EXHIBIT 10.20
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CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT
DATED AS OF SEPTEMBER 25, 2000
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
THE CHASE MANHATTAN BANK,
AS ADMINISTRATIVE AGENT
AND
AS ISSUING BANK
AND
NATIONAL BANK OF CANADA
AS CANADIAN FACILITY AGENT
AND
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
AS SYNDICATION AGENT
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS.............................................................................................2
2. THE LOANS..............................................................................................36
SECTION 2.1 U.S. Dollar Loans................................................................36
SECTION 2.2 Canadian Dollar Loans............................................................39
SECTION 2.3 Bankers' Acceptances.............................................................41
SECTION 2.4 Notes; Repayment.................................................................44
SECTION 2.5 Letters of Credit................................................................45
SECTION 2.6 Interest.........................................................................50
SECTION 2.7 Commitment Fee and Other Fees....................................................50
SECTION 2.8 Termination and/or Reduction of the Commitments..................................51
SECTION 2.9 Default Interest; Alternate Rate of Interest.....................................52
SECTION 2.10 Continuation and Conversion of Loans and Bankers' Acceptances....................53
SECTION 2.11 Prepayment of Loans and Bankers' Acceptances; Reimbursement of Lenders...........55
SECTION 2.12 Change in Circumstances..........................................................58
SECTION 2.13 Change in Legality...............................................................61
XXXXXXX 0.00 Xxxxxx Xxxxxx Withholding........................................................61
SECTION 2.15 Foreign Currency Conversion; Withholding.........................................64
SECTION 2.16 Interest Act (Canada)............................................................65
SECTION 2.17 Interest Adjustments.............................................................65
SECTION 2.18 Manner of Payments...............................................................66
SECTION 2.19 Provisions Relating to the Borrowing Base........................................66
3. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES.......................................................67
SECTION 3.1 Existence and Power..............................................................67
SECTION 3.2 Authority and No Violation.......................................................68
SECTION 3.3 Governmental Approval............................................................68
SECTION 3.4 Binding Agreements...............................................................69
SECTION 3.5 Financial Statements.............................................................69
SECTION 3.6 No Material Adverse Change.......................................................69
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(continued)
PAGE
SECTION 3.7 Ownership of Pledged Securities, Subsidiaries, etc...............................70
SECTION 3.8 Copyrights, Trademarks and Other Rights..........................................70
SECTION 3.9 Fictitious Names.................................................................71
SECTION 3.10 Title to Properties..............................................................71
SECTION 3.11 Places of Business...............................................................72
SECTION 3.12 Litigation.......................................................................72
SECTION 3.13 Federal Reserve Regulations......................................................72
SECTION 3.14 Investment Company Act...........................................................72
SECTION 3.15 Taxes............................................................................72
SECTION 3.16 Compliance with ERISA............................................................73
SECTION 3.17 Agreements.......................................................................73
SECTION 3.18 Security Interest................................................................73
SECTION 3.19 Disclosure.......................................................................74
SECTION 3.20 Distribution Rights..............................................................74
SECTION 3.21 Environmental Liabilities........................................................74
SECTION 3.22 Pledged Securities...............................................................75
SECTION 3.23 Compliance with Laws.............................................................76
SECTION 3.24 Canadian Plans...................................................................76
4. CONDITIONS OF LENDING..................................................................................76
SECTION 4.1 Conditions Precedent to Initial Loan or Letter of Credit.........................76
SECTION 4.2 Conditions Precedent to Each Loan, Bankers' Acceptance and Letter of
Credit...........................................................................81
SECTION 4.3 Conditions Precedent to Loans and/or Letters of Credit under the Special
Production Tranche...............................................................81
5. AFFIRMATIVE COVENANTS..................................................................................82
SECTION 5.1 Financial Statements and Reports.................................................83
SECTION 5.2 Corporate Existence; Compliance with Laws........................................84
SECTION 5.3 Maintenance of Properties........................................................85
SECTION 5.4 Notice of Material Events........................................................85
SECTION 5.5 Insurance........................................................................86
SECTION 5.6 Production and Distribution......................................................87
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 5.7 Music............................................................................87
SECTION 5.8 Copyrights and Trademarks........................................................87
SECTION 5.9 Books and Records................................................................88
SECTION 5.10 Third Party Audit Rights.........................................................88
SECTION 5.11 Observance of Agreements.........................................................89
SECTION 5.12 Laboratories; No Removal.........................................................89
SECTION 5.13 Taxes and Charges; Indebtedness in Ordinary Course of Business...................89
SECTION 5.14 Liens............................................................................90
SECTION 5.15 Further Assurances; Security Interests...........................................90
SECTION 5.16 ERISA and Canadian Plan Compliance and Reports...................................90
SECTION 5.17 Subsidiaries.....................................................................91
SECTION 5.18 Environmental Laws...............................................................92
SECTION 5.19 Use of Proceeds..................................................................93
SECTION 5.20 Uncompleted Items of Product.....................................................93
SECTION 5.21 Negative Cost Statements.........................................................94
SECTION 5.22 Distribution Agreements, Acceptable L/C's, Etc...................................94
SECTION 5.23 Completion Guaranty..............................................................95
SECTION 5.24 Security Agreements with the Guilds..............................................95
6. NEGATIVE COVENANTS.....................................................................................95
SECTION 6.1 Limitations on Indebtedness and Preferred Equity Interests.......................95
SECTION 6.2 Limitations on Liens.............................................................96
SECTION 6.3 Limitation on Guarantees.........................................................98
SECTION 6.4 Limitations on Investments.......................................................99
SECTION 6.5 Restricted Payments..............................................................99
SECTION 6.6 Limitation on Leases............................................................100
SECTION 6.7 Consolidation, Merger, Sale or Purchase of Assets, etc..........................100
SECTION 6.8 Receivables.....................................................................101
SECTION 6.9 Sale and Leaseback..............................................................101
SECTION 6.10 Places of Business; Change of Name..............................................101
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 6.11 Limitations on Capital Expenditures.............................................101
SECTION 6.12 Transactions with Affiliates....................................................101
SECTION 6.13 Business Activities.............................................................101
SECTION 6.14 Fiscal Year End.................................................................102
SECTION 6.15 Overhead Expense................................................................102
SECTION 6.16 Consolidated Capital Base.......................................................102
SECTION 6.17 Leverage Ratio..................................................................102
SECTION 6.18 Liquidity Ratio.................................................................102
SECTION 6.19 Fixed Charges Coverage Ratio....................................................102
SECTION 6.20 Prohibitions of Amendments and Waivers..........................................102
SECTION 6.21 Amortization Method.............................................................103
SECTION 6.22 Program Spending Ratio..........................................................103
SECTION 6.23 No Further Negative Pledge......................................................103
SECTION 6.24 Development Costs...............................................................103
SECTION 6.25 Print and Advertising Expenses..................................................103
SECTION 6.26 Additional Limitation on Production and Acquisition of Product..................103
SECTION 6.27 Bank Accounts...................................................................104
SECTION 6.28 ERISA Compliance................................................................104
SECTION 6.29 Hazardous Materials.............................................................105
SECTION 6.30 Use of Proceeds of Loans and Requests for Letters of Credit.....................105
SECTION 6.31 Interest Rate Protection Agreements, etc........................................105
SECTION 6.32 Subsidiaries....................................................................105
7. EVENTS OF DEFAULT.....................................................................................105
8. GRANT OF SECURITY INTEREST; REMEDIES..................................................................109
SECTION 8.1 Security Interests..............................................................109
SECTION 8.2 Use of Collateral...............................................................109
SECTION 8.3 Collection Accounts.............................................................109
SECTION 8.4 Credit Parties to Hold in Trust.................................................109
SECTION 8.5 Collections, etc................................................................110
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(continued)
PAGE
SECTION 8.6 Possession, Sale of Collateral, etc.............................................110
SECTION 8.7 Application of Proceeds on Default..............................................111
SECTION 8.8 Power of Attorney...............................................................112
SECTION 8.9 Financing Statements, Direct Payments...........................................112
SECTION 8.10 Further Assurances..............................................................113
SECTION 8.11 Termination and Release.........................................................113
SECTION 8.12 Remedies Not Exclusive..........................................................113
SECTION 8.13 Quiet Enjoyment.................................................................113
