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CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT
Dated as of June 20, 2000
among
OVERSEAS FILMGROUP, INC.
as Borrower,
THE GUARANTORS NAMED HEREIN
and
THE LENDERS NAMED HEREIN
with
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
THE CHASE MANHATTAN BANK,
as Issuing Bank
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Schedules
1.1 Schedule of Commitments
1.2 Acceptable Obligors/Allowable Amounts
3.7(a) Credit Parties/Pledged Securities
3.7(b) Beneficial Interests
3.8 All Items of Product
3.9 Fictitious Names
3.11 Chief Executive Office/Location of Collateral/Filing Offices
3.12 Litigation
3.15 Taxes
3.17 Material Agreements
6.1(b) Indebtedness
6.2 Existing Liens
6.3 Guarantees
6.4 Investments
6.18 Development Costs
6.25 Bank Accounts
Exhibits
A Form of Note
B Form of Opinion of Xxxxxxxx Xxxxxx & Xxxxxx, counsel to the
Credit Parties
C Form of Borrowing Base Certificate
D-1 Form of Pledgeholder Agreement (Uncompleted Product)
D-2 Form of Pledgeholder Agreement (Completed Product)
E-1 Form of Copyright Security Agreement
E-2 Form of Copyright Security Agreement Supplement
F Form of Laboratory Access Letter
G Form of Notice of Assignment and Irrevocable Instructions
H Form of Borrowing Certificate
I Form of Assignment and Acceptance
J Form of Instrument of Assumption and Joinder
K Form of Liquidity Certificate
L Form of Contribution Agreement
CREDIT, SECURITY, GUARANTY AND PLEDGE AGREEMENT, dated as of
June 20, 2000 (as amended, supplemented or otherwise
modified, renewed or replaced from time to time, the "Credit
Agreement"), among OVERSEAS FILMGROUP, INC., a Delaware
corporation (the "Borrower"), the Guarantors named herein,
the Lenders referred to herein, THE CHASE MANHATTAN BANK, a
New York banking corporation, as Administrative Agent (in
such capacity, the "Administrative Agent"), and THE CHASE
MANHATTAN BANK, as Issuing Bank (in such capacity, the
"Issuing Bank").
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.
The Borrower has requested that the Lenders make available a $40,000,000
five-year secured revolving credit facility (the "Facility") (of which only
$33,000,000 has been committed as of the date hereof) the proceeds of which will
be used to (i) refinance outstanding loans, accrued interest and fees and
expenses under the Existing Credit Facility (as defined below), the current
outstanding amount of which is approximately $17,941,406.28, (ii) finance the
Borrower's or a Guarantor's production, acquisition, distribution and
exploitation of feature length motion pictures, television programming, video
product and rights therein, (iii) fund the Borrower's or a Guarantor's working
capital, and (iv) otherwise fund lawful corporate purposes of the Borrower.
With regard to the portion of the Facility which is not committed as of the
date hereof, the Administrative Agent is being given authority to accept
commitments from additional Lenders in accordance with the provisions of Section
12.1(b) hereof.
To provide assurance for the repayment of the Loans and other Obligations
of the Borrower and the Guarantors hereunder, the Borrower and the Guarantors
will provide or will cause to be provided to the Administrative Agent, for the
benefit of the Administrative Agent, the Issuing Bank and the Lenders, the
following (each as more fully described herein):
(i) a security interest in the Collateral pursuant to Article 8 hereof;
(ii) a guaranty of the Obligations pursuant to Article 9 hereof; and
(iii) a pledge of the Pledged Securities 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 and each Lender is willing to
make Loans to the Borrower and participate in the Letters of Credit in amounts
in the aggregate at any one time outstanding not in excess of its Commitment
hereunder, all as set forth on the Schedule of Commitments attached hereto as
Schedule 1.1.
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. 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, New York (or
another city acceptable to the Administrative Agent in its sole discretion);
(iii) is issued or confirmed by (a) any 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) by any other bank which the Required
Lenders may in their sole discretion determine to be of acceptable credit
quality; and (iv) has an expiration date no earlier than two (2) months after
the "Outside Delivery Date" for an item of Product (as set forth in the
Completion Guarantee for such item of Product) to which the letter of credit
relates.
"Acceptable Obligors" shall mean any Person or Affiliated Group listed on
Schedule 1.2 hereto (as modified from time to time in accordance with Section
2.16).
"Administrative Agent" shall mean The Chase Manhattan Bank, in its capacity
as Administrative Agent for the Lenders hereunder, or such successor
Administrative Agent as may be appointed pursuant to Section 12.11 of this
Credit Agreement.
"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, power
either 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.
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"Allowable Amount" shall mean, with respect to any Person or Affiliated
Group, such amount (as modified from time to time in accordance with Section
2.16) as may be specified on Schedule 1.2 hereto as the maximum aggregate
exposure for an Acceptable Obligor.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect for such day plus 1/2
of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City. "Base CD Rate"
shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate
and (ii) Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary
CD Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
is not a Business Day, the next preceding Business Day) by the Board through the
public information telephone line of the Federal Reserve Bank of New York (which
rate will, under current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if such
rate shall not be so reported on such day or such next preceding Business Day,
the average of the secondary market quotations for three-month certificates of
deposit of major money center banks in New York City received at approximately
10:00 a.m., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Administrative Agent
from three New York City negotiable certificate of deposit dealers of recognized
standing selected by it. "Statutory Reserves" shall mean a fraction (expressed
as a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking authority to which
the Administrative Agent is subject for new negotiable nonpersonal time deposits
in Dollars of over $100,000 with maturities approximately equal to three months.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage. "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient quotations
in accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
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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 any state thereof or municipality therein or
foreign governmental bodies or regulatory agencies applicable to the Person in
question or its assets, and all orders and decrees of all courts and arbitrators
in proceedings or actions in which the Person in question is a party to the
extent binding upon such Person.
"Applicable Margin" shall mean 2% per annum for a Eurodollar Loan and 1%
per annum for an Alternate Base Rate Loan.
"Approved Completion Guarantor" shall mean a financially sound and
reputable completion guarantor approved by the Required Lenders. The Required
Lenders hereby pre-approve as an Approved Completion Guarantor (i) Fireman's
Fund Insurance Company, acting through its agent, International Film Guarantors
L.P. (the general partner of which is International Film Guarantors, Inc.), (ii)
Cinema Completions International Inc./Continental Casualty Company and (iii)
Film Finances, Inc. (only to the extent the Completion Guarantee is accompanied
by a Lloyd's of London "cut-through"); provided, however, that (x) any such pre-
approval with respect to Film Finances, Inc. applies to items of Product for
which the cost is less than $40,000,000 and (y) 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 15
days prior written notice to the Borrower.
"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 in the form of Exhibit
I hereto (or any other form approved by the Administrative Agent), executed by
the assignor, assignee and other parties as contemplated thereby.
"Authorized Financial Officer" shall mean the Chief Executive Officer, the
President, Chief Financial Officer or Chief Operating Officer of the Borrower
who is authorized by the Borrower to execute certificates hereunder on behalf of
the Borrower.
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"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 any
amount contained therein or deducted therefrom) of the following:
(a) 100% of the Eligible L/C Receivables; plus
(b) 85% of Eligible Receivables (other than Eligible L/C Receivables);
plus
(c) 50% of the Library Credit; plus
(d) 85% of Other Receivables up to $2,000,000 in the aggregate, but not
more than $100,000 from any one obligor that is not an Acceptable
Obligor; plus
(e) the Unsold Territory Credit (but no more than the lesser of 15% of the
Borrowing Base or the available Commitment) without double- counting
for any value included in the Library Credit and, with regard to each
item of Product prior to Completion, not in excess of the amount that
would be payable to the Borrower under the relevant Completion
Guarantee if such item of Product were then abandoned, minus
(f) to the extent not already deducted in computing the foregoing or in
calculating the amount of the Eligible Receivables pursuant to the
definition of Eligible Receivables, without duplication, the sum of
all amounts payable by the Credit Parties to third parties from or
with regard to the amounts otherwise included in the Borrowing Base,
including without limitation set offs, profit participations,
deferments, residuals, commissions and royalties.
The Borrowing Base shall not include amounts which are attributable to an
item of Product which has not been Completed unless the Administrative Agent is
the beneficiary of a Completion Guarantee to the extent of the Borrower's or
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Guarantor's, as the case may be, financial interest in such item of Product and
then the amount includable in the Borrowing Base may not exceed the amount that
would then be payable to the Administrative Agent under the Completion Guarantee
if such item of Product were to be abandoned, except that, in the absence of
such Completion Guarantee, if a Letter of Credit has been issued, contracts may
be included up to the amounts of the L/C Exposure provided that the Letter of
Credit may not be drawn unless there is sufficient delivery so as to enable the
Borrower or such Guarantor, as the case may be, to fulfill its delivery
obligation under such contracts.
Only non-refundable receivables contractually obligated to be paid to a
Credit Party (net of reserves for bad debts, payments due to third parties,
taxes, participations, royalties and residuals) on "payment dates certain" or
mutually agreed-upon estimated dates of payment that are a result of acceptable
contracts in which the obligation to pay the Borrower is unconditional or
subject to conditions solely within Borrower's control (except as provided above
with regard to Letters of Credit) are eligible for inclusion in the "Borrowing
Base."
The Administrative Agent may require that any or all of the following items
be delivered to it, in form and substance acceptable to the Administrative
Agent, in order for any particular Eligible Receivable to be included in the
Borrowing Base: (i) a copy of the executed Distribution Agreement and/or (ii) to
the extent not already delivered to the Administrative Agent, and to the extent
requested by the Administrative Agent, copyright registration for the
distribution rights, chain of title documents, acceptable insurance, and
security filings.
"Borrowing Base Certificate" shall have the meaning given 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 Borrower 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 bond fee,
and a contingency amount, and all other items customarily included in negative
costs, including finance charges and interest expense, but excluding production
fees and overhead charges payable to the Borrower or any Guarantor.
"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
or the State of California; provided, however, that when used in connection with
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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.
"Capital Expenditures" shall mean, with respect to any Person for any
period, 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 (other than "additions to film costs") reflected in the statement of cash
flows of such Person (other than the portion of such expenditures allocable in
accordance with GAAP to Product). For purposes of this definition, the purchase
price of equipment that is purchased simultaneously with the trade-in of
existing equipment or with insurance proceeds shall be included in Capital
Expenditures only to the extent of the gross amount of such purchase price less
the credit granted by the seller of such equipment for the equipment being
traded in at such time or the amount of such proceeds, as the case may be.
"Capital Lease" shall mean any lease of any property (whether real,
personal or mixed) by a 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 Account" shall have the meaning given 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 at the time of acquisition 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 at the time of acquisition 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 and on deposit with the Administrative Agent, or
(iv) any mutual fund or other pooled investment vehicle which invests
principally in the foregoing obligations.
"Chain of Title" shall have the meaning given such term in Section 5.20
hereof.
"Change in Control" shall mean that (i) the Little Trust ceases to own and
have the right to vote at least 10% of the equity securities of the Borrower,
(ii) Xxxxxxxxxxx Xxxxxx and Xxxxxxx Xxxxxx, collectively, cease to own and have
the right to vote at least 51% of the equity securities of Xxxxxxxx Street,
(iii) Xxxxxxxx Street ceases to own and have the right to vote at least 25% of
the equity securities of the Borrower or (iv) any Person at any time owns
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equity securities of the Borrower which exceed the equity securities owned, in
the aggregate, by the Little Trust and Xxxxxxxx Street. For purposes of clauses
(i) and (iii) of this definition only, calculation of percentages of equity
securities of the Borrower shall not give effect to the exercise or conversion
of warrants, options, convertible securities and other rights to acquire equity
securities of the Borrower which are outstanding on the Closing Date.
"Change in Management" shall mean more than one of the following Persons
ceases to be employed in their respective positions with the Borrower (such
position to be determined as of the Closing Date): Xxxxxxxxxxx Xxxxxx, Xxxxxxx
X. Xxxxxxx and Xxxxxx Xxxxxx; provided that a Change in Management shall not be
deemed to have occurred if, prior to the event which would otherwise have
resulted in a Change in Management, a person acceptable to the Administrative
Agent replaces Xxxxxxx X. Xxxxxxx, Xxxxxxxxxxx Xxxxxx or Xxxxxx Xxxxxx, as the
case may be.
"Clearing Account" shall mean the account of the Administrative Agent (for
the benefit of the Lenders) 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: Xxxxxx Xxxxxx, designated as the "Overseas
Filmgroup, Inc. Clearing Account", Account No. 323-143059.
"Closing Date" shall mean the date on which all conditions precedent to the
making of the initial Loans as set forth in Section 4.1 have been satisfied or
waived.
"Code" shall mean the Internal Revenue Code of 1986 and the rules and
regulations issued thereunder, as heretofore amended, 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 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, intercompany obligations, partnership and joint venture
interests, contract rights, documents, chattel paper, general intangibles,
goodwill, equipment, machinery, inventory, investment property, instruments,
copyrights, trademarks, trade names, insurance proceeds, cash, deposit accounts
and the Pledged Securities, any proceeds thereon, 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 Film Asset and type and item
of Product, the scenario, screenplay or script upon which an item of Product
and/or Film Asset is based, all of the properties thereof, tangible and
intangible, and all domestic and foreign copyrights and all other rights therein
and thereto, of every kind and character, whether now in existence or hereafter
to be made or produced, and whether or not in possession of such Credit Party,
including with respect to each and every Film Asset and item of Product and
without limiting the foregoing language, each and all of the following
particular rights and properties (to the extent they are owned or hereafter
created or acquired by such Credit Party):
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(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 each Film Asset and item of Product
which are and/or will be incorporated into each Film Asset and item of
Product, all component parts of each Film Asset and 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 the Film Asset or item of Product, and all other literary
material upon which the Film Asset or item of Product is based or from
which it is adapted;
(iii) all rights in and to all music and musical compositions used and
to be used in each Film Asset and item of Product, 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 each Film Asset and
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, master tapes and any and all other
physical properties of every kind and nature relating to such Film Asset or
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 otherwise
and all music sheets and promotional materials relating to such Film Asset
or item of Product (collectively, the "Physical Materials");
(v) all collateral, allied, subsidiary and merchandising rights
appurtenant or related to each Film Asset and item of Product including,
without limitation, the following rights: all rights to produce remakes or
sequels or prequels to each Film Asset and item of Product based upon each
Film Asset or item of Product, said literary properties or the theme of
each Film Asset and 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 any process
analogous thereto, now known or hereafter devised, each Film Asset and item
of Product or any remake or sequel or prequel to the Film Asset or 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
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other recording device or medium now known or hereafter devised, based upon
each Film Asset or item of Product, said literary properties or any part
thereof, including, without limitation, based upon any script, scenario or
the like used in each Film Asset and 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, each Film
Asset and item of Product, the title or titles of each Film Asset and item
of Product, the characters of each Film Asset and item of Product 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 each Film Asset and item of
Product, any remake or sequel thereof and/or said literary properties;
(vi) all statutory copyrights, domestic and foreign, obtained or to be
obtained on each Film Asset and item of Product, together with any and all
copyrights obtained or to be obtained in connection with each Film Asset
and item of Product or any underlying or component elements of each Film
Asset and item of Product, including, in each case without limitation, all
copyrights on the property described in subparagraphs (i) through (v)
inclusive of this paragraph, 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 bonds connected with each
Film Asset and 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 each Film Asset and item of
Product, the Physical Materials and motion picture rights in and to said
story, other literary material upon which each Film Asset and item of
Product is based or from which it is adapted, and said music and musical
compositions used or to be used in each Film Asset and 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 other property obtained or to be obtained from the
distribution, exhibition, sale or other uses or dispositions of each Film
Asset, item of Product, or any part of each Film Asset or item of Product,
including, without limitation, all proceeds, profits, products and
increases, whether in money or otherwise, from the sale, rental or
licensing of each Film Asset and item of Product and/or any of the elements
of each Film Asset and item of Product including from collateral, allied,
subsidiary and merchandising rights;
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(x) the dramatic, nondramatic, stage, television, radio and publishing
rights, title and interest in and to each Film Asset and item of Product,
and the right to obtain copyrights and renewals of copyrights therein;
(xi) the name or title of each Film Asset and 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 the rules and principles of law and of 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 each Film Asset and 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 under a completion
guaranty, all accounts and/or rights to payment due from exhibitors in
connection with the distribution of each Film Asset and item of Product,
and from exploitation of any and all of the collateral, allied, subsidiary,
merchandising and other rights in connection with each Film Asset and item
of Product;
(xiv) any and all "general intangibles" (as that term is defined in
the UCC) not elsewhere included in this definition, including, without
limitation, any and all general intangibles consisting of any right to
payment which may arise in 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 each Film Asset and item of Product, any and all general intangible
rights in favor of such Credit Party relating to licenses of sound or other
equipment, licenses for any photograph or photographic process, and all
general intangibles related to the distribution or exploitation of each
Film Asset and item of Product including general intangibles related to or
which grow out of the exhibition of each Film Asset and item of Product and
the exploitation of any and all other rights in each Film Asset and item of
Product set out in this definition;
(xv) any and all goods including inventory (as those terms are defined
in the UCC) which may arise in connection with the creation, production or
delivery of each Film Asset and item of Product and which goods pursuant to
any production or distribution agreement or otherwise are owned by such
Credit Party;
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(xvi) all and each of the rights, regardless of denomination, which
arise in connection with the creation, production, completion of
production, delivery, distribution, or other exploitation of each Film
Asset and 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 each Film Asset and item of
Product in the event that the Administrative Agent exercises any rights it
may have to take over and complete production of each Film Asset and item
of Product;
(xvii) any and all documents issued by any pledgeholder or bailee with
respect to the Film Asset or item of Product or any Physical Materials
(whether or not in completed form) with respect thereto;
(xviii) any and all Production Accounts, the Collection Account or
other bank accounts established by such Credit Party with respect to such
Film Asset or item of Product;
(xix) any and all rights of such Credit Party under contracts relating
to the production or acquisition of such Film Asset or item of Product; and
(xx) any and all rights of such Credit Party under Distribution
Agreements relating to each Film Asset and item of Product.
"Collection Account" shall mean the collection account of the Borrower
maintained at the office of the Administrative Agent at The Chase Manhattan
Bank, Agent Bank Services, Xxx Xxxxx Xxxxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, XX
00000, Attn.: Xxxx Xxxxxxx, designated as the "Overseas Filmgroup, Inc.
Collection/Cash Collateral Account," Account No. 323-150624, ABA No.: 000000000.
"Commitment" shall mean the Commitment of each Lender to make Loans to the
Borrower and 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, not in excess of the amount set forth (i) opposite its
name under the column entitled "Total Commitment" in the Schedule of Commitments
appearing in Schedule 1.1 hereto, as adjusted from time to time by any
applicable Assignment and Acceptance to which it is a party 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.
"Commitment Fee" shall have the meaning given such term in Section 2.5
hereof.
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"Commitment Termination Date" shall mean (i) June 20, 2005 or (ii) such
earlier date on which the Commitments shall terminate in accordance with Section
2.6 or Article 7 hereof.
"Complete", Completed" and "Completion" shall mean with respect to any item
of Product, that (A) either (i) sufficient elements have been delivered by a
Credit Party to, and accepted by, a Person (other than a Credit Party) 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 in the United
States or (ii) the Borrower has certified to the Administrative Agent that an
independent laboratory has in its possession a complete final 35 mm or 75 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 that,
if such certification shall not be verified to the Administrative Agent by such
independent laboratory within twenty (20) Business Days thereafter, such item of
Product shall revert to being un-Completed until the Administrative Agent
receives such verification, and (B) if such item of Product was acquired 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 (other than the
payment of money not yet due, for which a Completion Reserve has been
established) the occurrence of which might result in the relevant Credit Party
losing any of its rights in such item of Product.
"Completion Guarantee" shall mean a completion guarantee, in form and
substance satisfactory to the Administrative Agent, issued by an Approved
Completion Guarantor which names the Administrative Agent for the benefit of
itself, the Issuing Bank and the Lenders as a beneficiary thereof to the extent
of the Borrower's or Guarantor's financial interest in an item of Product.
"Completion Reserve" shall mean the portion of the Borrowing Base and
unused Commitment that has been reserved for (x) Completion of uncompleted
Product or acquisition of Product (including without limitation, the payment of
the entire acquisition price or minimum advance for any item of Product acquired
from a third party) and (y) any committed prints and advertising expenditure
which is a condition precedent to payments of items for which receivables have
been included in the Borrowing Base.
"Consolidated Net Worth" shall mean the amount of stockholders' equity of
the Borrower (including the Overseas Equity Offering) and its Consolidated
Subsidiaries less the sum of (i) the amount of minority interests in its
Consolidated Subsidiaries and (ii) the redemption value of equity securities
which are subject, prior to the second anniversary of the Commitment Termination
Date, to either mandatory redemption or redemption at the option of the security
holder.
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"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 L hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Controlled Foreign Corporation" shall mean a Subsidiary of the Borrower
which is a "controlled foreign corporation" as defined in Section 957(a) of the
Code or any successor provision thereto.
"Copyright Security Agreement" shall mean the Copyright Security Agreement,
substantially in the form of Exhibit E-1 hereto as the same may be amended or
supplemented from time to time by delivery of a Copyright Security Agreement
Supplement or otherwise.
"Copyright Security Agreement Supplement" shall mean a Supplement to the
Copyright Security Agreement substantially in the form of Exhibit E-2 hereto.
"Credit Exposure" shall mean, without duplication, with respect to any
Lender, the sum of such Lender's (i) aggregate outstanding Loans hereunder, (ii)
Pro Rata Share of the then current L/C Exposure, and (iii) the amount, if any,
by which the sum of such Lender's Commitments exceeds the sum of its outstanding
Loans plus its Pro Rata Share of the then current L/C Exposure.
"Credit Party" shall mean the Borrower and each Guarantor.
"Currency Agreement" shall mean any foreign exchange contract, currency
swap agreement, futures contract, option contract or other similar agreement
designed to protect any Credit Party against fluctuations in currency values.
"Default" shall mean any event, act or condition, which with the giving of
notice or the lapse of any period of time expressly prescribed in Article 7, or
both, would constitute an Event of Default.
"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 or otherwise transferred distribution rights, exhibition
rights or other exploitation rights to any item of Product to a Person that is
neither a Credit Party nor a Subsidiary of a Credit Party and (ii) any agreement
hereafter entered into by a Credit Party pursuant to which such Credit Party
sells, leases, licenses, assigns or otherwise transfers distribution rights or
other exploitation rights to an item of Product or Film Asset to a Person that
is neither a Credit Party nor a Subsidiary of a Credit Party.
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"Dollars" and "$" shall mean lawful money of the United States of America.
"Eligible Assignee" shall mean (i) a commercial bank organized under the
laws of the United States, or any State thereof, and having total assets in
excess of $1,000,000,000; (ii) a savings and loan association or savings bank
organized under the laws of the United States, or any State thereof, and having
a net worth of at least $100,000,000, calculated in accordance with GAAP; (iii)
a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development ("OECD"), or
a political subdivision of any such country, and having total assets in excess
of $1,000,000,000, provided that such bank is acting through a branch,
subsidiary or agency located in the country in which it is organized or another
country which is also a member of the OECD; or (iv) the central bank of any
country which is a member of the OECD.
"Eligible L/C Receivable" shall mean an Eligible Receivable with respect to
which an Acceptable L/C has been delivered to the Administrative Agent for the
full amount of such Eligible Receivable; provided, that such Eligible Receivable
need not be with an Acceptable Obligor.
