. Dollar Cash
Collateral Account"), into which the appropriate Credit Parties shall from time
to time deposit U.S. Dollars and (ii) with the Canadian Agent, a collateral
account at the Canadian Agent in the name of the Administrative Agent (the
"Canadian Dollar Cash Collateral Account" and together with the U.S. Dollar Cash
Collateral Account, the "Cash Collateral Accounts") into which the appropriate
Credit Parties shall deposit Canadian Dollars, in each case pursuant to the
express provisions of this Credit Agreement requiring or permitting such
deposits. Except to the extent otherwise provided in this Article 11, the Cash
Collateral Accounts shall be under the sole dominion and control of the
Administrative Agent and the Canadian Agent.
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SECTION 11.2 Investment of Funds. (a) The Administrative Agent and the
Canadian Agent are hereby authorized and directed to invest and reinvest the
funds from time to time transferred or deposited into the Cash Collateral
Accounts, so long as no Event of Default has occurred and is continuing, on the
instructions of the Borrowers (provided that any such instructions given
verbally shall be confirmed promptly in writing) or, if the Borrowers shall fail
to give such instructions upon delivery of any such funds, in the sole
discretion of the Administrative Agent or the Canadian Agent, as applicable,
provided that in no event may the Borrowers give instructions to the
Administrative Agent or the Canadian Agent to, or may the Administrative Agent
or the Canadian Agent in its discretion, invest or reinvest funds in the Cash
Collateral Accounts in other than Cash Equivalents.
(b) Any net income or gain on the investment of funds
from time to time held in the Cash Collateral Accounts, shall be promptly
reinvested by the Administrative Agent or the Canadian Agent, as applicable, as
a part of the applicable Cash Collateral Account; and any net loss on any such
investment shall be charged against the applicable Cash Collateral Account.
(c) None of the Administrative Agent, the Canadian Agent,
the Issuing Bank and the Lenders shall be a trustee for any of the Credit
Parties, or shall have any obligations or responsibilities, or shall be liable
for anything done or not done, in connection with the Cash Collateral Accounts,
except as expressly provided herein. The Administrative Agent, the Canadian
Agent, the Issuing Bank and the Lenders shall not have any obligation or
responsibility and shall not be liable in any way for any investment decision
made in accordance with this Section 11.2 or for any decrease in the value of
the investments held in the Cash Collateral Account.
SECTION 11.3 Grant of Security Interest. For value received and to
induce the Issuing Bank to issue Letters of Credit and the Lenders to make Loans
to the Borrowers and to acquire participations in Letters of Credit from time to
time as provided for in this Credit Agreement, as security for the payment of
all of the Obligations, each of the Credit Parties hereby assigns to the
Administrative Agent (for the benefit of itself, the Canadian Agent, the Issuing
Bank and the Lenders) and grants to the Administrative Agent (for the benefit of
itself, the Canadian Agent, the Issuing Bank and the Lenders), a first and prior
Lien upon all of such Credit Party's rights in and to the Cash Collateral
Accounts, all cash, documents, instruments and securities from time to time held
therein, and all rights pertaining to investments of funds in the Cash
Collateral Accounts and all products and proceeds of any of the foregoing. All
cash, documents, instruments and securities from time to time on deposit in the
Cash Collateral Accounts, and all rights pertaining to investments of funds in
the Cash Collateral Accounts shall immediately and without any need for any
further action on the part of any of the Credit Parties, the Issuing Bank, the
Canadian Agent, any Lender or the Administrative Agent, become subject to the
Lien set forth in this Section 11.3, be deemed Collateral for all purposes
hereof and be subject to the provisions of this Credit Agreement.
SECTION 11.4 Remedies. At any time during the continuation of an Event
of Default, the Administrative Agent may sell any documents, instruments and
securities held in the Cash Collateral Account and may immediately apply the
proceeds thereof and any other cash held in the Cash Collateral Account in
accordance with Section 11.2.
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12. THE ADMINISTRATIVE AGENT, THE CANADIAN AGENT AND THE ISSUING BANK
SECTION 12.1 Administration by the Administrative Agent. (a) The
general administration of the Fundamental Documents and any other documents
contemplated by this Credit Agreement or any other Fundamental Document shall be
by the Administrative Agent or its designees. Except as otherwise expressly
provided herein, each of the Lenders hereby irrevocably authorizes the
Administrative Agent, at its discretion, to take or refrain from taking such
actions as agent on its behalf and to exercise or refrain from exercising such
powers under the Fundamental Documents, the Notes and any other documents
contemplated by this Credit Agreement or any other Fundamental Document as are
expressly delegated by the terms hereof or thereof, as appropriate, together
with all powers reasonably incidental thereto. The Administrative Agent shall
have no duties or responsibilities except as set forth in the Fundamental
Documents.
(b) The Lenders hereby authorize the Administrative Agent
(in its sole discretion):
(i) in connection with the sale or other
disposition of any asset included in the Collateral or the capital stock of any
Guarantor, to the extent undertaken in accordance with the terms of this Credit
Agreement, to release a Lien granted to it (for the benefit of the
Administrative Agent, the Issuing Bank and the Lenders) on such asset or capital
stock and/or to release such Guarantor from its obligations hereunder;
(ii) to determine that the cost to the Borrowers
or another Credit Party is disproportionate to the benefit to be realized by the
Administrative Agent, the Issuing Bank and the Lenders by perfecting a Lien in a
given asset or group of assets included in the Collateral (other than any item
which is to be included in the Borrowing Base) and that the Borrowers or other
Credit Party should not be required to perfect such Lien in favor of the
Administrative Agent (for the benefit of itself, the Issuing Bank and the
Lenders);
(iii) to appoint subagents to be the holder of
record of a Lien to be granted to the Administrative Agent (for the benefit of
the Administrative Agent, the Issuing Bank and the Lenders);
(iv) to confirm in writing the right of Quiet
Enjoyment of licensees pursuant to the terms of Section 8.13;
(v) in connection with an item of Product being
produced by a Credit Party, the principal photography of which is being done
outside the United States, to approve arrangements with such Credit Party as
shall be satisfactory to the Administrative Agent with respect to the temporary
storage of the original negative film, the original sound track materials or
other Physical Materials of such item of Product in a production laboratory
located outside the United States;
(vi) to approve the terms and conditions of any
sale and leaseback or other tax benefit transaction pursuant to Section 6.1
hereof;
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(vii) to enter into and perform its obligations
under the other Fundamental Documents;
(viii) to enter into intercreditor and/or
subordination agreements on terms acceptable to the Administrative Agent with
(A) the unions and/or the guilds with respect to the security interests in favor
of such unions and/or guilds required pursuant to the terms of the collective
bargaining agreements or (B) with Persons who have been granted Liens which are
permitted pursuant to Section 6.2(f) hereof or (C) any licensee or licensor or
co-producer having any rights to any item of Product or (D) Persons providing
any services in connection with any item of Product; and
(ix) to enter into an agreement with the Sellers
substantially in the form of Exhibit O hereto regarding the Excluded Assets and
Box Office Contingent Payments on behalf of the Lenders.