SECTION 8.14 Continuation and Reinstatement..................................................114
9. GUARANTY..............................................................................................114
SECTION 9.1 Guaranty........................................................................114
SECTION 9.2 No Impairment of Guaranty, etc..................................................115
SECTION 9.3 Continuation and Reinstatement, etc.............................................116
SECTION 9.4 Limitation on Guaranteed Amount etc.............................................116
10. PLEDGE................................................................................................117
SECTION 10.1 Pledge..........................................................................117
SECTION 10.2 Covenant........................................................................117
SECTION 10.3 Registration in Nominee Name; Denominations.....................................117
SECTION 10.4 Voting Rights; Dividends; etc...................................................117
SECTION 10.5 Remedies Upon Default...........................................................118
SECTION 10.6 Application of Proceeds of Sale and Cash........................................119
SECTION 10.7 Securities Act, etc.............................................................120
SECTION 10.8 Continuation and Reinstatement..................................................120
SECTION 10.9 Termination.....................................................................121
11. CASH COLLATERAL.......................................................................................121
SECTION 11.1 Cash Collateral Accounts........................................................121
SECTION 11.2 Investment of Funds.............................................................121
SECTION 11.3 Grant of Security Interest......................................................122
SECTION 11.4 Remedies........................................................................122
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(continued)
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12. THE ADMINISTRATIVE AGENT, THE CANADIAN AGENT AND THE ISSUING BANK.....................................122
SECTION 12.1 Administration by the Administrative Agent......................................122
SECTION 12.2 Advances and Payments...........................................................123
SECTION 12.3 Sharing of Setoffs, Cash Collateral and Sharing Events..........................124
SECTION 12.4 Notice to the Lenders...........................................................125
SECTION 12.5 Liability of the Administrative Agent, Canadian Agent, Issuing Bank and
Syndication Agent...............................................................126
SECTION 12.6 Reimbursement and Indemnification...............................................126
SECTION 12.7 Rights of Administrative Agent and Canadian Agent...............................127
SECTION 12.8 Independent Investigation by Lenders............................................127
SECTION 12.9 Agreement of Required Lenders...................................................128
SECTION 12.10 Notice of Transfer..............................................................128
SECTION 12.11 Successor Administrative Agent..................................................128
SECTION 12.12 Successor Issuing Bank..........................................................128
SECTION 12.13 Successor Canadian Agent........................................................129
SECTION 12.14 Quebec Power of Attorney........................................................130
13. MISCELLANEOUS.........................................................................................130
SECTION 13.1 Notices.........................................................................130
SECTION 13.2 Survival of Agreement, Representations and Warranties, etc......................131
SECTION 13.3 Successors and Assigns; Syndications; Loan Sales; Participations................131
SECTION 13.4 Expenses; Documentary Taxes.....................................................134
SECTION 13.5 Indemnification of the Administrative Agent, the Issuing Bank and the
Lenders.........................................................................135
SECTION 13.6 CHOICE OF LAW...................................................................136
SECTION 13.7 WAIVER OF JURY TRIAL............................................................136
SECTION 13.8 WAIVER WITH RESPECT TO DAMAGES..................................................136
SECTION 13.9 No Waiver.......................................................................137
SECTION 13.10 Extension of Payment Date.......................................................137
SECTION 13.11 Amendments, etc.................................................................137
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(continued)
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SECTION 13.12 Severability....................................................................138
SECTION 13.13 SERVICE OF PROCESS..............................................................138
SECTION 13.14 Headings........................................................................139
SECTION 13.15 Execution in Counterparts.......................................................139
SECTION 13.16 Subordination of Intercompany Indebtedness, Receivables and Advances............139
SECTION 13.17 Entire Agreement................................................................139
vii
Schedules
1.1 Schedule of Commitments
1.2 Acceptable Obligors/Allowable Amounts
1.3 Guarantors
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) Items of Product
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
6.27 Existing Bank Accounts
Exhibits
A-1 Form of U.S. Dollar Note
A-2 Form of Canadian Dollar Note
B-1 Form of Opinion of Xxxxxx Xxxxxxx, Canadian counsel to the Borrowers
B-2 Form of Opinion of Xxxxxxx Xxxx 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
CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT,
dated as of September 25, 2000 (as 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) THE CHASE MANHATTAN 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) NATIONAL BANK
OF CANADA, as Canadian Agent (in such capacity, the
"Canadian Agent"); and (vi) DRESDNER BANK AG, NEW
YORK AND GRAND CAYMAN BRANCHES, as Syndication Agent
(in such capacity, the "Syndication Agent").
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.
LGEC has requested that the Canadian Dollar Lenders make
available a five-year revolving credit facility of US$25,000,000 or the Canadian
Dollar Equivalent and LGEI has requested that the U.S. Dollar Lenders make
available a five-year revolving credit facility of US$175,000,000. Each of the
facilities may be used (i) to finance the development, production, distribution
or acquisition of intellectual properties including feature films, television
and video product and/or rights therein or thereto and (ii) for general
corporate purposes, including acquisitions. In addition, the Canadian Dollar
Facility may be used to refinance the existing debt of LGEC and its Subsidiaries
in the approximate amount of C$18,000,000.
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 to create Bankers' Acceptances
for the account of LGEC as provided herein, and each U.S. Dollar Lender
is willing to make U.S. Dollar 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:
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 6.19, inclusive, Cine-Groupe
Corporation and Mandalay Pictures, LLC 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 either 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 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 2.19).
"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 2.19).
"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 2.19).
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"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:
(a) in the case of a tax credit under section 125.4 of the ITA, a Canadian
Film or Video Production Certificate (Part A); 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;
- 3 -
(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 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 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 2 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 2 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 2.3(b).
"Administrative Agent" shall mean The Chase Manhattan 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.
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"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 exposure for such Acceptable Obligor (as modified from
time to time in accordance with Section 2.19 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 << 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
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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.
"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 Alternate
Base Rate Loans, 1.5% per annum, (ii) in the case of Eurodollar Loans, 2.5% per
annum and (iii) in the case of Canadian Prime Rate Loans, 1.5% 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) The Motion
Picture Bond Company Inc. (to the extent a completion guaranty is accompanied by
a London Guarantee Insurance Company "cut-through endorsement"), (ii) Fireman's
Fund Insurance Company, acting through its agent, International Film Guarantors,
L.P. (the general partner of which is International Film Guarantors, Inc.),
(iii) Cinema Completions International Inc./Continental Casualty Company and
(iv) Film Finances, Inc. and its Affiliates (including Film Finances Canada 1998
Limited) 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 Borrower; 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.
"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, executed by the assignor,
assignee and other parties as contemplated thereby.
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"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 2.3.
"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. Montreal, Quebec 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. ss. 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 or 100% of the Interim Library Credit,
plus
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(ix) 100% of amounts held in the Cash Collateral Accounts, plus
(x) 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 within twelve months of its
Completion, the Borrower shall no longer be entitled to include the foregoing
credits in respect of such item of Product in the Borrowing Base, plus
(xi) 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 Borrower shall no longer be entitled to include the
foregoing credits in respect of such item of Product in the Borrowing Base, plus
(xii) 100% of the cash on deposit (or to be deposited from the proceeds of a
Borrowing requested in connection with the Trimark Acquisition) in the Trimark
Escrow Account, minus
(xiii) 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);
provided, however, that
(i) the portion of the Borrowing Base attributable to any particular Acceptable
Obligor (and its affiliates) 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$7,500,000 in the aggregate for all such
receivables or US$250,000 for any domestic obligor or US$50,000 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 Borrowing Base attributable to such Item of Product does not
exceed the amount of such Letter of Credit for such Item of Product);
- 8 -
(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; provided, however,
that Eligible Receivables attributable to the television series "Mysterious
Ways", the made for television movie "Shutterspeed" and the theatrical motion
picture "The Highwayman" may be included in the Borrowing Base provided that the
Administrative Agent has entered into an intercreditor agreement with the
applicable licensee or financier of each such item of Product in form and
substance satisfactory to the Administrative Agent within 30 days of the Closing
Date after which time the Eligible Receivables attributable to any such items of
Product for which such an intercreditor agreement has not been executed shall
not be included in the Borrowing Base until such time as such intercreditor
agreement has been executed;
(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; and
(viii) no additional amounts attributable to Acceptable Tax Credits shall be
included in the Borrowing Base after six months before the scheduled Maturity
Date.
