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EXHIBIT 10.56
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT ("Agreement") is entered into as of
November 4, 1997 by and among Dove Entertainment, Inc., a California corporation
(the "Company" or the "Borrower") and each Subsidiary of the Borrower whose name
appears at the foot hereof (collectively, the "Contributors", individually each
a "Contributor"), for the purpose of establishing the respective rights and
obligations of contribution among the Contributors and the Borrower in
connection with the Credit Agreement (as hereinafter defined). Capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.
WHEREAS, the Borrower and the Contributors are parties to a
Credit, Security, Guaranty and Pledge Agreement dated as of November 4, 1997
among the Borrower, the Contributors and The Chase Manhattan Bank (the "Lender")
(said agreement, as it may hereafter be amended, supplemented or otherwise
modified, renewed or replaced from time to time in accordance with its terms
being the "Credit Agreement"), pursuant to which the Lender has made certain
commitments, subject to the terms and conditions set forth therein, to extend a
credit facility to the Borrower;
WHEREAS, pursuant to the Credit Agreement, the Contributors have
guaranteed the Obligations (such term being used herein as defined in the Credit
Agreement) of the Borrower;
WHEREAS, pursuant to the terms of the Credit Agreement, each of
the Borrower and Contributors has granted to the Lender a security interest in
the Collateral (as defined in the Credit Agreement) for their respective
obligations thereunder;
WHEREAS, as a result of the transactions contemplated by the
Credit Agreement, the Borrower and the Contributors will benefit, directly and
indirectly, from the Obligations and in consideration thereof desire to enter
into this Agreement to allocate such benefits among themselves and to provide a
fair and equitable arrangement to make contributions in the event any payments
are made by the Contributors under the Credit Agreement or the Lender exercises
recourse against any of the Collateral owned by the Contributors (such payment
or recourse being referred to herein as a "Contribution");
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Contributors and the Borrower hereby agree as follows:
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SECTION 1. Contribution. In order to provide for just and
equitable contribution among the Contributors and the Borrower in the event any
Contribution is made by a Contributor (a "Funding Contributor") under the Credit
Agreement, that Funding Contributor shall be entitled to a contribution from
certain other Contributors and from the Borrower for all payments, damages and
expenses incurred by that Funding Contributor in discharging any of the
Obligations, in the manner and to the extent set forth in this Agreement. The
amount of any Contribution under this Agreement shall be equal to the payment
made pursuant to the Credit Agreement or the fair saleable value of the Funding
Contributor's portion of the Collateral against which recourse is exercised, and
shall be determined as of the date on which such payment is made or recourse is
exercised, as the case may be.
SECTION 2. Benefit Amount Defined. For purposes of this
Agreement, the "Benefit Amount" of any Contributor as of any date of
determination shall be the net value of the benefits to such Contributor from
extensions of credit made by the Lender to the Borrower under the Credit
Agreement. Such benefits shall include benefits of funds constituting proceeds
of Loans which are deposited into the account of the Borrower by the Lender
which are in turn advanced or contributed by the Borrower to such Contributor
(collectively, the "Benefits"). In the case of any proceeds of Loans or Benefits
advanced or contributed to a Person (an "Owned Entity") any of the equity
interests of which are owned directly or indirectly by a Contributor, the
Benefit Amount of a Contributor with respect thereto shall be that portion of
the net value of the benefits attributable to Loans or Benefits advanced or
contributed to the Owned Entity equal to the direct or indirect percentage
ownership of such Contributor in its Owned Entity.
SECTION 3. Contribution Obligation. Each Contributor and the
Borrower shall be liable to a Funding Contributor in an amount equal to the
greater of (A) the product of (i) a fraction the numerator of which is (x) the
Benefit Amount of such Contributor or Borrower, and the denominator of which is
(y) the total amount of Obligations and (ii) the amount of Obligations paid by
such Funding Contributor and (B) 95% of the excess of the fair saleable value of
the property of such Contributor over the total liabilities of such Contributor
(including the maximum amount reasonably expected to become due in respect of
contingent liabilities), as the case may be, determined as of the date on which
the payment made by a Funding Contributor is deemed made for purposes of this
Agreement or any recourse is exercised against any Contributor's portion of the
Collateral, as the case may be (giving effect to all payments made by other
Funding Contributors and to the exercise of recourse against any other Funding
Contributor's portion of the Collateral as of such date in a manner to maximize
the amount of such contributions).
