Exhibit 2.1
CONSENT AND WAIVER AGREEMENT (the "AGREEMENT") dated the 2nd day of July,
2002, among Peace Arch Entertainment Group Inc. (the "COMPANY"), Working
Opportunity Fund (EVCC) Ltd. ("WOF"), Royal Bank of Canada ("RB"), Xxxxx Xxxxx
("XXXXX"), FremantleMedia Enterprises Ltd. ("FREMANTLE"), Xxxxxxx Xxxxxx
("XXXXXX"), X.X. Xxxxxxx Xxxxx ("WHITE") and Xxxxxxxx Xxxxxxxxxxx Inc.
("IMMORTAL"),
WHEREAS:
A. The Company has entered into an amended and restated loan agreement (the
"LOAN AMENDMENT AGREEMENT") with WOF, Xxxxx, Xxxxxx and White dated November 30,
2001, specifying, subject to the Fremantle Priority Agreement (defined below),
that certain payments be made to WOF and certain other lenders from, inter alia,
certain tax credits received by the Company or the Company's subsidiaries from
the Canada Customs and Revenue Agency ("CCRA") and the province of British
Columbia;
B. The Company and Immortal have granted to WOF and certain other lenders, the
right to receive tax credits ("TCR") and tax refund interest income ("RII")
proceeds from the CCRA and the province of British Columbia, in the amount of
$717,096.OO (the "IMMORTAL TAX CREDIT PAYMENT");
C. WOF, Fremantle, Xxxxxxxx Xxxxxxxxxxx Inc. and First Wave Productions Inc have
entered into a priority agreement (the "FREMANTLE PRIORITY AGREEMENT") dated
November 30, 2001, specifying certain payments to be made to WOF/Xxxxx from Tax
credits and other sources; as follows:
SOURCE OF PAYMENT PAYMENT DATE PAYABLE TO
WOF/XXXXX
----------------- ------------ ----------
Sale of 000 X. 0xx Xxx. 19, 200l $950,000.00
First Wave II TCR May 31, 2002 $1,058,000.00
First Wave II RII May 31, 2002 $28,000.00
First Wave III TCR May 31, 2002 $1,316,000.00
First Wave III RII May 31, 2002 $300,000.00
Big Sound (Diva) TCR June 30, 2002 $727,000.00
Big Sound (Diva) RII June 30, 2002 $123,000.00
Immortal TCR July 15, 2002 $114,000.00
Immortal TCR July 15, 2002 $240,000.00
First Wave TCR July 31, 2002 $829,000.00
Working Capital Pymt. July 31, 2002 $1,793.00
Total $5,686,793,00
D. To date, the Company has made, or caused to be made, the following payments
to WOF from tax credits and other sources (the "PRIOR WOF PAYMENTS"):
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DATE PRIOR WOF PAYMENTS INTEREST PAID
---- ------------------ -------------
17-Dec-01 1,160,400.00
31-Dec-01 144,658.17
10-Jan-02 995,559.65
31-Jan-02 104,581.24
28-Feb-02 85,591.51
12-Mar-02 290,l00.00
15-Mar-02 897,376.00
31-Mar-02 75,164.30
31 May-02 58,454.54
11 Jun-02 503,498.00
5 July-02 807,793
Balance Owing $600,528.57
E. WOF and RB have entered into a priority agreement dated November 30, 2001,
specifying, among other things, certain payments to be made to WOF from tax
credits and other SOURCES (the "RB/WOF PRIORITY AGREEMENT");
X. Xxxxx, White, Gamble, Fremantle, Xxxxxxxx Xxxxxxxxxxx Inc. and First Wave
Productions Inc have entered into a priority agreement dated November 30, 2001,
specifying, among other things, the parties' priority with respect to security
interests in, and repayment of indebtedness by, the Company;
G. WOF, Xxxxx, White and Xxxxxx are parties to an amended and restated
inter-lender agreement dated November 30, 2001 specifying, among other things,
the parties' relative security interests in, and repayment of indebtedness, by
the Company;
H. In lieu of a portion of the Immortal Tax Credit Payment and other payments
outlined in recital C that were not made, the Company wishes to make alternative
arrangements for repayment to WOF; (as to approximately $1,256,712, or an amount
from other sources which repays WOF the currently outstanding $600,528.57 debt
(plus any additional accrued interest and costs, payable thereon) in full (the
"WOF OUTSTANDING DEBT") and Xxxxx (as to approximately $42,887.00, or an amount
from other sources which repays Xxxxx the currently outstanding $21,126.83 debt
(plus any additional accrued interest payable thereon) in full (the "XXXXX
OUTSTANDING DEBT") from tax credits and other sources (as may be amended from
time to time as agreed among the Company WOF and Xxxxx) in preference and
priority to any payments to the undersigned (other than WOF and Xxxxx and other
than to RB as provided in the RB/WOF Priority Agreement (as
amended)) (collectively, the "WOF/XXXXX PAYMENTS") as follows:
SOURCE OF PAYMENT AMOUNT FORECASTED PAYMENT DATE
----------------- ------ -----------------------
Payment of a Portion of $217,096.00 July 2,2002
Immortal Tax Credit
Tax Credit Receivables
From Sausage Productions $221,577.00 August 31,2002
Inc. and Mission Productions $101,426.00 September 30,2002
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Inc. (Xxxxxxx Movies)
Royal Bank Financing of Tax
Credits (on receipt of CAVCO
Part A)
Animal Miracles Productions $191,500 September 30,2002
Inc. (Season I and II)
Fees based on Tax Credit
Receipts from Edge
Entertainment Inc. for $150,000.00 November 1, 2002
Impossible Productions Inc. $155,000.00 July 31,2002
and Now and Forever Films
Inc.
