SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _____________
COMMISSION FILE NUMBER 1-5706
METROMEDIA INTERNATIONAL GROUP, INC.
(Exact name of registrant, as specified in its charter)
DELAWARE 58-0971455
(STATE OR OTHER (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
945 EAST PACES FERRY ROAD, SUITE 2210, ATLANTA, GEORGIA 30326
(Address and zip code of principal executive offices)
(404) 261-6190
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares of Common Stock outstanding as of July 22, 1996 was
65,794,550
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
INDEX TO
QUARTERLY REPORT ON FORM 10-Q
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Condensed Statement of Operations 2
Consolidated Condensed Balance Sheets 3
Consolidated Condensed Statement of Cash Flows 4
Consolidated Condensed Statement of Common Stock,
Paid-in Surplus and Accumulated Deficit 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 37
Item 6. Exhibits and Reports on Form 8-K 37
Signature 38
<PAGE>
Page 2
METROMEDIA INTERNATIONAL GROUP, INC.
Consolidated Condensed Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
<S> <C> <C> <C> <C>
JUNE 30, June 30, June 30, June 30,
1996 1995 1996 1995
Revenues $37,988 $40,755 $68,796 $78,433
Costs and expenses:
Cost of rentals and operating 29,745 35,144 54,834 72,012
expenses
Selling, general and administrative 16,338 12,578 30,404 23,552
Depreciation and amortization 1,967 493 3,690 1,021
Operating loss (10,062) (7,460) (20,132) (18,152)
Interest expense, including 7,676 8,234 15,955 17,170
amortization of debt discount
Interest income 1,156 881 2,401 1,698
Interest expense, net 6,520 7,353 13,554 15,472
Chapter 11 reorganization items 83 168 137 935
Loss before provision for income taxes (16,665) (14,981) (33,823) (34,559)
and equity in losses of joint ventures
Provision for income taxes 200 100 400 300
Equity in losses of Joint Ventures 1,985 1,633 3,768 2,221
Net loss $(18,850) $(16,714) $(37,991) $(37,080)
Primary loss per common share $(0.44) $(0.80) $(0.89) $(1.77)
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
<PAGE>
Page 3
METROMEDIA INTERNATIONAL GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands, except share amounts)
<TABLE>
<CAPTION>
JUNE 30, December 31,
1996 1995
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $3,325 $26,889
Short-term investments - 5,366
Accounts receivable, net allowance for doubtful accountants 34,184 29,452
of $11,951 at June 30, 1996 and $11,913 at December 31, 1995
Film inventories 53,157 59,430
Other Assets 5,632 6,314
Total current assets 96,298 127,451
Investments in and advances to joint ventures 44,619 36,934
Asset held for sale - Roadmaster Industries, Inc. 47,455 47,455
Asset held for sale - Snapper, Inc. 73,800 79,200
Property, plant and equipment, net of accumulated depreciation 7,374 6,021
Film inventories 129,580 137,233
Long-term film accounts receivable 27,877 31,308
Intangible assets, net of accumulated amortization 119,557 119,485
Other assets 26,651 14,551
Total Assets $573,211 $599,638
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $7,007 $4,695
Accrued expenses 92,108 96,696
Participations and residuals 24,511 19,143
Current portion of long-term debt 61,253 40,597
Deferred revenues 13,345 15,097
Total current liabilities 198,224 176,228
Long-term debt 258,975 264,046
Participations and residuals 32,007 28,465
Deferred revenues 37,487 47,249
Other long-term liabilities 742 395
Total liabilities 527,435 516,383
Commitments and contingencies
Stockholders' equity:
Preferred Stock, authorized 70,000,000 shares, none issued - -
Common Stock, $1.00 par value, authorized 110,000,000 42,686 42,614
shares, issued and outstanding 42,685,986 shares at June 30, 1996 and
42,613,738 shares at December 31, 1995
Paid-in surplus 729,187 728,747
Accumulated deficit (726,097) (688,106)
Total stockholders' equity 45,776 83,255
Total liabilities and shareholders' equity $573,211 $599,638
</TABLE>
See accompanying notes to the consolidated condensed financial statements.
<PAGE>
Page 4
METROMEDIA INTERNATIONAL GROUP, INC.
Consolidated Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
JUNE 30, June 30,
1996 1995
<S> <C> <C>
Operating activities:
Net loss $(37,991) $(37,080)
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Equity in losses of joint ventures 3,768 2,221
Amortization of film costs 29,418 49,307
Amortization of debt discounts 2,031 7,909
Depreciation and amortization 3,690 1,021
Other 274 268
Change in assets and liabilities:
(Increase) decrease in accounts (1,301) 3,535
receivable
(Increase) decrease in other assets 682 (391)
Increase in accounts payable and accrued 924 2,120
expenses
Accrual of participations and residuals 17,051 10,510
Payments of participations and residuals (8,141) (13,355)
Decrease in deferred revenues (11,514) (9,398)
Other operating activities, net 162 117
Cash provided by (used in) operations (947) 16,784
Investing activities:
Investments in and advances to Joint Ventures (12,053) (11,043)
Proceeds from sale of short-term investments 5,366 -
Proceeds from repayment of advances to Snapper 5,400 -
Investment in film inventories (22,392) (2,151)
Additions to property, plant and equipment (2,332) (1,595)
Other investing activities, net (2,967) 713
Cash used in investing activities (28,978) (14,076)
Financing activities:
Proceeds from issuance of long-term debt 38,325 22,207
Proceeds from issuance of common stock 238 -
Payments on notes and subordinated debt (24,290) (24,595)
Payments of deferred financing costs (7,912) -
Cash provided by (used in) 6,361 (2,388)
financing activities
Net increase (decrease) in cash and cash equivalents (23,564) 320
Cash and cash equivalents at beginning of period 26,889 13,869
Cash and cash equivalents at end of period $3,325 $14,189
</TABLE>
See accompanying notes to consolidated condensed financial
statements.