"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, in the case of amounts which are not due and payable within 12
months following the date of determination, on a quarterly basis by a rate of
interest equal to the average interest rate in effect on Alternate Base Rate
Loans on the date of the computation) of (a) all net amounts which pursuant to a
binding agreement are contractually obligated to be paid to a Credit Party
either unconditionally or subject only to normal delivery requirements, and
which are reasonably expected by the Borrower to be payable and collected from
Acceptable Obligors (including, without limitation, amounts which a distributor
has reported to a Credit Party in writing (and such report has been forwarded to
the Administrative Agent) will be paid to such Credit Party following receipt by
the distributor of sums contractually obligated to be paid to the distributor
from third parties) minus (b) the sum, without double-counting, of (i) the
following items (based on the Borrower's then best estimates): third party
profit participations, residuals, collection/distribution expenses, commissions,
home video fulfillment costs, 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 expenses or advances made by a distributor to
the extent subject to repayment by a Credit Party or which reduce amounts
otherwise payable pursuant to approved Distribution Agreements, but Eligible
Receivables shall not include amounts:
(i) in the aggregate due from a single Acceptable Obligor or Affiliated
Group to the extent such amounts are in excess of the Allowable Amount with
respect to such Acceptable Obligor or Affiliated Group;
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(ii) which, in the reasonable discretion 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 the
Borrower or any other party or obligations contingent upon future events not
within the Borrower's direct control within the ordinary course of business);
(iii) to the extent such receivables are more than 150 days past due;
(iv) which are theatrical receivables which are due from any obligor in
connection with the theatrical exhibition, distribution or exploitation of an
item of Product that are still outstanding six (6) months after their creation;
(v) if they are to be paid in a currency other than United States Dollars
unless hedged in a manner reasonably satisfactory to the Administrative Agent;
(vi) to the extent included in the Borrower's or a Guarantor's estimated
bad debts;
(vii) due (other than the amounts that are being disputed or contested in
good faith) from any obligor which has 20% or more of the total receivable
amount from such obligor 150 or more days past due;
(viii) which are subject to a 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 are attributable to an item of Product in which a Credit Party
cannot warrant sufficient title to the underlying rights to justify such
receivable;
(x) which are not subject to a first priority perfected security interest
in favor of the Administrative Agent (for the benefit of itself, the Issuing
Bank and the Lenders) under the applicable UCC and applicable copyright law;
provided that such receivable may be subject to Permitted Encumbrances
subordinate to the security interest of the Administrative Agent;
(xi) which are determined by the Administrative Agent or the Required
Lenders in their reasonable discretion, acting in good faith, upon written
notice from the Administrative Agent to the Borrower and effective ten (10) days
subsequent to the Borrower's receipt of such notice, to be unacceptable (it
being understood that certain unacceptable receivables may be made acceptable
and may be included in the Borrowing Base if secured by an Acceptable L/C);
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(xii) which relate to items of Product as to which the Administrative Agent
has not received a fully executed copy of a Laboratory Access Letter or a
Pledgeholder Agreement for each laboratory holding Physical Elements sufficient
to fully exploit the rights held by the Borrower or a Guarantor in such item of
Product;
(xiii) which will be subject to reduction or repayment to the extent not
earned by performance;
(xiv) which are attributable to items of Product which have not been
Completed (except that (1) if a Completion Guarantee has been issued for such
item of Product and no Default or Event of Default shall be continuing at such
time, amounts attributable to such item of Product may be treated as Eligible
Receivables (even though the item of Product has not yet been Completed),
provided that (A) the portion of the Borrowing Base attributable to such
Eligible Receivables for such item of Product shall not exceed the amount
payable to the Borrower, a Guarantor or the Administrative Agent, as the case
may be, under such Completion Guarantee in the event such item of Product is not
Completed in a timely manner and (B) such amounts otherwise meet all of the
applicable criteria for inclusion as Eligible Receivables; or (2) with respect
to an item of Product being produced by a third party where the Borrower or a
Guarantor is not subject to a completion risk (i.e. (i) payment by the Borrower
or a Guarantor is conditioned on delivery or (ii) such payment obligation is
supported by a Letter of Credit issued hereunder and proof of Completion of the
item of Product must be presented in order to draw under such Letter of Credit),
amounts generated from sales attributable to such item of Product may be treated
as Eligible Receivables (even though the item of Product has not been
Completed); provided that (A) the portion of the Borrowing Base attributable to
such Eligible Receivables for such item of Product does not exceed the face
amount of any Letter of Credit issued hereunder to support a Credit Party's
obligations in connection with the acquisition of such item of Product, and (B)
such amounts otherwise meet all the applicable criteria for inclusion as
Eligible Receivables except clauses (i) and (xii) above.
(xv) which will not become due and payable until twelve (12) months or more
after the scheduled Commitment Termination Date; or
(xvi) which are rendered unenforceable against the obligor due to the
failure of the Borrower or a Guarantor to be in good standing as a foreign
corporation.
"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 may at any time
hereafter be in effect, including without limitation, the Clean Water Act also
known as the Federal Water Pollution Control Act ("FWPCA"), 33 X.X.X.xx. 1251 et
seq., the Clean Air Act ("CAA"), 42 X.X.X.xx.xx. 7401 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 X.X.X.xx.xx. 136 et
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seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 X.X.X.xx.xx.
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 ("ECPCRKA"), 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 X.X.X.xx. 655 and ss. 657, together, in each case,
with any amendment thereto, and the regulations adopted pursuant thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
heretofore and hereafter amended, as codified at 29 X.X.X.xx. 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.
"Estimated Value" shall mean with respect to an item of Product being
funded hereunder, the estimated value attributable to each of the following
territories, which value shall be calculated by multiplying the percentage set
forth below for such territory times lesser of (x) the Borrower's
acquisition/production cost for such item of Product and (y) Budgeted Negative
Cost of such item of Product:
Estimated Value
Territory (Percentage of the final budget)
----------------- --------------------------------
Australia/New Zealand 3%
Benelux 2%
France 7%
Germany 12%
Italy 6%
Japan 10%
Scandinavia 3%
Spain 5%
United Kingdom 7%
All other foreign territories 5%
The foregoing percentages may be reduced by the Administrative Agent (in its
sole discretion) with respect to all remaining Unsold Major Foreign Territories
for any item of Product for which actual sales in a listed territory total less
than the aggregate estimate for such sold territory based on the foregoing
percentages.
"Eurodollar Loan" shall mean a Loan based on the LIBO Rate in accordance
with the provisions of Article 2 hereof.
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"Event of Default" shall have the meaning given such term in Section 7.1.
"Existing Credit Facility" shall mean the credit facility of the Borrower
with Xxxxxx & Co. and Bankgesellschaft Berlin AG (formerly known as Berliner
Bank A.G.) pursuant to that certain Syndication Agreement dated as of October
31, 1996, as amended.
"FASB" shall mean the Financial Accounting Standards Board or any successor
body.
"Fee Letter" shall mean that certain letter agreement dated as of February
3, 2000 among the Borrower, Chase Securities, Inc. and the Administrative Agent
relating to the payment of certain fees by the Borrower.
"Film Asset" shall mean any screenplay, novel, treatment, outline and other
literary property upon which any item of Product is to be based, copyright and
other tangible and intangible asset in connection with any item of Product.
"Fundamental Documents" shall mean this Credit Agreement, the Notes, the
Pledgeholder Agreements, the Laboratory Access Letters, the Copyright Security
Agreement, the Copyright Security Agreement Supplements, the Contribution
Agreement, the Instrument of Assumption and Joinder, the Notices of Assignment
and Irrevocable Instruction, UCC financing statements, and each of the
agreements delivered pursuant thereto, and any other ancillary documentation
which is required to be or is otherwise executed by any of the Credit Parties
and delivered to the Administrative Agent in connection with this Credit
Agreement or any other Fundamental Document.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time consistently applied (except for
accounting changes in response to FASB releases, or other authoritative
pronouncements).
"Governmental Authority" shall mean any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or any court, in each case whether of the United States or a foreign
jurisdiction.
"Guarantors" shall mean all of the direct and indirect Subsidiaries of the
Borrower (other than Controlled Foreign Corporations) now existing or hereafter
acquired or created.
"Guaranty" shall mean, as to any Person, any direct or indirect obligation
of such Person guaranteeing or intended to guaranty any Indebtedness, dividend
or other monetary obligation ("primary obligation") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (a) for the
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purchase or payment of any such primary obligation or (b) 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 (iii) to purchase property,
securities or services, in each case, primarily for the purpose of assuring the
performance of the primary obligor of any such primary obligation; provided,
however, that the term Guaranty shall not include endorsements for collection or
collections for deposit, in either case in the ordinary course of business. The
amount of any Guaranty of a Person shall be deemed to be an amount equal to the
lesser of (x) the maximum liability of such Person under the terms of such
Guaranty or (y) the stated or determinable amount of the primary obligation in
respect of which such Guaranty is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder).
"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.
"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 and similar current liabilities (payable within 120
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, the amount of such indebtedness to be limited to the maximum amount
guaranteed or (b) secured by a Lien on the assets of such Person (the amount of
such indebtedness to be limited to the value of the asset subject to the Lien),
whether or not such Person has assumed such indebtedness. Indebtedness shall not
include expenses, or set offs, profit participations, deferments, residuals,
commissions or royalties, or non-refundable or non-recoupable advances made by a
third-party distributor to a special-purpose Subsidiary of the Borrower to
"cash-flow" the production of an item of Product.
"Initial Date" shall mean (i) in the case of the Administrative Agent and
the Issuing Bank, the date hereof, (ii) in the case of each Lender which is an
original party to this Credit Agreement, the date hereof and (iii) in the case
of any other Lender, the effective date of the Assignment and Acceptance
pursuant to which it became a Lender.
"Instrument of Assumption and Joinder" shall mean the Instrument of
Assumption and Joinder substantially in the form of Exhibit J pursuant to which
Subsidiaries of the Borrower become parties to this Credit Agreement as
contemplated by Section 5.23.
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"Interest Deficit" shall have the meaning given such term in Section 2.13.
"Interest Payment Date" shall mean (i) as to any Eurodollar Loan having an
Interest Period of one, two or three months, the last day of such Interest
Period, (ii) 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 any integral multiple thereof and (iii) with respect
to Alternate Base Rate Loans, the last Business Day of each March, June,
September and December (commencing the last Business Day of June 2000).
"Interest Period" shall mean as to any Eurodollar Loan, the period
commencing on the date of such Loan 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 or twelve months thereafter as the Borrower 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
Commitment Termination Date, (iii) no Interest Period of nine or twelve months
may be selected unless generally available in the market and consented to by the
Administrative Agent and the Required Lenders (in their sole discretion) at the
time of each request.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, synthetic caps, collars and floors or
other financial agreement or arrangement designed to protect any Credit Party
against fluctuations in interest rates.
"Interest Rate Type" shall be as defined in Section 2.2(a).
"Investment" shall mean any stock, evidence of indebtedness or other
securities 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 (except for current trade and customer accounts receivable
arising in the ordinary course of business), and any purchase of (i) any
securities of another Person or (ii) any business or undertaking of any Person
or any commitment or option to make any such purchase.
"Issuing Bank" shall mean The Chase Manhattan Bank, in its capacity as
Issuing Bank for the Lenders hereunder.
"L/C Exposure" shall mean, at any time, the amount expressed in Dollars of
the aggregate face amount of all drafts which may then or thereafter be
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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.
"Laboratory" shall mean any laboratory reasonably acceptable to the
Administrative Agent, which is located in Canada, the United Kingdom, or the
United States or in another location acceptable to the Administrative Agent and
which in each case 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 a Credit Party
has the right of access, (ii) such Credit Party and (iii) the Administrative
Agent, substantially in the form of Exhibit F hereto or a form otherwise
reasonably acceptable to the Administrative Agent.
"Lender" and "Lenders" shall mean the financial institutions whose names
appear at the foot hereof and any assignee of a Lender pursuant to Section
13.3(b).
"Lending Office" shall mean, with respect to any of the Lenders, the branch
or branches (or affiliate or affiliates) from which any such Lender's 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 Eurodollar Loans or Alternate Base Rate Loans are made, as notified to
the Administrative Agent from time to time.
"Letter of Credit" shall mean a letter of credit issued by the Issuing Bank
pursuant to Section 2.15.
"LIBO Rate" shall mean, with respect to the Interest Period for a
Eurodollar Loan, the BBA Interest Settlement Rate per annum at which deposits in
U.S. dollars are offered in London, England to prime banks in the London
interbank market for such Interest Period as displayed on Telerate Screen page
3750 as of 11:00 a.m. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to the Administrative
Agent's portion of such Eurodollar Loan comprising part of such Borrowing to be
outstanding during such Interest Period. Telerate Screen page 3750 means the
display designated as page 3750 on the Dow Xxxxx Telerate Service (or such other
page as may replace page 3750 on that service or such other service as may be
nominated by the BBA as the information vendor for the purpose of displaying BBA
Interest Settlement Rates for U.S. dollars). If such rate does not appear on
Telerate Screen page 3750 on any relevant date for the determination of the
Eurodollar rate, the Eurodollar rate shall be an interest rate equal to the rate
per annum of the average (rounded upward to the nearest whole multiple of 1/100
of 1% per annum, if such average is not such a multiple) of the rate per annum
at which deposits in U.S. dollars are offered to the principal office of the
Administrative Agent in London, England by prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before the first day of
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such Interest Period in an amount substantially equal to the Eurodollar Loan
comprising part of such Borrowing to be outstanding during such Interest Period.
"Library Credit" shall mean the amount which represents the value of
Completed but unsold Product and will initially be equal to the net present
value of unsold rights prepared by an independent consultant selected by the
Administrative Agent (subject to its due diligence review) and shall be
redetermined no later than September 30, 2000 and thereafter on an annual basis
by an independent consultant selected by the Administrative Agent in its
reasonable discretion using a methodology consistent with the evaluation and
without double-counting for any item of value otherwise included in the
Borrowing Base and will be subject to periodic adjustments by the Borrower to
reflect collections and/or decrease in market value indicated by subsequent
sales.
"Lien" shall mean any mortgage, copyright mortgage, pledge, security
interest, encumbrance, lien or charge 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).
"Little Trust" shall mean the trust established for the benefit of Xxxxx
Xxxxxx and Xxxxxx Xxxxxx pursuant to that certain Trust Agreement dated May 31,
1996 between Xxxxx Xxxxxx and Xxxxxx Xxxxxx, as grantors, and Xxxxx Xxxxxx and
Xxxxxx Xxxxxx, as trustees.
"Liquidity Certificate" shall be as defined in Section 6.20.
"Loans" shall mean the loans made hereunder in accordance with the
provisions of Article 2, whether made as a Eurodollar Loan or an Alternate Base
Rate Loan, as permitted hereby.
"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.
"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 is obligated to
make contributions, or has within any of the five preceding Plan years made or
been obligated to make contributions.
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"Negative Pickup 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 Pickup Obligation includes both "traditional" negative
pickup arrangements and minimum guarantees.
"Notes" shall be defined as in Section 2.3 hereof.
"Notice of Assignment and Irrevocable Instructions" shall mean the Notice
of Assignment and Irrevocable Instructions substantially in the form of Exhibit
G or in such other form as shall be reasonably 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 Borrower to make due and
punctual payment of principal of and interest on the Loans, the Commitment Fee,
reimbursement obligations in respect of Letters of Credit and all other monetary
obligations of the Borrower owed to the Administrative Agent, the Issuing Bank
or any Lender under this Credit Agreement, the Notes or any other Fundamental
Document or the Fee Letter and all amounts payable by the Borrower to any Lender
(or Affiliate of a Lender) under any Interest Rate Protection Agreement or
Currency Agreement which provides, by its terms, that it shall be secured by the
Collateral, provided that the Administrative Agent shall have received written
notice within 10 Business Days after execution of each such Interest Rate
Protection Agreement or Currency Agreement.
"Other 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.
"Overseas Equity Offering" shall mean the purchase of certain common stock,
preferred stock and warrants of the Borrower by Xxxxxxxx Street pursuant to that
certain Securities Purchase Agreement dated May 3, 2000 between the Borrower and
Xxxxxxxx Xxxxxx.
"XXXX" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Percentage" shall mean, with respect to any Lender, its ratable share
expressed as a percentage equal to the ratio obtained by (A) dividing the
applicable Commitment of such Lender by the aggregate applicable Commitments of
the Lenders, or (B) if the Commitments shall have been terminated pursuant to
the terms of this Credit Agreement, dividing the sum of the aggregate principal
amount of all applicable Loans of such Lender and, if applicable, such Lender's
pro rata share of the L/C Exposure by the sum of the aggregate principal amount
of all applicable Loans of all Lenders and, if applicable, the L/C Exposure,
which Loans and L/C Exposure shall be outstanding immediately prior to the
termination of the Commitments.
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"Permitted Encumbrances" shall mean Liens permitted under Section 6.2
hereof.
"Person" shall mean any natural person, corporation, partnership, trust,
joint venture, association, company, limited liability company, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Materials" shall have the meaning given such term in clause (iv)
of the definition of "Collateral" herein.
"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 otherwise pursuant to which any
Credit Party could have liability.
"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 (i) all of the issued and outstanding
capital stock of any Guarantor and (ii) 65% of the stock of any Controlled
Foreign Corporation owned by the Borrower or a Subsidiary which is a domestic
entity, in each case, as initially listed on Schedule 3.7(a).
"Pledgeholder Agreement" shall mean a Laboratory Pledgeholder Agreement
among a Credit Party, the Administrative Agent, a third party completion
guarantor (if there is one), and one or more Laboratories, substantially in the
form of Exhibit D-1 or Exhibit D-2 hereto, or in such other form as shall be
acceptable to the Administrative Agent.
"Pledgors" shall mean those Credit Parties which own any Pledged
Securities.
"Prepayment Date" shall have the meaning given such term in Section 2.9(f).
"Print and Advertising Expenses" shall mean the actual out-of-pocket print
and advertising expenses associated with domestic theatrical release in any
medium of an item of Product which a Credit Party is contractually obligated to
pay or has paid.
"Product" shall mean any motion picture, film or video tape 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 the Borrower or any Guarantor (i) is
the initial copyright owner or subsequently becomes 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
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intangible, and whether now in existence or hereafter to be made or produced,
whether or not in possession of the Credit Parties, 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 with the Administrative Agent or at a commercial bank acceptable to the
Administrative Agent, for the sole purpose of paying the production costs of a
particular item of Product, and 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 Guarantee for such item of Product.
"Production Exposure" for an item of Product shall mean the Budgeted
Negative Cost or acquisition price paid or to be paid by a Credit Party (net of
production fees and overhead of the applicable Credit Party, and net of amounts
funded or committed to be funded in connection with such item of Product on a
cash-flow basis (and which therefore are not included in the Borrowing Base as
an Eligible Receivable) by Persons unrelated to any Credit Party pursuant to
contractual arrangements approved in writing by the Administrative Agent).
"Projected Known Cash Sources" shall mean, with respect to the Credit
Parties, for the period of determination, the sum of: (a) unrestricted cash
(i.e., cash and Cash Equivalents) held by the Credit Party on the date of
determination, plus (b) the aggregate amount, without duplication, of cash
projected by the Credit Party in good faith to be received from the following
sources: (i) Borrowings hereunder (taking into account projected Borrowing Base
availability), (ii) unfunded commitments to contribute equity (x) which the
Credit Party has the right and intends to require to be funded and (y) as to
which either (1) an irrevocable letter of credit is in full force and effect in
an aggregate face amount at least equal to the amount of the relevant unfunded
commitment or (2) in the opinion of the Administrative Agent, another adequate
source of funding exists and (iii) accounts receivables on a Product-by-Product
basis projected in excess of amounts dedicated to repaying Indebtedness for that
item of Product and so long as the relevant item of Product has been Completed
and there are no conditions to payment thereof other than (x) performance by the
Credit Party of the items within the control of the Credit Party or (y) the
passage of time, plus (c) the aggregate amount expected to be reimbursed to the
Credit Party for prior production advances made by the Credit Party with respect
to an item of Product.
"Projected Known Cash Uses" shall mean, with respect to the Credit Parties,
for the period of determination, the sum, without duplication, of the following
amounts as projected by the Credit Party in good faith: (a) cash overhead
expenses, plus (b) consolidated cash interest expense, plus (c) tax expense,
plus (d) cash expense attributable to print and advertising expenses for items
of Product which have commenced principal photography which have to be paid by
the Credit Party or one of its Subsidiaries, plus (e) Capital Expenditures to be
made, plus (f) any other anticipated cash expense in its business, including
dividends or investments or advances to be made in or to joint ventures.
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"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.
"Quiet Enjoyment" shall have the meaning given such term in Section 8.13
hereof.
"Regulation D" shall mean Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X 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 been in effect on the date of occurrence of such reportable event.
"Required Lenders" shall mean no less than three (3) of the Lenders which,
in the aggregate, hold 51% or more of the aggregate Credit Exposure of all
Lenders.
"Restricted Payment" shall mean (i) any distribution, dividend or other
direct or indirect payment on account of shares of any class of stock of,
partnership interest in, or any other equity interest of, a Credit Party, (ii)
any redemption or other acquisition, re-acquisition or retirement by a Credit
Party of any class of its own stock or other equity interest of a Credit Party,
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 acquire shares of any class of stock of, or any equity interest in,
a Credit Party, now or hereafter outstanding and (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 now or hereafter outstanding, except in each case
amounts payable to another Credit Party.
"Xxxxxxxx Street" shall mean Xxxxxxxx Street Productions, LLC, a Delaware
limited liability company.
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"Schedule of Commitments" shall mean the schedule of the Commitments of the
Lenders set forth in Schedule 1.1 hereto.
"Strike Price" shall mean the amount of funds required to be provided under
the relevant Completion Guarantee.
"Subordinated Debt" shall mean any Indebtedness of a Credit Party as to
which the subordinated creditor has agreed in writing, on terms acceptable to
the Required Lenders in their sole discretion, to be subordinate and junior in
right of payment to the rights of the Lenders with respect to the Obligations
under this Credit Agreement.
"Subsidiary" shall mean with respect to any Person, any corporation,
limited liability company, association, joint venture, partnership 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.
"Total Commitments" shall mean the aggregate amount of the Commitments then
in effect of all of the Lenders as such amount may be reduced from time to time
in accordance with the terms of this Credit Agreement.
"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.
"Unrecouped Print and Advertising Expenses" shall mean with respect to an
item of Product produced for domestic release, or released theatrically in the
U.S., 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
theretofore received 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 35% 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 domestic media
and domestic markets other than domestic theatrical distribution.
"Unsold Major Foreign Territory" shall mean each of (i) Australia/New
Zealand, (ii) Benelux, (iii) France, (iv) Germany, (v) Italy, (vi) Japan, (vii)
Scandinavia, (viii) Spain, (ix) United Kingdom, and (x) all other foreign
territories in the aggregate, to the extent such territory has not been presold.
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"Unsold Territory Credit" shall mean with respect to each item of Product
being funded hereunder, an amount equal to 50% of the aggregate amount,
determined on a territory-by-territory basis for each Unsold Major Foreign
Territory, of the lesser of (x) the Borrower's good faith estimates of the
minimum guarantee to be obtained with respect to each such Unsold Major Foreign
Territory and (y) the Estimated Value of each such Unsold Major Foreign
Territory; provided, however, that no Unsold Territory Credit shall be included
in the Borrowing Base with respect to such item of Product unless the Borrower
shall have delivered to the Administrative Agent satisfactory evidence that it
has concluded presales for at least three (3) of the territories listed in the
definition of "Estimated Value" (at least one of which shall be either France,
Germany, Japan or the United Kingdom); further provided, that six months
subsequent to Completion, no Unsold Territory Credit will be included in the
Borrowing Base with respect to such item of Product and the amount of unsold
territory credit shall be reduced upon the sale of such territory by an amount
equal to the greater of the amount included in the Unsold Territory Credit for
that territory and the actual amount of the sale.