"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.
"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 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
- 9 -
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 National Bank of Canada 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 maintained at National Bank of Canada, T.V. and Motion Picture
Group, 000 xxx xx Xx Xxxxxxxxxxx xxxx, Ground Floor, Montreal, Quebec, H3B 4L2,
Attention: Xxxxxxx Xxxxxx or Xxxxx Xxxxxxxxxx, designated as the "Lions Gate
Clearing Account", Account No. 00-000-00 transit number 1991-1.
"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 and accept and
discount Bankers' Acceptances 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 and Bankers'
Acceptances to LGEC in an aggregate principal amount of US$25,000,000 or the
Canadian Dollar Equivalent.
"Canadian Dollar Lenders" shall mean (i) the financial
institutions whose names appear at the foot hereof and who are designated as
such on Schedule 1.1 hereto and (ii) any assignee of a Canadian Dollar Lender
pursuant to Section 13.3.
"Canadian Dollar Loan" shall mean the loans made hereunder in
accordance with Section 2.2.
"Canadian Dollar Note" shall have the meaning given to such
term in Section 2.4(b) hereof.
"Canadian Dollars" and "C$" shall mean the lawful currency of
Canada.
"Canadian Plan" shall mean any employee benefit, pension,
retirement or other equivalent or analogous plan or program including, without
limitation, any multi-employer
- 10 -
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 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
- 11 -
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.
"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), other than any of Vulcan Ventures Incorporated,
Tele-Muenchen Group and SBS Broadcasting S.A. or a Subsidiary of any such
company acceptable to the Administrative Agent, 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 or (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
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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.
"Change in Management" shall mean either (i) Xxx Xxxxxxxxxx or
(ii) both Xxxxx Xxxxxxxxx and Xxx Xxxxxxxxx, 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
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 The Chase Manhattan Bank, Loan
and Agency Services Group, One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxx 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. ss. 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, 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
- 13 -
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 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
- 14 -
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;
(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;
- 15 -
(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.
"Collection Account" shall have the meaning given to such term
in Section 8.3(a) hereof.
"Commitment" shall mean the U.S. Dollar Credit Commitment
and/or the Canadian Dollar Credit Commitment of each Lender.
"Commitment Fee" shall have the meaning given to such term in
Section 2.7(a) hereof.
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"Commitment Termination Date" shall mean (i) September 25,
2005 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) 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 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 Subordinated Debt outstanding plus the amount of total
stockholders' equity (including capital stock and retained earnings and deficit)
of LGEC and its Consolidated Subsidiaries (but excluding any retained earnings
and deficit of Cine-Groupe Corporation and Mandalay Pictures, Inc.), 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
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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 or Trimark Holdings Inc. or its
Subsidiaries) 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.
"Credit Exposure" shall mean, without duplication, with
respect to any Lender, the sum of such Lender's (i) aggregate outstanding Loans
hereunder and under Special Purpose Producer Credit Agreements, (ii) Pro Rata
Share of the then current L/C Exposure, and (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.
"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).
- 18 -
"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.
"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 (i) 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 and (ii)
any item of income or expense attributable to Mandalay Pictures other than cash
dividends or distributions actually paid to a Credit Party.
"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.
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"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) zero until the earlier
of January 1, 2001 and the date on which the valuation of substantially all the
components of the Borrowers' library has been completed (other than the Trimark
Library) and (y) thereafter, the aggregate of the amounts for all of the
components of the Borrowers' library (including the Trimark Library) determined
initially and on an annual basis thereafter by an independent consultant
selected 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; 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 and (iii) 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;
- 20 -
(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;
(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
- 21 -
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 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,
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.
ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss. 7401 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. ss. 136
et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. ss.
1201 et seq., the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss. 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. ss.
11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29
U.S.C. ss. 655 and ss. 657, and
- 22 -
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.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as heretofore and hereafter amended, as codified at 29 U.S.C. ss. 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.
"Fee Letter" shall mean that certain letter agreement dated as
of May 11, 2000 between LGEC on the one hand, and the Administrative Agent and
Chase Securities Inc. on the other hand, relating to the payment of certain fees
by the Borrowers.
"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.
"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
- 23 -
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 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.
"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) 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,
(x) none of the Unrestricted Subsidiaries shall be a Guarantor hereunder and (y)
none of Xxxxx Entertainment LLC, Sterling Home Entertainment LLC or Locatrak
Inc. shall be a Guarantor hereunder.
"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
- 24 -
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 theatrical release in the United States and for
which a Credit Party holds home video rights for such territory, an amount equal
to 15% of the Budgeted Negative Cost for each 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 home video distribution of such item of Product
in such territory (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 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 and (ii) for purposes of computing the
Leverage Ratio; and further provided, that the Home Video Credit shall be
eliminated upon receipt by a Credit Party from the relevant home video
distributor of the first royalty statement reporting actual home video sales for
such item of Product.
"Hypothec" shall mean a hypothec substantially in the form of
Exhibit M-1.
"Inactive Subsidiary" shall mean (i) each Subsidiary of LGEC
existing as of the Closing Date and (ii) any additional Subsidiaries of LGEC
hereafter acquired by LGEC or any of its Subsidiaries which in either case has
assets of less than US$50,000 and is not a Credit Party.
"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
- 25 -
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 September 2000), (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
September, 2000).
"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 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.
"Interim Library Credit" shall mean (x) through the earlier of
December 31, 2000 and the date on which the valuation of substantially all the
components of the Borrowers' library has been completed (other than the Trimark
Library) the sum of (i) 50% of the value of the Trimark Library as previously
determined by an independent consultant and approved by the Administrative Agent
and (ii) the greater of US$10,000,000 and 50% of the sum of the valuations of
all of the components of the Borrowers' library (other than the Trimark Library)
- 26 -
provided to the Administrative Agent in accordance with the definition of
Eligible Library Amount and (y) thereafter, zero.
"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 The Chase Manhattan Bank, a New York
banking corporation in its capacity as such or 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, the amount expressed
in U.S. Dollars of the aggregate face amount of all drafts which may then or
thereafter be presented by beneficiaries under all Letters of Credit then
outstanding plus (without duplication), the face amount of all drafts which have
been presented or accepted under all Letters of Credit 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.
"Lender" and "Lenders" shall mean the Canadian Dollar Lenders
and/or the U.S. Dollar Lenders, as applicable.
"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.
- 27 -
"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.
"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 6.18 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 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 September 25, 2005.
- 28 -
"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 Notes and/or
Canadian Dollar 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 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 The
Chase Manhattan Bank or any of its Affiliates in connection with any bank
account maintained by the Borrowers or any other Credit Party at The Chase
Manhattan Bank or any
- 29 -
such Affiliate or any other banking services provided to the Borrowers or any
other Credit Party by The Chase Manhattan 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.
"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.
"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 theatrical release in the United States and for
which a Credit Party holds pay television rights for such territory, an amount
equal to 5% of the Budgeted Negative Cost of 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 exploitation of such item of Product in such media and
territory (computed in a manner acceptable to the Administrative Agent);
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 and (ii) for
purposes of computing the Leverage Ratio; provided further that such credit
shall be eliminated with respect to an item of Product upon the earliest of: (i)
in the case of an item of Product which is not eligible for inclusion under
Lions Gate Films, Inc.'s existing license agreement with HBO, the entering into
a distribution agreement for exploitation of such Product on pay television,
(ii) twenty-four (24) months after the theatrical release of such item of
Product and (iii) three (3) months after the theatrical release of such item of
Product if the applicable Credit Party has not spent a minimum of US$350,000 on
prints and advertising expenses nor entered into a licensing agreement for such
item of Product which agreement does not include a minimum for prints and
advertising expenses in connection with such item of Product's initial
theatrical distribution in the United States.
- 30 -
"Percentage" shall mean with respect to any Lender, the
percentage of the Total U.S. Dollar Credit Commitment or Total Canadian Dollar
Credit Commitment, represented by such Lender's U.S. Dollar Credit 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, (but any such preferred stock may
provide for dividends to be payable (x) in either cash or stock, at the option
of LGEC, or (y) in cash so long as there is no Default or Event of Default
continuing hereunder).