<PAGE>
Page 5
METROMEDIA INTERNATIONAL GROUP, INC.
Consolidated Condensed Statement of Common Stock,
Paid-in Surplus and Accumulated Deficit
(in thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996
Common Stock
Number of Amount Paid-in Accumulated Total
Shares Surplus Deficit
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1995 42,613,738 $42,614 $728,747 $(688,106) $83,255
Shares issued 72,248 72 440 - 512
Net loss - - - (37,991) (37,991)
Balances, June 30, 1996 42,685,986 $42,686 $729,187 $(726,097) $45,776
</TABLE>
See accompanying notes to the consolidated condensed
financial statements.
<PAGE>
METROMEDIA INTERNATIONAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated condensed
financial statements include the accounts of
Metromedia International Group, Inc. ("MIG" or the
"Company") and its wholly-owned subsidiaries,
Orion Pictures Corporation ("Orion") and
Metromedia International Telecommunications, Inc.
("MITI"). Another wholly-owned subsidiary,
Snapper, Inc. ("Snapper"), is included in the
accompanying consolidated condensed financial
statements as an asset held for sale. All
significant intercompany transactions and accounts
have been eliminated.
On November 1, 1995, Orion, MITI, the Company
and MCEG Sterling Incorporated ("Sterling")
consummated a series of mergers (the "November 1
Mergers"), pursuant to which Orion and MITI were
merged into wholly-owned subsidiaries of the
Company and Sterling was merged into the Company.
In connection with the November 1 Mergers, the
Company changed its name from The Actava Group
Inc. ("Actava") to Metromedia International
Group, Inc. For accounting purposes only, Orion
and MITI were deemed to be the joint acquirors of
Actava and Sterling. The acquisitions of Actava
and Sterling were accounted for as a reverse
acquisition. As a result of the reverse
acquisition, the historical financial statements
of the Company for periods prior to November 1,
1995 are those of Orion and MITI, rather than
Actava. The operations of Actava and Sterling
have been included in the accompanying
consolidated condensed financial statements from
November 1, 1995, the date of acquisition.
Investments in other companies and Joint
Ventures ("Joint Ventures") which are not majority
owned, or in which the Company does not have
control but exercises significant influence, are
accounted for using the equity method. The
Company reflects its net investments in Joint
Ventures under the caption "Investments in and
advances to Joint Ventures." The Company accounts
for its equity in earnings (losses) of the Joint
Ventures on a three month lag.
The accompanying interim consolidated
condensed financial statements have been prepared
without audit pursuant to the rules and
regulations of the Securities and Exchange
Commission. Certain information and footnote
disclosures normally included in financial
statements prepared in accordance with generally
accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures
made are adequate to make the information
presented not misleading. These financial
statements should be read in conjunction with the
consolidated financial statements and related
footnotes included in the Company's latest Annual
Report on Form 10-K (the "1995 Form 10-K"). In
the opinion of management, all adjustments,
consisting only of normal recurring adjustments,
necessary to present fairly the financial position
of the Company as of June 30, 1996, the results of
its operations for the six and three month periods
ended June 30, 1996 and 1995, and its cash flows
for the six month periods ended June 30, 1996 and
1995 have been included. The results of
operations for the interim periods are not
necessarily indicative of the results which may be
realized for the full year.
2. SUBSEQUENT EVENTS AND ACQUISITIONS
<PAGE>
Page 7
On July 2, 1996, the Company completed a
public offering of 18.4 million shares of common
stock, generating net proceeds of $191.3 million.
Proceeds of the offering were used to pay existing
bank debt of MIG, a MITI revolving credit bridge
loan from Metromedia Company and will be used to
finance the build-out of the Company's
communications operations in Eastern Europe and
other emerging markets, and for general corporate
purposes, including the working capital needs of
MIG and its subsidiaries, and for potential future
acquisitions. In addition, on July 2, 1996 Orion
entered into a $300 million credit facility with a
syndicate of lenders, led by Chemical Bank
("Chemical"), as agent (the "Orion Credit
Facility"). Proceeds of the loan were used, in
part, to refinance indebtedness of Orion and
certain indebtedness related to the Goldwyn and
MPCA mergers, as described below. Proceeds of
the loan will also be used to fund the production,
acquisition and distribution of motion picture and
other entertainment product (see Note 4).