SECTION 12.2 Advances and Payments. (a) On the date of each Loan, (x)
the Administrative Agent shall be authorized (but not obligated) to advance, for
the account of each of the U.S. Dollar Lenders, the amount of the U.S. Dollar
Loan to be made by it in accordance with its Percentage hereunder and (y) the
Canadian Agent shall be authorized (but not obligated) to advance, for the
account of each of the Canadian Dollar Lenders the amount of the Canadian Dollar
Loan to be made by it in accordance with its Percentage hereunder. Each of the
Lenders hereby authorizes and requests the Administrative Agent and the Canadian
Agent, as applicable, to advance for its account, pursuant to the terms hereof,
the amount of the Loan to be made by it, and each of the Lenders agrees
forthwith to reimburse the Administrative Agent and the Canadian Agent, as
applicable, in immediately available funds for the amount so advanced on its
behalf by the Administrative Agent or the Canadian Agent, as applicable. If any
such reimbursement is not made in immediately available funds on the same day on
which the Administrative Agent or the Canadian Agent, as applicable, shall have
made any such amount available on behalf of any Lender, such Lender shall pay
interest to the Administrative Agent or the Canadian Agent, as applicable, at a
rate per annum equal to (x) in the case of the Administrative Agent, the
Administrative Agent's cost of obtaining overnight funds in the New York Federal
Funds Market for the first three days following the time when the Lender fails
to make the required reimbursement, and thereafter at a rate per annum equal to
the Alternate Base Rate plus the Applicable Margin for Alternate Base Rate Loans
and (y) in the case of the Canadian Agent, the cost of obtaining overnight funds
as stated by the Canadian Agent which is applicable to the currency in which
such advance is to be denominated in accordance with market practice. If and to
the extent that any such reimbursement shall not have been made to the
Administrative Agent or the Canadian Agent, as applicable, the Borrowers agree
to repay to the Administrative Agent or the Canadian Agent, as applicable,
forthwith on demand a corresponding amount with interest thereon for each day
from the date such amount is made available to the Borrowers until the date such
amount is repaid to the Administrative Agent or the Canadian Agent, as
applicable, in the case of an Alternate Base Rate Loan, at the Alternate Base
Rate plus the Applicable Margin for Alternate Base Rate Loans, in the case of a
Eurodollar Loan, at the LIBO Rate plus the Applicable Margin for Eurodollar
Loans, and in the case of a Canadian Prime Rate Loan, at the Canadian Prime Rate
plus the Applicable Margin for Canadian Prime Rate Loans.
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(b) As between the Administrative Agent and the Canadian
Agent on one hand and the Lenders on the other hand, any amounts received by the
Administrative Agent and the Canadian Agent in connection with the Fundamental
Documents, the application of which is not otherwise provided for, shall be
applied, first, to pay the accrued but unpaid Commitment Fees in accordance with
each Lender's Percentage, second, to pay accrued but unpaid interest on the Term
Notes in accordance with the amount of outstanding Term Loans owed to each U.S.
Dollar Lenders, third, to pay the principal balance outstanding on the Term
Notes (with amounts payable on the principal balance outstanding on the Term
Notes in accordance with each Lender's percentage) fourth, to pay accrued but
unpaid interest on the Revolving Credit Notes in accordance with the amount of
outstanding Revolving Credit Loans owed to each Lender, fifth, to pay the
principal balance outstanding on the Revolving Credit Notes (with amounts
payable on the principal balance outstanding on the Revolving Credit Notes in
accordance with the amount of outstanding Revolving Credit Loans owed to each
Lender), amounts then due in respect of outstanding Bankers' Acceptances and
unreimbursed draws under the Letter of Credit, sixth, amounts outstanding under
Currency Agreements and Interest Rate Protection Agreements, and seventh, to pay
any other amounts then due under this Credit Agreement. All amounts to be paid
to any Lender by the Administrative Agent or the Canadian Agent, as applicable,
shall be credited to that Lender, after collection by the Administrative Agent
or the Canadian Agent, as applicable, in immediately available funds either by
wire transfer or deposit in such Lender's correspondent account with the
Administrative Agent or the Canadian Agent, as applicable, or as such Lender and
the Administrative Agent or the Canadian Agent, as applicable, shall from time
to time agree.
SECTION 12.3 Sharing of Setoffs, Cash Collateral and Sharing Events.
(a) Each of the Lenders agrees that if it shall, through the exercise of a right
of banker's lien, setoff or counterclaim against any Credit Party (including,
but not limited to, a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of, such
secured claim and received by such Lender under any applicable bankruptcy,
insolvency or other similar law) or otherwise, obtain payment in respect of its
Obligations as a result of which the unpaid portion of its Obligations is
proportionately less than the unpaid portion of Obligations of any of the other
Lenders (a) it shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from such other Lenders a participation in the Obligations
of such other Lenders, so that the aggregate unpaid principal amount of each of
the Lender's Obligations and its participation in Obligations of the other
Lenders shall be in the same proportion to the aggregate unpaid amount of all
remaining Obligations as the amount of its Obligations prior to the obtaining of
such payment was to the amount of all Obligations prior to the obtaining of such
payment and (b) such other adjustments shall be made from time to time as shall
be equitable to ensure that the Lenders share such payment pro rata. If all or
any portion of such excess payment is thereafter recovered from the Lender which
originally received such excess payment, such purchase (or portion thereof)
shall be canceled and the purchase price restored to the extent of such
recovery. The Credit Parties expressly consent to the foregoing arrangements and
agree that any Lender or Lenders holding (or deemed to be holding) a
participation in a Note, Bankers' Acceptance or Letter of Credit may exercise
any and all rights of banker's lien, setoff or counterclaim with respect to any
and all moneys owing by either of the Borrowers to such Lender or Lenders as
fully as if such Lender or Lenders held a Note and was the original obligee
thereon or was the issuer of the Letter of Credit or had accepted such Bankers'
Acceptance, in the amount of such participation.
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(b) Each of the Lenders agrees that if at any time while
a Sharing Event is continuing and an Lender's outstanding Credit Exposure is
proportionately less than its Percentage of the aggregate Commitments hereunder
it shall promptly purchase at par for cash (and shall be deemed to have
thereupon purchased) from such other Lenders a pro rata participation in the
outstanding Credit Exposure of such other Lenders, so that its Credit Exposure
and its participations in the Credit Exposure of the other Lenders shall be
equal to its Percentage of the aggregate Commitments; provided, however, that
with regard to any portion of the Credit Exposure of such other Lenders
attributable to BA Exposure and/or L/C Exposure, the Lender purchasing any pro
rata participations shall be deemed to have purchased a participation in such
portion of the Credit Exposure without providing cash for such portion until any
such Letter of Credit is drawn and/or the maturity date applicable to any such
Bankers' Acceptances.
(c) Once a Sharing Event shall have occurred, it shall
continue in existence (notwithstanding a cure of the underlying Event of Default
upon which such Sharing Event was based) unless terminated by written agreement
of all the Lenders holding outstanding Credit Exposure (including participations
bought in the Credit Exposure of other Lenders pursuant to Section 12.3(b).
SECTION 12.4 Notice to the Lenders. Upon receipt by the Administrative
Agent, the Canadian Agent or the Issuing Bank from any of the Credit Parties of
any communication calling for an action on the part of the Lenders, or upon
notice to the Administrative Agent of any Event of Default, the Administrative
Agent, the Canadian Agent or the Issuing Bank will in turn immediately inform
the other Lenders in writing (which shall include facsimile communications) of
the nature of such communication or of the Event of Default, as the case may be.