"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 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. 1980 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.
- 31 -
"Print and Advertising Expenditures" shall mean the actual
out-of-pocket print and advertising expenditure associated with the theatrical
release in the United States and Canada of an item of Product which a Credit
Party is contractually obligated to pay or has paid.
"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 (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.
- 32 -
"Program Spending" shall mean the cash component of "Increase
in investment in film and television programs" (as such term is used on LGEC's
consolidated statements of income and cash flow included in the financial
statements delivered pursuant to Section 5.1(a) hereof).
"Program Spending Ratio" shall mean the ratio of (x) cash
receipts for LGEC's "Television segment", determined in a manner consistent with
Note 21 to LGEC's audited consolidated financial statements for the fiscal year
ended March 31, 2000, to (y) the portion of Program Spending attributable to
such business segment.
"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.
"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 (i) Lenders holding at least 51%
of the outstanding Credit Exposure or (ii) if at the time there is zero Credit
Exposure, then Lenders holding 51% of the Commitments, with, in both (i) and
(ii), the Canadian Dollar Credit Commitments being included at their U.S. Dollar
Equivalents.
"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
with respect to, any Subordinated Debt and (v) any payment under any Synthetic
Purchase 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.
- 33 -
"Special Production Tranche" shall mean, with respect to each
Designated Picture, a portion of the U.S. Dollar 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 a form of agreement to be
agreed upon by the Borrowers, the Administrative Agent and the Required Lenders.
"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.
"Subordinated Debt" shall mean (i) LGEC's 6% convertible notes
due July 31, 2003 and (ii) 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.
"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. For purposes of this Credit Agreement, each
of Xxxxx Entertainment LLC and Sterling Home Entertainment LLC shall be
considered a Subsidiary of LGEC.
"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,
- 34 -
officers or employees of a Credit Party (or to their heirs or estates) shall be
deemed to be a Synthetic Purchase Agreement.
"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 such amount may be reduced from time to time
in accordance with the terms of this Credit Agreement.
"Total Interest" shall mean all interest expense (net of
interest income) of LGEC and its Consolidated Subsidiaries as consolidated in
accordance with GAAP.
"Total U.S. Dollar Credit Commitment" shall mean the aggregate
amount of the U.S. Dollar 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.
"Trimark" shall mean Trimark Holdings Inc.
"Trimark Acquisition" shall mean the merger of Trimark with
and into LGE Merger Sub Inc. in accordance with that certain Agreement and Plan
of Merger dated June 6, 2000 among Trimark, LGEC and LGE Merger Sub Inc.
"Trimark Escrow Account" shall mean the escrow account with
Xxxxx Xxxxxx Shareholder Services, LLC referred to in Section 2.6(b) of the
Agreement and Plan of Merger dated June 6, 2000 among Trimark, LGEC and LGE
Merger Sub Inc.
"Trimark Library" shall mean all items of Product of Trimark
and its Subsidiaries in existence at the time of the consummation of the Trimark
Acquisition.
"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 Expenditures exceeds (b) the
sum of (i) total billed receivables for domestic theatrical distribution plus
(ii) total receipts from domestic theatrical distribution plus (iii) estimated
additional receivables from domestic theatrical distribution (estimated no
sooner than the end of the first week after U.S. theatrical release) computed on
the basis of 40% of reported box office receipts for engagements which have not
yet been billed or collected plus (iv) that portion of film costs written off
attributable to Print and Advertising Expenditures (such portion to be
determined based upon the proportion of Print and Advertising Expenditures for
such item of Product to total film costs for such item of Product) plus (v)
receipts from media and markets other than domestic theatrical distribution
after recoupment of negative cost.
- 35 -
"Unrestricted Subsidiary" shall mean each Subsidiary of LGEC
listed in Schedule 3.7(d).
"U.S. Dollar Cash Collateral Account" shall have the meaning
given such term in Section 11.1 hereof.
"U.S. Dollar Credit Commitment" shall mean the Commitment of
each U.S. Dollar Lender to make U.S. Dollar 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 Equivalent" shall mean with respect to any amount
which is denominated in a currency other than U.S. Dollars, the amount in U.S.
Dollars determined by converting such other currency 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.
"U.S. Dollar 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$175,000,000.
"U.S. Dollar Lender" shall mean (i) the financial institutions
whose names appear at the foot hereof and who are designated as such on Schedule
1.1 hereof and (ii) any assignee of a U.S. Dollar Lender pursuant to Section
13.3 hereof.
"U.S. Dollar Loans" shall meant the loans made hereunder in
accordance with Section 2.1(a).
"U.S. Dollar Note" shall have the meaning given to such term
in Section 2.4(a) hereof.
"U.S. Dollars", "US$" and "$" shall mean lawful money of the
United States of America.
"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.
2. THE LOANS
SECTION 2.1 U.S. Dollar Loans.
- 36 -
(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 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 Loans then outstanding to LGEI from such Lender, plus such Lender's Pro
Rata Share of the then current L/C Exposure and the unused portion of the
Special Production Tranche for all Designated Pictures which have not yet been
Completed, does not exceed such Lender's U.S. Dollar Credit Commitment.
(b) In addition to the U.S. Dollar 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 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 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 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 Loans then outstanding plus the then current
L/C Exposure plus the unused portion of the Special Production Tranche for all
Designated Pictures which have not yet been Completed would exceed the Total
U.S. 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.
(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 Credit Commitments.
(e) Each U.S. Dollar 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 2.12(d), each U.S. Dollar Lender may at its option
fulfill its U.S. Dollar Credit Commitment with respect to any Eurodollar Loan by
causing a foreign branch or affiliate to make such U.S. Dollar Loan, provided
that any exercise of such option shall not affect the obligation of LGEI to
repay such U.S. Dollar Loan in accordance with the terms hereof and of the
relevant U.S. Dollar Note. Subject to the other provisions of this Section,
Section 2.9(b) and Section 2.13, U.S. Dollar Loans of more than one Interest
Rate Type may be outstanding at the same time.
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(f) Each U.S. Dollar 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 Loan is to be
made. Such notice shall specify (A) the amount of the requested U.S. Dollar
Loan, (B) the date on which such U.S. Dollar Loan is to be made (which shall be
a Business Day), (C) whether the U.S. Dollar 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 Loans to be made under a 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 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 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 share of the Borrowing available at the office
of The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Xxxxxxxxx
Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx 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 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
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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
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 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, 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.
(b) 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 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.
(c) 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.
(d) 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.
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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.
(e) Each Canadian Dollar Loan requested hereunder on any date shall be made
by each Canadian Dollar Lender in accordance with its respective Percentage.
(f) 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, Montreal, Quebec 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. 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.
(g) 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 at National Bank of Canada, T.V.
and Motion Picture Group, 000 xxx xx Xx Xxxxxxxxxxx xxxx, Ground Floor,
Montreal, Quebec, H3B 4L2, Attention: Xxxxxxx Xxxxxx or Xxxxx Xxxxxxxxxx for
credit to the Canadian Clearing Account and in each case, no later than 12:00
noon Montreal, Quebec 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.
(h) Notwithstanding any provision to the contrary in this Credit Agreement,
LGEC shall not, in any notice of borrowing under this Section 2.2 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.
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(i) 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 2.3 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
2.3(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 2.5% 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
2.3(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 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, Montreal, Quebec 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
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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 2.3(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. Montreal, Quebec 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. Montreal, Quebec
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 2.10(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 2.10(1) 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.
(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
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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 2.3. and Section 2.10 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 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.
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(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.
SECTION 2.4 Notes; Repayment.
(a) The U.S. Dollar Loans made by each U.S. Dollar Lender hereunder shall
be evidenced by a promissory note substantially in the form of Exhibit A-1
hereto (each a "U.S. Dollar Note") in the face amount of such Lender's U.S.
Dollar Credit Commitment, payable to the order of 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 as evidenced by a U.S. Dollar Note shall
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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.
(b) The Canadian Dollar Loans made by each Canadian Dollar Lender hereunder
shall be evidenced by a promissory note substantially in the form of Exhibit A-2
hereto (each a "Canadian Dollar Note") in the face amount of such Canadian
Dollar Lender's Canadian Dollar Credit Commitment, payable to the order of such
Lender, duly executed on behalf of LGEC and dated as of the date hereof. The
outstanding principal balance of each Canadian Dollar Loan as evidenced by a
Canadian Dollar Note 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.