ENTERTAINMENT GROUP
On July 2, 1996, the Company consummated its
acquisition (the "Goldwyn Merger") of The Samuel
Goldwyn Company ("Goldwyn"). Upon the
consummation of the Goldwyn Merger, Goldwyn was
renamed Goldwyn Entertainment Company. Holders of
Goldwyn common stock received .3335 shares of the
Company's common stock (the "Common Stock") for
each share of Goldwyn Common Stock in accordance
with a formula set forth in the Agreement and Plan
of Merger relating to the Goldwyn Merger (the
"Goldwyn Merger Agreement"). Pursuant to the
Goldwyn Merger, the Company issued 3,122,972
shares of Common Stock. Goldwyn is a producer and
distributor of motion pictures and television
product and has a film and television library of
over 850 titles. In addition, Goldwyn owns
Landmark Theatre Corporation, which the company
believes is the leading specialized theatre circuit
in the United States with 140 screens.
The purchase price, including stock options
and estimated transaction costs, related to the
Goldwyn merger was approximately $44.7 million.
The purchase of Goldwyn will be recorded in
accordance with the purchase method of accounting.
Also on July 2, 1996, the Company consummated
its acquisition (the "MPCA Merger" and together
with the Goldwyn Merger, the "Mergers") of Motion
Picture Corporation of America ("MPCA"). In
connection with the MPCA Merger, the Company (i)
issued 1,585,588 shares of Common Stock to MPCA's
sole stockholders, and (ii) paid such stockholders
approximately $4.9 million in additional
consideration, consisting of cash and promissory
notes.
The purchase price related to the acquisition
of MPCA was approximately $24.5 million. The
purchase of MPCA will be recorded in accordance
with the purchase method of accounting.
Following the consummation of the Mergers,
the Company contributed its interests in Goldwyn
and MPCA to Orion, with Goldwyn and MPCA becoming
wholly owned subsidiaries of Orion.
The following unaudited proforma information
illustrates the effect on revenue, net loss and
net loss per share of the Mergers for the six
months ended June 30, 1996 and 1995 and assumes
that the transfer occurred at the beginning of
each period and no refinancing of certain
indebtedness of Goldwyn and MPCA debt as discussed
above (in thousands except per share amounts):
<PAGE>
Page 8
<TABLE>
<CAPTION>
Six Months Ended
<S> <C> <C>
June 30, June 30,
1996 1995
Revenue $133,770 $134,345
Net loss $(60,151) $ (56,687)
Net loss per share $ (1.27) $ (2.21)
</TABLE>
Immediately following the consummation of the
Mergers and the public offering, there were
65,794,550 shares of Common Stock outstanding.
COMMUNICATIONS GROUP
On May 17, 1996, MITI acquired 56% of
Protocall Ventures, Ltd. ("Protocall") for a
purchase price of approximately $2.6 million.
Protocall is a United Kingdom company that has
ownership interests in nine companies providing
trunked mobile radio services in certain cities in
Portugal, Spain, Belgium and Germany.
On February 22, 1996, MITI entered into an
agreement to form National Business Communication,
SA ("NBC"), a Romanian joint stock company that
will provide trunked mobile telephony services in
Romania. MITI and its direct subsidiaries will
own 6% of NBC; CNM, a MITI majority owned and
controlled Joint Venture which provides paging
operations in Romania, will own 43% of NBC and
Protocall will own 51% of NBC. NBC was formed
with a starting capital of $500,000 contributed by
its shareholders in proportion to their respective
ownership interests.
3. EARNINGS PER SHARE OF COMMON STOCK
Primary earnings per share are computed by
dividing net income (loss) by the weighted average
number of common and common equivalent shares
outstanding during the year. Common equivalent
shares include shares issuable upon the assumed
exercise of stock options using the treasury stock
method when dilutive. Computations of common
equivalent shares are based upon average prices
during each period.
Fully diluted earnings per share are computed
using such average shares adjusted for any
additional shares which would result from using
end-of-year prices in the above computations, plus
the additional shares that would result from the
conversion of the 6 1/2% Convertible Subordinated
Debentures. Net income (loss) is adjusted by
interest (net of income taxes) on the 6 1/2%
Convertible Subordinated Debentures. The
computation of fully diluted earnings per share is
used only when it results in an earnings per share
number which is lower than primary earnings per
share.
The loss per share amounts for the three and
six month periods ended June 30, 1995 have been
calculated using the combined Orion and MITI
common shares converted at the exchange rate used
in the November 1 Mergers.
<PAGE>
Page 9
4. LONG-TERM DEBT
On July 2, 1996, Orion entered into the Orion
credit facility with Chemical, as agent for a
syndicate of lenders, pursuant to which the
lenders provided to Orion and its subsidiaries a
$300 million credit facility. The $300 million
facility consists of a secured term loan of $200
million (the "Term Loan") and a revolving credit
facility of $100 million, including a $10 million
letter of credit subfacility, (the "Revolving
Credit Facility"). Proceeds from the Term Loan
and $15 million of the Revolving Credit Facility
were used to refinance Orion's, Goldwyn's and
MPCA's existing indebtedness.