2. THE LOANS
SECTION 2.1. Loans. (a) Each Lender, severally and not jointly, agrees,
upon the terms and subject to the conditions hereof, to make Loans to the
Borrower, 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 Loans then outstanding to the
Borrower from such Lender, plus such Lender's Pro Rata Share of the then current
L/C Exposure does not exceed such Lender's Commitment.
(b) Subject to the terms and conditions of this Credit Agreement, at any
time prior to the Commitment Termination Date, the Borrower may borrow, repay
and re-borrow amounts up to the aggregate amount of the Commitments.
(c) Notwithstanding anything to the contrary above, a Lender shall not be
obligated to make any Loan or to incur any incremental L/C Exposure if, as a
result thereof, the aggregate principal amount of all Loans then outstanding
plus the then current L/C Exposure plus the then existing Completion Reserves
for all items of Product (less the amount of Loans being made to fund such
Completion Reserves) would exceed (i) the Total Commitments then in effect or
(ii) the Borrowing Base.
SECTION 2.2 Making of Loans.
(a) Each Loan shall be either an Alternate Base Rate Loan or Eurodollar
Loan (each such type of Loan, an "Interest Rate Type") as the Borrower may
request. Each Lender may at its option fulfill its Commitment with respect to
any Eurodollar Loans by causing a foreign branch or affiliate to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms hereof and of the
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relevant Note. Subject to the other provisions of this Section, Section 2.7(b)
and Section 2.11, Loans of more than one Interest Rate Type may be outstanding
at the same time.
(b) The Borrower shall give the Administrative Agent prior written,
telecopier or telephonic (promptly confirmed in writing) notice of each
Borrowing hereunder; 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
Loan is to be made. Such notice shall specify (A) the amount of the proposed
Borrowing, (B) the date thereof (which shall be a Business Day) and (C) whether
the 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. 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 Loan, such
notice shall be deemed a request for an Alternate Base Rate Loan. The Lenders
shall not be required to make Loans hereunder more often than three times each
calendar week. No Borrowing shall consist of Eurodollar Loans if after giving
effect thereto an aggregate of more than twelve (12) separate Eurodollar Loans
would be outstanding hereunder with respect to each Lender (determined in
accordance with Section 2.8(c) hereof). For purposes of determining the number
of such Loans outstanding, Loans with Interest Periods commencing or ending on
different dates shall be counted as different Loans.
(c) Each Loan requested hereunder on any date shall be made by each Lender
in accordance with its respective Percentage.
(d) The Administrative Agent shall promptly notify each Lender of its
proportionate share of each Borrowing, the date of such Borrowing, the Interest
Rate Type of each Loan being requested and the Interest Periods applicable
thereto. On the Borrowing date specified in such notice, each 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: Xxxxxx Xxxxxx for credit to the 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 Lenders to fund any Borrowing hereunder, the Administrative Agent shall
disburse such funds by depositing them into an account of the Borrower
maintained by the Administrative Agent or into a Production Account specified in
the Borrowing Certificate.
(e) The aggregate amount of any Borrowing consisting of Eurodollar Loans
shall be in a minimum aggregate principal amount of $500,000 or such greater
amount which is an integral multiple of $100,000, and the aggregate amount of
any Borrowing consisting of Alternate Base Rate Loans shall be in a minimum
aggregate principal amount of $500,000 or such greater amount which is an
integral multiple of $100,000 (or such lesser amount as shall equal (i) the
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available but unused portion of the Total Commitments, then in effect or (ii)
the amount of any Borrowing to fund drawings under Letters of Credit).
SECTION 2.3 Notes; Repayment. (a) The Loans made by each Lender hereunder
shall be evidenced by a promissory note substantially in the form of Exhibit A
(each a "Note") in the face amount of such Lender's Commitment, payable to the
order of such Lender, duly executed on behalf of the Borrower and dated the date
hereof. The outstanding principal balance of each Loan as evidenced by a Note
shall be payable in full on the Commitment Termination Date, subject to
mandatory prepayment as provided in Section 2.6 hereof and acceleration as
provided in Article 7 hereof.
(b) The Notes shall bear interest on the outstanding principal balance
thereof as set forth in Section 2.4 hereof. Each Lender and the Administrative
Agent on its behalf is hereby authorized by the Borrower, but not obligated, to
enter the amount of each Loan and the amount of each payment or prepayment of
principal or interest thereon in the appropriate spaces on the reverse of or on
an attachment to the appropriate Note; provided, however, that the failure of
any Lender or the Administrative Agent to set forth such Loans, principal
payments or other information, or any error with respect thereto, shall not in
any manner affect the obligation of the Borrower to repay the Loans.
(c) All amounts received by the Administrative Agent from or on behalf of
the Borrower as a payment or prepayment of, or interest on, the Notes shall be
applied among the Notes of the Lenders on a pro rata basis in accordance with
the outstanding Loans owed to each Lender.
SECTION 2.4. Interest on Notes. (a) 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, at the Commitment
Termination 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 notify the Borrower and the Lenders of the applicable interest rate so
determined. Such determination shall be conclusive absent manifest error.
(b) 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
Commitment Termination Date.
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(c) 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.
(d) Anything in this Credit Agreement or the Notes to the contrary
notwithstanding, the interest rate on the Loans shall in no event be in excess
of the maximum rate permitted by Applicable Law.
SECTION 2.5. Commitment Fees and Other Fees. (a) The Borrower agrees to pay
to the Administrative Agent for the account of each Lender on the last Business
Day of each March, June, September and December in each year (commencing on the
last Business Day of June 2000) prior to the Commitment Termination Date, on the
date of any termination or reduction of the Total Commitment, and on the
Commitment Termination Date, an aggregate fee (the "Commitment Fee") of 1/2 of
1% per annum, computed on the basis of the actual number of days elapsed during
the preceding period or quarter over a year of 365/366 days, as the case may be,
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, exceeds the sum of the principal balance of
such Lender's outstanding Loans plus its Pro Rata Share of L/C Exposure. The
Commitment Fee shall commence to accrue from the Closing Date.
(b) The Borrower agrees to pay to the Administrative Agent (i) for the
account of each Lender in accordance with its Percentage on the Closing Date an
upfront fee equal to 3/4 of 1% of the Total Commitments and (ii) for the account
of any additional Lender for which the Administrative Agent accepts commitments
pursuant to Section 12.1(b) hereof, an upfront fee equal to 3/4 of 1% of such
Lender's Commitment.
(c) In addition, the Borrower agrees to pay to the Administrative Agent on
the Closing Date any and all other fees that are then due and payable pursuant
to the Fee Letter.
SECTION 2.6. Optional and Mandatory Termination or Reduction of
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 Borrower may
at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitments. In the case of a partial reduction,
each such reduction of the Total Commitments shall be in a minimum aggregate
principal amount of $1,000,000 or an integral multiple of $100,000; provided,
however, that the Total Commitments (i) may not be reduced by more than the
amount of the then unused Total Commitments and (ii) may not be reduced to an
amount less than the aggregate principal amount of the Loans outstanding, plus
the then current L/C Exposure plus the Completion Reserves. Any partial
reduction of the Total Commitments shall be made among the Lenders in accordance
with their respective Percentages.
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(b) Simultaneously with each such termination or reduction of the Total
Commitments, the Borrower shall pay to the Administrative Agent for the benefit
of each Lender all accrued and unpaid Commitment Fees on the amount of the
Commitment so terminated or reduced through the date of such termination or
reduction.
SECTION 2.7. Default Interest; Alternate Rate of Interest. (a) So long as
an Event of Default shall have occurred and be continuing, the Borrower 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 of 2% in
excess of the rate otherwise in effect (computed as aforesaid).
(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 Lender of such
Lender's determination (which determination, absent manifest error, shall be
conclusive) that Dollar deposits in the amount of the principal amount of such
Lender's percentage of the Eurodollar Loan are not generally available in the
London Interbank Market or that the rate at which such Dollar deposits 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 percentage of the
Eurodollar Loan during such Interest Period or (ii) the Administrative Agent
shall have determined that reasonable means do not exist for ascertaining the
applicable LIBO Rate, the Administrative Agent shall, as soon as practicable
thereafter, give written or facsimile notice of such determination to the
Borrower and the Lenders, and any request by the Borrower for a Eurodollar Loan
(or conversion to or continuation as a Eurodollar Loan pursuant to Section 2.8
hereof), made after receipt of such notice and until the circumstances giving
rise to such notice no longer exist, shall be deemed to be a request for an
Alternate Base Rate Loan; provided, however, that in the circumstances described
in clause (i) above such deemed request shall only apply to the affected
Lender's portion thereof.
SECTION 2.8. Continuation and Conversion of Loans. The Borrower shall have
the right, at any time, (i) to convert any Eurodollar Loan or portion thereof to
an Alternate Base Rate Loan or to continue any Eurodollar Loan or a portion
thereof for a successive Interest Period, or (ii) to convert any Alternate Base
Rate Loan or a portion thereof to a Eurodollar Loan, subject to the following:
(a) the Borrower shall give the Administrative Agent prior written,
facsimile or telephonic (promptly confirmed in writing) notice of each
continuation or conversion hereunder of at least three (3) Business Days for
continuation as or conversion to a Eurodollar Loan; 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;
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(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 any
Eurodollar Loan into a subsequent Interest Period;
(c) no Alternate Base Rate Loan 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 Loans, an aggregate of more than twelve (12) separate Eurodollar Loans would
be outstanding hereunder (for purposes of determining the number of such Loans
outstanding, Loans with different Interest Periods shall be counted as different
Loans even if made on the same date);
(d) if fewer than all Loans at the time outstanding shall be continued or
converted, such continuation or conversion shall be made pro rata among the
Lenders in accordance with the respective Percentage of the principal amount of
such Loans held by the Lenders immediately prior to such continuation or
conversion;
(e) the aggregate principal amount of Loans continued as or converted to
Eurodollar Loans as part of the same Borrowing shall be $500,000 or such greater
amount which is an integral multiple of $100,000;
(f) accrued interest on the Eurodollar Loans (or portion thereof) being
continued or converted shall be paid by the Borrower at the time of continuation
or conversion (as applicable);
(g) 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;
(h) if a Eurodollar Loan is converted to an Alternate Base Rate Loan other
than on the last day of the Interest Period with respect thereto, the amounts
required by Section 2.9(b) shall be paid upon such conversion; and
(i) 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.
In the event that the Borrower shall not give notice to continue or convert any
Eurodollar Loan as provided above, such Loan (unless repaid) shall automatically
be converted to an Alternate Base Rate Loan at the expiration of the then
current Interest Period. The Administrative Agent shall, after it receives
notice from the Borrower, promptly give the Lenders notice of any continuation
or conversion.
SECTION 2.9. Prepayment of Loans; Reimbursement of Lenders. (a) Subject to
the terms of paragraph (b) of this Section 2.9, the Borrower shall have the
right at
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its option at any time and from time to time to prepay without premium or
penalty (i) any Alternate Base Rate Loan, in whole or in part, upon at least one
Business Day's prior written, telephonic (promptly confirmed in writing) or
facsimile notice to the Administrative Agent, in the principal amount of
$500,000 or such greater amount which is an integral multiple of $100,000 if
prepaid in part, or the remaining balance of such Loan if prepaid in full and
(ii) any Eurodollar Loan, in whole or in part, upon at least three (3) Business
Days' prior written, telephonic (promptly confirmed in writing) or facsimile
notice, in the principal amount of $500,000 or such greater amount which is an
integral multiple of $100,000 if prepaid in part, or the remaining balance of
such Loan if prepaid in full. Each notice of prepayment shall specify the
prepayment date, each 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. All prepayments of Eurodollar Loans under this
Section 2.9(a) shall be accompanied by accrued but unpaid interest on the
principal amount being prepaid to (but not including) the date of prepayment.
(b) The Borrower shall reimburse each Lender on written demand for any loss
incurred or to be incurred by any such Lender (x) in the reemployment of the
funds released (i) by any prepayment (for any reason) of any Eurodollar Loan if
such Loan is repaid prior to the last day of the Interest Period for such Loan
or (ii) in the event that after the Borrower delivers a notice of borrowing
under Section 2.2(b) or notice of continuation or conversion under Section
2.8(a) in respect of Eurodollar Loans, such Loan is not made, converted to or
continued as a Eurodollar Loan on the first day of the Interest Period specified
in such notice, in each case for any reason other than (A) a suspension or
limitation under Section 2.7(b) of the right of the Borrower to select a
Eurodollar Loan or (B) a breach by any such Lender of its obligation to fund
such borrowing when it is otherwise required to do so hereunder or (y) as a
result of the Borrower's failure to prepay any Loan on the date specified in any
prepayment notice delivered pursuant to Section 2.9(a). Such loss shall be the
amount as reasonably determined by such Lender as (a) the excess, if any, (I) of
the amount of interest which would have accrued to such Lender on the amount so
paid or not borrowed, continued or converted at a rate of interest equal to the
interest rate applicable to such Loan pursuant to Section 2.4, 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 prior to the last day of the Interest
Period for such Loan, of the then current Interest Period for such Loan or (y)
in the case of such failure to borrow, continue or convert, of the Interest
Period for such Loan which would have commenced on the date of such failure to
borrow, continue or convert, over (II) the amount realized or to be realized by
such Lender in reemploying the funds not advanced or the funds received in
prepayment or realized from the Loan not so continued or converted during the
period referred to above; or (b) the loss, cost or expenses incurred by reason
of the acquisition of deposits or other funds by such Lender to fulfill
obligations incurred in anticipation of such prepayment. Each Lender shall
deliver to the Borrower and the Administrative 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. The Borrower shall pay
the Administrative Agent for the account of such Lender the amounts shown on
such certificate within ten (10) days of the Borrower's receipt of such
certificate.
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(c) If at any time the sum of the Loans outstanding plus the L/C Exposure
plus the aggregate Completion Reserves for all items of Product exceeds the
Borrowing Base as set forth on the most recent Borrowing Base Certificate, the
Borrower shall immediately pay down the Loans outstanding or otherwise eliminate
such excess.
(d) If at any time the amount of the Loans outstanding plus the L/C
Exposure plus the aggregate Completion Reserves for all items of Product exceeds
the Total Commitments hereunder, the Borrower shall immediately pay down the
Loans outstanding or otherwise eliminate such excess.
(e) At the option of the Borrower, all prepayments under this Section shall
be applied to repay Alternate Base Rate Loans or Eurodollar Loans in such order
as the Borrower requests. In the event that the Borrower shall not give notice
as to how such prepayments are to be applied, such prepayment will be applied,
first, to prepay Alternate Base Rate Loans and, second, to prepay Eurodollar
Loans in order of maturity of the scheduled termination of Interest Periods with
respect thereto.
(f) If on any day on which Loans would otherwise be required to be prepaid
under this Section but for the operation of this Section 2.9(f) (each a
"Prepayment Date"), the amount of such required prepayment exceeds the then
outstanding aggregate principal amount of Alternate Base Rate Loans, and no
Default or Event of Default is then continuing, then on such Prepayment Date the
Borrower may, at its option, deposit Dollars into the Cash Collateral Account in
an amount equal to such excess. If the Borrower makes such deposit (i) only the
outstanding Alternate Base Rate Loans shall be required to be prepaid on such
Prepayment Date, and (ii) on the last day of each Interest Period in effect with
respect to a Eurodollar Loan after such Prepayment Date, the Administrative
Agent is irrevocably authorized and directed to apply funds from the Cash
Collateral Account (and liquidate investments held in the Cash Collateral
Account as necessary) to prepay 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 2.9(f).
(g) All prepayments shall be accompanied by accrued but unpaid interest on
the principal amounts being prepaid to but not including the date of prepayment.
SECTION 2.10. Change in Circumstances. (a) In the event that after the
Initial Date, as determined for any Lender, 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 change in conditions, shall
occur which shall:
(i) subject such Lender to, or increase the net amount of, any tax,
levy, impost, duty, charge, fee, deduction or withholding with respect to
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any Eurodollar Loan (other than withholding tax imposed by the United
States of America or any political subdivision or taxing authority thereof
or any other tax, levy, impost, duty, charge, fee, deduction or withholding
(A) 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, in which such Lending Office is located, managed or
controlled or in which such Lender has its principal office (or any
political subdivision or taxing authority thereof or therein), or (B) that
is imposed solely by reason of such Lender failing to make a declaration
of, or otherwise to establish, non-residence, or to make any other claim
for exemption, or otherwise to comply with any certification,
identification, information, documentation or reporting requirements
prescribed under the laws of the relevant jurisdiction, in those cases
where a Lender may properly make such declaration or claim or so establish
non-residence or otherwise comply); or
(ii) change the basis of taxation of any payment to such Lender of
principal or any interest on any Eurodollar Loan or other fees and amounts
payable to such Lender hereunder, or any combination of the foregoing,
other than withholding tax imposed by the United States of America or any
political subdivision or taxing authority thereof 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, in
which such Lending Office is located, managed or controlled or in which
such Lender has its principal office (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 Borrower shall pay to
the Administrative Agent for the account of such Lender, as provided in
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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, as
determined for any Lender, such 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 compliance by any Lender (or any
Lending Office of such Lender) or such Lender's holding company with any request
or directive issued after the Initial Date regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Credit Agreement or the Loans made or Letters of
Credit issued or participated in 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 Borrower shall pay to the Administrative
Agent 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 with respect to this Credit
Agreement or the Loans made by such Lender hereunder.
(c) Each Lender shall deliver to the Borrower and the Administrative Agent
from time to time, one or more certificates setting forth the amounts due to
such Lender under paragraphs (a) and/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 Borrower
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 Borrower's 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 rights to demand compensation on any other occasion.
The protection of this Section 2.10 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 this Section 2.10 or Section 2.11 or
Section 2.13(e) or Section 2.15(g) or (ii) would require the Borrower to pay an
increased amount under this Section 2.10 or Section 2.11 or Section 2.13(e) or
Section 2.15(g), it will use reasonable efforts to notify the Borrower of such
event or condition and, will use its reasonable efforts to make, fund or
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maintain the affected Loans of such Lender, or, if applicable, to participate in
Letters of Credit as required under Section 2.15 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
this Section 2.10 or Section 2.11 or Section 2.13(e) or Section 2.15(g) would be
materially reduced or the taxes or other amounts otherwise payable under this
Section 2.10 or Section 2.11 or Section 2.13(e) or Section 2.15(g) 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 therein through such other Lending Office would not otherwise
materially adversely affect such Loans, Letters of Credit or participations
therein or such Lender.
SECTION 2.11. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Credit Agreement, if any change after the
Initial Date 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 Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrower and the Administrative
Agent, such Lender may (i) declare that Eurodollar Loans will not thereafter be
made by such Lender hereunder for as long as such condition may be continuing
and/or (ii) require that, subject to Section 2.9(b), all outstanding Eurodollar
Loans made by it be converted to Alternate Base Rate Loans, whereupon all of
such Eurodollar Loans shall automatically be converted to Alternate Base Rate
Loans, as of the effective date of such notice as provided in paragraph (b)
below. Such Lender's pro rata portion of any subsequent Eurodollar Loan shall,
instead, be an Alternate Base Rate Loan unless such declaration is subsequently
withdrawn.
(b) A notice to the Borrower 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 Borrower.
SECTION 2.12. Manner of Payments. All payments of principal and interest by
the Borrower in respect of any Loans shall be shared pro rata among the Lenders
holding such Loans in accordance with the then outstanding principal amounts of
such Loans held by them. All payments by the Borrower hereunder and under the
Notes shall be made, without setoff or counterclaim, in 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: Xxxxxx Xxxxxx, for credit to the Clearing Account no later than 1:00
p.m., 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. Interest in respect of any Loan hereunder shall accrue
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from and including the date of such Loan to but excluding the date on which such
Loan is paid or converted to a Loan of a different Interest Rate Type.
SECTION 2.13. United States Withholding. (a) Prior to the date of the
initial Loans hereunder, and prior to the effective date set forth in the
Assignment and Acceptance with respect to any Lender or the Issuing Bank
becoming a Lender or the Issuing Bank after the date hereof, and from time to
time thereafter if requested by the Borrower 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 Lender or the Issuing Bank organized
under the laws of a jurisdiction outside the United States shall provide, if
applicable, the Administrative Agent and the Borrower with complete, accurate
and duly executed forms or other statements prescribed by the Internal Revenue
Service of the United States certifying such Lender's or the Issuing Bank'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 or the Issuing Bank hereunder and under the Notes.
(b) The Borrower 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 any Lender or the Issuing
Bank hereunder or under the Notes, if and to the extent that the Borrower or the
Administrative Agent in good faith determine(s) 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 that the
Borrower or the Administrative Agent shall so determine that deduction or
withholding of taxes is required, it shall advise the affected Lender or the
Issuing Bank as to the basis of such determination prior to actually deducting
and withholding such taxes. In the event the Borrower or the Administrative
Agent shall so deduct or withhold taxes from amounts payable hereunder, the
Borrower or the Administrative Agent as the case may be (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 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 the Lenders or the Issuing Bank from whom the taxes were deducted or
withheld; and (iii) shall forward to such Lenders or the Issuing Bank 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 the Borrower and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that payments hereunder or under the Notes are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Borrower 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 or the Issuing Bank organized under the laws of a jurisdiction
outside the United States.
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(c) Each Lender and the Issuing Bank agrees (i) that as between it and the
Borrower or the Administrative Agent, such Lender and the Issuing Bank 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 and the Issuing
Bank 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 the Borrower and the
Administrative Agent and any officers, directors, agents, or employees or
representatives of the Borrower or the Administrative Agent against and to
defend them against and 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
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 Borrower or the Administrative Agent on any form or
other document furnished by such Lender or the Issuing Bank 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 Lender's or the Issuing Bank's interest in this
Credit Agreement in conformity with Section 13.3 shall be bound by this Section
2.13, 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 2.13.
(e) Notwithstanding the foregoing, in the event that any withholding taxes
or additional United States 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, as determined for any Lender or the Issuing
Bank, in respect of any sum payable by the Borrower hereunder or under any other
Fundamental Document to any Lender or the Issuing Bank or the Administrative
Agent (i) the sum payable by the Borrower shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.13) such Lender, the Issuing Bank
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) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with Applicable Law and (iv) the Borrower shall forward to such Lender, the
Issuing Bank or the Administrative Agent (as the case may be) the official tax
receipts or other documentation pursuant to Section 2.13(b). In addition, the
Borrower shall indemnify each Lender, the Issuing Bank and the Administrative
Agent for any additional withholding taxes paid by such Lender, the Issuing Bank
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 Lender or the Issuing Bank receives a refund of or
credit for taxes withheld or paid pursuant to clause (e) of this Section 2.13,
which credit or refund is identifiable by such Lender or the Issuing Bank as
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being a result of taxes withheld in connection with sums payable hereunder or
under any other Fundamental Document, such Lender or the Issuing Bank shall
promptly notify the Administrative Agent and the Borrower and shall promptly
remit to the Borrower the amount of such refund or credit allocable to payments
made hereunder or under the other Fundamental Documents. At the expense and
written request of the Borrower (which shall include evidence of a suitable
basis therefor), a Lender or the Issuing Bank shall use its reasonable efforts
to assist the Borrower in seeking any such refund or credit.
(g) Each Lender and the Issuing Bank agrees that after it becomes aware of
the occurrence of an event that would cause the Borrower to pay any amount
pursuant to clause (e) of this Section 2.13, it will use reasonable efforts to
notify the Borrower of such event and, to the extent not inconsistent with such
Lender's or the Issuing Bank's internal policies, will use its reasonable
efforts to make, fund or maintain the affected Loans of such Lender or, if
applicable, participate in Letters of Credit issued by the Issuing Bank through
another Lending Office of such Lender or the Issuing Bank if as a result thereof
the additional monies which would otherwise be required to be paid by reason of
Section 2.13(e) in respect of such Loans, Letters of Credit or participations
therein would be materially reduced, and if, as determined by such Lender or the
Issuing Bank, in its discretion, the making, funding or maintaining of such
Loans, Letters of Credit or participations therein through such other Lending
Office would not otherwise materially adversely affect such Loans, Letters of
Credit or participations therein or such Lender or the Issuing Bank.