(c) Each of the Notes shall bear interest on the outstanding principal
balance thereof as set forth in Section 2.6 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 2.5 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, to issue Letters of
Credit (and to extend Letters of Credit previously issued hereunder) payable in
U.S. Dollars from time to time after the Closing Date and prior to the
Commitment Termination Date, provided, however, that (A) LGEI shall not request,
and the Issuing Bank shall not issue, any Letter of Credit if, after giving
effect thereto, either (i) the sum of the aggregate principal amount of all U.S.
Dollar Loans then outstanding plus the then current L/C Exposure plus the unused
portion of the Special Production Tranche for all Designated Pictures which have
not yet been Completed would exceed the Total U.S. 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 and (B) LGEI shall not 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).
(i) Immediately upon the issuance of each Letter of Credit, each U.S.
Dollar Lender 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.
(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
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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, 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) 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
2.5(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 Letters of Credit 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 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 Credit Commitments 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, 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 Lender of the issuance and the amount of such Lender's respective
participation in the applicable Letter of Credit.
(d) 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
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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.
(e) 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 U.S. Dollar Lenders and each U.S. 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 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.
(f) LGEI is 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
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 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. LGEI further agrees that the Issuing
Bank may reimburse itself for such drawing from the balance in the Chase
Clearing Account or from the balance in any other account of LGEI maintained
with the Issuing Bank.
(g) LGEI agrees 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
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(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 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 September, 2000) 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.
(h) LGEI agrees to pay to the Administrative Agent for distribution to each
U.S. Dollar 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
September, 2000) 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; and
(i) Promptly upon receipt by the Issuing Bank or the Administrative Agent
of any amount described in clause (B) of Section 2.5(g), or any amount described
in Section 2.5(f) previously reimbursed to the Issuing Bank by the U.S. Dollar
Lenders, the Issuing Bank or the Administrative Agent (as applicable) shall
distribute to each Lender its Pro Rata Share of such amount.
(j) 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 U.S. Dollar 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:
(A) the Issuing Bank or any U.S. Dollar 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 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, 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
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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 2.5, whether directly or by such being imposed on
or suffered by the Issuing Bank or any U.S. Dollar 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 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);
(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 U.S. Dollar Lender; or
(D) there shall be imposed on the Issuing Bank or any Lender any other
condition regarding this Section 2.5, 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 U.S. Dollar 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
U.S. Dollar 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 2.12(b), (c) and
(d) shall in all instances apply to the Issuing Bank and any U.S. Dollar Lender
with respect to the Letters of Credit issued hereunder. The determination by the
Issuing Bank or any Lender, as the case may be, of any amount due pursuant to
this Section 2.5 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.
(k) 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 Lenders shall, require
LGEI 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 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
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all of such collateral relating to such deposit to LGEI 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 LGEI.
(l) Notwithstanding the termination of the Commitments and the payment of
the U.S. Dollar Loans, the obligations of LGEI under this Section 2.5 shall
remain in full force and effect until the Administrative Agent, the Issuing Bank
and the U.S. Dollar Lenders shall have been irrevocably released from their
obligations with regard to any and all Letters of Credit.
SECTION 2.6. 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.
(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 2.7 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
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each year (commencing on the last Business Day of September, 2000) 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 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 either (x) 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) if less than 50% of the facility
hereunder is drawn or (y) of 1% per annum if 50% or more of the facility
hereunder is drawn in either case on the average daily amount during the
preceding period or quarter by which such Lender's Commitment (as such
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 L/C Exposure plus the aggregate principal amount
of such Lender's outstanding U.S. Dollar 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 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 2.8 Termination and/or Reduction of the 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 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 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 Credit Commitment may
not be reduced to an amount less than the sum of the aggregate principal amount
of all U.S. Dollar Loans then outstanding, plus the then current L/C Exposure
plus the unused portion of a Special Production Tranche for all Designated
Pictures 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 then
current BA Exposure. Any partial reduction of the Total U.S. Dollar Credit
Commitment or the Total Canadian Dollar Credit Commitment shall be made
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among the U.S. Dollar Lenders or the Canadian Dollar Lenders ratably in
accordance with their respective Percentages.
(b) The Total U.S. Dollar 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 Mandalay
Pictures, LLC and Cine-Groupe Corporation, (ii) the Lions Gate Vancouver studio
listed on Schedule 3.24 hereto and (iii) the first US$20,000,000 of any Net Cash
Proceeds received in connection with the sale of LGEC's equity interest in or
assets of any of its joint ventures which is engaged in business activities that
are substantially the same as another joint venture of LGEC's in which LGEC
retains all of its investment.
(c) Simultaneously with each such termination or reduction of the Total
U.S. Dollar 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.
SECTION 2.9 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 2.2 or conversion to or continuation as a Eurodollar Loan
pursuant to Section 2.10, made after receipt of such notice and
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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 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 2.10 and
2.3.(c)), made after receipt of such notice, shall be 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 2.10 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. Montreal, Quebec 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;
- 53 -
(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 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 2.11 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
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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 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 2.11 Prepayment of Loans and Bankers' Acceptances; Reimbursement
of Lenders.
(a) Subject to the terms of Section 2.11(c), 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,
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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 2.11(c), 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 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 on the 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 Mandalay
Pictures, LLC and Cine-Groupe Corporation, (ii) the Lions Gate Vancouver studio
listed on Schedule 3.24 hereto and (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
of its joint ventures which is engaged in business activities that are
substantially the same as another joint venture of LGEC's in which LGEC retains
all of its investment.
(d) All such mandatory prepayments pursuant to this Section 2.11(c) shall
be 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.
(e) The Borrowers shall reimburse each Lender on demand for any loss
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 Borrower delivers a
notice of Borrowing under Section 2.2(a) or a notice of conversion or
continuation under Section 2.10(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 2.9(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
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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 2.5
hereof or (2) the Bankers' Acceptance Rate applicable to such Bankers'
Acceptance pursuant to Section 2.3 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 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, 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 Loans or deposit Cash Equivalents
in the Cash Collateral Accounts to the extent necessary to eliminate such
excess.
(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 Credit Commitment pursuant to Section 2.8, 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 the sum of the aggregate outstanding
principal amount of the U.S. Dollar Loans plus the L/C Exposure plus the unused
portion of the Special Production Tranche for all Designated Pictures which have
not yet been Completed exceeds the reduced Total U.S. Dollar Credit Commitments
or the sum of the aggregate outstanding principal amount of the Canadian Dollar
Loans plus the
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BA Exposure 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 L/C Exposure at the time of any optional or mandatory
termination of the Total U.S. Dollar Credit Commitment, the Borrowers shall
deliver to the Administrative Agent Cash Equivalents in an amount equal to the
full amount of the L/C Exposure or furnish other security acceptable to the
Required 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
2.11(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 its 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 2.11(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 2.11, (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 2.12 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 subdivision or taxing authority thereof or therein
or any other tax, levy, impost, duty, charge, fee,
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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
compliance by any Lender (or any Lending Office of such Lender) or any Lender's
holding
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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 2.12 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 2.5(j), Section 2.9(b), this
Section 2.12 or Section 2.17 or (ii) would require the Borrowers to pay an
increased amount under Section 2.5(j), Section 2.9(b), this Section 2.12 or
Section 2.17, 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 2.5 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 2.5(j), Section
2.9(b), this Section 2.12 or Section 2.17 would be materially reduced or the
taxes or other amounts otherwise payable under Section 2.5(j), Section 2.9(b),
this Section 2.12 or Section 2.17 would be materially reduced, and if, as
determined by such Lender, in its sole discretion, the making, funding or
maintaining of such Loans, Letters of Credit or participations
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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 2.5(j), 2.9(b),
this Section 2.12 or Section 2.17. 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 2.11(b) and 2.13(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 2.13 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 2.10 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.
XXXXXXX 0.00 Xxxxxx Xxxxxx Withholding.
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(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 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
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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 2.14,
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 2.14.