SECTION 12.5 Liability of the Administrative Agent, Canadian Agent,
Issuing Bank and Syndication Agent. (a) The Administrative Agent, Canadian
Agent, or the Issuing Bank, when acting on behalf of the Lenders, may execute
any of its duties under this Credit Agreement or the other Fundamental Documents
by or through its officers, agents, or employees and neither the Administrative
Agent, Canadian Agent, the Issuing Bank nor their respective officers, agents or
employees shall be liable to the Lenders or any of them for any action taken or
omitted to be taken in good faith, nor be responsible to the Lenders or to any
of them for the consequences of any oversight or error of judgment, or for any
loss, unless the same shall happen through its gross negligence or willful
misconduct. The Administrative Agent, Canadian Agent, the Issuing Bank and their
respective directors, officers, agents, and employees shall in no event be
liable to the Lenders or to any of them for any action taken or omitted to be
taken by it pursuant to instructions received by it from the Required Lenders or
in reliance upon the advice of counsel selected by it with reasonable care. The
Syndication Agent and its directors, officers, agents and employees shall in no
event be liable to the Lenders or to any of them for any reason whatsoever in
connection with this Agreement. Without limiting the foregoing, neither the
Administrative Agent, the Canadian Agent, the Issuing Bank, the Syndication
Agent nor any of their respective directors, officers, employees, or agents
shall be responsible to any of the Lenders for the due execution, validity,
genuineness, effectiveness, sufficiency, or enforceability of, or for any
statement, warranty, or representation in, or for the perfection of any security
interest contemplated by, this Credit Agreement, any other Fundamental Document
or any
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related agreement, document or order, or for freedom of any of the Collateral or
any of the Pledged Securities from prior Liens or security interests, or shall
be required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Credit Party of any of the terms,
conditions, covenants, or agreements of this Credit Agreement, any other
Fundamental Document, or any related agreement or document.
(b) None of the Administrative Agent, Canadian Agent,
Syndication Agent (each in its capacity as agent for the Lenders), the Issuing
Bank or any of their respective directors, officers, employees, or agents shall
have any responsibility to the Borrowers or any other Credit Party on account of
the failure or delay in performance or breach by any of the Lenders of any of
such Lender's obligations under this Credit Agreement, the other Fundamental
Documents or any related agreement or document or in connection herewith or
therewith. No Lender nor any of its directors, officers, employees or agents
shall have any responsibility to the Borrower or any other Credit Party on
account of the failure or delay in performance or breach by any other Lender of
such other Lender's obligations under this Credit Agreement, the other
Fundamental Documents or any related agreement or document or in connection
herewith or therewith.
(c) The Administrative Agent, the Canadian Agent, each as
agent for the Lenders hereunder and the Issuing Bank in such capacity, shall be
entitled to rely on any communication, instrument, or document believed by it to
be genuine or correct and to have been signed or sent by a Person or Persons
believed by it to be the proper Person or Persons, and it shall be entitled to
rely on advice of legal counsel, independent public accountants, and other
professional advisers and experts selected by it.
SECTION 12.6 Reimbursement and Indemnification. Each of the Lenders
agrees (i) to reimburse the Administrative Agent and the Canadian Agent for such
Lender's Pro Rata Share of any expenses and fees incurred for the benefit of the
Lenders under the Fundamental Documents, including, without limitation, counsel
fees and compensation of agents and employees paid for services rendered on
behalf of the Lenders, and any other expense incurred in connection with the
operations or enforcement thereof not reimbursed by or on behalf of the
Borrower, (ii) to indemnify and hold harmless the Administrative Agent and any
of its directors, officers, employees, or agents, on demand, in accordance with
such Lender's Percentage, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against, it or any of them in any way relating to or arising out
of any Completion Guaranty, the Fundamental Documents or any related agreement
or document, or any action taken or omitted by it or any of them under any
Completion Guaranty, the Fundamental Documents or any related agreement or
document, to the extent not reimbursed by or on behalf of the Borrowers or any
other Credit Party (except such as shall result from its gross negligence or
willful misconduct), (iii) in the case of the U.S. Lenders only, to indemnify
and hold harmless the Issuing Bank and any of its directors, officers,
employees, or agents, on demand, in the amount of its Pro Rata Share, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against it or any
of them in any way relating to or arising out of the issuance of any Letters of
Credit or the failure to issue Letters of Credit if such failure or issuance was
at the
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direction of the Required Revolving Credit Lenders (except as shall result from
the gross negligence or willful misconduct of the Person to be reimbursed,
indemnified or held harmless, as applicable, (iv) in the case of the Canadian
Dollar Lenders only, to indemnify and hold harmless the Canadian Agent and any
of its directors, officers, employees, or Canadian Agents, on demand, in
accordance with each Lender's Percentage, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against it or any of them in any way
relating to or arising out of the Fundamental Documents or any action taken or
omitted by it or any of them under the Fundamental Documents to the extent not
reimbursed by the Borrowers or any other Credit Party (except such as shall
result from its gross negligence or willful misconduct). To the extent
indemnification payments made by the Lenders pursuant to this Section 12.6 are
subsequently recovered by the Administrative Agent, the Canadian Agent or the
Issuing Bank from a Credit Party, the Administrative Agent or the Canadian
Agent, as the case may be, will promptly refund such previously paid indemnity
payments to the Lenders.
SECTION 12.7 Rights of Administrative Agent and Canadian Agent. It is
understood and agreed that each of the Administrative Agent and the Canadian
Agent shall have the same duties, rights and powers as a Lender hereunder
(including the right to give such instructions) as any of the other Lenders and
may exercise such rights and powers, as well as its rights and powers under
other agreements and instruments to which it is or may be party, and engage in
other transactions with any Credit Party or Affiliate thereof, as though it were
not the Administrative Agent or the Canadian Agent of the Lenders under this
Credit Agreement and the other Fundamental Documents.
SECTION 12.8 Independent Investigation by Lenders. Each of the Lenders
acknowledges that it has decided to enter into this Credit Agreement and the
other Fundamental Documents and to make the Loans and participate in the Letters
of Credit hereunder based on its own analysis of the transactions contemplated
hereby and of the creditworthiness of the Credit Parties and agrees that neither
the Administrative Agent nor the Issuing Bank shall bear any responsibility
therefor.
SECTION 12.9 Agreement of Required Lenders. Upon any occasion requiring
or permitting an approval, consent, waiver, election or other action on the part
of the Required Lenders, action shall be taken by the Administrative Agent for
and on behalf of, or for the benefit of, all Lenders upon the direction of the
Required Lenders and any such action shall be binding on all Lenders. No
amendment, modification, consent or waiver shall be effective except in
accordance with the provisions of Section 13.11 hereof.
SECTION 12.10 Notice of Transfer. The Administrative Agent, the
Canadian Agent and the Issuing Bank may deem and treat any Lender which is a
party to this Credit Agreement as the owner of such Lender's respective portions
of the Loans and participations in Letters of Credit for all purposes, unless
and until a written notice of the assignment or transfer thereof executed by any
such Lender shall have been received by the Administrative Agent and become
effective in accordance with Section 13.3 hereof.
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SECTION 12.11 Successor Administrative Agent. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders and the
Borrowers, but such resignation shall not become effective until acceptance by a
successor agent of its appointment pursuant hereto. Upon any such resignation,
the retiring Administrative Agent shall promptly appoint a successor agent from
among the U.S. Dollar Lenders which successor shall be experienced and
sophisticated in entertainment industry lending, provided that such replacement
is reasonably acceptable (as evidenced in writing) to the Required Lenders and
the Borrowers; provided, however, that such approval by the Borrowers shall not
be required at any time when a Default or Event of Default is continuing. If no
successor agent shall have been so appointed by the retiring Administrative
Agent and shall have accepted such appointment, within 30 days after the
retiring agent's giving of notice of resignation, the Borrowers may appoint a
successor agent (which successor may be replaced by the Required Lenders;
provided that such successor is experienced and sophisticated in entertainment
industry lending and reasonably acceptable to the Borrowers), which shall be
either a Lender or a commercial bank organized, licensed, carrying on business
under the laws of the United States of America or of any State thereof and shall
have a combined capital and surplus of at least US$500,000,000 and shall be
experienced and sophisticated in entertainment industry lending. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
agent, such successor agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under this Credit Agreement, the other Fundamental Documents and
any other credit documentation. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Article 12
and Article 13 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Credit Agreement.