SECTION 2.14. Interest Adjustments. If the provisions of this Credit
Agreement or any Note would at any time require payment by the Borrower 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 so that such Lender shall not receive
interest in excess of such maximum amount. If, as a result of the foregoing, a
Lender shall receive interest payments hereunder or under a Note in an amount
less than the amount otherwise provided hereunder, such deficit (hereinafter
called the "Interest Deficit") will, to the fullest extent permitted by
Applicable Law, cumulate and will be carried forward (without interest) until
the termination of this Credit Agreement. Interest otherwise payable to a Lender
hereunder and under a Note for any subsequent period shall be increased by the
maximum amount of the Interest Deficit that may be so added without causing such
Lender to receive interest in excess of the maximum amount then permitted by
Applicable Law with respect to the Loans.
The amount of any Interest Deficit relating to a particular Loan and 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 Borrower to the Lenders of all the Loans at that time
outstanding pursuant to Section 2.9(a) hereof and a termination of the
Commitments under Section 2. 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 2.9(a) hereof and a termination of the Commitments under Section 2)
shall be canceled and not paid.
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SECTION 2.15. Letters of Credit. (a) (i) Subject to the terms and
conditions hereof and of Applicable Law, the Issuing Bank agrees to issue
Letters of Credit payable in Dollars from time to time after the Closing Date
and prior to the Commitment Termination Date upon the request of the Borrower,
provided, however, that (A) the Borrower shall not request, and the Issuing Bank
shall not issue, any Letter of Credit if, after giving effect thereto, the sum
of the then current L/C Exposure, plus the aggregate Loans then outstanding plus
the aggregate Completion Reserves for all items of Product would exceed the
lesser of the then current Borrowing Base or the Total Commitments then in
effect, and (B) in no event shall the Issuing Bank issue 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.
(ii) Immediately upon the issuance of each Letter of Credit, each 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
Lender's Percentage.
(iii) Each Letter of Credit may, at the option of the Issuing Bank, provide
that the Issuing Bank may (but shall not be required to) pay all or any part of
the maximum amount which may at any time be available for drawing thereunder to
the beneficiary thereof upon the occurrence and continuation of an Event of
Default and the acceleration of the maturity of the Loans, provided that, if
payment is not then due to the beneficiary, the Issuing Bank may 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 the Borrower) 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 the Issuing Bank under the related
Letter of Credit.
(b) Whenever the Borrower desires the issuance of a Letter of Credit, it
shall deliver to the Issuing Bank and the Administrative Agent 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. Such 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, the Borrower 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, the Borrower
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
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certificates to be presented by the beneficiary. Upon issuance of the 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 each such
Lender's respective participation therein.
(c) The acceptance and payment of drafts under any Letter of Credit shall
be made in accordance with the terms of such Letter of Credit and the Uniform
Customs and Practice for Documentary Credits, International Chamber of Commerce
Publication No. 500, as adopted or amended from time to time. The Issuing Bank
shall be entitled to honor any drafts and accept any documents presented to it
by the beneficiary of such Letter of Credit in accordance with the terms of such
Letter of Credit and believed by the Issuing Bank in good faith to be genuine.
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.
(d) 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 Lenders and each 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 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.
(e) The Borrower 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 which is required to be paid 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,
payment of which is required to be made after the Commitment Termination Date or
at the time when an Event of Default shall have occurred and then be continuing,
then the Borrower shall immediately pay to the Issuing Bank, in immediately
available funds, the full amount of such draft, together with interest thereon
at the default rate in accordance with Section 2.7(a) accruing from the date the
Issuing Bank makes payment of such draft under the Letter of Credit until the
date it receives full reimbursement for such payment from the Borrower. The
Borrower further agrees that the Issuing Bank may reimburse itself for such
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drawing from the balance in the Clearing Account or from the balance in any
other account of the Borrower maintained with the Issuing Bank.
(f) (i) The Borrower agrees to pay the following amount to the Issuing Bank
with respect to Letters of Credit issued by it hereunder:
(A) with respect to the issuance, amendment, transfer or any other
transaction related to each Letter of Credit and each drawing made
thereunder, documentary and processing charges in accordance with the
Issuing Bank's standard schedule for such charges in effect at the time of
such issuance, amendment, transfer or drawing, as the case may be; and
(B) a fronting fee payable to the Issuing Bank for the period from and
including the Closing Date to, but excluding, the Commitment Termination
Date, computed at a rate equal to 1/4 of 1% per annum of the daily average
L/C Exposure, 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 June 2000) prior to the Commitment
Termination Date or the expiration of the last outstanding Letter of Credit
(whichever is the later), on the Commitment Termination Date and on the
expiration of the last outstanding Letter of Credit.
(ii) The Borrower agrees to pay to the Administrative Agent for
distribution to each Lender in respect of its L/C Exposure, such Lender's Pro
Rata Share of a commission calculated at a rate per annum equal to the
Applicable Margin for Eurodollar Loans (calculated in the same manner as
interest) of the daily average L/C Exposure. Such commission shall be 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 June 2000) prior
to the Commitment Termination Date or the expiration of the last outstanding
Letter of Credit (whichever is the later), on the Commitment Termination Date
and on the expiration of the last outstanding Letter of Credit.
(iii) Promptly upon receipt by the Administrative Agent of any amount
described in clause (ii) of this Section 2.15(f), or by the Issuing Bank of any
amount described in Section 2.14(e) previously reimbursed to the Issuing Bank by
the Lenders, the Issuing Bank or the Administrative Agent (as applicable) shall
distribute to each Lender its Pro Rata Share of such amount. Amounts payable
under clauses (i)(A) and (i)(B) of this Section 2.15(f) shall be paid directly
to the Issuing Bank and shall be for its exclusive use.
(g) If by reason of (i) any change in Applicable Law after the Initial Date
as determined for the Issuing Bank or any Lender, or in the interpretation or
administration thereof after the Initial Date (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 such Lender with any
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direction, request or requirement (whether or not having the force of law)
issued after such Initial Date by any Governmental Authority or monetary
authority (including any change whether or not proposed or published prior to
the Initial Date), including, without limitation, any modifications:
(A) the Issuing Bank or any Lender shall be subject to any tax, levy,
impost, duty, fee, charge, deduction or withholding of any nature with
respect to any Letter of Credit (other than withholding tax imposed by the
United States of America or any other tax, levy, impost, duty, charge, fee,
deduction or withholding (i) 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 in which such Lending Office is located, managed or
controlled or in which the Issuing Bank or such Lender has its principal
office (or any political subdivision or taxing authority thereof or
therein) or (ii) that is imposed solely by reason of the Issuing Bank or
such Lender failing to make a declaration of, or otherwise to establish,
non-residence or to make any other claim for exemption, or otherwise to
comply with any certification, identification, information, documentation
or reporting requirements prescribed under the laws of the relevant
jurisdiction, in those cases where the Issuing Bank 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 2.15,
whether directly or by such being imposed on or suffered by the Issuing
Bank or any Lender;
(B) the basis of taxation of any fee or amount payable hereunder with
respect to any Letter of Credit shall be changed;
(C) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit issued
by the Issuing Bank or participations therein purchased by any Lender; or
(D) there shall be imposed on the Issuing Bank or any Lender any other
condition regarding this Section 2.15, any Letter of Credit or any
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Issuing Bank or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by the Issuing Bank or any
Lender, then and in any such case the Issuing Bank or such Lender may, at any
time, notify the Borrower, and the Borrower shall promptly pay the Issuing Bank
or such Lender upon its written demand such amounts as the Issuing Bank or such
Lender may reasonably specify to be necessary to compensate the Issuing Bank or
such Lender for such additional cost or reduced receipt. Sections 2.10(b), (c)
and (d) shall in all instances apply to the Issuing Bank and any Lender with
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respect to 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 2.15 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.
(h) 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
the Borrower to deliver to the Issuing Bank Cash Equivalents in an amount equal
to the full amount of the L/C Exposure or to furnish other security reasonably
acceptable to the Administrative Agent and the Issuing Bank. 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 Commitment Termination Date, (i) no
Default or Event of Default is then continuing, the Issuing Bank shall return
all of such collateral relating to such deposit to the Borrower 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 Issuing Bank hereunder
shall exceed the then current L/C Exposure, then such excess shall first be
applied to pay any Obligations then due under this Credit Agreement and the
remainder shall be returned to the Borrower.
(i) Notwithstanding the termination of the Commitments and the payment of
the Loans, the obligations of the Borrower under this Section 2.15 shall remain
in full force and effect until the Issuing Bank, the Administrative Agent and
the Lenders shall have been irrevocably released from their obligations with
regard to any and all Letters of Credit.
SECTION 2.16. Provisions Relating to the Borrowing Base. (a) The
Administrative Agent or the Required Lenders may from time to time by written
notice to the Borrower (i) delete any Person or Affiliated Group from the
schedule of Acceptable Obligors or (ii) decrease the Allowable Amount for any
Acceptable Obligors, in each case, as the Administrative Agent or the Required
Lenders acting in good faith may deem appropriate. Any such notice shall be
prospective only, i.e., to the extent that giving effect to such notice would
otherwise result in a mandatory prepayment by the Borrower under Section 2.9(c),
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 Borrower's receipt of such notice.
(b) The Required Lenders may also from time to time by written notice to
the Borrower add or reinstate a Person or Affiliated Group to the schedule of
Acceptable Obligors or increase or reinstate 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 notify
the Borrower that a Person or Affiliated Group is to be deleted as an Acceptable
Obligor in accordance with Section 2.16(a), no additional Eligible Receivables
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from such Person or Affiliated Group may be included in the Borrowing Base
subsequent to such notice unless the Required Lenders thereafter notify the
Borrower that such Person or Affiliated Group is reinstated as an Acceptable
Obligor in accordance with Section 2.16(b). In the event the Administrative
Agent or the Required Lenders notify the Borrower that the Allowable Amount with
respect to an Acceptable Obligor is to be reduced in accordance with Section
2.16(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 Borrower that the Allowable Amount for such Acceptable Obligor is
increased in accordance with Section 2.16(b); provided, however, that the
Allowable Amount for such Acceptable Obligor shall automatically be restored to
its former amount upon request of the Borrower if the Administrative Agent or
the Required Lenders, as the case may be, are satisfied 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.
SECTION 2.17. Eurodollar Reserves. The Borrower shall pay to the
Administrative Agent for the account of each Lender, so long as such Lender
shall be required under regulations of the Board to maintain reserves with
respect to liabilities or assets consisting of, or including Eurocurrency
Liabilities (as defined in Regulation D of the Eurocurrency Liabilities),
additional interest on the unpaid principal amount of each Eurodollar Loan made
to the Borrower by such Lender, from the date of such Loan until such Loan is
paid in full, at an interest rate per annum equal at all times during the
Interest Period for such Loan to the remainder obtained by subtracting (i) the
LIBO Rate for such interest period from (ii) the rate obtained by multiplying
the LIBO Rate above by 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
average Statutory Reserves of such Lender for such Interest Period. Such
additional interest shall be determined by such Lender and notified to the
Borrower in writing (together with an explanation in reasonable detail of the
reasons therefor) (with a copy to the Administrative Agent) not later than five
Business Days before the date of the next Borrowing for such Loan, and such
additional interest so notified to the Borrower by any Lender shall be payable
to the Administrative Agent for the account of such Lender on each Interest
Payment Date for such Loan.
3. REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES
In order to induce the Administrative Agent, the Issuing Bank and the
Lenders to enter into this Credit Agreement and to make the Loans and issue or
participate 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,
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the issuance of the Notes, the making of the Loans and the issuance of the
Letters of Credit.
SECTION 3.1. Corporate Existence and Power. Each of the Credit Parties is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and is in good standing as a foreign
corporation in all jurisdictions where both (i) the nature of its properties or
business so requires and (ii) the failure to be in good standing as a foreign
corporation might render Eligible Receivables which are included in the
Borrowing Base unenforceable or would have a Material Adverse Effect. Each of
the Credit Parties has the corporate power and authority to own its respective
properties and carry on its respective businesses as now being conducted, to
execute, deliver and perform, as applicable, its obligations under this Credit
Agreement, the Notes and the other Fundamental Documents and other documents
contemplated hereby and to grant to the Administrative Agent, for the benefit of
the Administrative Agent, the Issuing Bank and the Lenders, a security interest
in the Collateral of such Credit Party as contemplated by Article 8 hereof, and
in the Pledged Securities as contemplated by Article 10 hereof and to guaranty
the Obligations as contemplated by Article 9 hereof.
SECTION 3.2. Corporate 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 and, in the case of the
Borrower, the Borrowings hereunder and the execution and delivery of the Notes
and, in the case of each Credit Party, the grant by such Credit Party to the
Administrative Agent for the benefit of the Administrative Agent, the Issuing
Bank and the Lenders of the security interest in the Collateral as contemplated
by Article 8 hereof and in the other Fundamental Documents and in the Pledged
Securities as contemplated by Article 10 hereof and, in the case of each
Guarantor, the guaranty by such Guarantor of the Obligations as contemplated in
Article 9 hereof (i) have been duly authorized by all necessary corporate action
on the part of each such Credit Party, (ii) will not constitute a violation by
such Credit Party of any provision of Applicable Law or any order of any
Governmental Authority applicable to such Credit Party or any of its properties
or assets except where such violation would not have a Material Adverse Effect,
(iii) will not violate any provision of the Certificate or Articles of
Incorporation or other organizational documents or By-Laws of such Credit Party,
or 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 its properties or assets are bound, (iv) will not be in
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under or create any right to terminate any such
Distribution Agreement, indenture, agreement, bond, note or other instrument,
except where such conflict, breach or default would not have a Material Adverse
Effect and (v) will not result in the creation or imposition of any Lien 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.
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(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 authorizations, approvals,
registrations or filings with any Governmental Authority (other than UCC
financing statements and the Copyright Security Agreement which will be
delivered to the Administrative Agent prior to the making of the initial Loan
hereunder, 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 delivery by the Borrower of the Notes, have been
duly obtained or made, or duly applied for and are in full force and effect, and
if any such 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, enforceable against such Credit Party in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws affecting the rights and
remedies of creditors generally and to general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding thereof may be brought.
SECTION 3.5. Financial Statements. The audited consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries (including all Guarantors) at
December 31, 1999 and the unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries (including all Guarantors) at March 31, 2000,
together with the related statements of cash flows and stockholders' equity and
the related notes and supplemental information for the audited statements, in
the forms which have previously been provided to the Administrative Agent for
distribution to the Lenders, have been prepared in accordance with GAAP, except
as otherwise indicated in the notes to such financial statements. All of such
financial statements fairly present in all material respects the consolidated
financial condition or the results of operations of the Borrower and its
Consolidated Subsidiaries (including all Guarantors) at the dates or for the
periods indicated, subject (in the case of unaudited statements) to changes
resulting from normal year-end and audit adjustments and (in the case of balance
sheets) reflect (including the notes thereto) all known liabilities, contingent
or otherwise, or reserve therefor as of such dates required in accordance with
GAAP to be shown on or disclosed in the notes to the financial statements.
SECTION 3.6. No Material Adverse Change; Solvency. (a) There has been no
material adverse change with respect to the business, operations, performance,
assets, properties or financial condition of the Credit Parties, taken as a
whole, from March 31, 2000 except for changes due to seasonality consistent with
the corresponding periods in prior years.
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(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 Party and the amounts referred
to in clause (ii)); 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 (x) the 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 (y) the 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 and each Controlled Foreign Corporation showing, as
to each, its name, the jurisdiction of incorporation, its authorized
capitalization, the number of shares of its capital stock outstanding and the
ownership of the capital stock of each such Credit Party and Controlled Foreign
Corporation.
(b) Except as noted on Schedule 3.7(b), no Credit Party owns any voting
stock or beneficial interest, directly or indirectly, in any entity other than
another Credit Party or a Controlled Foreign Corporation.
SECTION 3.8. Copyrights and Other Rights. On the date hereof, the items of
Product and Film Assets listed on Schedule 3.8 comprise all of the Product and
Film Assets in which any Credit Party has any right, title or interest (either
directly or through a joint venture or partnership). The copyright registration
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number and the character of the interests held by the Credit Party on the date
hereof for the items of Product and Film Assets listed on Schedule 3.8(a) are
set forth across from the description of such item of Product and Film Assets
and as to each such item of Product or Film Assets the Credit Party holding such
interests has duly recorded its interests in the United States Copyright Office
and has delivered copies of all such recordations to the Administrative Agent.
Schedule 3.8 also identifies, as of the date hereof, the location of the best
available Physical Materials related to each item of Product owned by the Credit
Parties. The Physical Materials held at such locations are sufficient to permit
the Credit Parties to fully exploit their rights in such items of Product and to
perform all of the Credit Parties' material obligations under all Distribution
Agreements to which they are a party, other than rights and Distribution
Agreements with respect to items of Product which are not yet Completed. To the
best of each Credit Party's knowledge, all items of Product and Film Assets in
which the Credit Party has an interest do not violate or infringe upon any
copyright, right of privacy, trademark, patent, trade name, performing right or
any literary, dramatic, musical, artistic, personal, private, contract or
copyright right or any other right of any Person or contain any libelous or
slanderous material other than to an extent which either would not have a
Material Adverse Effect or for which coverage is provided in existing insurance
policies. Except as set forth on Schedule 3.12, 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 or Film Assets listed on Schedule
3.8 and no Credit Party has knowledge of any existing infringement by any other
Person of any copyright held by any Credit Party with respect to any item of
Product or Film Assets listed on Schedule 3.8.
SECTION 3.9. Fictitious Names. Except as disclosed on Schedule 3.9, none of
the Credit Parties are doing business or intend to do business other than under
its full corporate 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 or
valid leasehold interests to each of the properties and assets reflected on the
latest balance sheets referred to in Section 3.5 (other than such properties or
assets disposed of in the ordinary course of business since the date of such
balance sheets) and, to the best of each Credit Party's knowledge, all such
properties and assets are free and clear of Liens, except Permitted
Encumbrances.
SECTION 3.11. Places of Business. The chief executive office of each Credit
Party is, on the date hereof, as set forth on Schedule 3.11 hereto. 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 on Schedule 3.12 hereto,
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
knowledge of such Credit Party, threatened action, suit or other proceedings
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against or affecting, any Credit Party or of any of their respective properties
or rights. None of the items, if any, listed on Schedule 3.2 either (A) if
adversely determined would have a significant likelihood of having 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 would 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 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 any foreign, federal or local statute or any other Applicable
Law of the United States of America 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. Except as disclosed in Schedule 3.15, each Credit
Party has filed or caused to be filed all federal, state and 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. Except as disclosed in Schedule 3.15, no Credit Party knows
of any material additional assessments or any basis therefor. The Credit Parties
believe that the changes, accrual and reserves on its books in respect of taxes
or other governmental changes are adequate.
SECTION 3.16. Compliance with ERISA. Each Plan has been maintained and
operated in all material respects in accordance with all applicable laws,
including ERISA and the Code, and with respect to each Plan which a Credit Party
or the respective ERISA Affiliate intends to be a qualified plan under section
401(a) of the Code and the Credit Party or the applicable ERISA Affiliate has
received a favorable determination letter from the IRS and, to the knowledge of
the Credit Parties, nothing has occurred with respect to any Plan since the date
of such determination letter for such Plan that could reasonably be expected to
affect the qualified status of such Plan. No Reportable Event has occurred in
the last five years as to any Plan, and the present value of all benefits under
all Plans subject to Title IV of ERISA (based on those assumptions used to fund
such Plans) did not, in the aggregate, as of the last annual valuation date
applicable thereto, exceed the actuarial value of the assets of such Plans
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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 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 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.
SECTION 3.17. Agreements. (a) As of the date hereof, 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 any
Distribution Agreement) to which it is a party and, with respect to the time
period subsequent to the Closing Date, which would reasonably be expected to
have 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 the Credit Parties, other than the
Fundamental Documents, (ii) all joint venture agreements to which the Credit
Parties are a party, (iii) all Distribution Agreements and (iv) all other
contractual arrangements which 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 or its counsel 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 contract or
agreement 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 $1,000,000, (B) incur liabilities or obligations in excess
of $1,000,000 or (C) likely suffer damages or losses in excess of $500,000 by
reason of the breach or termination thereof.
SECTION 3.18. Security Interest; Other Security. This Credit Agreement and
the other Fundamental Documents, when executed and delivered and, upon the
making of the initial Loan hereunder, will create and grant to the
Administrative Agent for the benefit of itself, the Issuing Bank and the Lenders
(upon (i) the filing of the appropriate UCC-1 financing statements with the
filing offices listed on Schedule 3.11, (ii) the filing of the Copyright
Security Agreement with the U.S. Copyright Office and (iii) delivery of the
Pledged Securities with appropriate stock powers to the Administrative Agent)
valid and first priority perfected security interests in the Collateral and the
Pledged Securities in existence on the Closing Date, subject only to Permitted
Encumbrances.
SECTION 3.19. Disclosure. Neither this Credit Agreement nor any other
Fundamental Document nor any agreement, document, certificate or statement
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furnished to the Administrative Agent for the benefit of 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 not constituting general industry conditions or not
disclosed in such agreements, documents, certificates and statements which would
have a Material Adverse Effect.
SECTION 3.20. Distribution Rights. Each Credit Party has sufficient right,
title and interest in each item of Product to enable it (i) to enter into and
perform in all material respects all of the Distribution Agreements to which it
is a party relating to such item of Product and other agreements generating
Eligible Receivables and accounts receivable reflected on the most recent
balance sheet delivered in accordance with Section 5.1 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 would have,
or would reasonably be expected in the future 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 or from 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 materially violated any Environmental Law governing the
use, storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials and to the best of the Credit
Parties' 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 materially violated any Environmental Law
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials.
(b) To the best of each Credit Party's knowledge (i) no Credit Party has
any obligations or liabilities, known or unknown, matured or not matured,
absolute or contingent, assessed or unassessed, which would reasonably be
expected to have a Material Adverse Effect and (ii) no claims have been made
against any of the Credit Parties during 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
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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.
SECTION 3.22. Pledged Securities. All of the Pledged Securities are duly
authorized, validly issued, fully paid and non-assessable, and are owned and
held by the Pledgors, free and clear of any Liens, other than those created
pursuant to this Credit Agreement or Permitted Encumbrances and there are no
restrictions on the transfer of the Pledged Securities other than as a result of
this Credit Agreement or applicable securities laws and the regulations
promulgated thereunder. There are no outstanding rights, warrants, options, or
agreements to purchase or otherwise acquire any shares of the stock or
securities or obligations of any kind convertible into any shares of capital
stock, of the issuers of the Pledged Securities. The Pledged Securities are
owned by the Persons specified on Schedule 3.7(a).
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 and the intended use of the
proceeds of the Loans as described in the preamble hereto and as contemplated by
Section 5.19 will not violate any Applicable Law.
SECTION 3.24. Projected Financial Information. The Borrower has delivered
to the Administrative Agent certain projections (copies of which were previously
circulated to the Lenders) relating to the Borrower and its Consolidated
Subsidiaries (including all Guarantors) consisting of balance sheets and
statements of income, cash flows, stockholders' equity, Borrowing Base
availability and covenant compliance, together with appropriate supporting
details and a statement of the underlying assumptions. Such projected statements
cover a period commencing on January 1, 2000 and ending on December 31, 2002 and
are based on good faith estimates and assumptions believed to be reasonable at
the time made, it being recognized by the Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such other projections may differ from the
projected results.