(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 2.14) 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 2.14(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 2.14, 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 2.17(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 such
Loans, Letters of Credit or participations therein through such other Lending
Office would
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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 2.15 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 Montreal 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 and the Bankers' Acceptances 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 payment by or on behalf of LGEC to the Canadian
Agent by any taxing authority or
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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 and 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 2.16 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 2.17 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 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
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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 2.11(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 2.11(a) hereof and a termination of the Commitments under Section 2.8)
shall be canceled and not paid.
SECTION 2.18 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 The Chase Manhattan Bank, Loan and Agency
Services Group, One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxx 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 at National Bank of Canada, T.V. and Motion Picture Group, 000
xxx xx Xx Xxxxxxxxxxx xxxx, Ground Floor, Montreal, Quebec, H3B 4L2, Attention:
Xxxxxxx Xxxxxx or Xxxxx Xxxxxxxxxx, for credit to the Canadian Clearing Account
no later than 12:00 noon, Montreal, Quebec 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 2.19 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 2.11(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 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
execution, delivery and performance by any Credit Party of this Credit Agreement
and the other Fundamental Documents to which it is a party, and the execution
and
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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, 1999 and March 31, 2000 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, 2000.
(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, 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 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, the items of Product listed on Schedule 3.8(a) 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). The copyright
registration number and the character of the interests held by the relevant
Credit Party for such items of Product (other than (i) items of Product that, in
the Borrowers' best estimation, 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)
subject to the consent of the Administrative Agent in its sole discretion,
additional items of Product; provided that the Borrowers shall, within 30 days
of the Closing Date, (x) register the copyright of each such item of Product in
conformity with the laws of the United States and Canada, and (y) provide the
Administrative Agent with written evidence of such registration) are set forth
across from the description of such item of Product and as to each item of
Product listed on Schedule 3.8(a), the Credit Party holding such interests has
duly recorded its interests in the United States Copyright Office and the
Canadian Intellectual Property Office and has delivered copies of all such
recordations to the Administrative Agent. Schedule 3.8(a) also identifies the
location of the best available Physical Materials related to each item of
Product (other than items of Product that, in the Borrowers' best estimation, in
the aggregate account for no more than 10% of the total value
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of all items of Product listed on Schedule 3.8(a)) 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
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), 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).
(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 name 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; provided, however, that the Credit Parties shall have
until 30 days after delivery of the calculation of the Eligible Library Amount
in accordance with Section 5.1(h) hereof to complete any additional applications
and registrations for copyright to the extent necessary to comply with this
provision.
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.
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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, which
offices are the places where each Credit Party is "located" for the purposes of
the UCC and the "location" of the Credit Party for the purposes of the PPSA in
effect in each state or province, as the case may be, 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 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, or (B) relate to this Credit Agreement or any
of the transactions contemplated hereby. 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.
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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 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 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 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$1,000,000, (B)
incur liabilities or obligations in excess of US$1,000,000 or (C) likely suffer
damages or losses in excess of US$1,000,000 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
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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 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.
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(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 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, 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.
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(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 intended use of
the proceeds of 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 obligation of the Issuing Bank to issue the initial Letter of Credit, and of
each Lender to make
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the initial Loan, accept and discount the initial Bankers' Acceptance and
participate in the initial Letter of Credit, is 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 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.
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(c) Opinion of Counsel. The Administrative Agent shall have received the
written opinions of Xxxxxx Xxxxxxx, Canadian counsel to the Credit Parties and
Xxxxxxx Xxxx XXX, Xxxxxx Xxxxxx 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, special Canadian counsel to the
Administrative Agent.
(d) 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, 2000.
(e) 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 The Chase Manhattan 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.
(f) 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.
(g) 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) hereto (other than for items of Product for which
(x) the Borrowers have not supplied copyright registration information on
Schedule 3.8(a) hereto in accordance with Section 3.8(a) hereof; provided,
however, that to the extent such copyright registration is subsequently obtained
as required hereunder, the Borrowers shall provide the Administrative Agent
Pledgeholder Agreements for such items of Product no later than the date on
which such copyright registration is required hereunder and (y) no value is
given in the Borrowing Base and subject to the prior consent of the
Administrative Agent); (ii) a Copyright Security Agreement listing each item of
Product in which any Credit Party has a copyrightable interest (as listed on
Schedule 3.8(a) hereto) 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 (other than for items of Product for which (x) the
Borrowers have not supplied copyright registration information on Schedule
3.8(a) hereto in accordance with Section 3.8(a) hereof; provided, however, that
to the extent such copyright registration is subsequently obtained as required
hereunder, the Borrowers
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shall provide the Administrative Agent Laboratory Access Letters for such items
of Product no later than the date on which such copyright registration is
required hereunder and (y) no value is given in the Borrowing Base and subject
to the prior consent of the Administrative Agent); (v) appropriate UCC-1 and
PPSA financing statements relating to the Collateral; (vi) all certificates
evidencing any of the Pledged Securities with appropriate undated stock powers
executed in blank; and (vii) deeds of hypothec, debentures and debenture pledge
agreements in form and substance satisfactory to the Administrative Agent.
(h) 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.
(i) Payment of Fees. All fees and expenses then due and payable by any
Credit Party to the Administrative Agent and/or the Lenders in connection with
the transactions contemplated hereby or as required by the Fee Letter shall have
been paid.
(j) 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.
(k) 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.
(l) 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.
(m) 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
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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.
(n) 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.
(o) 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.
(p) 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.
(q) Contribution Agreement. The Administrative Agent shall have received a
fully executed Contribution Agreement duly executed by each of the Credit
Parties.
(r) Delivery of Agreements. The Administrative Agent shall have received
and be satisfied with the terms and provisions of all output existing
distribution agreements, (ii) all material agreements listed on Schedule 3.18
and (iii) all other agreements to the extent requested by the Administrative
Agent.
(s) Required Consents and Approvals. The Administrative Agent shall be
satisfied that all required consents and approvals have been obtained with
respect to the transactions contemplated hereby from all Governmental
Authorities with jurisdiction over the business and activities of 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.
(t) 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.
(u) 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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(v) 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 & Xxxxxxx LLP, counsel to the
Administrative Agent and Fraser Xxxxxx Casgrain, special Canadian counsel to the
Administrative Agent.
(w) 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 shall have received from LGEI 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 Credit
Commitments as being reserved as part of the Special Production Tranche for such
Designated Picture and specifying whether the U.S. Dollar Loans to finance the
production of such Designated Picture are to be made to LGEI, 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 or unsatisfied, each Credit Party
agrees that, unless the Required Lenders shall otherwise consent
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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 and twenty (120) days after the end of each fiscal
year of LGEC (commencing with fiscal year 2001), 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
PricewaterhouseCoopers LLP 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 principles in
the United States;
(b) Within sixty (60) 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 and (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
this Section 5.1(c);
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(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 December 31, 2000 and thereafter simultaneously with the
delivery of the statements referred to in paragraph (a) of this Section 5.1, the
calculation of the Eligible Library Amount computed as of the last Business Day
of the prior fiscal year as contemplated by the definition of "Eligible Library
Amount;"
(i) At least annually and not later than March 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 five 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.
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.
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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 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
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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.
(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,
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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 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 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.
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(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 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.
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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, 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
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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) 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) 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
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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 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. (a) Prior to any (i) Inactive Subsidiary
becoming active or (ii) Unrestricted Subsidiary becoming a Credit Party after
the date hereof and promptly
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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.
(b) Within six months of the Closing Date, the Borrowers shall deliver to
the Administrative Agent either (a) an Assumption and Joinder for each of The
Movie Group Inc. and International Movie Group, together with all the additional
documentation required under Section 5.17(a) hereof or (b) evidence of the
dissolution of each such company.
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, 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,
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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 Loans (i) for
the development, production, distribution, exploitation or acquisition of
intellectual properties including feature films, television and video product
and/or rights therein or thereto; and (ii) for general working capital purposes
including acquisitions and (b) the Canadian Dollar Loans to refinance the
existing debt of LGEC.
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
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,
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(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) to the extent not already covered by an existing Pledgeholder
Agreement, executed Pledgeholder Agreement(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. 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 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
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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 to exceed 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 for which the Production Exposure exceeds
US$3,000,000 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 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;
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(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(k), 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;
(g) liabilities relating to profit participations, 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 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) other Indebtedness not to exceed US$1,000,000 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;
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(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$2,000,000 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 to collective bargaining agreements; provided, however, that
each such guild has entered into an intercreditor agreement with the
Administrative Agent reasonably satisfactory to the Administrative Agent in all
respects;
(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$5,000,000 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;
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(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; and
(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.