SECTION 12.12 Successor Issuing Bank. The Issuing Bank may resign at
any time by giving prior written notice thereof to the Lenders and the
Borrowers, but such resignation shall not become effective until acceptance by a
successor Issuing Bank of its appointment pursuant hereto. Upon any such
resignation, the retiring Issuing Bank shall promptly appoint a successor
Issuing Bank from among the Lenders, provided that such replacement is
reasonably acceptable (as evidenced in writing) to the Required Lenders and the
Borrowers and has a credit rating at least as high as that of the Issuing Bank;
provided, however, that such approval by the Borrowers shall not be required at
any time when a Default or Event of Default is continuing. If no successor
Issuing Bank shall have been so appointed by the retiring Issuing Bank and shall
have accepted such appointment, within 30 days after the retiring Issuing Bank's
giving of notice of resignation, the Borrowers may appoint a successor Issuing
Bank (which successor may be replaced by the Required Lenders; provided that
such successor is reasonably acceptable to the Borrowers), which shall be either
a Lender or a commercial bank organized, licensed, carrying on business under
the laws of the United States of America or of any State thereof and shall have
a combined capital and surplus of at least US$500,000,000. Upon the acceptance
of any appointment as Issuing Bank hereunder by a successor Issuing Bank, such
successor Issuing Bank shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Issuing Bank, and the
retiring Issuing Bank shall be discharged from its duties and obligations under
this Credit Agreement, the other Fundamental Documents and any other credit
documentation, except with respect to Letters of Credit which are outstanding at
the time of the resignation unless the successor Issuing Bank replaces the
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retiring Issuing Bank as the issuing bank on such Letters of Credit. The
Borrowers and each Lender hereby agrees that each will use its commercially
reasonable efforts to replace any such outstanding Letters of Credit issued by
the retiring Issuing Bank. After any retiring Issuing Bank's resignation
hereunder as Issuing Bank, the provisions of this Article 12 and Article 13
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Issuing Bank under this Credit Agreement.
SECTION 12.13 Successor Canadian Agent. The Canadian Agent may resign
at any time by giving written notice thereof to the Lenders and the Borrowers,
but such resignation shall not become effective until acceptance by a successor
agent of its appointment pursuant hereto. Upon any such resignation, the
retiring Canadian Agent shall promptly appoint a successor agent from among the
Canadian Dollar Lenders which successor shall be experienced and sophisticated
in entertainment industry lending, provided that such replacement is reasonably
acceptable (as evidenced in writing) to the Required Lenders and the Borrowers;
provided, however, that such approval by the Borrowers shall not be required at
any time when a Default or Event of Default is continuing. If no successor agent
shall have been so appointed by the retiring Canadian Agent and shall have
accepted such appointment, within 30 days after the retiring agent's giving of
notice of resignation, the Borrowers may appoint a successor agent (which
successor may be replaced by the Required Lenders; provided that such successor
is experienced and sophisticated in entertainment industry lending and
reasonably acceptable to the Borrowers), which shall be either a Lender or a
commercial bank organized under the laws of Canada and carrying on business in
Canada and shall have a combined capital and surplus of at least US$500,000,000
and shall be experienced and sophisticated in entertainment industry lending.
Upon the acceptance of any appointment as Canadian Agent hereunder by a
successor agent, such successor agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Canadian Agent, and the retiring Canadian Agent shall be discharged from its
duties and obligations under this Credit Agreement, the other Fundamental
Documents and any other credit documentation. After any retiring Canadian
Agent's resignation hereunder as Canadian Agent, the provisions of this Article
12 and Article 13 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Canadian Agent under this Credit Agreement.
SECTION 12.14 Quebec Power of Attorney. For the purposes of holding any
security granted by any of the Credit Parties pursuant to the laws of the
Province of Quebec, the Administrative Agent shall be the holder of an
irrevocable power of attorney for itself, the Canadian Agent and the Issuing
Bank, and all present and future lenders. By executing an Assignment and
Acceptance, any future Lender shall be deemed to ratify the power of attorney
granted to the Administrative Agent hereunder. The Lenders, the Canadian Agent,
the Issuing Bank, JPMorgan Chase Bank and the other Banking Service Providers
(herein acting through The Chase Manhattan Bank), and the Credit Parties agree
that notwithstanding Section 32 of the Act respecting the Special Powers of
Legal Persons (Quebec), the Administrative Agent may, as the person holding the
power of attorney of the Lenders, the Canadian Agent, the Issuing Bank and the
Banking Service Providers, acquire any debentures or other title of indebtedness
secured by any hypothec granted by any of the Credit Parties to the
Administrative Agent pursuant to the laws of the Province of Quebec.
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13. MISCELLANEOUS
SECTION 13.1 Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered or mailed (or if by facsimile
communications equipment, delivered by such equipment) addressed, (a) if to the
Administrative Agent, the Issuing Bank or JPMorgan Chase Bank, to it at 1166
Avenue of the Xxxxxxxx, 00xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attn: Xxxxxxx
Xxxxxxx, Facsimile No.: (000) 000-0000 with a copy to JPMorgan Chase Securities
Inc., 1999 Avenue of the Stars, 00xx xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attn:
Xxxxxxx Xxxxxx, Facsimile No.: (000) 000-0000, and to JPMorgan Chase Bank, Loans
and Agency Services Group, 0000 Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attn.:
Xxxxx Xxxxxxx, Facsimile No.: 000-000-0000, or (b) if to any Credit Party to it
at Lions Gate Entertainment Corp., 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxx
Xxx, XX, 00000, Attn: Xxxxx Xxxxx, Facsimile No.: 000-000-0000, or (c) if to the
Canadian Agent to it at Xxxxx Xxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx, X0X 0X0, Xxxxxx,
Attn: Xxxxxxxxx Xxxx, Facsimile No.: (000) 000-0000, or (d) if to a Lender, to
it at its address set forth on the signature pages hereto, or such other address
as such party may from time to time designate by giving written notice to the
other parties hereunder. Any failure of the Administrative Agent, the Canadian
Agent or a Lender giving notice pursuant to this Section 13.1, to provide a
courtesy copy to a party as provided herein, shall not affect the validity of
such notice. All notices and other communications given to any party hereto in
accordance with the provisions of this Credit Agreement shall be deemed to have
been given on the fifth Business Day after the date when sent by registered or
certified mail, postage prepaid, return receipt requested, if by mail, or upon
receipt by such party, if by any telegraphic or facsimile communications
equipment, in each case addressed to such party as provided in this Section 13.1
or in accordance with the latest unrevoked written direction from such party.
SECTION 13.2 Survival of Agreement, Representations and Warranties,
etc. All warranties, representations and covenants made by any of the Credit
Parties herein, in any other Fundamental Document or in any certificate or other
instrument delivered by it or on its behalf in connection with this Credit
Agreement or any other Fundamental Document shall be considered to have been
relied upon by the Administrative Agent, Canadian Agent, Syndication Agent,
Issuing Bank and the Lenders and, except for any terminations, amendments,
modifications or waivers thereof in accordance with the terms hereof, shall
survive the making of the Loans and the issuance of the Letters of Credit herein
contemplated and the execution and delivery to the Administrative Agent of the
Notes regardless of any investigation made by the Administrative Agent, Canadian
Agent, Syndication Agent, Issuing Bank or the Lenders or on their behalf and
shall continue in full force and effect so long as any Obligation is outstanding
and unpaid and so long as any Letter of Credit remains outstanding and so long
as the Commitments have not been terminated. All statements in any such
certificate or other instrument shall constitute representations and warranties
by the Credit Parties hereunder.