4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to Initial Loans or Letter of Credit. The
obligation of the Issuing Bank to issue the initial Letter of Credit and of each
Lender to make its initial Loan or issue and participate in the initial Letter
of Credit is subject to the following conditions precedent:
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(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 as of a recent date
by the Secretary of State of such Credit Party's jurisdiction of
incorporation or organization, as the case may be;
(ii) a certificate of the Secretary of State and of the franchise tax
entity of such jurisdiction of incorporation, dated as of a recent date as
to the good standing of and payment of taxes by each Credit Party which
lists the charter documents on file in the office of such Secretary of
State;
(iii) a certificate dated as of a recent date as to the good standing
of each Credit Party issued by the Secretary of State of each jurisdiction
in which each Credit Party is qualified as a foreign corporation;
(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 of such party as in effect on the date of such
certification, (B) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of such party authorizing (to
the extent applicable) the Borrowings hereunder, the execution, delivery
and performance in accordance with their respective terms of this Credit
Agreement, the Notes (if any) to be executed by it, and any other documents
required or contemplated hereunder or thereunder to be executed by it and
that such resolutions have not been amended, rescinded or supplemented and
are currently in effect, (C) that the certificate of incorporation of such
party has not been amended since the date of the last amendment thereto
indicated on the certificate of the Secretary of State furnished pursuant
to clause (i) above except to the extent specified in such Secretary's
certificate and (D) as to the incumbency and specimen signature of each
officer of such party executing (as applicable) this Credit Agreement, the
Notes or any other document delivered by it in connection herewith or
therewith (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
the Credit Agreement executed by the Credit Parties and the Notes executed by
the Borrower.
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(c) Opinion of Counsel. The Administrative Agent shall have received the
written opinion of Xxxxxxxx Xxxxxx & Xxxxxx, counsel to the Credit Parties,
dated the date hereof and addressed to the Administrative Agent and the Lenders
substantially in the form attached hereto as Exhibit B, in form and substance
satisfactory to Xxxxxx, Xxxxx & Bockius LLP.
(d) Contribution Agreement. The Administrative Agent shall have received
the Contribution Agreement executed by the Credit Parties.
(e) No Material Adverse Change. No material adverse change shall have
occurred with respect to the business (except for changes due to seasonality
that are consistent with corresponding periods in prior years), assets,
properties or condition (financial or otherwise) of the Credit Parties taken as
a whole from March 31, 2000.
(f) Insurance. The Borrower shall have furnished the Administrative Agent
with (i) a summary of all existing insurance coverage, (ii) evidence reasonably
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 Borrower's compliance with Section
5.5(f) with respect to all insurance coverage existing as of the Closing Date.
(g) Borrowing Base Certificate. The Administrative Agent shall have
received an initial Borrowing Base Certificate substantially in the form of
Exhibit C hereto, signed by an Authorized Financial Officer.
(h) Security and Other Documentation. The Administrative Agent shall have
received two fully executed copies of (i) Pledgeholder Agreements for each item
of Product intended for theatrical release from each principal Laboratory
(identified as such on Schedule 3.11), for which a Credit Party has control over
any physical elements thereof as listed on Schedule 3.8(a) hereto; (ii) a
Copyright Security Agreement listing each item of Product and Film Assets in
which any Credit Party has a copyrightable interest (as listed on Schedule
3.8(a) hereto) executed by each such Credit Party; (iii) Laboratory Access
Letters from each principal Laboratory (identified as such on Schedule 3.11)
where a Credit Party has access rights to any physical elements of Product; (iv)
appropriate UCC-1 financing statements relating to the Collateral; and (v) the
Pledged Securities with appropriate undated stock powers executed in blank.
(i) Security Interests in Copyrights and other Collateral. The
Administrative Agent shall have received evidence reasonably 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 its financial statements and in the
other documents 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
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Credit Party to grant to Administrative Agent for the benefit of itself, 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
delivered to the Administrative Agent in satisfactory form for filing.
(j) Payment of Fees. All fees and expenses then due and payable hereunder
or under the Fee Letter by any Credit Party to the Administrative Agent and the
Lenders in connection with the transactions contemplated hereby or by the Fee
Letter shall have been paid.
(k) Overseas Equity Offering. The Administrative Agent shall have received
evidence satisfactory to it (i) of the completion of the Overseas Equity
Offering and (ii) that the net proceeds to the Borrower from the Overseas Equity
Offering are no less than $14,000,000.
(l) Litigation. No litigation, inquiry, injunction or restraining order
shall be pending, entered or threatened which involves this Credit Agreement or
which would have a Material Adverse Effect.
(m) Existing Indebtedness. Simultaneously with the making of the initial
Loans, all outstanding loans, accrued interest and fees and expenses under the
Existing Credit Facility shall have been paid in full, the commitments of the
lenders thereunder shall have been terminated and all Liens granted in
connection therewith shall have been terminated (with UCC termination statements
delivered to the Administrative Agent, in form and substance satisfactory to the
Administrative Agent).
(n) UCC Searches. The Administrative Agent shall have received UCC searches
satisfactory to it indicating that no other filings (other than in connection
with Permitted Encumbrances and the Existing Credit Facility) with regard to the
Collateral are of record (or if such unpermitted Liens are disclosed, the
Administrative Agent shall have received reasonably satisfactory evidence of
release of such Liens) in any jurisdiction in which it shall be necessary or
desirable for the Administrative Agent to make a UCC filing in order to provide
the Administrative Agent (for the benefit of itself, the Issuing Bank and the
Lenders) with a perfected security interest in the Collateral.
(o) Financial Statements. The Administrative Agent and the Lenders shall
have received and be satisfied with the true and complete copies of all the
financial statements referred to in Section 3.5.
(p) Projected Financial Information. The Credit Parties shall have
delivered to the Administrative Agent forecasted financial statements consisting
of balance sheets, cash flow statements, income statements and borrowing base
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projections together with appropriate supporting details and a statement of the
underlying assumptions. Such projected statements shall cover a period
commencing on the Closing Date and ending on December 31, 2002 and shall have
been prepared on a basis consistent with the Borrower's past practices. All of
the foregoing shall have been prepared in good faith and shall represent the
good faith opinion of the senior management of the Borrower of the most probable
course of its business as of the date of delivery of such projections to the
Administrative Agent.
(q) 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 the Credit
Parties, and from any other entity, foreign or domestic, whose consent or
approval the Administrative Agent in its reasonable discretion deems necessary
to consummate the transactions contemplated hereby.
(r) Compliance with Laws. The Administrative Agent shall be satisfied that
the transactions contemplated hereby and by the other Fundamental Documents will
not violate any provision of Applicable Law.
(s) Liquidity Certificate. The Lenders shall have received a Liquidity
Certificate, duly executed by an Authorized Financial Officer of the Credit
Party demonstrating compliance with Section 6.20.
(t) ERISA. The Administrative Agent shall have received copies of all Plans
of the Credit Parties that are in existence on the Closing Date, and
descriptions of those Plans that are committed to on the Closing Date.
(u) Due Diligence Review. The Administrative Agent shall have completed a
due diligence investigation of the Credit Parties, including, without
limitation, with respect to the initial film library valuation done by Cineval,
LLC, and the results of such investigation shall have been satisfactory to the
Administrative Agent.
(v) Delivery of Agreements. The Administrative Agent shall have received a
fully executed original and be satisfied with the terms and provisions of (i)
the Borrower's standard form Distribution Agreement, (ii) all existing
Distribution Agreements listed on Schedule 3.17, (iii) all joint venture or
partnership agreements to which any Credit Party is a party and (iv) all other
agreements listed on Schedule 3.17 to the extent requested by the Administrative
Agent.
(w) 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.
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(x) 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 and Letter of Credit. The
obligation of the Issuing Bank to issue each Letter of Credit and of the Lenders
to make each Loan and to issue and participate in each Letter of Credit
(including the initial Loans and Letter of Credit) are subject to the following
conditions precedent:
(a) Notice. The Administrative Agent shall have received a notice with
respect to such Borrowing 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 with respect to such Borrowing, duly executed by an
Authorized Financial Officer.
(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 and
issuance of a 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 or the issuance of
each Letter of Credit each Credit Party shall be in compliance with all of the
terms and provisions set forth herein to be observed or performed and no Default
or Event of Default shall have occurred and be continuing.
(e) Other Documents. The Administrative Agent shall have received such
other documentation as the Administrative Agent may reasonably request.
Each request for a Borrowing or for issuance of a Letter of Credit shall be
deemed to be a representation and warranty by the Borrower on the date of such
Borrowing or issuance of such Letter of Credit as to the matters specified in
paragraphs (c) and (d) of this Section.
SECTION 4.3. Conditions Precedent to Inclusion of Each Item of Product in
the Borrowing Base. The inclusion in the Borrowing Base of any item of Product
produced or acquired by a Credit Party after the Closing Date is subject to the
following conditions precedent:
(a) Insurance. The Borrower 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 5.3
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
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the certificate holder and shall evidence such Borrower's compliance with
Section 5.3(g) with respect to all insurance coverage existing as of the date
all conditions precedent set forth in this Section 4.3 have been satisfied or
waived.
(b) 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 reasonable satisfaction of the Administrative Agent, (i) the
applicable Credit Party's ownership of sufficient copyright rights in the
literary properties upon which each item of Product is to be based to enable
such Credit Party to produce and/or distribute the Product and to grant to the
Administrative Agent for the benefit of the Lenders the security interests which
are contemplated by this Credit Agreement, and (ii) the interest of such Credit
Party in the Film Assets upon which each item of Product is to be based.
(c) Security and Other Documentation. The Administrative Agent shall have
received fully executed copies of, to the extent applicable, (i) a Copyright
Security Agreement or Copyright Security Agreement Supplement, as applicable,
listing each item of Product (including Film Assets) in which any Credit Party
has a copyrightable interest (including, without limitation, as listed on
Schedule 3.8 hereto) executed by such Credit Parties, (ii) appropriate UCC-1
financing statements relating to the Collateral, (iii) notice letters to each
bank where there is a bank account (including, without limitation, Production
Accounts) in which a security interest has been granted to the Administrative
Agent for the benefit of the Lenders, (iv) Pledgeholder Agreements for each item
of Product from each Laboratory and (v) any other security documentation
relating to the Product as the Administrative Agent may reasonably require, all
of which shall be in form and substance reasonably acceptable to the
Administrative Agent.
(d) Security Interests in Copyrights and other Collateral. The
Administrative Agent shall have received evidence reasonably satisfactory to it
that the applicable Credit Party has sufficient right, title and interest in and
to the item of Product and related Collateral, as set forth in the documents
presented to the Lenders to enable such Credit Party to produce the Product and
to perform the Distribution Agreements and to grant to the Administrative Agent
for the benefit of the Lenders the security interests contemplated by this
Credit Agreement and the other Fundamental Documents, and that all financing
statements, copyright filings and other filings under Applicable Law as the
Administrative Agent shall deem necessary to provide the Administrative Agent
for the benefit of the Lenders with a first priority perfected security interest
in the item of Product and related Collateral have been filed or delivered to
the Administrative Agent in satisfactory form for filing.
(e) Payment of Fees. All fees and expenses then due and payable by any
Credit Party to the Administrative Agent and the Lenders in connection with the
transactions contemplated hereby or by the Fee Letter shall have been paid.
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(f) Completion Guarantee. The Administrative Agent shall have received a
fully executed Completion Guarantee which shall be in form and substance
satisfactory in all respects to the Administrative Agent.
(g) UCC Searches. The Administrative Agent shall have received UCC,
copyright office and other searches satisfactory to it indicating that no other
filings (other than in connection with Permitted Encumbrances) with regard to
the Collateral are of record in any jurisdiction.
(h) Distribution Agreements. The Administrative Agent shall have received a
fully executed original and be reasonably satisfied with the terms and
provisions of any Distribution Agreement entered into after the Closing Date
relating to amounts in excess of $400,000.
(i) Liquidity Certificate. The Lenders shall have received a Liquidity
Certificate, duly executed by an Authorized Financial Officer of the Credit
Party demonstrating compliance with Section 6.20.
(j) Approved Budget and Approved Cash Flow. The Lenders shall have received
and reviewed a copy of both the Approved Budget and the Approved Cash Flow for
the applicable item of Product and evidence that it has been approved by all
parties that have approval rights thereto.
(k) Talent Agreements. The Administrative Agent shall have received a copy
of the executed agreement for the services of each of the producer, director and
principal cast (as well as any other Person to whom a share of revenue (gross or
net) with respect to an item of Product is payable).
(l) Interparty Agreements. The Lenders shall have received a fully executed
original of each interparty agreement that the Administrative Agent deems
warranted.
(m) Credit Party Funding. The Administrative Agent shall be satisfied that
the Credit Parties have either paid items of Budgeted Negative Cost or the
acquisition cost (acknowledged in writing by the Approved Completion Guarantor)
or have deposited (or have provided for such deposit concurrently with the
initial Loan or Letter Credit with respect to each item of Product) in the
Production Account an aggregate amount equal to the amount by which the Strike
Price for that item of Product exceeds the amount of Loans to be made and
Letters of Credit to be issued hereunder in connection with such item of
Product.
(n) Compliance with Laws. The Administrative Agent shall be satisfied that
the transactions contemplated hereby and by the other Fundamental Documents will
not violate any provision of Applicable Law.
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(o) 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.
(p) Other Documents. The Administrative Agent shall have received such
other documentation as the Administrative Agent may reasonably request.
5. AFFIRMATIVE COVENANTS
From the date hereof and for so long as the Commitments shall be in effect,
any amount remains outstanding under the Notes, any Letter of Credit shall
remain outstanding or any Obligations remain unpaid or unsatisfied, each Credit
Party agrees that, unless the Required Lenders shall otherwise consent in
writing, each of them will:
SECTION 5.1. Financial Statements and Reports. Furnish or cause to be
furnished to the Administrative Agent in sufficient numbers for distribution to
the Issuing Bank and the Lenders:
(a) Within 120 days after the end of each fiscal year of the Borrower the
audited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries (including all Guarantors) 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 opinion of PriceWaterhouseCoopers LLP, or any
other of the Big Five accounting firms or another independent public accountant
of recognized standing as shall be retained by the Borrower 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 or other
authoritative pronouncements.
(b) Within 60 days after the close of each of the first three fiscal
quarters of each of its fiscal years, the unaudited consolidated balance sheets
of the Borrower and its Consolidated Subsidiaries (including all Guarantors) as
at the end of, and the related unaudited consolidated statements of income 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 Financial Officer, on behalf
of the Borrower, to the effect that such financial statements, while not
examined by independent public accountants, reflect, in the opinion of the
Borrower, all adjustments necessary to present fairly in all material respects
the financial position of the Borrower and its Consolidated Subsidiaries
(including the Guarantors) as at the end of the fiscal quarter and the results
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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
Financial Officer in form and substance reasonably satisfactory to the
Administrative Agent (i) stating whether or not such Authorized Financial
Officer has knowledge, after due inquiry, of any condition or event which would
constitute an Event of Default or Default has occurred and, if so, specifying
each such condition or event and the nature thereof, (ii) demonstrating in
reasonable detail compliance with the provisions of Sections 6.15 through 6.20
hereof, (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) and (iv)
containing a brief report by management of the operations of the Borrower;
(d) Together with each set of audited financial statements required by
paragraph (a) above, a certificate from the independent public accountants
rendering the report thereon (i) stating whether, in connection with their audit
examination, any condition or event, at any time during or at the end of the
accounting period covered by such financial statements, which constitutes an
Event of Default under covenants relating to accounting matters has come to
their attention, and if such a condition or event has come to their attention,
specifying the nature and period, if known, of existence thereof and (ii)
stating that, insofar as they relate to accounting matters, the matters set
forth in the compliance certificate delivered therewith pursuant to clause (ii)
of paragraph (c) above at the end of the fiscal year are stated in accordance
with the terms of this Credit Agreement;
(e) On or prior to the twentieth day of each month, a certificate
("Borrowing Base Certificate") in the form of Exhibit C 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 reasonably
detailed information including the calculation of each such component (the
Borrower, at their option, may furnish additional Borrowing Base Certificates
setting forth such information as of such other dates as they may deem
appropriate);
(f) Promptly upon their becoming available, copies of all audits (except
royalty audits, participation audits and similar audits), studies, reports or
evaluations prepared for or submitted to any of the Credit Parties by any
outside professional firm or service in connection with each annual, interim or
special audit of the financial statements of the Borrower, including, without
limitation, the comment letter submitted by the Credit Parties' accountants to
management in connection with their annual audit;
(g) Promptly upon their becoming available, copies of (i) all registration
statements, proxy statements, and all reports which any Credit Party shall file
with any securities exchange or with the Securities and Exchange Commission or
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any successor agency and (ii) all audits, reports, financial statements, press
releases and other information which any Credit Party shall release, send or
make available to its stockholders generally;
(h) Upon reasonable request, deliver all regular periodic financial reports
prepared by a Credit Party with respect to each item of Product from the
beginning of preproduction for such item of Product until such item of Product
is Completed. Such report shall include the Credit Party's cost basis in the
item of Product and the estimated cost to Complete such item of Product;
(i) Deliver within (i) fifteen (15) Business Days after delivery of the
statements referred to in paragraph (a) of this Section 5.1, forecasted
financial statements consisting of balance sheets of the Borrower and its
Consolidated Subsidiaries (including all Guarantors), cash flow statements and
income statements together with appropriate supporting details and a statement
of underlying assumptions comparable to the projections delivered to the Lenders
pursuant to Section 4.1(p) hereof which cover the succeeding two fiscal years,
and which shall have been prepared in accordance with GAAP; and
(j) From time to time such additional information regarding the financial
condition or business of the Credit Parties or otherwise regarding the
Collateral, as the Administrative Agent or any Lender acting through the
Administrative Agent may reasonably request including, without limitation,
copies of all management projections, studies or evaluations prepared by
consultants for or presented to any Credit Party's Board of Directors.
SECTION 5.2. Corporate Existence; Compliance with Laws. Subject to Section
6.7, do or cause to be done all things necessary to (i) preserve, renew and keep
in full force and effect its corporate existence, rights, licenses, permits and
franchises, and (ii) comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, any Governmental Authority,
except with respect to any Guarantor where the failure to do so would not have a
Material Adverse Effect.
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) 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 leases and other
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, unless the failure to do so would not have
a Material Adverse Effect.
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 or operations of the
Borrower and its Subsidiaries taken as a whole, financial or otherwise (other
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than changes due to seasonality that are consistent with the corresponding
periods in prior years), (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, the repayment of the Notes or
the security interests granted to the Administrative Agent for the benefit of
itself, the Issuing Bank and the Lenders under this Credit Agreement or any
other Fundamental Document, (iv) the opening of any office of any Credit Party
or the change of the 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, (v) any change in the name of any Credit Party, (vi)
any other event which could reasonably be expected to materially and adversely
impact on the amount or collectibility of accounts receivable of the Credit
Parties or otherwise materially decrease the value of the Collateral or (vii)
any Person giving any notice to any Credit Party or taking any other action to
enforce remedies with respect to claimed default or event or condition of the
type referred to in paragraph (f) 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 and the nature of such claimed Event of Default or
condition and what action such 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 (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), could reasonably be expected to materially and adversely affect the
Borrower and its Subsidiaries (including the Guarantors) taken as a whole, such
Credit Party shall promptly give notice thereof to the Administrative Agent and
provide such other information as may be available to it to enable the Lenders
to evaluate such matters; and, in addition to the requirements set forth in
clauses (i) and (ii) of this subsection (b), such Credit Party upon request
shall promptly give notice of the status of any action, suit, proceeding,
investigation or arbitration covered by a report delivered to the Lenders
pursuant to clause (i) and (ii) above to the Lenders and provide such other
information as may be reasonably available to it to enable the Lenders to
evaluate such matters.
SECTION 5.5. Insurance. (a) Keep its assets which are of an insurable
character insured (to the extent and for the time periods consistent or greater
than normal U.S. industry standards for companies similar to the Borrower) 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 U.S. industry practices for companies similar to the
Borrower.
(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 customary for companies in similar businesses.
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(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 with respect to all items
of Product for which principal photography has commenced, 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.
(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 or 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 recreating such item, 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 a like type of Product, 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 customary for companies in
similar businesses.
(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
Issuing Bank and the Lenders as a loss payee (except for "Errors and Omissions"
insurance and other third party liability insurance), provided, however, that
production insurance recoveries received prior to Completion or abandonment of
an item of Product may be turned over to the relevant Credit Party to be
utilized to finance the production of such item of Product and property
insurance proceeds may be turned over to the relevant Credit Party to be used to
repair damage in respect of which such proceeds were received; and (iii) to the
extent that none of the Administrative Agent, the Issuing Bank or the Lenders
shall be liable for premiums or calls, name the Administrative Agent, the
Issuing Bank and the Lenders as additional insureds including, without
limitation, under any "Errors and Omissions" policy.
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(g) Upon the request of the Administrative Agent, the Borrower will render
to the Administrative Agent a statement in such detail as the Administrative
Agent may reasonably request as to all such insurance coverage.
SECTION 5.6. Production. Cause each item of Product being produced by any
Credit Party to be produced in all material respects 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.
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 (a) written evidence of the music
synchronization rights, if any, obtained from the composer or the licensor of
the music and (b) copies of all music cue sheets with respect to such item of
Product.
SECTION 5.8. Copyright. (a) Within 90 days after the later of (x) the
initial release or broadcast of each item of Product or (y) the acquisition of
rights in each such item of Product by a Credit Party, to the extent any Credit
Party is or becomes the copyright proprietor thereof, or any Credit Party
otherwise acquires a copyrightable interest, take any and all actions necessary
to register the copyright for such item in the name of such Credit Party
(subject to a Lien in favor of the Administrative Agent for the benefit of the
Administrative Agent, the Lenders and the Issuing Bank pursuant to the Copyright
Security Agreement) in conformity with the laws of the United States and such
other jurisdictions as the Administrative Agent may reasonably specify, and, if
such interest may be registered with the United States Copyright Office or such
other jurisdictions, promptly 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 relating to such item executed by such Credit Party.
(b) Obtain instruments of transfer or other documents evidencing the
interest of any Credit Party with respect to the copyright relating to items of
Product or Film Assets in which such Credit Party is not entitled to be the
initial copyright proprietor, and, if such interest may be registered with the
United States Copyright Office or such other jurisdictions, promptly record such
instruments of transfer on the United States Copyright Register and in such
other jurisdictions as the Administrative Agent may reasonably 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
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advance written notification to the Borrower may discuss the affairs, finances
and accounts with, and be advised as to the same by, 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 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 included in the Borrowing Base, the Administrative
Agent will so notify the Borrower in writing. 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, the Administrative
Agent may proceed to make such confirmations directly with account debtors and
other payors. 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 the amounts and terms
of all accounts receivable.
SECTION 5.10. Third Party Audit Rights. Promptly notify the Administrative
Agent of, and 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 third party licensees, partnerships and joint
ventures upon the reasonable request of the Administrative Agent. 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 such Credit Party with respect to any
item of Product included in the Collateral.
SECTION 5.11. Observance of Agreements. Duly observe and perform all
material terms and conditions of all material agreements to which any Credit
Party is a party with respect to the exploitation of items of Product and Film
Assets and diligently protect and enforce the rights of the Credit Party 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. (a) 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 materials at a
Laboratory that has delivered a Pledgeholder Agreement or Laboratory Access
Letter to the Administrative Agent, then the Credit Party will deliver to the
Administrative Agent a fully executed Laboratory Access Letter covering such
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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 (other than 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, Canada, the United Kingdom or such other location
reasonably approved by the Administrative Agent or (ii) to any state or
jurisdiction where UCC-1 financing statements (or in the case of jurisdictions
outside the United States, documentation similar in purpose and effect
satisfactory to the Administrative Agent) have not been filed against such
Credit Party holding any rights to such item of Product.
