INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT
dated as of _____________, among Skyline
Multimedia Entertainment, Inc., New York Skyline,
Inc., Skyline Virtual Reality, Inc., Skyline
Chicago, Inc., Skyline Magic, Inc. and Skyline Las
Vegas, Inc. (collectively, the "Borrowers") and
Prospect Street NYC Discovery Fund, L.P.
("Prospect") and the Bank of New York as Trustee
for the Employees Retirement Plan of the Brooklyn
Union Gas Company ("Bug") and any other lender
from time to time a party to the Credit Agreement
(as defined below) (collectively, the "Lenders").
Reference is made to (a) the Senior Credit Agreement dated as
of December __, 1996 (as amended, modified or restated from time to time, the
"Credit Agreement"), among the Borrowers and Lenders, and (b) the Subsidiary
Guarantee Agreement entered into in connection with the Credit Agreement (as
amended, modified or restated from time to time, the "Guarantee Agreement"),
among the Subsidiary Guarantors and the Lenders. Capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. The Subsidiary Guarantors have guaranteed such Loans and the
other Obligations (as defined in the Guarantee Agreement) of the Borrowers under
the Credit Agreement pursuant to the Guarantee Agreement. The obligations of the
Lenders to make Loans are conditioned on, among other things, the execution and
delivery by the Borrowers and the Subsidiary Guarantors of an agreement in the
form hereof. As consideration for Loans previously made, and in order to induce
the Lenders to make Additional Loans, the Borrowers and the Subsidiary
Guarantors are willing to execute this Agreement.
Accordingly, each Borrower, each Subsidiary Guarantor and the
Lenders agree as follows:
I. SECTION Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Subsidiary Guarantors may have under
applicable law (but subject to Section 3), each Borrower agrees that in the
event a payment shall be made by any Subsidiary Guarantor under the Guarantee
Agreement, such Borrower shall indemnify such Subsidiary Guarantor for the
full amount of such payment, and such Subsidiary Guarantor shall
be subrogated to the rights of the Person to whom such payment shall have been
made to the extent of such payment.
SECTION 2. Contribution and Subrogation. Each Subsidiary
Guarantor (a "Contributing Subsidiary Guarantor") agrees (subject to Section 3)
that, in the event a payment shall be made by any other Subsidiary Guarantor
under the Guarantee Agreement and such other Subsidiary Guarantor (the "Claiming
Subsidiary Guarantor") shall not have been fully indemnified by the Borrowers as
provided in Section 1, the Contributing Subsidiary Guarantor shall indemnify the
Claiming Subsidiary Guarantor in an amount equal to the amount of such payment
or the greater of the book value or the fair market value of such assets, as the
case may be, in each case multiplied by a fraction of which the numerator shall
be the net worth of the Contributing Subsidiary Guarantor on the date hereof and
the denominator shall be the aggregate net worth of all the Subsidiary
Guarantors on the date hereof (or, in the case of any Subsidiary Guarantor
becoming a party hereto pursuant to Section 12, the date of the Supplement
hereto executed and delivered by such Subsidiary Guarantor). Any Contributing
Subsidiary Guarantor making any payment to a Claiming Subsidiary Guarantor
pursuant to this Section 2 shall be subrogated to the rights of such Claiming
Subsidiary Guarantor under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations. No failure on the part
of any Borrower or any Subsidiary Guarantor to make the payments required by
Sections 1 and 2 (or any other payments required under applicable Law or
otherwise) shall in any respect limit the obligations and liabilities of any
Subsidiary Guarantor with respect to its obligations hereunder, and each
Subsidiary Guarantor shall remain liable for the full amount of the obligations
of such Subsidiary Guarantor hereunder. The subordination effected by this
Section 3 shall prohibit (i) any exercise of a set off in respect of the
subordinated obligations, (ii) the commencement of any action seeking to enforce
the subordinated obligations and (iii) the assignment of subordinated
obligations. Any Subsidiary Guarantor receiving the any payment in respect of a
subordinated obligation in violation of this Section 3 shall be deemed to have
received such payment in trust for the benefit of the Lenders and immediately
turn over such amount to the Lenders for application in respect of the
Obligations.
SECTION 4. Representations and Warranties. Each of the
Subsidiary Guarantors represents and warrants to the Lenders that this Agreement
has been duly authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.
SECTION 5. Termination. This Agreement (a) shall survive and
be in full force and effect until the indefeasible payment in full in cash of
the Obligations and the termination of the Commitments, and (b) shall continue
to be effective or be reinstated, as the case may be, if at
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any time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by the any Lender or any Subsidiary Guarantor upon the
bankruptcy or reorganization of any Borrower, any Subsidiary Guarantor or
otherwise.