Corporate Tax Recovery for $263,000.00 October 31, 2002
DMG Too Productions Inc.
(Dead Man's Gun)
Total: $1,299,599.00
I. To secure payment of the WOF/Xxxxx Payments and to provide additional
security interests to WOF, Xxxxx, White and Xxxxxx from the following entities:
Sausage Productions Inc.
Mission Productions Inc.
Animal Miracles Productions Inc.
Edge Entertainment Inc.
DMG Too Productions Inc.
by way of guarantees, general security agreements and assignment of tax credits
and assignment of debt, all in such form as WOF may reasonably request in
preference and priority to any payments to the undersigned (other than WOF and
Xxxxx and other than to RB as provided in the Royal Bank Priority Agreement (as
amended)) (collectively, the "ADDITIONAL SECURITY");
J. RB and WOF wish to amend the RB/WOF Priority Agreement by deleting Section
3.(e) and substituting the following therefor:
"(e) consents to the granting by the Subsidiaries and of assignments of tax
credits, guarantees relating to the obligations of the Company and the
Company's assignment of debt owed to it by Edge Entertainment Inc. to WOF,
Xxxxx Xxxxx, W,D. Xxxxxxx Xxxxx and Xxxxxxx Xxxxxx and of security
agreements creating security interests in the property and assets of the
Subsidiaries as follows:
Animal Miracles Productions Inc.
Cake Night Productions Inc.
Citizen Productions Inc.
Harm's way Productions Inc.
Heroines Productions Inc.
Mall World Productions Inc.
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Passage Productions Inc.
Passage Productions Inc.
Peace Arch Productions Inc.
Prisoner of Zenda Productions Inc.
Xxxxxx and Xxxxx Productions Inc.
Sausage Productions Inc.
Mission Productions Inc.
DMG Too Productions Inc.
and the Company's assignment of the debt owed to the Company by Edge
Entertainment Inc.
provided that WOF, Xxxxx, Xxxxxx or White, as the case may be, executes and
delivers to Royal all such priority agreements and other documents as Royal
may reasonably require in order to ensure that any security granted to
Royal by any Subsidiary has priority over the security granted to WOF by
that Subsidiary.";
K. The Company represents and warrants for itself and on behalf of its
subsidiaries that no security interests in any tax credits, and the payments
resulting therefrom, or any other payments, granted and payable to RB have been
granted, or are payable, to the Lenders and no security interests in any tax
credits, and the payments resulting therefrom, or any other payments, granted or
payable to the Lenders have been granted or are payable to RB;
L. Each of the undersigned parties has an interest or potential interest in the
transactions contemplated herein; and
M. Each of the undersigned parties has agreed to execute this Consent and Waiver
in order to permit the Company to make the WOF/Xxxxx Payments and to ratify,
confirm and approve and the Prior WOF Payments and to permit the Company to
grant the Additional Security.
NOW THEREFORE, in consideration of and in reliance on the premises (which are
deemed to form part of this Agreement), the mutual covenants contained herein
and other good and valuable consideration, the adequacy and sufficiency of which
is hereby acknowledged by the parties, the parties agree as follows:
1. WOF/Xxxxx Payments - The Company hereby agrees to pay or cause to be paid to
WOF and Xxxxx the WOF/Xxxxx Payments, and WOF and Xxxxx agree to accept the
WOF/Xxxxx Payments in lieu of the Immortal Tax Credit Payment.
2. Additional Security - To secure payment of the WOF/Xxxxx Payments, the
Company hereby agrees to grant, or cause to be granted, the Additional Security
to WOF, Xxxxx, White and Xxxxxx.
3. Payments to White and Xxxxxx - Once WOF has been paid the WOF Outstanding
Debt and Xxxxx has been paid the Xxxxx Outstanding Debt, the Company will pay to
White and Xxxxxx the outstanding loans and accrued interest owing to each of
them under the loan agreement among the Company, Groff, Gamble, White and
certain others dated August 16, 2000, as amended November 30, 2001.
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4. AMENDMENT TO RB/WOF PRIORITY AGREEMENT -- RB and WOF agree that the
RB/WOF Priority Agreement is amended as set out in Recital 3 above and Xxxxx,
Xxxxxx and White agree that the terms and conditions of RB/WOF Priority
Agreement apply to, and are binding on each of them as though each of them was
an original signatory thereto.