SECTION 13.3 Successors and Assigns; Syndications; Loan Sales;
Participations.
(a) Whenever in this Credit Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; provided, however, that neither any Borrower nor any
other Credit Party may assign its rights hereunder
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without the prior written consent of the Administrative Agent, the Canadian
Agent, the Issuing Bank and all of the Lenders, and all covenants, promises and
agreements by or on behalf of any of the Credit Parties which are contained in
this Credit Agreement shall inure to the benefit of the successors and assigns
of the Administrative Agent, the Issuing Bank and the Lenders.
(b) Each of the Lenders may (but only with the prior
written consent of the Administrative Agent, the Canadian Agent (with respect to
the Canadian Dollar Lenders only) and the Issuing Bank, which consent shall not
be unreasonably withheld or delayed) assign all or a portion of its interests,
rights and obligations under this Credit Agreement (including, without
limitation, all or a portion of its Commitment and the same portion of all Loans
at the time owing to it and the Notes held by it and its obligations and rights
with regard to Letters of Credit); provided, however, that (i) each assignment
shall be of a constant, and not a varying, percentage of the assigning Lender's
interests, rights and obligations under this Credit Agreement, (ii) each
assignment shall be in a minimum Commitment amount (or at any time after the
Commitment Termination Date, minimum Loan amount) of at least US$5,000,000 for
Revolving Credit Commitments and US$1,000,000 for Term Loan Commitments unless,
in either case, each of the Borrowers and the Administrative Agent otherwise
consent, provided that no such consent of the Borrowers shall be required if an
Event of Default has occurred and is continuing, (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with the assigning Lender's original Note and a processing
and recordation fee of US$3,500 to be paid to the Administrative Agent (or to
the Canadian Agent with respect to assignments by the Canadian Dollar Lenders)
by the assigning Lender or the assignee prior to an Event of Default hereunder,
such an assignment shall be (x) to an Eligible U.S. Assignee in the case of an
assignment by a U.S. Dollar Lender and (y) to an Eligible Canadian Assignee in
the case of an assignment by a Canadian Dollar Lender. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall not (unless
otherwise agreed to by the Administrative Agent) be earlier than five Business
Days after the date of acceptance and recording by the Administrative Agent, (x)
the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and under the other Fundamental Documents and shall be bound by the
provisions hereof and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Credit Agreement except that,
notwithstanding such assignment, any rights and remedies available to the
Borrowers for any breaches by such assigning Lender of its obligations hereunder
while a Lender shall be preserved after such assignment and such Lender shall
not be relieved of any liability to the Borrowers due to any such breach. In the
case of an Assignment and Acceptance covering all or the remaining portion of
the assigning Lender's rights and obligations under this Credit Agreement, such
assigning Lender shall cease to be a party hereto.
(c) Each Lender may at any time make an assignment of its
interests, rights and obligations under this Credit Agreement, without the
consent of the Administrative Agent, the Issuing Bank or the Credit Parties, to
(i) any Affiliate of such Lender or (ii) any other Lender hereunder; provided
that after giving effect to such assignment, the assignee's Percentage shall not
exceed 10% of the aggregate amount of all Commitments then outstanding
hereunder. Any such assignment to any Affiliate of the assigning Lender or any
other Lender hereunder shall not
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be subject to the requirements of Section 13.3(b) that (x) that the amount of
the Commitment (or Loans if applicable) of the assigning Lender subject to each
assignment be in a minimum principal amount of US$5,000,000 for Revolving Credit
Commitments and US$1,000,000 for Term Loan Commitments and (y) the payment of a
processing and recordation fee and any such assignment to any Affiliate of the
assigning Lender shall not release the assigning Lender of its remaining
obligations hereunder, if any.
(d) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned thereby and that such interest is free and clear
of any adverse claim, the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or any other
Fundamental Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Fundamental Documents or any other
instrument or document furnished pursuant hereto or thereto; (ii) such assignor
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any of the Credit Parties or the
performance or observance by any of the Credit Parties of any of their
obligations under the Fundamental Documents or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Credit Agreement, together with copies of the most recent financial
statements delivered pursuant to Sections 5.1(a) and 5.1(b) (or if none of such
financial statements shall have then been delivered, then copies of the
financial statements referred to in Section 3.5 hereof) and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee agrees
that it will, independently and without reliance upon the assigning Lender, the
Administrative Agent, the Issuing Bank 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 action under this Credit
Agreement or any other Fundamental Document; (v) such assignee appoints and
authorizes the Administrative Agent, the Canadian Agent, and the Issuing Bank to
take such action as the agent on its behalf and to exercise such powers under
this Credit Agreement as are delegated to the Administrative Agent, the Canadian
Agent, or the Issuing Bank by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will be
bound by the provisions of this Credit Agreement and will perform in accordance
with their terms all of the obligations which by the terms of this Credit
Agreement are required to be performed by it as a Lender.
(e) The Administrative Agent shall maintain at its
address at which notices are to be given to it pursuant to Section 13.1 a copy
of each Assignment and Acceptance and a register for the recordation of the
names and addresses of the Lenders and the Commitments of, and principal amount
of the Loans owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Credit Parties, the Administrative Agent, the Issuing Bank and the
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of the Fundamental Documents. The Register shall be
available for inspection by any Credit Party or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
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(f) Subject to the foregoing, upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and an assignee
together with the assigning Lender's original Note and the processing and
recordation fee, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in the form of Exhibit J hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt written notice thereof to the Borrowers.
Within five (5) Business Days after receipt of the notice, the Borrowers, at
their own expense, shall execute and deliver to the Administrative Agent, in
exchange for the surrendered Note, a new Note to the order of such assignee in
an amount equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and if the assigning Lender has retained a Commitment hereunder a new
Note to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Note and shall
otherwise be in substantially the form of Exhibit A-1 or Exhibit A-2, as
applicable. In addition the Credit Parties will promptly, at their own expense,
execute such amendments to the Fundamental Documents to which each is a party
and such additional documents, and take such other actions as the Administrative
Agent or the assignee Lender may reasonably request in order to give such
assignee Lender the full benefit of the Liens contemplated by the Fundamental
Documents.
(g) Each of the Lenders may, without the consent of any
of the Credit Parties or the Administrative Agent or the other Lenders, sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Credit Agreement (including, without
limitation, all or a portion of its Commitment and the Loans owing to it and the
Note or Notes held by it and its participation in Letters of Credit); provided,
however, that (i) any such Lender's obligations under this Credit Agreement
shall remain unchanged, (ii) such participant shall not be granted any voting
rights or any right to control the vote of such Lender under this Credit
Agreement, except with respect to proposed changes to interest rates, amount of
Commitments, final maturity of any Loan, releases of all or substantially all
the Collateral and fees (as applicable to such participant), (iii) any such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participating banks or other entities
shall be entitled to the cost protection provisions contained in Sections 2.12,
2.13, 2.14 and 12.3 hereof but a participant shall not be entitled to receive
pursuant to such provisions an amount larger than its share of the amount to
which the Lender granting such participation would have been entitled to receive
and (v) the Credit Parties, the Administrative Agent the Canadian Agent, and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's and its participants' rights and obligations under
this Credit Agreement.