SECTION 6. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. This Agreement shall become effective as to any
Subsidiary Guarantor and as to any Borrower when a counterpart hereof executed
on behalf of such Subsidiary Guarantor or Borrower, as the case may be, shall
have been delivered to the Lenders, and a counterpart hereof shall have been
executed on behalf of the Lenders, and thereafter shall be binding upon such
Subsidiary Guarantor or such Borrower, as the case may be, and the Lenders and
their respective successors and assigns, and shall inure to the benefit of such
Subsidiary Guarantor or such Borrower, as the case may be, and their respective
successors and assigns, except that neither any Borrower nor any Subsidiary
Guarantor may assign or transfer any of its rights or obligations hereunder (and
any such attempted assignment or transfer shall be void) without the prior
written consent of the Required Lenders, except in connection with any
transaction permitted by Section 7.3 of the Credit Agreement. Notwithstanding
the foregoing, at the time any Subsidiary Guarantor is released from its
obligations under the Guarantee Agreement in accordance with such Guarantee
Agreement and the Credit Agreement, such Subsidiary Guarantor will cease to have
any rights or obligations under this Agreement.
SECTION 7. Waivers; Amendment. (a) No failure or delay on the
part of any Lender or any Subsidiary Guarantor in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy, or any abandonment or
discontinuance of steps to enforce such right, power or remedy, preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. All rights, powers and remedies of any Lender hereunder are cumulative
and are not exclusive of any other rights, powers and remedies provided by law
or otherwise. No waiver of any provision of this Agreement or consent to any
departure by any Borrower or any Subsidiary Guarantor therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on any Borrower or any
Subsidiary Guarantor in any case shall entitle such Borrower or Subsidiary
Guarantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrowers and the Subsidiary Guarantors with respect to which such
waivers, amendment or modification relates and the Required Lenders.
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SECTION 8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
SECTION 9. Notices. All communications and notices hereunder
shall be in writing and given as provided in the Guarantee Agreement and
addressed as specified therein.
SECTION 10. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrowers and the Subsidiary Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement shall be considered to have been relied upon by
the Lenders and each Subsidiary Guarantor and shall survive the making by the
Lenders of the Loans and shall continue in full force and effect until the
indefeasible payment in full in cash of the Obligations and the termination of
the Commitments.
(b) If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully severable, (ii)
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
SECTION 11. Counterparts. This Agreement may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
SECTION 12. Rules of Interpretation. The rules of
interpretation specified in Section 1.1(b) of the Credit Agreement shall be
applicable to this Agreement.
SECTION 13. Additional Subsidiary Guarantors. Upon execution
and delivery, after the date hereof, by the Lenders and any Subsidiary of any
Borrower required to become a party to this Agreement pursuant to Section 6.10
of the Credit Agreement, of an instrument in the form of Annex 1 hereto, such
Subsidiary shall become a Subsidiary Guarantor hereunder with the same force and
effect as if originally named as a Subsidiary Guarantor. The execution and
delivery of any instrument adding an additional Subsidiary Guarantor as a party
to this Agreement shall not require the consent of any Subsidiary Guarantor
hereunder. The rights and
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obligations of each Subsidiary Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Subsidiary Guarantor as a
party to this Agreement.
SECTION 14. Expenses. Each Borrower and each Subsidiary
Guarantor agrees, jointly and severally, to reimburse each Lender for its
reasonable out-of-pocket expenses in connection with this Agreement, including
the fees, disbursements and other charges of counsel for such Lender.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
appearing above.
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By:_________________________________
Name:
Title:
NEW YORK SKYLINE, INC.
By:_________________________________
Name:
Title:
SKYLINE VIRTUAL REALITIES, INC.
By:_________________________________
Name:
Title:
SKYLINE CHICAGO, INC.
By:_________________________________
Name:
Title:
SKYLINE MAGIC, INC.
By:_________________________________
Name:
Title:
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SKYLINE LAS VEGAS, INC.
By:_________________________________
Name:
Title:
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
as a Subsidiary Guarantor,
By:__________________________
Name:
Title: Authorized Officer
PROSPECT STREET NYC DISCOVERY FUND, L.P.