(b) 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 as soon as practicable and will use its
best efforts to deliver the daily rushes on a weekly basis.
(c) With respect to items of Product Completed after the Closing Date,
together with the financial statements delivered pursuant to Section 5.1(b),
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. 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 material 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, charge, levy or claim need not
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if such Credit Party shall have set aside
on its books reserves (the presentation of which is segregated to the extent
required by GAAP) adequate with respect thereto if reserves shall be deemed
necessary by the Credit Parties; 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 or post a bond or other security thereof.
Each Credit Party will promptly pay when due, or in conformance with customary
trade terms, all other indebtedness incident to its operations.
SECTION 5.14. Liens. Defend the Collateral against any and all Liens
howsoever arising, other than Permitted Encumbrances, and in any event defend
against any attempted foreclosure.
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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 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 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 and the rules and regulations thereunder, or any other
Applicable Law of the United States or any other jurisdiction, and perform or
cause to be performed such other ministerial acts which are necessary, from time
to time, in order to grant and maintain in favor of the Administrative Agent for
the benefit of itself, 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, the Issuing Bank 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
Issuing Bank and the Lenders.
(d) With respect to each Distribution Agreement entered into after the
Closing Date relating to Product produced or acquired by a Credit Party after
the date hereof, as promptly as practicable execute and (i) cause each party
thereto to duly execute and deliver to the Administrative Agent an original
Notice of Assignment and Irrevocable Instructions or (ii) include language
constituting such notice in each such Distribution Agreement.
(e) With respect to each Distribution Agreement in existence on the Closing
Date giving rise to Eligible Receivables in excess of $400,000 included in the
Borrowing Base, execute and cause each party thereto to duly execute and deliver
to the Administrative Agent an original Notice of Assignment and Irrevocable
Instructions.
SECTION 5.16 Receivables Audit. In connection with the annual audit of the
financial statements of the Borrower and its Consolidated Subsidiaries
(including all Guarantors) by PriceWaterhouseCoopers LLP (or any successor
auditor), if so requested by the Administrative Agent, arrange for account
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debtors to confirm accounts receivable (both on and off balance sheet) which
confirmations shall be delivered by PriceWaterhouseCoopers LLP (or such
successor auditor) to the Administrative Agent.
SECTION 5.17. ERISA Compliance and Reports. Furnish to the Administrative
Agent (a) as soon as possible, and in any event within 30 days after any Credit
Party has knowledge that (i) any Reportable Event with respect to any 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, (ii) an accumulated funding deficiency has been incurred or an application
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard or an extension of any amortization period under
Section 412 of the Code with respect to a Plan, (iii) a Plan or Multiemployer
Plan has been or is proposed to be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA, (iv) proceedings have been
instituted to terminate a Plan or (v) 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 Plan or Multiemployer Plan under Sections
4062, 4063, 4201 or 4204 of ERISA, if the occurrence of any of the foregoing
events individually or in the aggregate would result in a liability which is
materially adverse to the financial condition of the Borrower and its
Subsidiaries taken as a whole, or a Credit Party, or would materially adversely
affect the ability of the Credit Party to perform its obligations under this
Credit Agreement or the Notes, a statement of an Authorized Financial Officer of
a Credit Party, setting forth details as to such event and the action the
applicable Credit Party proposes to take with respect thereto, (b) promptly upon
reasonable request of the Administrative Agent, copies of each annual and other
report with respect to each Plan and (c) 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 Plan or to appoint a trustee
to administer any Plan.
SECTION 5.18. Environmental Laws. (a) 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.
(b) Comply with and use reasonable efforts to ensure compliance by all
tenants and subtenants with all Environmental Laws, and obtain and comply in all
material respects with and maintain and use best efforts to ensure that all
tenants and subtenants obtain and comply in all material respects with and
maintain any and all licenses, approvals, registrations or permits
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required by Environmental Laws, except where failure to do so would not have a
Material Adverse Effect.
(c) 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.
(d) Defend, indemnify and hold harmless the Administrative 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, 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 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 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 the Loans solely to (i)
refinance outstanding loans, accrued interest and fees and expenses under the
Existing Credit Facility, (ii) finance the Borrower's or a Guarantor's
production, acquisition, distribution (including, without limitation, internet
distribution) and exploitation of feature length motion pictures, television
programming, video product and rights therein, (iii) fund the Borrower's or a
Guarantor's working capital and/or (iv) otherwise for lawful corporate purposes
of the Borrower.
SECTION 5.20. Uncompleted Products. With respect to each item of Product
for which any Credit Party has any Production Exposure in the amount of
$1,500,000 or more, deliver to the Administrative Agent not later than (A) five
(5) Business Days prior to the commencement of principal photography of any such
item of Product being produced by or under the control of any Credit Party or
for which any Credit Party has a financial interest which is subject to a
completion risk (i.e., payment by such Credit Party is not conditioned upon
delivery), and (B) five (5) Business Days prior to payment of the acquisition
cost for a negative pickup for any item of Product, each of the following to the
extent applicable (it being understood that for purposes of clause (B) that
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clauses (i) and (viii) below shall not be applicable, and that a Pledgeholder
Agreement or a Laboratory Access Letter in lieu of a Pledgeholder Agreement
pursuant to clause (vii) shall be delivered if such item of Product is not
already covered by a Pledgeholder Agreement): (i) the budget and cash flow
schedule for such item of Product, (ii) a schedule identifying all agreements in
connection with such item of Product which provide for deferments of
compensation or a gross profit participation, in either case, payable by any
Credit Party or from its share of revenues, (iii) copies of such of the
foregoing agreements as the Administrative Agent may reasonably request, (iv)
certificates or binders of insurance with respect to such item of Product (and
policies of insurance if requested by the Administrative Agent), including all
forms of insurance coverage required by Section 5.5 hereof, (v) 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
copyright rights 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 (for the benefit of itself, the
Issuing Bank and the Lenders) the security interests therein which are
contemplated by this Credit Agreement which documents shall evidence to the
Administrative Agent's satisfaction the Credit Party's rights in, and with
respect to, such item of Product, (vi) an executed Copyright Security Agreement
Supplement with respect to such item of Product, (vii) to the extent not already
covered by an existing Pledgeholder Agreement, executed Pledgeholder
Agreement(s) with respect to such item of Product and (viii) a Completion
Guarantee with respect to such item of Product.
SECTION 5.21 Security Agreements with the Guilds. Furnish to the
Administrative Agent duly executed copies of each security agreement relating to
an item of Product entered into by a Credit Party with any guild and with
respect to (A) any such guild security agreement entered into after the date
hereof, furnish to the Administrative Agent duly executed copies of an
intercreditor agreement (in the customary form used by 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 and (B) any such security
agreement entered into prior to the date hereof with respect to an item of
Product included in the Borrowing Base, (x) use its reasonable best efforts to
furnish the Administrative Agent duly executed copies of an intercreditor
agreement described in clause (A) above, or (y) furnish duly executed copies of
an intercreditor agreement from the applicable guild with respect to all such
items of Product (which agreement provides the Administrative Agent with notice
and an opportunity to cure prior to any such guild foreclosing on such items of
Product).
SECTION 5.22. Negative Cost Statements. Deliver to the Administrative
Agent, within 30 days after each item of Product produced by a Credit Party is
Completed, a tentative negative cost statement, and within 120 days after each
such item of Product is Completed, a final negative cost statement.
SECTION 5.23. Subsidiaries. Deliver to the Administrative Agent reasonably
promptly after formation of any new direct or indirect Subsidiary (but in any
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event prior to commencement of operations by such Subsidiary) an Instrument of
Assumption and Joinder executed by such Subsidiary, appropriate UCC-1 financing
statements, corporate documents to the extent set forth in Section 4.1(a),
written opinions of counsel (which may be an employee of, or counsel for, a
Credit Party) in form and substance satisfactory to the Administrative Agent and
certificates representing 100% of the stock of such Subsidiary owned by the
Credit Party together with an undated stock power executed in blank, except that
with respect to any Controlled Foreign Corporation, only 66% of the stock of
such Controlled Foreign Corporation shall be delivered.
SECTION 5.24. Release of Product. Each Credit Party will either (a) release
each Completed item of Product in the United States in the market for which it
is intended within twelve (12) months of delivery or (b) revise the ultimates
for such item of Product and immediately write down the negative cost of such
item of Product in accordance with GAAP. Without limiting and in addition to the
foregoing, in the event a Credit Party fails to release a Completed item of
Product in the market for which it is intended within twelve (12) months of
delivery, the ultimates for such item of Product shall be immediately revised by
the Borrower or such Credit Party, as applicable, to exclude such item of
Product therefrom until such time, if ever, as such item of Product is released
as provided in the first sentence of this Section 5.24. In addition to the
foregoing, if at any time any Credit Party determines in accordance with GAAP
that the ultimates for an item of Product previously included in the Borrowing
Base have decreased, then the Borrower or such Credit Party shall revise the
ultimates for such item of Product, and accordingly, reflect such write down in
the next quarterly Borrowing Base Certificate delivered to the Administrative
Agent in accordance with this Section 5.24.
SECTION 5.25. Borrowing Base. In the event that the Borrower determines
that in accordance with its existing credit policies or in accordance with GAAP
that it should reserve as a bad debt an item included in the Borrowing Base as a
result of the lack of creditworthiness of an Acceptable Obligor or any account
debtor, the Borrower shall give notice thereof to the Administrative Agent and
shall delete from all future computations from the Borrowing Base any amounts
payable by such obligor or account debtor.
SECTION 5.26. Distribution Agreements, Negative Pickups, Acceptable L/C's,
Etc. (a) Take all action necessary to effect the transfer of all Acceptable
L/C's to the Administrative Agent for the benefit of the Lenders including,
without limitation, timely preparation and acquisition of all documents, drafts
or other instruments required to effect such transfer to the Administrative
Agent.
(b) Furnish to the Administrative Agent, concurrently with the delivery of
each Borrowing Base Certificate, (i) a list in the form of Schedule 3.17 hereto
of all Distribution Agreements, joint venture agreements, co-production
agreements and negative pick-up agreements entered into by a Credit Party during
the preceding month and all amendments entered into during the preceding month
with respect to any Distribution Agreement, joint venture agreement,
co-production agreement or negative pick-up agreement that was previously
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delivered to the Administrative Agent or included on any such list or included
on Schedule 3.17, and (ii) copies of all Notices of Assignment and Irrevocable
Instructions executed during the preceding month.
(c) From time to time (i) furnish to the Administrative Agent such
information and reports regarding the Distribution Agreements to which a Credit
Party is a party as the Administrative Agent may reasonably request and (ii)
upon the occurrence and continuation of an Event of Default and the reasonable
request of the Administrative Agent, make to the other parties to a Distribution
Agreement to which a 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.
6. NEGATIVE COVENANTS
From the date hereof and for so long as the Commitments shall be in effect,
any amount remains outstanding under the Notes, any Letter of Credit shall
remain outstanding or any Obligations 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 to:
SECTION 6.1. Limitations on Indebtedness. Incur, create, assume or suffer
to exist any preferred stock 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 other than:
(a) the Indebtedness represented by the Notes and the other
Obligations;
(b) existing Indebtedness as of the date hereof listed on Schedule
6.1(b) hereto, but no increases, extensions or renewals thereof unless
otherwise listed on Schedule 6.1(b);
(c) Indebtedness relating to net, gross or other profit
participations, deferments and guild residuals arising in the ordinary
course of business in connection with the production, acquisition or
exploitation of Product and Film Assets;
(d) Subordinated Debt;
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(e) unsecured liabilities or liabilities secured solely by Letters of
Credit issued hereunder, in each case for acquisitions of Film Assets or
Product in the ordinary course of business and which are not otherwise
prohibited hereunder;
(f) Indebtedness in respect of inter-company advances constituting
Investments permitted under Section 6.4(iii) hereof (which intercompany
Indebtedness is subordinate to the repayment of the Obligations in
accordance with Section 13.16 hereof);
(g) Indebtedness in respect of secured purchase money financing
(including Capital Leases), to the extent permitted by Section 6.2(f) and
not to exceed $1,000,000 for all Credit Parties in the aggregate at any one
time outstanding;
(h) Guarantees permitted pursuant to Section 6.3 hereof;
(i) Indebtedness in connection with Liens permitted pursuant to
Section 6.2(m);
(j) other Indebtedness not to exceed $500,000 for all Credit Parties
in the aggregate outstanding at any one time; and
(k) the issuance by the Borrower (i) of preferred stock to Xxxxxxxx
Street pursuant to the Overseas Equity Offering and (ii) of preferred stock
which is not subject, prior to the later of the repayment of the
Obligations in full and the second anniversary of the Commitment
Termination Date, to either mandatory redemption or redemption at the
option of the security holder and which provides no remedies for the
security holder other than the election of a minority of directors of the
Borrower (and which would not otherwise result in a Change of Control) for
the failure to pay dividends.
SECTION 6.2. Limitations on Liens. Incur, create, assume or suffer to exist
any Lien on its revenue stream, property or assets, whether now owned or
hereafter acquired, except:
(a) Liens pursuant to written security agreements after the date
hereof required by collective bargaining agreements with guilds on
customary terms consistent with the past practices of the Administrative
Agent; provided that, each such guild has entered into an intercreditor
agreement with the Administrative Agent in the customary form used by the
Administrative Agent;
(b) Liens to secure distribution, exhibition and/or exploitation
rights of licensees pursuant to Distribution Agreements on terms
satisfactory to the Administrative Agent;
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(c) 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 (other than completion
bonds) incurred in the ordinary course of business;
(d) Liens incurred in the ordinary course of business with regard to
goods provided and services rendered by laboratories and post-production
houses, record warehouses, common carriers, landlords, warehouses,
mechanics and suppliers of materials and equipment which secure outstanding
trade payables in amounts not exceeding $500,000 in the aggregate;
(e) the Liens of the Administrative Agent and the Lenders under this
Credit Agreement, the other Fundamental Documents and other documents
contemplated hereby;
(f) Liens granted to the Person financing the acquisition of property,
plant or equipment or other property acquired by a Credit Party if (i)
limited to the particular assets acquired; (ii) the Indebtedness secured by
the Lien does not exceed the acquisition cost of a particular asset for
which such Lien is granted; (iii) such transaction is not otherwise
prohibited by this Credit Agreement; and (iv) the aggregate amount of all
Indebtedness for all Credit Parties secured by such Liens does not exceed
$1,000,000 at any one time outstanding;
(g) 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;
(h) Liens for taxes, assessments or other governmental charges or
levies 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;
(i) customary Liens in favor of Approved Completion Guarantors in
connection with Completion Guaranties;
(j) 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;
(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 for borrowed money;
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(l) Liens on assets of the Borrower or Guarantor existing as of the
date hereof described in Schedule 6.2 (including Liens in favor of guilds
existing as of the date hereof);
(m) liens on an item of Product to secure (i) the purchase price of
such item of Product payable by a non-Credit Party licensee to an owner or
licensor of such item of Product or (ii) in situations in which a Credit
Party is neither the owner or licensor, the rights of non-Credit Party
owners or licensors of such item of Product to receive a contractually
agreed share of revenue or other payments with respect to such item of
Product payable by a Credit Party to the owner or the licensor, in each
case on terms reasonably satisfactory to the Administrative Agent (which
terms shall (A) provide the Administrative Agent with notice and an
opportunity to cure prior to any such licensee or owner foreclosing on such
item of Product, (B) limit such lien to the particular item of Product and
(C) provide that such lien shall be junior and subject to any senior
recoupment right of a Credit Party in accordance with (and to the extent
provided in) its agreement with such non-Credit Party with respect to such
item of Product); and
(n) easements, rights of way, restrictions, minor defects or
irregularities in title or other similar encumbrances on real property
which do not materially detract from the value of the property subject
therefor or interfere with the ordinary conduct of business of the Credit
Parties.
SECTION 6.3. Limitation on Guarantees. Incur, create, assume or suffer to
exist any Guaranty, either directly or indirectly, except:
(a) Negative Pickup Obligations not in excess of $7,500,000 in the
aggregate for all Credit Parties, incurred in the ordinary course of
business, to the extent otherwise permitted under Section 6.15 and the
other provisions hereof;
(b) Guarantees of the obligations of Credit Parties under talent
agreements for the provision of services related to the production of
Product, provided that such obligations are included within the Credit
Party's Production Exposure for such item of Product;
(c) Guarantees to the Administrative Agent, the Issuing Bank and the
Lenders in accordance with Article 8 hereof;
(d) Guarantees of one Credit Party of the obligations of another to
the extent not otherwise prohibited hereunder;
(e) Guarantees by the Borrower or Guarantor existing on the date
hereof described in Schedule 6.3; and
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(f) other Guarantees not to exceed $250,000 for all Credit Parties in
the aggregate outstanding at any time.
SECTION 6.4. Limitations on Investments. Create, make or incur any
Investment other than: (i) to acquire Product in the ordinary course of business
to the extent otherwise permitted under Section 6.15 and the other provisions
hereof, (ii) purchase of Cash Equivalents, (iii) inter-company advances among
Credit Parties permitted under Section 6.1 hereof, (iv) Investments as of the
Closing Date set forth on Schedule 6.4, (v) guarantees permitted pursuant to
Section 6.3, (vi) 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 6.26 hereof, (vii) 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, (viii) promissory notes or other
debt obligations received in connection with asset dispositions permitted
hereunder, (ix) ordinary course of business Investments in items of Product
otherwise permissible hereunder, (x) advances in connection with the acquisition
or distribution of Product and (xi) other Investments not to exceed $250,000 for
all Credit Parties in the aggregate outstanding at any time.
SECTION 6.5. Restricted Payments. Declare, make or become obligated to make
any Restricted Payment other than:
(a) the declaration and payment of dividends, and the payment of any
Indebtedness, in each case by any Credit Party to another Credit Party; and
(b) any Credit Party may declare and deliver dividends and
distributions payable only in common stock of such Credit Party;
(c) so long as no Event of Default has occurred and is continuing, the
repurchase or other acquisition of shares of capital stock of the Borrower
from employees, former employees, directors or former directors of the
Borrower or any of its Subsidiaries (or permitted transferees of such
employees, former employees, directors or former directors), pursuant to
the terms of agreements (including employment agreements) or plans (or
amendments thereto) approved by the Board of Directors of the Borrower
under which such individuals purchase or sell or are granted the option to
purchase or sell, shares of such capital stock; provided, however, that the
aggregate amount of such repurchases and other acquisitions shall not
exceed $500,000 in any calendar year (with unused amounts being carried
forward indefinitely);
(d) cash payments in lieu of the issuance of fractional shares in
connection with stock splits or upon the conversion into capital stock of
the Borrower of any security of the Borrower or any convertible
Indebtedness of the Borrower; and
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(e) repayment of $1,430,000 of Indebtedness to Xxxxx Xxxxxx in
connection with the Overseas Equity Offering.
SECTION 6.6. Limitations on Leases. Create, incur or assume combined lease
expense (but specifically excluding amounts included in the Budgeted Negative
Cost of an item of Product) for any twelve consecutive months in excess of
$750,000 for all Credit Parties in the aggregate.
SECTION 6.7. Merger, Sale or Purchase of Assets, etc. 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 Collateral or all or substantially all of its
property, stock or assets or agree to do or suffer any of the foregoing, except
(i) for licenses for the distribution, exhibition or other exploitation of an
item of Product pursuant to Distribution Agreements entered into in the ordinary
course of business, (ii) for sales of individual items of Product or Film Assets
in the ordinary course of business, (iii) for sales or other disposition of
assets (other than items of Product or Film Assets) in the ordinary course of
business which are obsolete or no longer useful in the operation of the business
of a Credit Party, (iv) for transactions permitted by Section 6.9 hereof, and
(v) that any Subsidiary of a Credit Party may merge with and into, or transfer
assets to, another Subsidiary of the Credit Party or with and into, or transfer
assets to, the Credit Party (provided that, with respect to clause (v), (A) if
any such transaction involves the Borrower, then the Borrower must be the
surviving entity in each such transaction and (B) if any such transaction
involves a Credit Party that is a Subsidiary of the Borrower but does not
involve the Borrower, then such Credit Party must be the surviving entity in any
such transaction).
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 the 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, unless such arrangement does not impair the collateral position of the
Lenders and is evidenced by documentation acceptable 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 material 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 30 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
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perfection of the security interest of the Administrative Agent for the benefit
of the Administrative 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 during any fiscal year in excess of
$500,000 for all Credit Parties in the aggregate.
SECTION 6.12. Transactions with Affiliates. Except for that certain First
Look Agreement between The Little Film Company and the Borrower (which
agreement, when executed, shall be substantially similar in all material
respects with the draft provided to the Administrative Agent prior to the date
hereof), enter into any transaction with any of its Affiliates (other than any
transaction which is solely among Credit Parties) on a basis that is less
favorable to such Credit Party than would have been the case if such transaction
had been effected on an arms-length basis (and if involving more than $50,000,
without a resolution approving each such transaction from the Board of Directors
of each Credit Party involved).
SECTION 6.13. Business Activities. Engage in any business activities other
than (i) activities relating to the acquisition of, investment in and
production, distribution and exploitation of animated or live-action theatrical
motion pictures and television programming, video products and rights therein
(e.g. music publishing, soundtrack album, internet distribution, merchandising,
publishing, television movies-of-the-week, animated television spin-offs,
interactive and other exploitation of ancillary rights) and (ii) the production
and marketing of sound recordings and related interactive products and any
ancillary activities.
SECTION 6.14. Amortization Method. Change the method of amortization of
film/television inventory used by any Credit Party if the effect of such change
is to reduce the rate at which such costs are or will be amortized unless
required to do so by FASB.
SECTION 6.15. Limitations on Production and Acquisition of Product;
Production Exposure. (a) Begin production on any item of Product or enter any
agreement to co-finance or acquire any item of Product or rights therein with a
Production Exposure for such item of Product in excess of $3,000,000 without the
prior written consent of the Required Lenders.
(b) Begin production on an item of Product for which the Credit Parties (or
any of them) have a current financial exposure (as opposed to a negative pick-up
arrangement) or are otherwise subject to a completion risk (i.e., payment by
such Credit Party is not conditions upon delivery) if the Production Exposure
with respect to such item of Product exceeds $750,000, unless a Completion
Guarantee is in place with respect to such item of Product.
(c) Have Production Exposure exceeding (i) $5,000,000 in the aggregate for
all Completed Product not yet released theatrically or (ii) $10,000,000 in the
aggregate for all items of Product not yet Completed.
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SECTION 6.16. Unrecouped Print and Advertising Expenses. Permit Unrecouped
Print and Advertising Expenses to at any time exceed $2,000,000 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 $5,000,000 in
the aggregate at any time.
SECTION 6.17. Overhead Expense. Permit aggregate allocated and unallocated
overhead expenses to exceed $5,000,000 for all Credit Parties in the aggregate
for any fiscal year.
SECTION 6.18. Development Costs. Permit development costs (which have not
been sold, written off or allocated to an item of Product for which active
preproduction has commenced) of the Credit Parties with respect to items of
Product for which active preproduction has not yet commenced to exceed (i)
$1,200,000 in the aggregate for all such items of Product as of the date hereof
(which items are listed on Schedule 6.18 hereto), (ii) $500,000 in the aggregate
for all items of Product acquired or produced after the date hereof or (iii)
$100,000 with respect to any such individual item of Product.