Borrowings under Orion's Credit Facility
which do not exceed the "borrowing base" as
defined in the agreement will bear interest at
Orion's option at a rate of LIBOR plus 2 1/2% or
Chemical's alternative base rate plus 1 1/2 %,
and borrowings in excess of the borrowing base,
which have the benefit of the guarantee referred
to below, will bear interest at Orion's option at
a rate of LIBOR plus 1% or Chemical's alternative
base rate. The Term Loan has a final maturity
date of June 30, 2001 and will amortize in 20
equal quarterly installments of $7.5 million
commencing on September 30, 1996, with the
remaining principal amount due at the final
maturity date. If the outstanding balance under
the Term Loan exceeds the borrowing base, the
Company will be required to pay down such excess
amount. The Term Loan and the Revolving Credit
Facility are secured by a first priority lien on
all of the stock of Orion and its subsidiaries and
on substantially all of Orion's assets, including
its accounts receivable and film and television
libraries. Amounts outstanding under the
Revolving Credit Facility in excess of the
applicable borrowing base are also guaranteed
jointly and severally by Metromedia Company, and
John W. Kluge, its general partner. To the extent
the borrowing base exceeds the amount outstanding
under the Term Loan, such excess will be used to
support the Revolving Credit Facility so as to
reduce the exposure of the guarantors under such
facility.
The Orion Credit Facility contains customary
covenants including limitations on the issuance of
additional indebtedness and guarantees, on the
creation of new liens, development costs and
budgets for films, the aggregate amount of
unrecouped print and advertising costs Orion may
incur, on the amount of Orion's leases, capital
and overhead expenses (including specific
limitations on Orion's theatrical exhibition
subsidiary's capital expenditures), prohibitions
on the declaration of dividends or distributions
by Orion (except as defined in the agreement),
limitations on the merger or consolidation of
Orion or the sale by Orion of any substantial
portion of its assets or stock and restrictions on
Orion's line of business, other than activities
relating to the production, distribution and
exhibition of entertainment product. Orion's
Credit Facility also contains financial covenants,
including requiring maintenance by Orion of
certain cash flow and operational ratios.
The Revolving Credit Facility contains
certain events of default, including nonpayment of
principal or interest on the facility, the
occurrence of a "change of control" (as defined in
the agreement) or an assertion by the guarantors
of such facility that the guarantee of such
facility is unenforceable. The Term Loan portion
of Orion's Credit Facility also contains a number
of customary events of default, including non-
payment of principal and interest and the
occurrence of a "change of management" (as defined
in the agreement), violation of covenants, falsity
of representations and warranties in any material
respect, certain cross-default and cross-
acceleration provisions, and bankruptcy or
insolvency of Orion or its material subsidiaries.
<PAGE>
Page 10
In connection with the refinancing of the
Orion Credit Facility, Orion will expense the
deferred financing costs associated with old debt
and will record an extraordinary loss of
approximately $5.0 million in the quarter ended
September 30, 1996.
5. ASSETS HELD FOR SALE
ROADMASTER INDUSTRIES, INC.
As of June 30, 1996, the Company owned
approximately 38% of the issued and outstanding
shares of common stock of Roadmaster Industries,
Inc. ("Roadmaster" and the "Roadmaster Common
Stock") based on the approximate 49,800,000 shares
of Roadmaster Common Stock outstanding at April
30, 1996.
The Company has deemed its investment in
Roadmaster to be a non-strategic asset and it
plans to dispose of its investment in Roadmaster
during 1996 and will exclude its equity in
earnings and losses of Roadmaster from the
Company's results of operations through the date
of sale. The carrying value of the Company's
investment in Roadmaster at June 30, 1996 and
December 31, 1995 was approximately $47.5 million,
based on the anticipated proceeds from its sale.
The latest available summarized financial
information for Roadmaster is shown below (in
thousands):
<TABLE>
<CAPTION>
As of and for the
Three Months Ended
MARCH 31, 1996
<S> <C>
Net sales $129,414
Gross profit 16,222
Net income 4,630
Current assets 318,207
Non-current assets 124,840
Current liabilities 173,018
Non-current liabilities 210,192
Total shareholders' equity 59,837
</TABLE>
SNAPPER, INC.
During December 1995, the Company adopted a
formal plan to dispose of its wholly-owned
subsidiary, Snapper, Inc. At June 30, 1996 and
December 31, 1995 the carrying value of Snapper
was approximately $73.8 million and $79.2million,
respectively. The carrying value of Snapper
represents the Company's estimated proceeds from
the sale of Snapper and the repayment of
intercompany loans, through the date of sale.
Management believes that Snapper will be disposed
of by November 1996.
<PAGE>
Page 11
The results of operations of Snapper for the
six months ended June 30, 1996, which are excluded
from the accompanying consolidated condensed
statement of operations, are as follows (in
thousands):
<TABLE>
<CAPTION>
<S> <C>
Net Sales $98,096
Operating expenses 101,311
Operating loss (3,215)
Interest expense (4,325)
Other income 1,013
Net loss $6,527
</TABLE>
For the six months ended June 30, 1996, the
Company has received $5.4 million of cash from
Snapper. Accordingly, $5.4 million has been
removed from the $79.2 million carrying value of
Snapper at December 31, 1995.
6. FILM INVENTORIES
The following is an analysis of film
inventories (in thousands):
<TABLE>
<CAPTION>
JUNE 30, December 31,
1966 1995
<S> <C> <C>
Current:
Current:
Theatrical films released, less amortization $47,794 $53,813
Television programs released, less amortization 5,363 5,617
53,157 59,430
Non Current:
Theatrical films released, less amortization 115,815 132,870
Theatrical films in process and development 10,286 -
Television programs released, less amortization 3,479 4,363
129,580 137,233
$182,737 $196,663
</TABLE>
Orion has recorded substantial writeoffs to
its released product. As a result, approximately
two-thirds of the film inventories are stated at
estimated net realizable value and will not result
in the recording of gross profit upon the
recognition of related revenues in future periods.