By: Prospect Street Discovery Fund,
Inc., its General Partner
By:__________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BANK OF NEW YORK, as Trustee for the
Employees Retirement Plan of the
Brooklyn Union Gas Company
By:__________________________
Name:
Title:
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[NAME OF NEW ADDITIONAL LENDER]
By:_______________________________
Name:
Title:
SCHEDULE I
to the Indemnity, Subrogation
and Contribution Agreement
SUBSIDIARY GUARANTORS
Name of Subsidiary Address of Subsidiary Name of Borrower
------------------ --------------------- ----------------
ANNEX 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. ____ dated as of _________, to
the Indemnity, Subrogation and Contribution agreement
dated as of ____________ (as the same may be amended,
modified or restated from time to time, the
"Indemnity, Subrogation and Contribution agreement"),
among Skyline Multimedia Entertainment, Inc., New
York Skyline, Inc., Skyline Virtual Realty, Inc.,
Skyline Chicago, Inc., Skyline Magic, Inc. and
Skyline Las Vegas, Inc. (collectively, the
"Borrowers") and Prospect Street NYC Discovery Fund,
L.P. ("Prospect"), the Bank of New York as Trustee
for the Employees Retirement Plan of the Brooklyn
Union gas Company ("Bug") and any other lender from
time to time a party to the Credit Agreement (as
defined below) (collectively, the "Lenders").
Reference is made to (a) the Credit agreement dated as of
December __, 1996 (as amended, modified or restated from time to time, the
"Credit Agreement"), among the Borrowers and the Lenders and (b) the Guarantee
Agreement to be entered into in connection therewith (as amended, modified or
restated from time to time, the "Guarantee Agreement"), among the Subsidiary
Guarantors and the Lenders. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Indemnity,
Subrogation and Contribution Agreement and the Credit Agreement.
The Borrowers and the Subsidiary Guarantors have entered into
the Indemnity, Subrogation and Contribution Agreement in order to induce the
Lenders to make Additional Loans and as consideration for Loans previously made.
Pursuant to Section 6.10 of the Credit Agreement, each Subsidiary of any
Borrower that was not in existence on the date of the Credit Agreement is
required to enter into the Guarantee Agreement as a Subsidiary Guarantor upon
becoming a Subsidiary. Section 12 of the Indemnity, Subrogation and Contribution
Agreement provides that additional Subsidiaries of the Company may become
Subsidiary Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of the Company (the "New Subsidiary
Guarantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Subsidiary Guarantor under the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Additional Loans and as consideration for Loans previously made.
Accordingly, the Lenders and the New Subsidiary Guarantor
agree as follows:
SECTION 1. Indemnity, Subrogation and Contribution Agreement.
In accordance with Section 12 of the Indemnity, Subrogation and Contribution
Agreement, the New Subsidiary Guarantor by its signature below becomes a
Subsidiary Guarantor under the Indemnity, Subrogation and Contribution Agreement
with the same force and effect as if originally named therein as a Subsidiary
Guarantor and the New Subsidiary Guarantor hereby agrees to all the terms and
provisions of the Indemnity, Subrogation and Contribution Agreement applicable
to it as a Subsidiary Guarantor thereunder. Each reference to a "Subsidiary
Guarantor" in the Indemnity, Subrogation and Contribution Agreement shall be
deemed to include the New Subsidiary Guarantor. The Indemnity, Subrogation and
Contribution Agreement is hereby incorporated herein by reference.
SECTION 2. Representations and Warranties. The New Subsidiary
Guarantor represents and warrants to the Lenders that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. Counterparts. This Supplement may be executed in
any number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and he same instrument. This Supplement shall
become effective when the Lenders shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New Subsidiary
Guarantor and the Lenders.
SECTION 4. Effect on Indemnity, Subrogation and Contribution
Agreement. Except as expressly supplemented hereby, the Indemnity, Subrogation
and Contribution Agreement shall remain in full force and effect.
SECTION 5. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
SECTION 6. Severability. If any provision of this Supplement
is held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Supplement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Supplement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Supplement will remain in full force and
effect and will not be
2
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision,
there will be added automatically as a part of this Supplement a legal, valid
and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
SECTION 7. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 9 of the Indemnity,
Subrogation and Contribution Agreement.
SECTION 8. Expenses. The New Subsidiary Guarantor agrees to
reimburse each Lender for its reasonable out-of-pocket expenses in connection
with this Supplement, including the reasonable fees, other charges and
disbursements of counsel for such Lender.
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the
Lenders have duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
[NAME OF NEW SUBSIDIARY GUARANTOR]
By_____________________________
Name:
Title:
Address:
PROSPECT STREET NYC DISCOVERY FUND, L.P.
By: Prospect Street Discovery Fund,
Inc., its General Partner
By_____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BANK OF NEW YORK, as Trustee for the
Employees Retirement Plan of the
Brooklyn Union Gas Company
By_____________________________
Name:
Title:
3
[NAME OF NEW ADDITIONAL LENDER]
By:__________________________________
Name:
Title:
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