(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; and
(r) other Liens securing other Indebtedness not to exceed US$1,000,000 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) indemnities to studios given in connection with LGEC's investment
in Cinegate Production Management Services Inc., provided that (x) any such
indemnity is backed by insurance or a third party guaranty, in either case
acceptable to the Administrative Agent or (y) to the extent not backed by such
insurance or third party guaranty, the maximum amount of LGEC's liability
thereunder is expressly limited
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by the terms thereof to $5,000,000 in the aggregate at any one time in
existence, (v) existing Guarantees listed on Schedule 6.3 hereto, (vi)
Guarantees by one Credit Party of the obligations of another Credit Party to the
extent otherwise permitted hereunder and (vii) other Guarantees not to exceed
US$1,000,000 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,
and (xiv) other Investments not to exceed US$1,000,000 in the aggregate
outstanding at any one time.
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, (iv) cash dividends in
respect of shares of Permitted Preferred Stock provided that at the time of such
payment and after giving effect thereto no Default or Event of Default shall
have occurred and be continuing, (v) required payments but not prepayments of
interest and principal on LGEC's 6% convertible notes due July 31, 2003 which
are outstanding on the date hereof, (vi) payments (x) 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
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, (y) 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 (z) 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 (x),(y) and (z),
but, in each case, only if no Default or Event of Default is in existence or
would be caused thereby; (vii) payments to a Credit Party by another Credit
Party which is not a Borrower, and (viii) payments to the Borrowers from any
other Credit Party.
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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$2,000,000.
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 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 and (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; provided that any Net
Cash Proceeds received by any Credit Party pursuant to clause (iv) hereof shall
be used to prepay the Loans in accordance with Section 2.11(c); provided,
however, that nothing in this Agreement shall prevent LGEC from performing a
stock split or a reverse stock split; 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, (ii) the Trimark Acquisition; provided, that, there has been no
material adverse change in the business, operations, performance, assets,
properties, condition (financial or otherwise) or prospects of Trimark from June
30, 2000 and provided, further, that before any Loans are made hereunder the
proceeds of which shall be used to complete the Trimark Acquisition, including,
without limitation, to fund the Trimark Escrow Account, the Administrative Agent
shall have received a certificate from the Borrowers showing that, on a pro
forma basis and after giving effect to such Borrowing, the Trimark Acquisition
and any related transactions, the Credit Parties are in compliance with the
covenants contained in Section 6.15 through 6.19, inclusive, and that there will
be sufficient Borrowing Base to cover all outstanding Loans, L/C Exposure and BA
Exposure and (iii) acquisitions for which the cash consideration does not exceed
the lesser of (A) 50% of the total consideration, (B) US$25,000,000 and (C) the
amount of the Borrowing Base which would be attributable to the acquired assets
upon closing of such acquisition, and the only other consideration consists
solely of common stock of LGEC, Subordinated Debt or Permitted Preferred Stock;
provided, however that (x) no Default or Event of Default shall be continuing
upon giving effect to any such acquisition and (y) the aggregate cash
consideration paid for all
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acquisitions made in reliance on the exception set forth in clause (iii) above
shall not exceed US$40,000,000.
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. 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 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 Required Lenders.
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) 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$5,000,000 from and after the Closing Date.
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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 aggregate allocated and
unallocated overhead expenses of LGEC and its Consolidated Subsidiaries in any
fiscal year to exceed (x) US$33,000,000 for the fiscal year ending March 31,
2001 and (y) thereafter, 110% of the maximum amount permitted for the
immediately preceding fiscal year.
SECTION 6.16 Consolidated Capital Base. Permit Consolidated Capital Base
at the end of any quarter to be less than the sum of (i) US$140,000,000 plus
(ii) 75% of (x) all net new equity invested in LGEC after the Closing Date other
than the stock issued in connection with the Trimark Acquisition and (y)
Indebtedness converted into equity after the Closing Date, plus (iii) 50% of
Consolidated Net Income, if any, for each quarter 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) an amount equal to (A) the sum of Consolidated Senior Debt plus Off-Balance
Sheet Commitments minus (B) the sum of all Off-Balance Sheet Receivables and any
Foreign Rights Credits, Free Television Credits, Home Video Credits or Pay
Television Credits which relate to items of Product which are the subject of
such Off-Balance Sheet Commitments (but not more with respect to any particular
item of Product than the amount of Off-Balance Sheet Commitments relating to the
same item of Product) to (ii) Consolidated Capital Base to be above 1.3:1.0 at
any time.
SECTION 6.18 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 6.19 Fixed Charges Coverage Ratio. Permit the ratio (the "Fixed
Charges Coverage Ratio") of (i) the sum of EBIT plus amortization of goodwill
and capitalized financing costs 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) to be
below 2.25 to 1, initially determined on the basis of the single quarter ending
September 30, 2000, then on the basis of the two quarters ending December 31,
2000, then on the basis of the three quarters ending March 31, 2001, and
thereafter determined on a trailing four quarters basis.
SECTION 6.20 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.
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SECTION 6.21 Amortization Method. Permit the method of amortization of
film\television inventory currently used to be changed unless required under
GAAP.
SECTION 6.22 Program Spending Ratio. Permit the Program Spending Ratio
for any rolling four quarter period to be less than .75:1.0.
SECTION 6.23 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 6.24 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.
SECTION 6.25 Print and Advertising Expenses. Permit Unrecouped Print and
Advertising Expenses to at any one time exceed U.S.$10,000,000 for any
individual item of Product or permit the sum of Unrecouped Print and Advertising
Expenses, computed for each individual item of Product, to exceed
U.S.$20,000,000 in the aggregate at any one time.
SECTION 6.26 Additional Limitation on Production and Acquisition of
Product.
(a) Produce or acquire any item of Product (other than a television series)
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$1,250,000 per week of episodes.
(c) Acquire rights in product which is not in its first cycle of
exploitation except as otherwise permitted hereunder.
(d) Make any Program Acquisition Guarantees or commence active
preproduction for any made-for-television Product (other than game shows,
reality based shows
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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.
(e) 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.
(f) 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 in excess of US$10,000,000 in the
aggregate unless the aggregate domestic and foreign pre-sales for such items of
Product equals 100% 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 6.27, 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 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.
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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.
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;
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(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 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
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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, 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;
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(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
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.
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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.
(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
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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 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
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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 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
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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 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
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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.
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
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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.
(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
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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, 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
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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.
(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
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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 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.
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(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 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
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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 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
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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. 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.
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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.
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
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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.
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):
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(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 enter into and perform its obligations under the other
Fundamental Documents; and
(vii) 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 having any rights to any
item of Product or (D) Persons providing any services in connection with any
item of Product.
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
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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.
(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 Notes in
accordance with the amount of outstanding Loans owed to each Lender, third, to
pay the principal balance outstanding on the Notes (with amounts payable on the
principal balance outstanding on the Notes in accordance with the amount of
outstanding Loans owed to each Lender), amounts then due in respect of
outstanding Bankers' Acceptances and unreimbursed draws under the Letter of
Credit, fourth, amounts outstanding under Currency Agreements and Interest Rate
Protection Agreements, and fifth, 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
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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.
(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.
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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 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
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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 direction of the Required 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
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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.
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
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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 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
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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, The Chase Manhattan 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.
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 The Chase Manhattan Bank, to it at 000
Xxxx Xxxxxx, 00xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxx Xxxxxxxxxx,
Facsimile No.: (000) 000-0000 with a copy to Chase Securities Inc., 0000 Xxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxxx Xxxxxxxx,
Facsimile No.: (000) 000-0000, and to The Chase Manhattan Bank, Administrative
Agent Bank Services Department, One Chase Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attn.: Xxxx Xxxxxxx, Facsimile No.: (000) 000-0000, or (b) if to
any Credit Party to it at Lions Gate Entertainment Corp., Suite 501, 0000
Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, XX, 00000-0000, Attn: Xxxxx Xxxxxxxxx,
Facsimile No.: 000-000-0000, or (c) if to the Canadian Agent to it at National
Bank of Canada, T.V. and Motion Picture Group, 000 xxx xx Xx Xxxxxxxxxxx xxxx,
Ground Floor, Montreal, Quebec, H3B 4L2, Attn: Xxxxxxx Xxxxxx or Xxxxx
Xxxxxxxxxx, 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.