(h) A Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
13.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to any of the Credit Parties furnished to
the Administrative Agent or such Lender by or on behalf of the Borrowers;
provided that prior to any such disclosure, each such assignee or participant or
proposed assignee or participant shall agree, by executing a confidentiality
letter substantially in the form of Exhibit O hereto to preserve the
confidentiality of any confidential information relating to any of the Credit
Parties received from such Lender.
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(i) Any assignment pursuant to paragraph (b) or
(c) of this Section 13.3 shall constitute an amendment of the Schedule of
Commitments as of the effective date of such assignment.
(j) The Credit Parties consents that any Lender
may at any time and from time to time pledge or otherwise grant a security
interest in any Loan or in any Note evidencing the Loans (or any part thereof)
to any Federal Reserve Bank.
SECTION 13.4 Expenses; Documentary Taxes. Whether or not the
transactions hereby contemplated shall be consummated, the Borrowers agree to
pay (a) all reasonable out-of-pocket expenses incurred by the Administrative
Agent or JPMorgan Securities Inc. in connection with, or growing out of, the
performance of due diligence, the syndication of the credit facility
contemplated hereby, the negotiation, preparation, execution, delivery, waiver
or modification and administration of this Credit Agreement and any other
documentation contemplated hereby, the making of the Loans and the issuance of
the Letters of Credit, the Collateral, the Pledged Securities, any Fundamental
Document or any Completion Guaranty for an item of Product, including but not
limited to, the reasonable out-of-pocket costs and internally allocated charges
of audit or field examinations of the Administrative Agent in connection with
the administration of this Credit Agreement, the verification of financial data
and the transactions contemplated hereby, and the reasonable fees and
disbursements of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for the Administrative
Agent and the Issuing Bank and any other counsel that the Administrative Agent
or the Issuing Bank shall retain, and (b) all reasonable out-of-pocket expenses
incurred by the Administrative Agent, the Canadian Agent, the Issuing Bank or
the Lenders in the enforcement or protection (as distinguished from
administration) of the rights and remedies of the Issuing Bank or the Lenders in
connection with this Credit Agreement, the other Fundamental Documents, the
Letters of Credit or the Notes, or as a result of any transaction, action or
non-action arising from any of the foregoing, including but not limited to, the
reasonable fees and disbursements of any counsel for the Administrative Agent,
the Canadian Agent, the Issuing Bank or the Lenders. Such payments shall be made
on the date this Credit Agreement is executed by the Borrowers and thereafter on
demand. The Borrowers agree that they shall indemnify the Administrative Agent,
the Canadian Agent, the Issuing Bank and the Lenders from and hold them harmless
against any documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution and delivery of this Credit Agreement or
the Notes or the issuance of the Letters of Credit. The obligations of the
Borrowers under this Section shall survive the termination of this Credit
Agreement, the payment of the Loans and/or the expiration of any Letter of
Credit.
SECTION 13.5 Indemnification of the Administrative Agent, the Issuing
Bank and the Lenders. The Borrowers agree (a) to indemnify and hold harmless the
Administrative Agent, the Canadian Agent, the Issuing Bank and the Lenders and
their respective directors, officers, employees, trustees and agents (each, an
"Indemnified Party") (to the full extent permitted by Applicable Law) from and
against any and all claims, demands, losses, judgments and liabilities
(including liabilities for penalties) of whatsoever nature, and (b) to pay to
the Indemnified Parties an amount equal to the amount of all costs and expenses,
including reasonable legal fees and disbursements, and with regard to both (a)
and (b) growing out of or resulting from any litigation, investigation or other
proceedings relating to the Collateral, this Credit Agreement, the other
Fundamental Documents and the Letters of Credit, the making of
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the Loans, any attempt to audit, inspect, protect or sell the Collateral, or the
administration and enforcement or exercise of any right or remedy granted to the
Administrative Agent, the Canadian Agent, the Issuing Bank or Lenders hereunder
or thereunder but excluding therefrom all claims, demands, losses, judgments,
liabilities, costs and expenses arising out of or resulting from (i) the gross
negligence or willful misconduct of an Indemnified Party, (ii) litigation or
claims among Indemnified Parties in connection with the Fundamental Documents or
in any way relating to the transactions contemplated hereby and (iii) claims
asserted or litigation commenced against any of the any Indemnified Party by a
Credit Party in which the Credit Party is the prevailing party. The foregoing
indemnity agreement includes any reasonable costs incurred by any Indemnified
Party in connection with any action or proceeding which may be instituted in
respect of the foregoing by any Indemnified Party, or by any other Person either
against the Lenders or in connection with which any officer, director, agent or
employee of any Indemnified Party is called as a witness or deponent, including,
but not limited to, the reasonable fees and disbursements of Xxxxxx, Xxxxx &
Xxxxxxx LLP, counsel to the Administrative Agent and the Issuing Bank, and any
out-of-pocket costs incurred by any Indemnified Party in appearing as a witness
or in otherwise complying with legal process served upon them. Except as
otherwise required by Applicable Law which may not be waived, the Lenders shall
not be liable to the Borrowers for any matter or thing in connection with this
Credit Agreement other than their express obligations hereunder, including
obligations to make Loans and account for moneys actually received by them in
accordance with the terms hereof.
Whenever the provisions of this Credit Agreement or any other
Fundamental Document provide that, if any Credit Party shall fail to do any act
or thing which it has covenanted to do hereunder, the Administrative Agent, or
the Canadian Agent, may (but shall not be obligated to) do the same or cause it
to be done or remedy any such breach and if the Administrative Agent does the
same or causes it to be done, there shall be added to the Obligations hereunder
the cost or expense incurred by the Administrative Agent or the Canadian Agent
in so doing, and any and all amounts expended by the Administrative Agent or the
Canadian Agent in taking any such action shall be repayable to it upon its
demand therefor and shall (x) for advances made by the Administrative Agent,
bear interest at 2% in excess of the Alternate Base Rate and (y) for advances
made by the Canadian Agent bear interest at 2% in excess of the Canadian Prime
Rate, from time to time in effect from the date advanced to the date of
repayment.
All indemnities contained in this Section 13.5 shall survive
the expiration or earlier termination of this Credit Agreement and shall inure
to the benefit of any Person who was a Lender notwithstanding such Person's
assignment of all its Loans and Commitments as to any actions taken or omitted
to be taken by it while it was a Lender.
SECTION 13.6 CHOICE OF LAW. THIS CREDIT AGREEMENT AND THE
NOTES SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK WHICH ARE APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING TO
INTEREST RATES, ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. EACH LETTER
OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OR
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RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE
DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS,
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 AS ADOPTED OR AMENDED FROM
TIME TO TIME (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE
UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 13.7 WAIVER OF JURY TRIAL. TO THE EXTENT NOT
PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY
WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT
OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE,
CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, ANY OTHER FUNDAMENTAL DOCUMENT OR
THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO
ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THE
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH
OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS
CREDIT AGREEMENT AND ANY OTHER FUNDAMENTAL DOCUMENT. ANY PARTY MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 13.7 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF ANY OTHER PARTY TO THE WAIVER OF ITS RIGHTS TO TRIAL
BY JURY.