Since the date of the Orion's quasi-
reorganization (February 28, 1982), when Orion's
inventories were restated to reflect their then
current market value, Orion has amortized 94% of
the gross cost of its film inventories, including
those produced or acquired subsequent to the
quasi-reorganization. Approximately 98% of such
gross film inventory costs will have been
amortized by June 30, 1999. As of June 30, 1996,
approximately 63% of the unamortized balance of
film
<PAGE>
Page 12
inventories will be amortized within the next
three-year period based upon the Orion's revenue
estimates at that date.
7. INVESTMENTS IN AND ADVANCES TO JOINT VENTURES
MITI has recorded its investments in Joint
Ventures at cost, net of its equity in earnings or
losses. Advances to the Joint Ventures under the
line of credit agreements are reflected based on
amounts recoverable under the credit agreement,
plus accrued interest.
Advances are made to Joint Ventures, in the
form of cash, for working capital purposes and for
payment of expenses or capital expenditures, or in
the form of equipment purchased on behalf of the
Joint Ventures. Interest rates charged to the
Joint Ventures range from prime rate to prime rate
plus 4%. The credit agreements generally provide
for the payment of principal and interest from 90%
of the Joint Ventures' available cash flow, as
defined, prior to any substantial distributions of
dividends to the Joint Venture partners. MITI has
entered into credit agreements with its Joint
Ventures to provide up to $55.5 million in funding
of which $9.2 million remains available at
June 30, 1996. MITI funding commitments are
contingent on its approval of the Joint Ventures'
business plans.
<PAGE>
Page 13
MITI's investments in the Joint Ventures, at
cost, net of adjustments for its equity in
earnings or losses, were as follows (in
thousands):
<TABLE>
<CAPTION>
Investments in and
Advances to
JOINT VENTURES
<S> <C> <C> <C> <C> <C>
NAME June 30, Dec. 31, Ownership Year Date Operations
1996 1995 % Venture COMMENCED
FORMED
WIRELESS CABLE TV
Kosmos TV, Moscow, Russia $2,855 $4,317 50% 1991 May, 1992
Baltcom TV, Riga Latvia 8,236 6,983 50% 1991 June, 1992
Ayety TV, Tbilisi, Georgia 4,233 3,630 49% 1991 September, 1993
Kamalak, Tashkent, Uzbekistan{(1)} 5,433 3,731 50% 1992 September, 1993
Sun TV, Kishinev, Moldova 1,845 1,613 50% 1993 October, 1994
Alma-TV, Almaty, Kazakstan{(1)} 2,134 1,318 50% 1994 September, 1994
24,736 21,592
PAGING
Baltcom Paging, Tallin, Estonia 3,344 2,585 39% 1992 December, 1993
Baltcom Plus, Riga, Latvia 2,083 1,412 50% 1994 April, 1995
Tbilisi Paging, Tbilisi, Georgia 752 619 45% 1993 November, 1994
Raduga Paging, Nizhny, Novgorod 353 364 45% 1993 October, 1994
St. Petersburg Paging, St. Petersburg, 830 - 40% 1994 October, 1995
Russia
7,362 4,980
RADIO BROADCASTING
SAC-Radio 7, Moscow, Russia 379 1,174 51% 1994 January, 1994
Radio Katusha, St. Petersburg, Russia 735 - 50% 1993 May, 1995
Radio Skonto, Riga, Latvia 212 - 55% 1993 July, 1995
Radio Socci, Socci, Russia 244 - 51% 1995 December, 1995
1,570 1,174
TELEPHONY
Telecom Georgia, Tbilisi, Goergia 2,256 2,078 30% 1994 September, 1994
Subtotal 35,924 29,824
PRE-OPERATIONAL
Raduga TV, Nizhny Novgorod 222 254 50% 1994 Pre-Operational
Minsk Cable, Minsk, Belarus 1,269 918 50% 1993 Pre-Operational
Vilnius Cable, Vilnius, Lithuania 960 - 55% 1996 Pre-Operational
St. Petersburg Paging, St. Petersburg, - 527 40% 1994 October, 1995
Russia
Other 6,244 5,411
Sub-Total 8,695 7,110
Total $44,619 $36,934
</TABLE>
(1) Includes paging operations.
<PAGE>
Page 14
The ability of MITI and its Joint Ventures to establish profitable
operations is subject to among other things, special political, economic and
social risks inherent in doing business in Eastern Europe and the former Soviet
Republics. These include matters arising out of government policies, economic
conditions, imposition of taxes or other similar charges by governmental
bodies, foreign exchange fluctuations and controls, civil disturbances,
deprivation or unenforceability of contractual rights, and taking of property
without fair compensation.
MITI has obtained political risk insurance policies from the Overseas
Private Investment Corporation for certain of its Joint Ventures. The policies
cover loss of investment and losses due to business interruption caused by
political violence or expropriation.