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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 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, (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
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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 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 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
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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.
(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
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other entities shall be entitled to the cost protection provisions contained in
Sections 2.11, 2.12, 2.13 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.
(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 Chase 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
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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 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
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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 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
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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.
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 2.5(f)(i) or (vi)
reduce the Acceptance Fee payable hereunder and (ii) and (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)
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amend or modify Section 2.1(c), 2.2(b), 2.11(d), 2.5(a)(i), 2.5(i) or this
Section 13.11 and (vii) increase the advance rates of any components or add any
new components to the Borrowing Base. 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 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
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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.
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
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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.
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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 /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
LIONS GATE ENTERTAINMENT INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
GUARANTORS:
LIONS GATE FILMS CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
LIONS GATE FILMS INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
AVALANCHE HOME ENTERTAINMENT LLC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
- 141 -
LIONS GATE MUSIC CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
LIONS GATE FILMS PRODUCTION
CORP./PRODUCTIONS FILMS LIONS GATE S.A.R.F.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
LIONS GATE TELEVISION CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
569147 B.C. LIMITED
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
408376 B.C. LIMITED
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
LIONS GATE STUDIO MANAGEMENT LTD.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
- 142 -
LIONS GATE TELEVISION INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
LGE MERGER SUB INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
CINEPIX FILMS INC./FILMS CINEPIX INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
CINEPIX ANIMATION INC./ANIMATION CINEPIX INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
PRISONER OF LOVE PRODUCTIONS CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
PSYCHO PRODUCTIONS SERVICES CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
- 143 -
AM PSYCHO PRODUCTIONS, INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
SHUTTERSPEED PRODUCTIONS CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
HIGHER GROUND PRODUCTIONS CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
M WAYS PRODUCTIONS CORP.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
HIGH CONCEPT PRODUCTIONS INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
LG PICTURES INC.
By /s/ Xxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Chief Financial Officer
- 144 -
LENDERS:
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Vice President
Address: 000 Xxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxxx
Facsimile: (000) 000-0000
NATIONAL BANK OF CANADA
as Canadian Agent
By /s/ Xxxxxxxx Frabete
-----------------------------------------
Name: Xxxxxxxx Frasete
Title: Syndication Manager
Address:
By /s/ Baudon Airiam
-----------------------------------------
Name: Baudon Airiam
Title: Senior Manager
Address:
NATIONAL BANK OF CANADA
as Lender
By /s/ Xxxxx Xxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxx
Title: Directeur de Comptes
Address:
By /s Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Directeur de Comptes
Address:
- 145 -
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
individually and as Syndication Agent
By /s/ Xxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxx
Title: First Vice President
Address:
By /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Address:
UNION BANK OF CALIFORNIA
By /s/ Xxxxxx X. Xxxxx, Xx.
-----------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Vice President
Address:
BNP-PARIBAS
By /s/ Xxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
Title: SVP & Manager
Address: 000 X. Xxxxxxxx Xx.
Xxx Xxxxxxx, XX 00000
By /s/ Xxxxxx Xx
-----------------------------------------
Name: Xxxxxx Xx
Title: Vice President
Address: 000 X. Xxxxxxxx Xx.
Xxx Xxxxxxx, XX 00000
- 146 -
WESTDEUTSCHE LANDESBANK
By /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Director
Address: 0000 0xx
Xxx Xxxx, XX 00000
WESTDEUTSCHE LANDESBANK
By /s/ Pascal Kabemba
-----------------------------------------
Name: Pascal Kabemba
Title: Associate Director
Address:
THE BANK OF NOVA SCOTIA
By /s/ Xxxx X. Xxxxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Managing Director
Address: 000 Xxxxxxxxxx Xx.
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
FLEET NATIONAL BANK
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Associate
Address: 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
- 147 -
U.S. BANK
By /s/ Xxxx X. Xxxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
Address:
VEREINS-UND WESTBANK AG
By /s/ A. Druske
-----------------------------------------
Name: A. Druske
Title: Account Manager
Address:
By /s/ van der Post
-----------------------------------------
Name: van der Post
Title: Account Manager
Address:
BANQUE INTERNATIONALE A LUXEMBOURG
By /s/ E. Roun
-----------------------------------------
Name: E. Roun
Title: Senior Manager
Address:
By /s/ X. Xxxxxxxx
-----------------------------------------
Name: X. Xxxxxxxx
Title Director:
Address:
- 148 -
THE FUJI BANK LTD.
By /s/ Shinzo Nishitate
-----------------------------------------
Name: Shinzo Nishitate
Title: Sr. Vice President
Address: 000 X. Xxxx Xx. 00xx Xx.
Xxx Xxxxxxx, XX 00000
ISRAEL DISCOUNT BANK OF NEW YORK
By /s/ Xxxxxx Xxxxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
Address: 000 0xx Xxxxxx
Xxx Xxxx, XX 00000
By /s/ Xxxx Xxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
Address: 000 0xx Xxxxxx
Xxx Xxxx, XX 00000
NATEXIS BANQUE-BFCE
By /s/ Xxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President and
Group Manager
Entertainment Finance
Address:
By /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Assistant Vice President
Address:
- 149 -
FAR EAST NATIONAL BANK
By /s/ Xxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
Address: 0000 Xxxxxxxx Xxxx., Xxx. 000
Xxxxxxx Xxxxx, XX 00000
IMPERIAL BANK
By /s/ Xxx Xxxxxxxx
-----------------------------------------
Name: Xxx Xxxxxxxx
Title: Vice President
Address:
THE CHASE MANHATTAN BANK,
TORONTO BRANCH
By /s/ Xxxxxxxxx Xxxx
-----------------------------------------
Name: Xxxxxxxxx Xxxx
Title: Authorized Representative
Address: 0 Xxxxx Xxxxxxxx Xxxxx,
Xxx. 0000
000 Xxxx Xxxxxx Xxxx,
X.X. Xxx 000
Xxxxxxx, Xxxxxxx, X0X 0X0
XXX XXXXX XXXXXXXXX XXXX,
XXXXXXX BRANCH
By /s/ Xxxx XxXxxxxx
-----------------------------------------
Name: Xxxx XxXxxxxx
Title: Authorized Representative
Address: 0 Xxxxx Xxxxxxxx Xxxxx,
Xxx. 0000
000 Xxxx Xxxxxx Xxxx,
X.X. Xxx 000
Xxxxxxx, Xxxxxxx, X0X 0X0
- 150 -
Schedule 1.1
Schedule of Commitments
U.S. DOLLAR LENDERS Commitment Percentage
------------------- ---------- ----------
The Chase Manhattan Bank $15,000,000.00 7.50%
Dresdner Kleinwort Xxxxxx Bank AG $20,000,000.00 10.00%
Union Bank of California $20,000,000.00 10.00%
BNP Paribas $15,000,000.00 7.50%
Westdeutsche Landesbank $15,000,000.00 7.50%
The Bank of Nova Scotia $15,000,000.00 7.50%
Fleet National Bank $10,000,000.00 5.00%
U.S. Bank $10,000,000.00 5.00%
Vereins-Und Westbank AG $10,000,000.00 5.00%
Banque Internationale a Luxembourg $10,000,000.00 5.00%
The Fuji Bank Ltd. $10,000,000.00 5.00%
Israel Discount Bank of New York $ 7,500,000.00 3.75%
Natexis Banque-BFCE $ 7,500,000.00 3.75%
Imperial Bank $ 5,000,000.00 2.50%
Far East National Bank $ 5,000,000.00 2.50%
CANADIAN DOLLAR LENDERS
National Bank of Canada $20,000,000.00 10.00%
The Chase Xxxxxxxxx Xxxx, Xxxxxxx $ 5,000,000.00 2.5%
Branch
---------------------------------------- ---------------------------------------
TOTAL FACILITY $200,000,000.00 100.00%
Schedule 1.2
Acceptable Obligors/Allowable Amounts
SCHEDULE 1.3
Guarantors
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)
Items of Product
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 6.27
Bank Accounts
Schedule 6.22
Bank Account