SECTION 6.19. Consolidated Net Worth. Permit Consolidated Net Worth at the
end of any fiscal quarter of the Borrower to be less than (x) $28,000,000 in the
event the Borrower has expensed no less than $300,000 in fees associated with
closing of the Facility and the Overseas Equity Offering on or before June 30,
2000 or (y) $28,400,000 in the event the Borrower has not expensed the fees
described in clause (x) on or before June 30, 2000, in each case plus, on an
aggregate basis adjusted each quarter based on the following, (i) 100% of the
net proceeds of all new equity invested in the Borrower after the Closing Date
and (ii) 50% of net earnings, if any, for the trailing four fiscal quarters for
each quarter ending after the fourth fiscal quarter following the Closing Date
and prior to the date at which compliance is being determined (without any
deduction for net losses). Consolidated Net Worth shall be calculated without
giving effect to the proposed Statement of Position which is expected to replace
FASB 53 (which replacement is expected to occur before the end of the third
calendar quarter of 2000).
SECTION 6.20. Liquidity Ratio. Permit the ratio (the "Liquidity Ratio") of
(i) all Projected Known Cash Sources to (ii) all Projected Known Cash Uses, 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. The Borrower or relevant Credit Party
shall deliver a compliance certificate substantially in the form of Exhibit K
hereto (each, a "Liquidity Certificate") demonstrating in detail compliance with
this Section 6.20 (i) as of the end of each fiscal quarter (by the fifteenth day
of the following month) and (ii) prior to the initial Loan or Letter of Credit
with respect to an item of Product (as required by Section 4.3(i) hereof).
SECTION 6.21. Distribution Arrangements. Enter into any major distribution
arrangement in connection with a substantial portion of Product produced or to
be produced by the Borrower (other than standard Distribution Agreements in the
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ordinary course of the Borrower's business) without the prior approval of the
Administrative Agent (such approval not to be unreasonably delayed or withheld)
as to the terms of and parties to such arrangement.
SECTION 6.22. ERISA Compliance. Engage in a "prohibited transaction", as
defined in Section 406 of ERISA or Section 4975 of the Code, with respect to any
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 Plan or Multiemployer Plan; or
permit any 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
Plan 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 Plan to
breach any fiduciary responsibility imposed under Title I of ERISA with respect
to any 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 Plan
or Multiemployer Plan which would 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 is materially adverse to the
financial condition of the Credit Parties taken as a whole or would materially
and adversely affect the ability of the Borrower to perform its obligations
under this Credit Agreement or the Notes.
SECTION 6.23. 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 or of 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 6.24. Interest Rate Protection Agreements, etc. Enter into any
Interest Rate Protection Agreement or Currency Agreement for other than bona
fide hedging purposes.
SECTION 6.25. Bank Accounts. After the date hereof, open or maintain any
bank account other than (a) those accounts contemplated by this Credit Agreement
and maintained with the Administrative Agent, (b) those accounts approved by the
Administrative Agent and listed on Schedule 6.25, or (c) a Production Account,
as to which the Administrative Agent shall have received notice.
SECTION 6.26. Subsidiaries. Acquire or create any new direct or indirect
Subsidiary; provided, however, that a Credit Party may incorporate additional
Subsidiaries if (i) each such Subsidiary that is not a Controlled Foreign
Corporation executes an Instrument of Assumption and Joinder in the form
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attached hereto as Exhibit J whereby such Subsidiary becomes a Credit Party
hereunder and the certificates representing 100% of the shares of capital stock
of such Subsidiary that is not a Controlled Foreign Corporation or 66% of the
shares of capital stock of such Subsidiary that is a Controlled Foreign
Corporation held by such Credit Party become part of the Pledged Securities
hereunder and are delivered to the Administrative Agent together with stock
powers for each such certificate executed in blank.
SECTION 6.27. Prohibition of Amendments or Waivers. Amend, alter, modify,
terminate or waive, or consent to any amendment, alteration, modification or
waiver of (x) any material agreement to which any Credit Party is a party,
including, without limitation, all agreements identified on Schedule 3.17
hereto, or the terms thereof in any manner which would change, alter or waive
any material term thereof and which could reasonably be expected to (i)
materially and adversely affect the collectibility of accounts receivable that
form part of the Borrowing Base, (ii) materially and adversely affect the
financial condition of the Credit Parties taken as a whole, (iii) materially and
adversely affect the rights of the Lenders under this Credit Agreement, the
other Fundamental Documents and any other agreements contemplated hereby, (iv)
materially decrease the value of the Collateral, or (v) decrease the amount of
the Borrowing Base to less than the then outstanding principal amount of the
Loans, or (y) any agreement governing the Subordinated Debt in any manner
whatsoever.
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 any Credit Party in this Credit
Agreement or any other Fundamental Document or in connection with this Credit
Agreement or with the execution and delivery of the Notes and Borrowings
hereunder, or any statement or representation made in any report, financial
statement, certificate or other document furnished by or on behalf of a Credit
Party to the Administrative Agent, the Issuing Bank or any Lender under or in
connection with this Credit Agreement or any other Fundamental Document shall
prove to have been false or misleading in any material respect when made, deemed
to be made or delivered;
(b) default shall be made in the payment of any principal of or interest on
the Notes or of any fees or other amounts payable by the Borrower hereunder,
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, in the case of payments of any amounts other than principal, such
default shall continue unremedied for three (3) Business Days;
(c) default shall be made in the due observance or performance of any
covenant, condition or agreement contained in Section 5.4 or Article 6 of this
Credit Agreement;
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(d) failure to submit any Borrowing Base Certificate to the Administrative
Agent within ten (10) Business Days of the date such certificate was due
pursuant to Section 5.1(e); 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 and Letters of Credit outstanding;
(e) 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 any Credit Party obtains knowledge of such occurrence;
(f) default shall be made with respect to any payment of any Indebtedness
of any Credit Party in excess of $500,000 when due or the performance of any
other obligation incurred in connection with any such Indebtedness, if the
effect of such 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 by the holders of such Indebtedness within the period of grace with
respect thereto;
(g) 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 any of the foregoing;
(h) any involuntary case, proceeding or other action against any Credit
Party shall be commenced seeking to have an order for relief entered against it
as debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or composition
of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its property, and such case, proceeding or other action (i)
results in the entry of any order for relief against it or (ii) shall remain
undismissed for a period of sixty (60) days;
(i) final judgment(s) for the payment of money in excess of $250,000 shall
be rendered against any Credit Party and within thirty (30) days from the entry
thereof such judgment shall not have been discharged or stayed pending appeal or
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shall not have been discharged or bonded in full within thirty (30) days from
the entry of a final order of affirmance on appeal;
(j) (i) failure by any Credit Party or ERISA Affiliate to make any
contributions required to be made to a Plan subject to Title IV of ERISA or
Multiemployer Plan, (ii) any accumulated funding deficiency (within the meaning
of Section 4971 of the Code) with respect to any Plan (whether or not waived)
shall exist, (ii) the present value of all benefits under all Plans subject to
Title IV of ERISA (based on those assumptions used to fund such Plans) exceeds,
in the aggregate, as of the last annual valuation date applicable thereto, the
actuarial value of the assets of such Plans allocable to such benefits, (iii)
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, (iv) a Reportable Event with respect to a Plan shall have
occurred, (v) the withdrawal by any Credit Party or ERISA Affiliate from a 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), (vi) the termination of a Plan, or the
filing of a notice of intent to terminate a Plan under section 4041(c) of ERISA,
(vii) the institution of proceedings to terminate, or the appointment of a
trustee with respect to, a Plan by the PBGC, (viii) 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 Plan, or (ix)
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 and the Administrative Agent
shall have notified the Borrower that the Required Lenders have made a
determination that on the basis of any such event there are reasonable grounds
to believe that such occurrence would have a Material Adverse Effect;
(k) this Credit Agreement, the Copyright Security Agreement, or any
Copyright Security Agreement Supplement (each a "Security Document") shall, for
any reason, not be or shall cease to be in full force and effect and, as a
result, the Administrative Agent and the Lenders would not be able to obtain the
material benefits of the Security Documents 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 itself,
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 its Affiliates, provided that no such defect in the
Security Documents shall give rise to an Event of Default under this paragraph
(k) unless such defect or such failure 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 $500,000;
(l) a Change in Management shall occur; or
(m) a Change in Control shall occur;
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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 and/or (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 Borrower to deliver to the Administrative
Agent from time to time, Cash Equivalents in an amount equal to the full amount
of L/C Exposure or to furnish other security therefor acceptable to the Required
Lenders. If an Event of Default specified in paragraph (g) or (h) 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 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 and the Lenders pursuant
to Applicable Law or otherwise.
8. GRANT OF SECURITY INTEREST; REMEDIES
SECTION 8.1. Security Interests. The Borrower, as security for the due and
punctual payment of the Obligations, and the Guarantors, as security for their
obligations under Article 9 hereof, hereby mortgage, pledge, assign, transfer,
set over, convey and deliver to the Administrative Agent (for the benefit of
itself, the Issuing Bank and the Lenders) and grant to the Administrative Agent
(for the benefit of itself, 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 expressly provided
hereunder.
SECTION 8.3. Collection Account. (a) On or before the Closing Date, the
Borrower will establish the Collection Account and will direct, by Notice of
Assignment and Irrevocable Instructions, all Persons 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 Collection
Account. Upon agreement between the Administrative Agent and the Borrower, a
Collection Account 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 Issuing Bank and the Lenders) and is under the sole
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dominion and control of the Administrative Agent. So long as no Event of Default
is continuing the Borrower shall have full and unfettered access to the
Collection Account.
(b) The Borrower and each Credit Party will execute such documentation as
may be reasonably required by the Administrative Agent in order to effectuate
the provisions of this Section 8.3.
(c) In the event the Borrower or any Credit Party receives payment from any
Person or proceeds under an Acceptable L/C, which payment should have been
remitted directly to a Collection Account, such Person shall promptly remit such
payment or proceeds to a Collection Account to be applied in accordance with the
terms of this Credit Agreement.
(d) All such Collection Accounts shall be maintained with the
Administrative Agent.
SECTION 8.4. Credit Parties to Hold in Trust. Upon the occurrence and
during the continuance of an Event of Default, the Credit Parties will, upon
receipt by them 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 in trust
for the Administrative Agent (for the benefit of itself, the Issuing Bank and
the Lenders), segregate such sum from their own assets and forthwith, without
any notice or demand whatsoever (all notices, demands, or other actions on the
part of the Administrative Agent 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 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 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
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to the security interests of 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, the
Issuing Bank and the Lenders 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, the Issuing Bank and the Lenders may take such
measures as they deem 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, the Issuing Bank and the Lenders shall decide, in one or
more sales or parcels, at such prices as the Administrative Agent, the Issuing
Bank and the Lenders 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 or notice of intention to sell or of time or place of sale
(except ten (10) days' written notice to the Credit Parties of the time and
place of any such public or private sale or sales (which notice the Credit
Parties hereby agree is reasonable) and such other notices as may be required by
Applicable Law and cannot be waived), and neither the Administrative Agent, the
Issuing Bank nor 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 to the extent permitted by law the Administrative Agent, the Issuing
Bank, the Lenders or any other Person may be the purchaser of all or any portion
of the Collateral so sold and thereafter hold the same absolutely, free (to the
fullest extent permitted by Applicable Law) from any claim or right of whatever
kind, including any equity of redemption, of any Credit Party, any such demand,
notice, claim, right or equity being hereby expressly waived and released. At
any sale or sales made pursuant to this Article 8, the Administrative Agent, the
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 Issuing Bank and the Lenders by any Credit Party
hereunder as a credit against the purchase price. The Administrative Agent, the
Issuing Bank and the Lenders shall in any such sale make no representations or
warranties with respect to the Collateral or any part thereof, and neither the
Administrative Agent, the Issuing Bank nor any Lender 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
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, the Issuing Bank
and the Lenders 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 Issuing Bank or Lenders) prior to such taking of actual possession or
control by the Administrative Agent, the Issuing Bank and the Lenders (whether
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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, the Issuing Bank and the Lenders but excluding therefrom
all claims with respect to the Collateral resulting from the gross negligence or
willful misconduct of any of the Administrative Agent, the Issuing Bank or any
Lender; and (ii) neither the Administrative Agent, the Issuing Bank nor any
Lender shall have 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, 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, to the maximum extent
permitted by Applicable Law, 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, the Issuing Bank and the Lenders 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 Issuing Bank and the Lenders shall be
entitled to apply, without prior notice to the Credit Parties, any cash or cash
items constituting Collateral in the possession of the Administrative Agent, the
Issuing Bank and the Lenders to payment of the Obligations.
SECTION 8.7. Application of Proceeds on Default. During the continuance of
an Event of Default, the balances in the Clearing Account, Collection Account,
Cash Collateral Account or in any other account of any Credit Party with a
Lender, all other income on the Collateral, and all proceeds from any sale of
the Collateral pursuant hereto shall be applied first toward payment of the
reasonable out-of-pocket costs and expenses paid or incurred by the
Administrative Agent in enforcing this Credit Agreement, in realizing on or
protecting any Collateral and in enforcing or collecting any Obligations or any
Guaranty thereof, including, without limitation, court costs and the reasonable
attorney's fees and expenses incurred by the Administrative Agent, then to
satisfy or provide cash collateral for all Obligations relating to the Letters
of Credit, and then to the 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 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
continuation of an Event of Default which is not waived in writing by the
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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 or such other Person 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 each
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 itself, 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 on behalf of itself, the Issuing
Bank or the Lenders hereunder, 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. The
Credit Parties hereby ratify and confirm 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 financing statements and
any amendments thereto or continuations thereof, any Copyright Security
Agreement, any Copyright Security Agreement Supplement, and any other
appropriate security documents or instruments and to give any notices necessary
or desirable to perfect the Lien of the Administrative Agent on behalf of
itself, the Issuing Bank and the Lenders on the Collateral, in all cases without
the signatures 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 Borrower. Each Credit Party
further authorizes the Administrative Agent upon the occurrence of an Event of
Default, and during the continuance of an Event of Default, 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.
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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
judgment of the Administrative Agent, to carry out the provisions and purposes
of this Article 8, to perfect and preserve the Liens of the Administrative Agent
for the benefit of itself, the Issuing Bank and the Lenders hereunder and under
the Fundamental Documents, and in the Collateral or any portion thereof.
SECTION 8.11. Termination. The security interests granted under this
Article 8 shall terminate when all Commitments shall have terminated, all
amounts outstanding under the Notes shall have been paid in full, all amounts
outstanding under all Letters of Credit shall have been reimbursed in full, all
issued but undrawn Letters of Credit shall have expired or been terminated or
canceled and all other monetary Obligations then due and payable shall have been
indefeasibly paid in full. 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 executing UCC termination statements, Pledgeholder Agreement
terminations, termination letters to account debtors and copyright releases, to
terminate the security interest granted to it 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 that their security interest hereunder is subject to
the rights of Quiet Enjoyment (as defined below) of parties 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 or Film Asset licensed
to them, and to receive prints or tapes or have access to preprint material or
master tapes in connection therewith and that even if the Lenders shall become
the owner of the Collateral in case of an Event of Default, the Lenders'
ownership rights shall be subject to the rights of said parties under such
agreement, provided, however, that such licensee shall not be in default under
the relevant 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
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or the Lenders to the granting of any security interest to the licensee or other
party 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 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
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, the Credit Parties or any other Guarantor of any
of the Obligations, and also waives notice of protest for nonpayment, notice of
acceleration and notice of interest to accelerate. The obligations of each
Guarantor hereunder shall not be affected by (i) the failure of the
Administrative Agent, the Issuing Bank or the Lenders to assert any claim or
demand or to enforce any right or remedy against the 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 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 Issuing Bank or the Lenders to exercise
any right or remedy against any other Guarantor or any other guarantor of the
Obligations; or (vi) 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, 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 constitutes a guaranty
of performance and of payment when due and not just of collection, and waives
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any right to require that any resort be had by the Administrative 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 Issuing Bank or any Lender in favor of the Borrower,
any other Guarantor or to any other Person.
(d) Each Guarantor hereby expressly assumes all responsibilities to remain
informed of the financial condition of the Borrower, the Guarantors and any
other guarantors of the Obligations and any circumstances affecting the
Collateral or the Pledged Securities or the ability of the Borrower 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
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 Issuing Bank or any
Lender to assert any claim or demand or to enforce any remedy under this Credit
Agreement or any other agreement, by any waiver or modification of any provision
hereof or thereof, by any default, failure or delay, willful or otherwise, in
the performance of the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of such Guarantor or would otherwise operate as a discharge
of such Guarantor as a matter of law, unless and until the Obligations are paid
in full, the Commitments have terminated and each outstanding Letter of Credit
has expired or otherwise been terminated.
SECTION 9.3. Continuation and Reinstatement, etc. (a) 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 Issuing Bank or the Lenders upon the bankruptcy or reorganization of
the 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 Issuing Bank or the Lenders may have at law or in
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equity against the Borrower or a Guarantor or any other Person by virtue hereof,
upon failure of the Borrower 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 Issuing Bank and the Lenders,
forthwith pay or cause to be paid to the Administrative Agent for the benefit of
the Administrative Agent, the Issuing Bank and the Lenders 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 2.7(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 Issuing Bank and the Lenders with regard to amounts payable by the
Borrower 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.
(b) All rights of the Guarantors against the Borrower, arising as a result
of the payment by any Guarantor of any sums to the Administrative Agent for the
benefit of itself, the Issuing Bank and 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 payment in full of all the
Obligations. If any amount shall be paid to such Guarantor for the account of
the Borrower, such amount shall be held in trust for the benefit of the
Administrative Agent, segregated from such Guarantor's own assets, and shall
forthwith be paid to the Administrative Agent on behalf of itself, the Issuing
Bank and the Lenders to be credited and applied to the Obligations, whether
matured or unmatured.
SECTION 9.4. Limitation on Guaranteed Amount etc. Notwithstanding any other
provision of this Article 9, the amount guaranteed by each Guarantor hereunder
shall be limited to the extent, if any, required so that its obligations under
this Article 9 shall not be subject to avoidance under Section 548 of the
Bankruptcy Code or to being set aside or annulled under any Applicable Law
relating to fraud on creditors. In determining the limitations, if any, on the
amount of any Guarantor's obligations hereunder pursuant to the preceding
sentence, it is the intention of the parties hereto that any rights of
subrogation or contribution which such Guarantor may have under this Article 9
or any other agreement or under Applicable Law shall be taken into account.
10. PLEDGE
SECTION 10.1. Pledge. Each Pledgor, as security for the due and punctual
payment and performance of the Obligations (including interest accruing on and
after the filing of any petition in bankruptcy or of reorganization of the
Borrower whether or not post filing interest is allowed in such proceeding) in
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the case of the Borrower 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 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 representing all Pledged Securities existing on such
date, accompanied by executed undated stock powers, duly endorsed or executed in
blank by the appropriate Pledgor, and such other instruments or documents as the
Administrative Agent on behalf of itself, the Issuing Bank and the Lenders or
its counsel shall reasonably request.
SECTION 10.2. Covenant. Each Pledgor covenants that as 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 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
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 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 or any part thereof for
any purpose not inconsistent with the terms hereof, at all times, except as
expressly provided in (c) below.
(b) 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
Issuing Bank and the Lenders, segregated from such Pledgor's own assets, and
shall be delivered to the Administrative Agent.
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(c) Upon the occurrence and during the continuance of an Event of Default
and notice from the Administrative Agent to each affected Pledgor of the
transfer of such rights to the Administrative Agent, all rights of the Pledgors
to exercise the voting and/or consensual rights and powers and to receive cash
dividends and distributions which they are entitled to exercise or receive
pursuant to this Section 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 or waived.
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
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 the Pledgors. The Administrative Agent shall give the Pledgors ten (10)
days' written notice of its intention to make any such public or private sale,
or sale at any broker's board or on any such securities exchange, or of any
other disposition of the Pledged Securities. Such notice, in the case of public
sale, shall state the time and place for such sale and, in the case of sale at a
broker's board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Pledged Securities, or
portion thereof, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Administrative Agent may fix and shall
state in the notice of such sale. At any such sale, the Pledged Securities, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Administrative Agent may (in its sole and absolute discretion)
determine. The Administrative Agent shall not be obligated to make any sale of
the Pledged Securities if it shall determine not to do so, regardless of the
fact that notice of sale of the Pledged Securities may have been given. The
Administrative Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case the
sale of all or any part of the Pledged Securities is made on credit or for
future delivery, the Pledged Securities so sold shall be retained by the
Administrative Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Administrative Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Pledged
Securities so sold and, in case of any such failure, such Pledged Securities may
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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 Issuing Bank
and 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 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, 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 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 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 party 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 Issuing Bank and
the Lenders shall have no liability or obligation to any Credit Party arising
out of any such claim. As an alternative to exercising the power of sale herein
conferred upon it, the Administrative Agent may proceed by a suit or suits at
law or in equity to foreclose upon the Collateral and Pledged Securities under
this Credit Agreement and to sell the Pledged Securities, or any portion
thereof, pursuant to a judgment or decree of a court or courts having competent
jurisdiction.
SECTION 10.6. Application of Proceeds of Sale and Cash. The proceeds of
sale of the Pledged Securities sold pursuant to Section 10.5 hereof shall be
applied by the Administrative Agent on behalf of itself, the Issuing Bank and
the Lenders as follows:
(i) to the payment of all reasonable out-of-pocket costs and expenses paid
or incurred by the Administrative Agent in connection with such sale, including,
without limitation, all court costs and the reasonable fees and expenses of
counsel for the Administrative Agent in connection therewith, and the payment of
all reasonable out-of-pocket costs and expenses paid or incurred by the
Administrative Agent in enforcing this Credit Agreement, in realizing or
protecting any Collateral and in enforcing or collecting any Obligations or any
Guaranty thereof, including, without limitation, court costs and the reasonable
attorney's fees and expenses incurred by the Administrative Agent in connection
therewith;
(ii) satisfy or provide cash collateral for all Obligations relating to the
Letters of Credit; and
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(iii) to the 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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11. CASH COLLATERAL ACCOUNT
SECTION 11.1. Cash Collateral Accounts. On or prior to the Closing Date,
there shall be established with the Administrative Agent a collateral account in
the name of the Administrative Agent (the "Cash Collateral Account"), into which
the appropriate Credit Parties shall from time to time deposit amounts 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 Account shall be under the sole dominion and control of the
Administrative Agent.
SECTION 11.2. Investment of Funds. (a) The Administrative Agent is hereby
authorized and directed to invest and reinvest the funds from time to time
deposited in the Cash Collateral Account, so long as no Event of Default has
occurred and is continuing, on the instructions of the Borrower (provided that
such notice may be given verbally to be confirmed promptly in writing) or, if
the Borrower shall fail to give such instruction upon delivery of any such
funds, in the sole discretion of the Administrative Agent, provided that in no
event may the Borrower give instructions to the Administrative Agent to, or may
the Administrative Agent in its discretion, invest or reinvest funds in the Cash
Collateral Account 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 Account, shall be promptly reinvested by the
Administrative Agent as a part of the Cash Collateral Account and any net loss
on any such investment shall be charged against the Cash Collateral Account.
(c) None of the Administrative Agent, the Issuing Bank or the Lenders shall
be a trustee for any of the Credit Parties, or shall have any obligations or
responsibilities, or shall be liable for anything done or not done, in
connection with the Cash Collateral Account, except as expressly provided
herein. The Administrative Agent, the Issuing Bank and the Lenders shall not
have any obligations or responsibilities 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 from
time to time to the Borrower and to acquire participations in Letters of Credit
as provided for in this Credit Agreement, as security for the payment of all of
the Obligations, the Credit Parties hereby assign to the Administrative Agent
(for the benefit of itself, the Issuing Bank and the Lenders) and grant to the
Administrative Agent (for the benefit of itself, the Issuing Bank and the
Lenders), a first and prior Lien upon all the Credit Parties' rights in and to
the Cash Collateral Account, all cash, documents, instruments and securities
from time to time held therein, and all rights pertaining to investments of
funds in the Cash Collateral Account and all products and proceeds of any of the
foregoing. All cash, documents, instruments and securities from time to time on
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deposit in the Cash Collateral Account, 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, 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 12.2(b).