In 1995, the Russian Federation legislature proposed legislation that
would limit to 35%, the interest which a foreign person is permitted to own in
entities holding broadcast licenses. While such proposed legislation was not
enacted, it is possible that such legislation could be reintroduced and enacted
in the future. Further, even if enacted, such law may be challenged on
constitutional grounds and may be inconsistent with Russian Federation treaty
obligations. In addition, it is unclear how Russian federation regulators
would interpret and apply the law to existing license holders. However, if the
legislature passes a law restricting foreign ownership of broadcast license
holding entities and such a law is found to be constitutional and fails to
contain a grandfathering clause to protect existing companies, it could require
MITI to reduce its ownership interests in its Russian Joint Ventures. It is
unclear how such reductions would be effected.
The Republic of Latvia passed legislation in September 1995 which purports
to limit to 20% the interest which a foreign person is permitted to own in
entities engaged in certain communications businesses such as radio, cable
television and other systems of broadcasting. This legislation will require
MITI to reduce to 20% its existing ownership interest in Joint Ventures which
operate a wireless cable television system and an FM radio station in Riga,
Latvia. Management believes that the ultimate outcome of this matter will not
have a material adverse impact on the Company's financial position or results
of operations.
<PAGE>
Page 15
Summarized combined financial information of Joint Ventures accounted for
under the equity method that have commenced operations as of the dates
indicated are as follows (in thousands):
<TABLE>
<CAPTION>
COMBINED BALANCE SHEETS March 31, September 30,
1996 1995
<S> <C> <C>
ASSETS
Current assets $ 11,971 $ 6,937
Investments in wireless systems and equipment, 37,571 31,349
net
Other non-current assets 3,546 2,940
$ 53,088 $ 41,226
LIABILITIES AND JOINT VENTURES' EQUITY (DEFICIT)
Current liabilities $ 23,179 $ 10,954
Amount payable under MITI credit facilities 34,279 33,699
57,458 44,653
Joint Ventures' Capital (Deficit) (4,370) (3,427)
Total Liabilities and Joint Ventures' Capital (Deficit) $ 53,088 $ 41,226
</TABLE>
<PAGE>
Page 16
<TABLE>
<CAPTION>
COMBINED STATEMENT OF OPERATIONS Six Months Ended
<S> <C> <C>
March 31, March 31,
1996 1995
Revenues $14,690 $6,966
Expenses:
Cost of service 5,653 3,696
Selling, general and administrative 8,871 3,693
Depreciation and amortization 2,908 1,962
Other - 323
Total Expenses $17,432 $9,674
Operating Loss (2,742) (2,708)
Interest Expense (1,563) ( 695)
Other Income (Loss) ( 26) ( 19)
Foreign Currency Translation 1,604 21
Net Loss $(2,727) $(3,401)
</TABLE>
<PAGE>
Page 17
The following tables represent summary financial information for
all operating entities grouped as indicated as of and for the six months
ended June 30, 1996 (in thousands):
<TABLE>
<CAPTION>
Wireless PAGING Radio TELEPHONY TOTAL
CABLE TV BROADCASTING
<S> <C> <C> <C> <C> <C>
CONSOLIDATED SUBSIDIARIES AND
JOINT VENTURES
Revenues $30 $1,335 $3,731 - $5,096(1)
Depreciation and amortization 165 160 50 - 375
Operating income (loss) before taxes (713) (336) 565 - (484)
Assets 912 3,023 2,539 - 6,474
Capital expenditures 789 149 407 - 1,345
Unconsolidated Equity Joint Ventures
Revenues $6,883 $2,715 $601 $4,491 $14,690
Depreciation and amortization 2,496 232 42 138 2,908
Operating income (loss) before taxes (2,639) (318) (726) 941 (2,742)
Assets 27,202 7,173 1,372 17,341 53,088
Capital expenditures 5,048 427 (7) 256 5,724
Net Investment in Joint Ventures 24,736 7,362 1,570 2,256 35,924
MITI equity in income (losses) of (2,740) (425) (1,059) 456 (3,768)
unconsolidated investees
Combined
Revenues $6,913 $4,050 $4,332 $4,491 $19,786
Depreciation and amortization 2,661 392 92 138 3,283
Operating income (loss) before taxes (3,352) (654) (161) 941 (3,226)
Assets 28,114 10,196 3,911 17,341 59,562
Capital expenditures 5,837 576 400 256 7,069
Subscribers 53,706 29,107 n/a n/a 82,813
</TABLE>
(1) Does not reflect revenue of MITI's headquarters of
approximately $0.8 million.
Financial information for Joint Ventures which are not yet operational
is not included in the above summaries. MITI's investment in and
advances to those Joint Ventures and for those entities whose venture
agreements have not yet been finalized at June 30, 1996 amounted to
approximately $8.7 million.
More than 90% of the Company's assets are located in, and substantially
all of the Company's operations are derived from, Republics in the
Commonwealth of Independent States or Eastern Europe.
On March 18, 1996 Metromedia Asia Limited ("MAL"), MITI's 90%
subsidiary entered into a Joint Venture agreement with Golden Cellular
Communications, Ltd., ("GCC") a company located in the People's Republic
of China ("PRC"). The purpose of the Joint Venture is to provide
wireless local loop telephone equipment, network planning, technical
support and training to domestic telephone operators throughout the PRC.