SECTION 4. Allocation. In the event that at any time there exists
more than one Funding Contributor with respect to any Contribution (in any such
case, the "Applicable Contribution"), then payment from other Contributors and
from the Borrower pursuant to this Agreement shall be allocated among such
Funding Contributors in proportion to the total amount of the Contribution made
for or on account of the Borrower by each such Funding Contributor pursuant to
the Applicable Contribution. In the event that at any time any Contributor pays
an
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amount under this Agreement in excess of the amount calculated pursuant to
clause (A) of Section 3, that Contributor shall be deemed to be a Funding
Contributor to the extent of such excess and shall be entitled to contribution
from the other Contributors and from the Borrower in accordance with the
provisions of this Agreement.
SECTION 5. Subrogation. Any payments made hereunder by the
Borrower shall be credited against amounts payable by the Borrower pursuant to
any subrogation rights of the Contributors which received the payments under
this Agreement.
SECTION 6. Preservation of Rights. This Agreement shall not limit
any right which any Contributor may have against any other Person which is not a
party hereto.
SECTION 7. Subsidiary Payment. The amount of contribution payable
under this Agreement by any Contributor shall be reduced by the amount of any
contribution paid hereunder by a Subsidiary of such Contributor.
SECTION 8. Equitable Allocation. If as a result of any
reorganization, recapitalization, or other corporate change in the Company or
any Affiliates or Subsidiaries thereof, or as a result of any amendment, waiver
or modification of the terms and conditions governing the Credit Agreement or
the Obligations, or for any other reason, the Contributions under this Agreement
become inequitable, the parties hereto shall promptly modify and amend this
Agreement to provide for an equitable allocation of the Contributions. Any of
the foregoing modifications and amendments to this Agreement shall be in writing
and signed by all parties hereto.
SECTION 9. Asset of Party to Which Contribution is Owing. The
parties hereto acknowledge that the right to contribution hereunder shall
constitute an asset in favor of the party to which such contribution is owing.
SECTION 10. Subordination. No payments payable by a Contributor
or by the Borrower pursuant to the terms hereof shall be paid until all amounts
then due and payable by the Borrower to the Lender, pursuant to the terms of the
Fundamental Documents, are paid in full in cash. Nothing contained in this
Agreement shall affect the obligations of any party hereto to the Lender under
the Credit Agreement or any other Fundamental Documents.
SECTION 11. Successors and Assigns; Amendments. This Agreement
shall be binding upon each party hereto and its respective successors and
assigns and shall inure to the benefit of the parties hereto and their
respective successors and assigns, and in the event of any transfer or
assignment of rights by a Contributor or by the Borrower, the rights and
privileges herein conferred upon that Contributor shall automatically extend to
and be vested in such transferee or assignee, all subject to the terms and
condition hereof. Except as specifically required under Section 8, this
Agreement shall not be amended without the prior written consent of the Lender.
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SECTION 12. Termination. This Agreement, as it may be modified or
amended from time to time, shall remain in effect, and shall not be terminated
until the Credit Agreement has been discharged or otherwise satisfied in
accordance with its terms.
SECTION 13. Choice of Law. This Agreement, and any instrument or
agreement required hereunder, shall be deemed to be made under, shall be
governed by, and shall be construed and enforced in accordance with, the laws of
the State of New York without regard to principles of conflict of laws.
SECTION 14. Counterparts. This Agreement, and any modifications
or amendments hereto may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original for all
purposes, but all such counterparts shall constitute but one and the same
instrument.
SECTION 15. Effectiveness. This Agreement shall become effective
on the date on which all of the parties hereto shall have executed this
Agreement. The Company shall deliver counterparts hereof bearing the signatures
of each of the parties hereto to the Lender.
IN WITNESS WHEREOF, the undersigned parties have caused this
Agreement to be duly executed as of the day and year first written above.
DOVE ENTERTAINMENT, INC.
By: /s/ XXXX XXXXXX
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Name:
Title:
DOVE INTERNATIONAL, INC. /s/ XXXX XXXXXX
DOVE FOUR POINT, INC.
By: /s/ XXXX XXXXXX
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Name:
Title:
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