SECTION 13.8 WAIVER WITH RESPECT TO DAMAGES. EACH CREDIT PARTY
ACKNOWLEDGES THAT NEITHER THE ADMINISTRATIVE AGENT, THE CANADIAN AGENT, THE
ISSUING BANK NOR ANY LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY
DUTY TO, ANY CREDIT PARTY ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT
AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENT AND THE RELATIONSHIP BETWEEN THE
ADMINISTRATIVE AGENT, THE CANADIAN AGENT, THE ISSUING BANK AND THE LENDERS, ON
THE ONE HAND, AND THE CREDIT PARTIES, ON THE OTHER HAND, IN CONNECTION THEREWITH
IS SOLELY THAT OF DEBTOR AND CREDITOR. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NO CREDIT PARTY SHALL ASSERT, AND EACH CREDIT PARTY HEREBY WAIVES, ANY
CLAIMS AGAINST THE ADMINISTRATIVE AGENT, THE ISSUING BANK, THE CANADIAN AGENT,
AND THE LENDERS ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL
OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN
CONNECTION WITH, OR AS A RESULT OF, THIS CREDIT AGREEMENT, ANY FUNDAMENTAL
DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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SECTION 13.9 No Waiver. No failure on the part of the Administrative
Agent, the Canadian Agent, or any Lender or the Issuing Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder, under the Notes or
any other Fundamental Document or with regard to any Letter of Credit shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 13.10 Extension of Payment Date. Except as otherwise
specifically provided in Article 2 hereof, should any payment or prepayment of
principal of or interest on the Notes or any other amount due hereunder, become
due and payable on a day other than a Business Day, the due date of such payment
or prepayment shall be extended to the next succeeding Business Day and, in the
case of a payment or prepayment of principal, interest shall be payable thereon
at the rate herein specified during such extension.
SECTION 13.11 Amendments, etc. No modification, amendment or waiver of
any provision of this Credit Agreement or any other Fundamental Document, and no
consent to any departure by the Borrowers herefrom or therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Required Lenders and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given; provided, however, that
no such modification, waiver, consent or amendment shall, without the written
consent of (a) each affected Lender, (i) change the Commitment of such Lender,
(ii) reduce the interest payable on such Lender's Loans, (iii) alter the
principal amount of any Loan, (iv) reduce the rate at which the Commitment Fees
are payable to such Lender or (v) reduce the fees payable with respect to
Letters of Credit issued hereunder as set forth in Section 2.6(f)(i) or (vi)
reduce the Acceptance Fee payable hereunder; (b) all Lenders, (i) amend or
modify any provision of this Credit Agreement, if any, which expressly provides
for the unanimous consent or approval of the Lenders, (ii) release a substantial
portion of the Collateral or any of the Pledged Securities (except as
contemplated herein) or release any Guarantor from its obligations hereunder,
(iii) extend the Maturity Date, (iv) amend the definition of "Required Lenders,"
(v) amend the definition of "Collateral" (and defined terms used in the
definition of Collateral), (vi) amend or modify Section 2.1(c), 2.2, 2.3(b),
2.13(d), 2.6(a)(i), 2.6(i) or this Section 13.11 and (vii) increase the advance
rates of any components or add any new components to the Borrowing Base; and (c)
all the Required Revolving Credit Lenders, amend or modify the definition of
"Required Revolving Credit Lenders". No such amendment or modification may
adversely affect the rights and obligations of the Administrative Agent
hereunder without its prior written consent or the rights and obligations of the
Issuing Bank without its prior written consent. No notice to or demand on the
Borrowers shall entitle the Borrowers to any other or further notice or demand
in the same, similar or other circumstances. Each holder of a Note shall be
bound by any amendment, modification, waiver or consent authorized as provided
herein, whether or not such Note shall have been marked to indicate such
amendment, modification, waiver or consent and any consent by any holder of a
Note shall bind any Person subsequently acquiring such Note, whether or not such
Note is so marked.
SECTION 13.12 Severability. Any provision of this Credit Agreement or
of the Notes which is invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without invalidating
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the remaining provisions hereof, and any such invalidity, illegality or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13.13 SERVICE OF PROCESS. EACH PARTY HERETO (EACH A "SUBMITTING
PARTY") HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF
THE STATE OF NEW YORK IN NEW YORK COUNTY AND TO THE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF
ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS CREDIT
AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE LETTERS OF CREDIT), THE SUBJECT
MATTER HEREOF, ANY OTHER FUNDAMENTAL DOCUMENT AND THE SUBJECT MATTER THEREOF.
EACH SUBMITTING PARTY TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY
WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE,
IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS,
ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS,
THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS CREDIT AGREEMENT, THE
SUBJECT MATTER HEREOF, THE OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER
THEREOF (AS APPLICABLE) MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY
WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED BY THE
ADMINISTRATIVE AGENT OR A LENDER IN STATE COURT TO FEDERAL COURT, AND (C) HEREBY
WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR
COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM
THE SAME SUBJECT MATTER. EACH SUBMITTING PARTY HEREBY CONSENTS TO SERVICE OF
PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT
TO SECTION 13.1 HEREOF. EACH SUBMITTING PARTY AGREES THAT ITS SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS
BENEFIT OF EACH OF THE OTHER SUBMITTING PARTIES. FINAL JUDGMENT AGAINST ANY
SUBMITTING PARTY IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND
MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON
THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF
THE FACT AND OF THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY
THEREIN DESCRIBED OR (Y) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS
OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT,
THE ISSUING BANK OR A LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER
JUDICIAL PROCEEDINGS AGAINST A SUBMITTING PARTY OR ANY OF ITS ASSETS IN ANY
XXXXX XX XXXXXXX XXXXX XX XXX XXXXXX XXXXXX OR OF ANY COUNTRY OR PLACE WHERE THE
SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.
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SECTION 13.14 Headings. Section headings used herein and the Table of
Contents are for convenience only and are not to affect the construction of or
be taken into consideration in interpreting this Credit Agreement.
SECTION 13.15 Execution in Counterparts. This Credit Agreement may be
executed in any number of counterparts, each of which shall constitute an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 13.16 Subordination of Intercompany Indebtedness, Receivables
and Advances. (a) Each Credit Party hereby agrees that any intercompany
Indebtedness or other intercompany receivables or intercompany advances of any
other Credit Party, directly or indirectly, in favor of such Credit Party of
whatever nature at any time outstanding shall be completely subordinate in right
of payment to the prior payment in full of the Obligations, and that no payment
on any such Indebtedness, receivable or advance shall be made (i) except
intercompany receivables and intercompany advances permitted pursuant to the
terms hereof may be repaid and intercompany Indebtedness permitted pursuant to
the terms hereof may be repaid, in each case so long as no Default or Event of
Default, shall have occurred and be continuing and (ii) except as specifically
consented to by all the Lenders in writing, until the prior payment in full of
all the Obligations and termination of the Commitments.
(b) In the event that any payment on any such
Indebtedness shall be received by such Credit Party other than as permitted by
Section 13.17(a) before payment in full of all Obligations and termination of
the Commitments, such Credit Party shall receive such payments and hold the same
in trust for, segregate the same from its own assets and shall immediately pay
over to, the Administrative Agent on behalf of itself, the Issuing Bank and the
Lenders all such sums to the extent necessary so that the Administrative Agent,
the Issuing Bank and the Lenders shall have been paid all Obligations owed or
which may become owing.
SECTION 13.17 Entire Agreement. This Credit Agreement (including the
Exhibits and Schedules hereto) represents the entire agreement of the parties
with regard to the subject matter hereof and the terms of any letters and other
documentation entered into between any of the parties hereto (other than the Fee
Letter) prior to the execution of this Credit Agreement which relate to Loans to
be made or the Letters of Credit to be issued hereunder shall be replaced by the
terms of this Credit Agreement.