The total required equity contribution to the venture is $8 million, of
which 60% will be contributed by MAL and 40% will be contributed by GCC.
<PAGE>
Page 18
8.CONTINGENT LIABILITIES
LITIGATION
FUQUA INDUSTRIES, INC. SHAREHOLDER LITIGATION
Between February 25, 1991 and March 4, 1991, three lawsuits were filed
against the Company (formerly named Fuqua Industries, Inc.) in the
Delaware Chancery Court. On May 1, 1991, these three lawsuits were
consolidated by the Delaware Chancery Court in IN RE FUQUA INDUSTRIES,
INC. SHAREHOLDERS LITIGATION, Civil Action No. 11974. The named
defendants are certain current and former members of the Company's Board
of Directors and certain former members of the Board of Directors of
Intermark, Inc. ("Intermark"). Intermark is a predecessor to Triton
Group Ltd., which formerly owned approximately 25% of the outstanding
shares of the Company's Common Stock. The Company was named as a nominal
defendant in this lawsuit. The action was brought derivatively on behalf
of the Company and purportedly was filed as a class action lawsuit on
behalf of all holders of the Company's Common Stock, other than the
defendants. The complaint alleges, among other things, a long-standing
pattern and practice by the defendants of misusing and abusing their
power as directors and insiders of the Company by manipulating the
affairs of the Company to the detriment of the Company's past and
present stockholders. The complaint seeks (i) monetary damages from the
director defendants, including a joint and several judgment for
$15,700,000 for alleged improper profits obtained by Mr. J.B. Fuqua in
connection with the sale of his shares in the Company to Intermark; (ii)
injunctive relief against the Company, Intermark and its former
directors, including a prohibition against approving or entering into
any business combination with Intermark without specified approval; and
(iii) costs of suit and attorneys' fees. On December 28, 1995,
plaintiffs filed a consolidated second amended derivative and class
action complaint, purporting to assert additional facts in support of
their claim regarding an alleged plan, but deleting their prior request
for injunctive relief. On January 31, 1996, all defendants moved to
dismiss the second amended complaint and filed a brief in support of
that motion. The motion to dismiss is still pending.
The Company and its subsidiaries are contingently liable with respect
to various matters, including litigation in the ordinary course of
business and otherwise. Some of the pleadings in the various litigation
matters contain prayers for material awards. Based upon management's
review of the underlying facts and circumstances and consultation with
counsel, management believes such matters will not result in significant
additional liabilities which would have a material adverse effect upon
the consolidated financial position or results of operations of the
Company.
ENVIRONMENTAL PROTECTION
The Company has been involved in various environmental matters
involving property owned and operated by Snapper, including clean-up
efforts at landfill sites and the remediation of groundwater
contamination. The costs incurred by the Company with respect to these
matters have not been material. As of June 30, 1996, the Company had a
remaining reserve of approximately $1,250,000 to cover its obligations
to Snapper.
During 1995, the Company was notified by certain potentially
responsible parties at a superfund site in Michigan that a former
subsidiary may be a potentially responsible party at such site.
<PAGE>
Page 19
Snapper's liability, if any, has not been determined but the Company
believes that such liability will not be material.
The Company, through a wholly-owned subsidiary, owns approximately
17 acres of real property located in Opelika, Alabama (the "Opelika
Property"). The Opelika Property was formerly owned by Diversified
Products Corporation, a former subsidiary of the Company, and was
transferred to a wholly owned subsidiary of the Company in connection
with the sale of the Company's former sporting goods business to
Roadmaster. The Company believes that reserves of approximately $1.8
million previously established by the Company for the Opelika Property
will be adequate to cover the cost of the remediation plan that is
currently being developed.
<PAGE>
Page 20
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Company's consolidated condensed financial statements and related notes
thereto.
GENERAL
In connection with the November 1 Mergers, the Company changed its name
from "The Actava Group Inc." to "Metromedia International Group, Inc."
For accounting purposes only, Orion and MITI were deemed to be the joint
acquirors of Actava and Sterling. The acquisitions of Actava and
Sterling were accounted for as reverse acquisitions. As a result of the
reverse acquisitions, the historical financial statements of the Company
for periods prior to the November 1 Mergers are the combined financial
statements of Orion and MITI, rather than Actava's.
The operations of Actava and Sterling have been included in the
accompanying consolidated financial statements from November 1, 1995,
the date of acquisition. During December 1995, the Company adopted a
formal plan to dispose of Snapper. In addition, the Company's
investment in Roadmaster has been deemed to be a non-strategic asset.
The Company intends to dispose of Snapper and its investment in
Roadmaster during 1996. Snapper and Roadmaster are included in the
consolidated condensed financial statements of the Company as assets
held for sale.
On July 2, 1996 the Company completed the Goldwyn Merger and the MPCA
Merger. See Note 2 to the notes to the Company's consolidated condensed
financial statements. The acquisition of Goldwyn will provide the
Company with a valuable library of over 850 films and television titles,
including numerous Hollywood classics and critically acclaimed recent
films. Goldwyn also owns the leading specialized theatre circuit in the
United States, with 52 theatres with 140 screens. The acquisition of
MPCA will enhance the Company's ability to produce and acquire new film
product. The acquisitions of Goldwyn and MPCA are important steps in
MIG's plan to enhance its role as a leading global entertainment, media
and communications company.