5. DEFERRED INTEREST PAYMENTS -- WOF agrees to defer the April Interest
Payment until the last payment of WOF's Outstanding Debt is made, provided
interest will accrue thereon at the rate and terms prescribed in Section 2.2 of
the Loan Amendment Agreement for the "WOF Debt" (as defined therein), until
payment of the April Interest Payment and accrued interest has been paid in full
to WOF.
6. PAYMENTS -- Each of the undersigned parties hereby agrees to the Company
making the WOF/Xxxxx Payments, ratifies confirms and approves the Company's
payment of the Prior WOF Payments to WOF, the Company's payments to date to
Xxxxx and consents to the granting of the Additional Security.
7. CONSENT AND WAIVER -- Notwithstanding any prohibition thereof contained in
any instrument, document or agreement with WOF, Xxxxx, the Company or any
Company subsidiary to which any of the undersigned may be a party, each of the
undersigned hereby waives any breach of or default of such agreements by any
party thereto, resulting from the WOf/Xxxxx Payments, the Prior WOf Payments or
the granting of the Additional Security.
8. TIME -- Time is of the essence herein.
9. ASSIGNMENT -- No party (other than WOF, Xxxxx, White and/or Xxxxxx) shall
be entitled to assign his rights under this Agreement to any person without the
prior written consent of the other parties, provided that such consent shall
not be unreasonably withheld or delayed. WOF and Xxxxx may assign their rights
an obligations under this Agreement, provided that such person first agrees to
become party to and bound by this Agreement.
10. ENTIRE AGREEMENT -- This Agreement constitutes the entire agreement among
the parties to this Agreement with respect to the subject matter hereof and
supersedes all prior negotiations, proposals and agreements, whether oral
or written, with respect to the subject matter of this Agreement.
11. HEADINGS -- The headings used in this Agreement are for case of reference
only and shall not affect the meaning or the interpretation of this Agreement.
12. COUNTERPARTS -- This Agreement may be signed in as many counterparts as
may be necessary, each of which so signed shall be deemed to be an original
(and each signed copy sent by electronic facsimile transmission shall be deemed
to be an original), and such counterparts together shall constitute one and the
same instrument and notwithstanding the date of execution shall be deemed to
bear the date set forth herein.
IN WITNESS WHEREOF the parties have signed, sealed and delivered this agreement
as of the date first written above.
ROYAL BANK OF CANADA FREMANTLEMEDIA ENTERPRISES LTD.
(SIGNATURE)
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Per: Per: (SIGNATURE)
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
------------------------------ ------------------------------
XXXXXXX XXXXXX W.D. XXXXXXX XXXXX
XXXXXXXX XXXXXXXXXXX INC.
Per:
------------------------------ ------------------------------
XXXXX XXXXX Authorized Signatory
FIRST WAVE PRODUCTIONS INC. PEACE ARCH ENTERTAINMENT GROUP INC.
Per: Per: (SIGNATURE)
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
WORKING OPPORTUNITY FUND (EVCC)
LTD., by its manager GrowthWorks
Capital Ltd.
Per:
------------------------------
Authorized Signatory
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Per: Per:
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
(SIGNATURE)
------------------------------ ------------------------------
XXXXXXX XXXXXX W.D. XXXXXXX XXXXX
XXXXXXXX XXXXXXXXXXX INC.
Per: (SIGNATURE)
------------------------------ ------------------------------
XXXXX XXXXX Authorized Signatory
FIRST WAVE PRODUCTIONS INC. PEACE ARCH ENTERTAINMENT GROUP INC.
Per: (SIGNATURE) Per: (SIGNATURE)
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
WORKING OPPORTUNITY FUND (EVCC)
LTD., by its manager GrowthWorks
Capital Ltd.
Per: (SIGNATURE)
------------------------------
Authorized Signatory
-6-
Per: Per:
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
(SIGNATURE) (SIGNATURE)
------------------------------ ------------------------------
XXXXXXX XXXXXX W.D. XXXXXXX XXXXX
XXXXXXXX XXXXXXXXXXX INC.
Per: (SIGNATURE)
------------------------------ ------------------------------
XXXXX XXXXX Authorized Signatory
FIRST WAVE PRODUCTIONS INC. PEACE ARCH ENTERTAINMENT GROUP INC.
Per: Per: (SIGNATURE)
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
WORKING OPPORTUNITY FUND (EVCC)
LTD., by its manager GrowthWorks
Capital Ltd.
Per:
------------------------------
Authorized Signatory
-6-
Per: Per:
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
------------------------------ ------------------------------
XXXXXXX XXXXXX W.D. XXXXXXX XXXXX
XXXXXXXX XXXXXXXXXXX INC.
(SIGNATURE) Per:
------------------------------ ------------------------------
XXXXX XXXXX Authorized Signatory
FIRST WAVE PRODUCTIONS INC. PEACE ARCH ENTERTAINMENT GROUP INC.
Per: Per: (SIGNATURE)
------------------------------ ------------------------------
Authorized Signatory Authorized Signatory
WORKING OPPORTUNITY FUND (EVCC)
LTD., by its manager GrowthWorks
Capital Ltd.
Per:
------------------------------
Authorized Signatory