12. THE ADMINISTRATIVE AGENT AND THE ISSUING BANK
SECTION 12.1. Administration by Administrative Agent. (a) The general
administration of the Fundamental Documents and any other documents contemplated
by this Credit Agreement 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 Administrative 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 as are
expressly delegated by the terms hereof or thereof, as appropriate, together
with all powers reasonably incidental thereto. The Administrative Agent shall
have no duties or responsibilities except as set forth in the Fundamental
Documents.
(b) The Lenders hereby authorize the Administrative Agent (in its sole
discretion):
(i) in connection with the sale or other disposition of any asset
included in the Collateral or all of 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
and/or release such Guarantor from its obligations hereunder;
(ii) to determine that the cost to the Borrower 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
Borrower 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;
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(iii) to appoint subagents to be the holder of record of a Lien to be
granted to the Administrative Agent for the benefit of itself, the Issuing
Bank and the Lenders;
(iv) to confirm in writing the right of Quiet Enjoyment of licensees
and other parties 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;
(vii) to enter into intercreditor and/or subordination agreements on
terms acceptable to the Administrative Agent with (i) 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 and (ii) other Persons holding Liens permitted by Section 6.2(b)
and/or Liens set forth on Schedule 6.2;
(viii) to accept commitments from Persons which satisfy the definition
of "Eligible Assignee" for the remaining $7,000,000 of the Facility not
committed to as of the date hereof by (i) obtaining an executed counterpart
of this Agreement from each such Person, (ii) amending Schedule 1.1 hereto
to add each such Person's name and Commitment and circulating the amended
Schedule 1.1 to the Issuing Bank, the Lenders and the Credit Parties and
(iii) recording in the Register (as defined in Section 13.3(e) hereof) the
name and address of each such Person and the Commitment of, and principal
amount of the Loans owing to, it, whereupon (x) the Borrower shall execute
and deliver to the Administrative Agent a Note (substantially in the form
of Exhibit A hereto) to the order of each such Person in an amount equal to
its Commitment and (y) each such Person shall be a party hereto, have the
rights and obligations of a Lender hereunder and under the other
Fundamental Documents and shall be bound by the provisions hereof; and
(ix) upon the acceptance of additional commitments pursuant to Section
12.1(b)(viii) hereof, to allocate equitably among the Lenders the Alternate
Base Rate Loans and Eurodollar Loans so as to achieve pro rata status.
SECTION 12.2. Advances and Payments. (a) On the date of each Loan, the
Administrative Agent shall be authorized (but not obligated) to advance, for the
account of each of the Lenders, the amount of the Loan to be made by it in
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accordance with its Percentage hereunder. Each of the Lenders hereby authorizes
and requests the Administrative Agent 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 in immediately
available funds for the amount so advanced on its behalf by the Administrative
Agent. If any such reimbursement is not made in immediately available funds on
the same day on which the Administrative Agent shall have made any such amount
available on behalf of any Lender, such Lender shall pay interest to the
Administrative Agent at a rate per annum equal to 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. If and to the
extent that any such reimbursement shall not have been made to the
Administrative Agent, the Borrower agrees to repay to the Administrative Agent
forthwith on demand a corresponding amount with interest thereon for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, in the case of an Alternate Base
Rate Loan, at the Alternate Base Rate plus the Applicable Margin for Alternate
Base Rate Loans and, in the case of a Eurodollar Loan, at the LIBO Rate plus the
Applicable Margin for Eurodollar Loans.
(b) As between the Administrative Agent and the Lenders, any amounts
received by the Administrative Agent in connection with the Credit Agreement or
the Notes, the application of which is not otherwise provided for, shall be
applied as soon as reasonably practicable, in accordance with each Lender's
Percentage, first, to pay accrued but unpaid Commitment Fees, second, to pay
accrued but unpaid interest on the Notes in accordance with the amount of
outstanding Loans owed to each Lender, third, the principal balance outstanding
on the Notes (with amounts payable on the principal balance outstanding on the
Notes in accordance with each Lender's Percentage) and amounts outstanding under
Currency Agreements and Interest Rate Protection Agreements, fourth, to satisfy
or provide cash collateral for all Obligations relating to Letters of Credit,
fifth, to pay amounts outstanding under Currency Agreements and Interest Rate
Protection Agreements, and sixth, to pay any other amounts payable to the
Administrative Agent. All amounts to be paid to any Lender by the Administrative
Agent shall be credited to that Lender, after collection by the Administrative
Agent, in immediately available funds either by wire transfer or deposit in such
Lender's correspondent account with the Administrative Agent, or as such Lender
and the Administrative Agent shall from time to time agree.
SECTION 12.3. Sharing of Setoffs and Cash Collateral. 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 Loans as a result of
which the unpaid portion of its Loans and L/C Exposure is proportionately less
than the unpaid portion of any of the other Lenders (a) it shall promptly
purchase at par (and shall be deemed to have thereupon purchased)
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from such other Lenders a participation in the Loans or Letters of Credit of
such other Lenders, so that the aggregate unpaid principal amount of each of the
Lenders' Loans and its participation in Loans and Letters of Credit of the other
Lenders shall be in the same proportion to the aggregate unpaid principal amount
of all Loans then outstanding and L/C Exposure as the principal amount of its
Loans and L/C Exposure prior to the obtaining of such payment was to the
principal amount of all Loans outstanding and L/C Exposure 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 or Letters of Credit may exercise any and all
rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by the Borrower 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, in the amount of such participation.
SECTION 12.4. Notice to the Lenders. Upon receipt by the Administrative
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 or the
Issuing Bank will in turn immediately inform the other Lenders in writing (which
shall include facsimile communications) of the nature of such communication or
of the Event of Default, as the case may be.
SECTION 12.5. Liability of Administrative Agent and Issuing Bank. (a) The
Administrative 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, 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, 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.
Without limiting the foregoing, neither the Administrative Agent, the Issuing
Bank 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 the 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
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the performance or observance by the Borrower or any 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) Neither the Administrative Agent, the Issuing Bank, any Lender nor any
of their respective 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 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 Credit Party on account of the failure or
delay in performance or breach by any other Lender or 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, as Administrative 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 in accordance with such Lender's
Percentage, for 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 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 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 any Completion
Guarantee, the Fundamental Documents or any related agreement or document, or
any action taken or omitted by it or any of them under any Completion Guarantee,
the Fundamental Documents or any related agreement or document to the extent not
reimbursed by the Borrower or any other Credit Party (except such as shall
result from its gross negligence or willful misconduct) and (iii) to indemnify
and hold harmless the Issuing Bank and any of its directors, officers,
employees, or agents, on demand, in the amount of its 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 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
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negligence or willful misconduct of the Person to be reimbursed, indemnified or
held harmless, as applicable). To the extent indemnification payments made by
the Lenders pursuant to this Section 12.6 are subsequently recovered by the
Administrative Agent or the Issuing Bank from a Credit Party, the Administrative
Agent will promptly refund such previously paid indemnity payments to the
Lenders.
SECTION 12.7. Rights of Administrative Agent. It is understood and agreed
that the Administrative Agent shall have the same 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 of the Lenders or the Issuing Bank
under this Credit Agreement and the other Fundamental Documents.
SECTION 12.8. Independent Investigation by Lenders. Each of the Lenders
acknowledges that it has decided to enter into this Credit Agreement and the
other Fundamental Documents and to make the Loans and participate in the Letters
of Credit hereunder based on its own analysis of the transactions contemplated
hereby and of the creditworthiness of the Credit Parties and agrees that the
Administrative Agent and the Issuing Bank shall bear no 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 of this Credit Agreement shall be
effective except in accordance with the provisions of Section 13.11 hereof.
SECTION 12.10. Notice of Transfer. The Administrative Agent 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
Borrower, but such resignation shall not become effective until acceptance by a
successor administrative agent of its appointment pursuant hereto. Upon any such
resignation, the retiring Administrative Agent shall promptly appoint a
successor administrative agent from among the 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. If no successor administrative agent shall have been so
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appointed by the retiring Administrative Agent and shall have accepted such
appointment, within thirty (30) days after the retiring Administrative Agent's
giving of notice of resignation, the Borrower may appoint a successor
administrative agent (which successor may be replaced by the Required Lenders;
provided that such replacement is experienced and is sophisticated in
entertainment industry lending and reasonably acceptable to the Borrower), which
shall be either a Lender or a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $250,000,000 and which is experienced and sophisticated
in entertainment industry lending. Upon the acceptance of any appointment as
administrative agent hereunder by a successor administrative agent, such
successor Administrative 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 Borrower, but
such resignation shall not become effective until acceptance by a successor
Issuing Bank of its appointment pursuant hereto. Upon any such resignation, the
retiring Issuing Bank shall promptly appoint a successor Issuing Bank from among
the Lenders, provided that such replacement is reasonably acceptable (as
evidenced in writing) to the Required Lenders and the Borrower and has a credit
rating at least as high as that of the Issuing Bank; provided, however, that
such approval by the Borrower 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 Borrower may appoint a successor Issuing Bank (which
successor may be replaced by the Required Lenders; provided that such successor
is reasonably acceptable to the Borrower), which shall be either a Lender or a
commercial bank organized or licensed 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 $250,000,000. 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 Borrower 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.
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13. MISCELLANEOUS
SECTION 13.1. Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered or mailed (or if by facsimile
communications equipment, delivered by such equipment) addressed, 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 X. Xxxxx III,
Facsimile No.: (000) 000-0000 with a copy to Chase Securities Inc., 0000 Xxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attn: Xxxxxxx X. Xxxxxx,
Facsimile No.: (000) 000-0000, or if to any Credit Party to Overseas Filmgroup,
Inc., 0000 Xxxxxx Xxxxxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attn:
Xxxxxxx X. Xxxxxxx, Facsimile No.: (000) 000-0000, with a copy to Xxxxxxxx
Xxxxxx & Xxxxxx at its office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Xxxxx Xxxxxxxxxxxxx, Facsimile No.: (000) 000-0000, or if to a Lender, to
it at its address set forth on the signature page, 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 any party 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 facsimile
communications equipment, in each case addressed to such party as provided in
this Section 13.1 or in accordance with the latest unrevoked written direction
from such party.
SECTION 13.2. Survival of Agreement, Representations and Warranties, etc.
All warranties, representations and covenants made by any of the Credit Parties
herein, in any other Fundamental Document or in any certificate or other
instrument delivered by it or on its behalf under or in connection with this
Credit Agreement or any other Fundamental Document shall be considered to have
been relied upon by the Administrative Agent, the 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, the 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 the Borrower nor any
other Credit Party may assign their rights hereunder without the prior written
consent of the Administrative Agent, the Issuing Bank and all of the
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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 and the Issuing Bank) 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 any Letter 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
and (ii) 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 any Note or Notes
subject to such assignment and a processing and recordation fee of $3,500 to be
paid to the Administrative Agent by the assigning Lender or the assignee. Upon
such execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
not earlier than five (5) Business Days after the date of acceptance and
recording by the Administrative Agent, (x) the assignee thereunder shall be a
party hereto and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder and under the other Fundamental
Documents and shall be bound by the provisions hereof and thereof 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 Borrower 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
Borrower due to any such breach (and, 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) Notwithstanding the other provisions of this Section 13.3, each Lender
may at any time make an assignment of its interests, rights and obligations
under this Credit Agreement 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 the Administrative Agent's
Percentage.
(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
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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 and the Issuing Bank to take such action as
the Administrative Agent or the Issuing Bank on its behalf and to exercise such
powers under this Credit Agreement as are delegated to the Administrative 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 its 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 the
Borrower 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 any
Notes subject to such assignment, and the processing and recordation fees the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in the form of Exhibit I 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 Borrower. Within five (5)
Business Days after receipt of the notice, the Borrower, at its own expense,
shall execute and deliver to the Administrative Agent, in exchange for the
surrendered Notes, new Notes to the order of such assignee in an amount equal to
the Commitments assumed by it pursuant to such Assignment and
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Acceptance and new Notes to the order of the assigning Lender in an amount equal
to the Commitments (if any) retained by it hereunder. Such new Notes shall be in
an aggregate principal amount equal to the surrendered Notes, shall be dated the
date of the surrendered Notes and shall otherwise be in substantially the form
of Exhibit A hereto. 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 the Administrative
Agent or any of the Credit Parties, 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 applicable to its participation, the amount
of its participation in the Commitments, final maturity of its participation in
any of the Loans, releases of all or substantially all the Collateral and fees
(as applicable to such participant), (iii) any such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iv) the participating banks or other entities shall be entitled to the cost
protection provisions contained in Sections 2.9(b), 2.10, 2.11, 2.13(e) and
2.15(g) 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 and (v) the Credit
Parties, the Administrative 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 any of the Credit Parties; provided that prior to
any such disclosure, each such assignee or participant or proposed assignee or
participant shall agree in writing to preserve the confidentiality of any
confidential information relating to the Credit Parties received from such
Lender.
(i) Any assignment pursuant to paragraph (b) or (c) of this Section 13.3,
and the acceptance of additional commitments pursuant to Section 12.1(b), shall
constitute an amendment of the Schedule of Commitments as of the effective date
of such assignment or acceptance of additional commitment.
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(j) The Borrower and each Credit Party 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 of the Notes evidencing such 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 Borrower agrees to pay (a) all
reasonable out-of-pocket expenses incurred by the Administrative Agent, Chase
Securities Inc. or the Issuing Bank in connection with performance of due
diligence by the Administrative Agent in connection with the transactions hereby
contemplated and the syndication, negotiation, preparation, execution, delivery,
waiver or modification and administration of this Credit Agreement and any other
documentation contemplated hereby, the Notes and the making of the Loans and the
issuance of the Letters of Credit, the Collateral, the Pledged Securities, any
Fundamental Document or any Completion Guarantee, including but not limited to,
the reasonable out-of-pocket costs and any reasonable internally allocated
charges of audit or field examinations of the Administration Agent in connection
with the administration of this Credit Agreement (it being understood that,
unless an Event of Default has occurred and is continuing, the Administrative
Agent shall conduct only one such audit or field examination in any calendar
year), 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
Issuing Bank and/or the Lenders in the enforcement or protection of their rights
and remedies in connection with this Credit Agreement, the other Fundamental
Documents, the Notes or the Letters of Credit, and with respect to any action
which may be instituted by any Person other than the Credit Parties, the Issuing
Bank or any Lender against the Administrative Agent, the Issuing Bank or any
Lender in respect of the foregoing, or as a result of any transaction, action or
non-action arising from the foregoing, including but not limited to the
reasonable fees and disbursements of any counsel for the Administrative Agent,
the Issuing Bank and/or the Lenders. Such payments shall be made on the date of
execution of this Credit Agreement and thereafter on demand. The Borrower agrees
that it shall indemnify the Administrative 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, the Notes or the issuance of Letters of
Credit. The obligations of the Borrower under this Section 13.4 shall survive
the termination of this Credit Agreement and/or the payment of the Loans and/or
the expiration of the Letters of Credit.
SECTION 13.5. Indemnification of the Administrative Agent, the Issuing Bank
and the Lenders. The Borrower agrees (a) to indemnify and hold harmless the
Administrative Agent, the Issuing Bank and the Lenders and their respective
directors, officers, employees, trustees and agents (to the full extent
permitted by 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 Administrative Agent and the Issuing Bank an
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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 Copyright Security Agreements, the
Pledgeholder Agreements 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 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 the gross negligence or willful
misconduct of the Lenders, the Issuing Bank or the Administrative Agent claiming
indemnification hereunder. The foregoing indemnity agreement includes any
reasonable costs incurred by the Administrative Agent, the Issuing Bank or the
Lenders in connection with any action or proceeding which may be instituted in
respect of the foregoing by the Administrative Agent or the Issuing Bank, or by
any other Person either against the Lenders or in connection with which any
officer, director, agent or employee of the Administrative Agent, the Issuing
Bank or the Lenders 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 the Administrative Agent, the Issuing Bank or
the Lenders 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 Borrower 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.
If any Credit Party shall fail to do any act or thing which it has
covenanted to do hereunder, under any other Fundamental Document or under a
Completion Guarantee, or any representation or warranty of any Credit Party
shall be breached, the Administrative 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 in so doing, and any and all amounts expended by the Administrative Agent
in taking any such action shall be repayable to it upon its demand therefor and
shall bear interest at a rate per annum of 2% in excess of the Alternate Base
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, each other Fundamental Document
and the payment of the Loans, and shall inure to the benefit of any Person who
was a Lender notwithstanding such Person's assignment of all its Loans and
Commitments.
Notwithstanding anything in this Section 13.5 to the contrary, no Lender
shall be liable to the Borrower for any special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
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connection with, or as a result of, this Credit Agreement, the other Fundamental
Documents and the transactions contemplated hereby and thereby.
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 PRACTICES FOR DOCUMENTARY CREDITS
(1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 (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 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 OR
THE SUBJECT MATTER HEREOF OR ANY FUNDAMENTAL DOCUMENT, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH
PARTY ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE LENDERS THAT THE PROVISIONS
OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE LENDERS HAVE
RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS CREDIT AGREEMENT AND ANY
OTHER FUNDAMENTAL DOCUMENT. THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY
LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 13.7 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH CREDIT 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 ISSUING BANK NOR ANY
LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, ANY CREDIT
PARTY ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OTHER
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FUNDAMENTAL DOCUMENT AND THE RELATIONSHIP BETWEEN THE ADMINISTRATIVE 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 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 Issuing Bank or any Lender 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 Letters 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 expressly
provided herein, 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 thereof
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 any Credit Party 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) reduce the rate
at which the Commitment Fees are payable to such Lender or (iv) reduce the fees
payable to such Lender with respect to Letters of Credit issued hereunder as set
forth in Section 2.15(f); and (b) all Lenders, (i) amend or modify any provision
of this Credit Agreement which provides for the unanimous consent or approval of
the Lenders, (ii) release any material amount of the Collateral or any of the
Pledged Securities or release any Guarantor from its obligations hereunder,
(iii) extend the final scheduled maturity or reduce the principal amount of any
Loan, (iv) subordinate the Obligations hereunder to other Indebtedness or
subordinate the security interests of the Administrative Agent in the Collateral
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except as permitted by Section 12.1, (v) amend the definition of "Required
Lenders," (vi) amend the definition of "Applicable Margin" so as to decrease the
amount thereof, (vii) materially amend the definition of "Collateral", (viii)
materially amend the definition of "Borrowing Base" or (ix) amend or modify this
Section 13.11. 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 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 any of the Credit Parties shall
entitle such Credit Party 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 a 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 a Note, whether or not a Note is so
marked.
SECTION 13.12. Severability. Any provision of this Credit Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition 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 (EACH A "SUBMITTING PARTY")
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
COURTS OF THE STATE OF NEW YORK 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) OR THE SUBJECT
MATTER HEREOF. 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 PROCEEDING BROUGHT IN SUCH COURTS, ANY
CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED
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 OR THE SUBJECT MATTER HEREOF 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, THE ISSUING BANK OR A LENDER IN STATE
COURT TO FEDERAL COURT OR TO REMAND TO STATE COURT ANY SUCH ACTION,
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SUIT OR PROCEEDING INSTITUTED BY THE ADMINISTRATIVE AGENT, THE ISSUING BANK OR A
LENDER IN 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 HEREOF. EACH
SUBMITTING PARTY HEREBY AGREES THAT THE PROCESS BY WHICH ANY SUIT, ACTION OR
PROCEEDING IS BEGUN MAY BE SERVED ON IT BY BEING DELIVERED TO THE PERSON AND AT
THE ADDRESS SET FORTH IN SECTION 13.1. EACH SUBMITTING PARTY HEREBY CONSENTS TO
SERVICE OF PROCESS BY MAIL TO THE PERSON AND AT THE ADDRESS SET FORTH IN SECTION
13.1. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. THE SUBMITTING PARTY AGREES THAT ITS SUBMISSION TO
JURISDICTION AND CONSENT TO SERVICE OF PROCESS IN ACCORDANCE WITH THE PROVISIONS
HEREOF IS MADE FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE AGENT, THE ISSUING
BANK AND THE LENDERS. FINAL JUDGMENT AGAINST THE SUBMITTING PARTY IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR
TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF
INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED OR (B) IN
ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION,
PROVIDED, HOWEVER, THAT EACH PARTY MAY AT ITS OPTION BRING SUIT, OR INSTITUTE
OTHER JUDICIAL PROCEEDINGS AGAINST THE 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 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, receivables or advance shall be made (i) except intercompany
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receivables and intercompany advances permitted pursuant to the terms hereof may
be repaid and intercompany Indebtedness permitted to be repaid pursuant to the
terms hereof in the ordinary course of business 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 paragraph (a) of this
Section 13.16 before payment in full of all Obligations and termination of the
Commitments, such Credit Party shall receive such payments and hold the same in
trust for, segregate the same from its own assets and shall immediately pay over
to, the Administrative Agent (on behalf of itself, the Issuing Bank and the
Lenders) all such sums to the extent necessary so that the Administrative Agent,
the Issuing Bank and the Lenders shall have been paid all Obligations owed or
which may become owing.
SECTION 13.17. Entire Agreement. This Credit Agreement including the
Exhibits and Schedules hereto represents the entire agreement of the parties
with regard to the subject matter hereof, and the terms of any letters and other
documentation entered into between any of the parties hereto (other than the Fee
Letter) prior to the execution of this Credit Agreement which relate to Loans to
be made or Letters of Credit to be issued hereunder shall be replaced by the
terms of this Credit Agreement.
SECTION 13.18. Use of Information. The Borrower and each Credit Party
understands that each of the Administrative Agent, the Issuing Bank, each
Lender, and their respective affiliates (x) may be providing debt financing,
equity capital or other services (including financial advisory services) to
other companies in respect of which the Borrower or any Credit Party may have
conflicting interests regarding the transactions described herein and otherwise
and (y) has no obligation to use in connection with the transactions
contemplated by this Credit Agreement or any other Fundamental Document, or to
furnish to the Borrower or any Credit Party, confidential information obtained
from such other companies.
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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.
BORROWER:
OVERSEAS FILMGROUP, INC.
By: ____________________________
Name:
Title:
GUARANTORS:
INTRASTATE FILM DISTRIBUTORS, INC.
By: ____________________________
Name:
Title:
JACARANDA MUSIC, INC.
By: ____________________________
Name:
Title:
WALRUS PICTURES, INC.
By: ____________________________
Name:
Title:
ALIEN TOWERS, INC.
By: ____________________________
Name:
Title:
CODE 99 PRODUCTIONS, INC.
By: ____________________________
Name:
Title:
MAP PRODUCTIONS, INC.
By: ____________________________
Name:
Title:
LENDERS:
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
and Issuing Bank
By: ____________________________
Name:
Title:
Address: 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx III
Facsimile: (000) 000-0000
BNP PARIBAS
By: ____________________________
Name:
Title:
Address: 000 X. Xxxxxxxx Xxxxxx,
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
BANKGESELLSCHAFT BERLIN AG
By: ____________________________
Name:
Title:
Address: No. 0 Xxxxx Xxxxx
Xxxxxxxxx
Xxxxxx XX0X 0XX
XXXXXXX
Facsimile: (000) 00000-000-0000
CITY NATIONAL BANK
By: ____________________________
Name:
Title:
Address: 000 Xxxxx Xxxxxxx Xxxxx,
0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
XXXXXX & CO.
By: ____________________________
Name:
Title:
Address: 000 Xxxxxx
Xxxxxx XX0X 0XX
XXXXXXX
Facsimile:
COMERICA BANK - CALIFORNIA
By: ____________________________
Name:
Title:
Address: 00000 Xxxxxxxx Xxxxxxxxx,
Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