SECTION 13.18 Transition. Each of the Lenders whose name appears on the
Schedule of Commitments attached hereto as Schedule 1 acknowledges and agrees
that, upon execution of this Credit Agreement, each of the Lenders who was a
party to the Existing Credit Agreement but is not listed on the Schedule of
Commitments hereto shall (i) be paid the full amount of principal and interest
outstanding on its Loans and (ii) relinquish its rights and be released from its
obligations under this Credit Agreement. The parties hereto confirm that this
Existing Credit Agreement shall not constitute novation of the Existing Credit
Agreement and all hypothecs, debentures, debenture pledge agreements, guarantees
and all other Security interests granted in favour of the Administrative Agent
and the Lenders pursuant to the Existing Credit Agreement shall continue to
remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed as of the day and the year first written.
BORROWERS:
LIONS GATE ENTERTAINMENT CORP.
By _________________________________________
Name:
Title:
LIONS GATE ENTERTAINMENT INC.
By _________________________________________
Name:
Title:
GUARANTORS:
408376 B.C. LIMITED
AM PSYCHO PRODUCTIONS, INC.
ATTRACTION PRODUCTIONS LLC
BLUE PRODUCTIONS INC.
CINEPIX ANIMATION INC./ANIMATION CINEPIX
INC.
CINEPIX FILMS INC./FILMS CINEPIX INC.
CONFIDENCE PRODUCTIONS, INC.
COVEN PRODUCTIONS CORP.
CUBE FORWARD PRODUCTIONS CORP.
DEAD ZONE PRODUCTION CORP.
FINAL CUT PRODUCTIONS CORP.
FIVE DAYS PRODUCTIONS CORP.
FRAILTY PRODUCTIONS, INC.
HIGH CONCEPT PRODUCTIONS INC.
HYPERCUBE PRODUCTIONS CORP.
KING OF THE WORLD PRODUCTIONS LLC
LG PICTURES INC.
LIONS GATE FILMS CORP.
LIONS GATE FILMS DEVELOPMENT CORP.
LIONS GATE FILMS INC.
LIONS GATE FILMS PRODUCTIONS
CORP./PRODUCTIONS FILMS LIONS GATE
S.A.R.F.
LIONS GATE MUSIC CORP.
LIONS GATE RECORDS, INC.
LIONS GATE STUDIO MANAGEMENT LTD.
LIONS GATE TELEVISION CORP.
LIONS GATE TELEVISION (ONTARIO) CORP.
LIONS GATE TELEVISION DEVELOPMENT LLC
LIONS GATE TELEVISION INC.
LUCKY 7 PRODUCTIONS CORP.
MISSING PRODUCTIONS CORP.
MISSING PRODUCTIONS I CORP.
M WAYS PRODUCTIONS CORP.
M WAYS II PRODUCTIONS CORP.
PLANETARY PRODUCTIONS, LLC
PRESSURE PRODUCTIONS CORP.
PRISONER OF LOVE PRODUCTIONS CORP.
PROFILER PRODUCTIONS CORP.
PSYCHO PRODUCTIONS SERVICES CORP.
SHUTTERSPEED PRODUCTIONS CORP.
TERRESTRIAL PRODUCTIONS CORP.
VOID PRODUCTIONS CORP.
WRITERS ON THE WAVE
3F SERVICES, INC.
ARIMA INC.
ARTISAN ENTERTAINMENT INC.
ARTISAN FILMED PRODUCTIONS, INC.
ARTISAN HOME ENTERTAINMENT INC.
ARTISAN MUSIC INC.
ARTISAN PICTURES INC.
ARTISAN RELEASING INC.
ARTISAN TELEVISION INC.
BD OPTICAL MEDIA, INC.
BL DISTRIBUTION CORP.
CAVE PRODUCTIONS, INC.
FHCL, LLC
FILM HOLDINGS CO.
FUSION PRODUCTIONS, INC.
LANDSCAPE ENTERTAINMENT CORP.
POST PRODUCTION, INC.
PUNISHER PRODUCTIONS, INC.
SCREENING ROOM, INC.
SILENT DEVELOPMENT CORP.
VESTRON INC.
By: ________________________________________
Name:
Title:
XXXXX WITCH FILM PARTNERS LTD.
By: Artisan Filmed Productions Inc.
Its: General Partner
By: _______________________________
Name:
Title:
LENDERS:
JPMORGAN CHASE BANK,
individually and as Administrative Agent
By: ________________________________________
Name:
Title:
Address: 1166 Avenue of the Xxxxxxxx,
00xx xxxxx Xxx Xxxx,
XX 00000-0000
Attention: Xxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Schedule 1.1
Schedule of Commitments
Schedule 1.2
Acceptable Obligors/Allowable Amounts
Schedule 1.3
Guarantors
Schedule 1.4
Pay Television Formula
SHOWTIME DEAL
For Qualifying Pictures:
- $300,000 in U.S. direct media costs qualifies for $350,000 minimum license
fee*
- All Qualifying Pictures must meet a minimum of $5,000,000 in U.S. P&A costs
(including a minimum of $3,000,000 in U.S. direct media costs) to qualify
for license fees above the minimum, according to the schedule below.
- Up to 6 Qualifying Pictures per year, as designated by Lions Gate, will be
exempted from the $5,000,000 P&A requirement for earning license fees above
the minimum provided the Pictures meet the required spend of $300,000 in
U.S. direct media costs.
DOMESTIC THEATRICAL RENTALS LICENSE FEE FORMULA
$ 0 - 466,667 $350,000
$ 466,668 - 5,000,000 75% of U.S. film rentals
$ 5,000,000 - 10,000,000 65% of U.S. film rentals
$ 10,000,001 - 15,000,000 45% of U.S. film rentals
$ 15,000,001 - 30,000,000 25% of U.S. film rentals
$ 30,000,001 - 53,076,920 13% of U.S. film rentals
$ 53,076,920 plus $16,000,000
* Minimum license fee for DV pictures (shot in digital video) is $175,000
unless production
Schedule 1.5
Home Video Formula
LIONS GATE VIDEO GRID
Box Office Level Credit
---------------------------------------------------------------
- $ 999,000 $ 250,000
$ 1,000,000 $ 2,499,000 $ 1,000,000
$ 2,500,000 $ 4,999,000 $ 1,500,000
$ 5,000,000 $ 9,999,000 $ 2,500,000
$10,000,000 $14,999,000 $ 4,000,000
$15,000,000 $19,999,000 $ 6,000,000
$20,000,000 $29,999,000 $ 7,000,000
$30,000,000 $39,999,000 $ 8,000,000
$40,000,000 $59,999,000 $10,000,000
$60,000,000 $79,999,000 $12,000,000
$80,000,000 plus $15,000,000
Schedule 3.1(a)
List of Jurisdictions
Schedule 3.7(a)
Credit Parties/Pledged Securities
Schedule 3.7(b)
Beneficial Interests
Schedule 3.7(c)
Inactive Subsidiaries
Schedule 3.7(d)
Unrestricted Subsidiaries
Schedule 3.8(a)(i)
All Items of Product
Schedule 3.8(a)(i)(ii)
Items of Product: Copyrights
Schedule 3.8(b)
Trademarks
Schedule 3.9
Fictitious Names
Corporate Name
Fictitious Name
Schedule 3.11
Chief Executive Office, Location of Collateral and Records
Schedule 3.12
Litigation
Schedule 3.17
Agreements
Schedule 3.18
Filing Offices for UCC-1 and PPSA Financing Statements
Schedule 3.22
Outstanding Right re Pledged Securities
Schedule 3.24
Real Properties
Schedule 6.1
Existing Indebtedness
Schedule 6.2
Existing Liens
Schedule 6.3
Existing Guaranties
Schedule 6.4
Existing Investments
Schedule 6.26
Bank Accounts