The Company intends to continue to pursue a strategy of making
selective acquisitions of attractive entertainment, media and
communications assets that complement its existing business groups. In
particular, the Company is interested in expanding its library of
proprietary motion picture rights and in expanding the network through
which it distributes various entertainment, media and communications
products and services.
The business activities of the Company consist of two business
segments: (i) the Entertainment Group, which specializes in the
development, production, acquisition, exploitation and worldwide
distribution in all media of motion pictures, television programming and
other filmed entertainment product (the "Entertainment Group"), and (ii)
the Communications Group, which provides wireless cable television,
paging services, radio broadcasting, and various types of telephony
services (the "Communications Group").
THE ENTERTAINMENT GROUP
The Entertainment Group consists of Orion and, as of July 2, 1996,
Goldwyn and MPCA and their respective subsidiaries. Until November 1,
1995, Orion operated under the terms of its Modified Third Amended Joint
Consolidated Plan of Reorganization (the "Plan"), which severely limited
Orion's
<PAGE>
Page 21
ability to finance and produce additional theatrical motion
pictures. Therefore, Orion's primary activity prior to the November 1
Mergers was the ongoing distribution of its library of theatrical motion
pictures and television programming. Orion believes the lack of a
continuing flow of newly produced theatrical product while operating
under the Plan adversely affected its results of operations. As a
result of the removal of the restrictions on the Entertainment Group to
finance, produce, and acquire entertainment products in connection with
the November 1 Mergers, the Entertainment Group intends to acquire and
produce new theatrical product.
Theatrical motion pictures are produced initially for exhibition in
theatres. Initial theatrical release generally occurs in the United
States and Canada. Foreign theatrical exhibition generally begins
within the first year after initial release. Home video distribution in
all territories usually begins six to twelve months after theatrical
release in that territory, with pay television exploitation beginning
generally six months after initial home video release. Exhibition of
the Company's product on network and on other free television outlets
begins generally three to five years from the initial theatrical release
date in each territory.
THE COMMUNICATIONS GROUP
The Communications Group, through MITI and its subsidiaries, is the
owner of various interests in Joint Ventures that are currently in
operation or planning to commence operations in certain republics of the
former Soviet Union and in certain other Eastern European countries.
During 1995, the Company began to pursue opportunities to extend its
communications businesses into emerging markets in the Pacific Rim.
The Joint Ventures currently offer wireless cable television, radio
paging systems, radio broadcasting, trunked mobile radio services and
various types of telephony services. Joint Ventures are principally
entered into with governmental agencies or ministries under the existing
laws of the respective countries.
The consolidated condensed financial statements include the accounts
and results of operations of MITI, its majority owned and controlled
Joint Ventures, CNM Paging, Radio Juventas and Romsat, and their
subsidiaries. Investments in other companies and Joint Ventures which
are not majority owned, or in which the Company does not have control,
but exercises significant influence, have been accounted for using the
equity method.
<PAGE>
Page 22
The following tables set forth the operating results of the Company's
Entertainment Group, Communications Group and Corporate Headquarters for
the three months and six months ended June 30, 1996 and 1995. Financial
information summarizing the results of operations of Snapper, which is
classified as an asset held for sale, is presented in Note 5 to the
notes to the consolidated condensed financial statements.
Segment Information
Management's Discussion & Analysis Table
June 30, 1996
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
<S> <C> <C> <C> <C>
Entertainment Group:
Revenues $35,212 $38,550 $62,853 $75,117
Cost of Rentals and (29,732) (35,144) (54,834) (72,012)
Operating Expenses
Selling, General & Administrative (4,576) (5,614) (9,488) (10,986)
Depreciation & Amortization (329) (154) (596) (296)
Operating Income (Loss) 575 (2,362) (2,065) (8,177)
Communications Group:
Revenues 2,775 2,205 5,939 3,316
Cost of Rentals and Operating (13) - - -
Expenses
Selling, General & Administrative (8,969) (6,964) (16,494) (12,566)
Depreciation & Amortization (1,634) (339) (3,083) (725)
Operating Loss (7,841) (5,098) (13,638) (9,975)
Corporate Headquarters:
Revenues 1 - 4 -
Cost of Rentals and - - - -
Operating Expenses
Selling, General & Administrative (2,793) - (4,422) -
Depreciation & Amortization (4) - (11) -
Operating Loss (2,796) - (4,429) -
Consolidated:
Revenues 37,988 40,755 68,796 78,433
Cost of Rentals and (29,745) (35,144) (54,834) (72,012)
Operating Expenses
Selling, General & Administrative (16,338) (12,578) (30,404) (23,552)
Depreciation & Amortization (1,967) (493) (3,690) (1,021)
Operating Loss (10,062) (7,460) (20,132) (18,152)
Interest Expense (7,676) (8,234) (15,955) (17,170)
Interest Income 1,156 881 2,401 1,698
Chapter 11 Losses (83) (168) (137) (935)
Provision for Income Taxes (200) (100) (400) (300)
Equity in Losses of Joint Ventures (1,985) (1,633) (3,768) (2,221)
Net Loss $ (18,850) $ (16,714) $ (37,991) $ (37,080)
</TABLE>
<PAGE>
Page 23
MIG CONSOLIDATED - RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30,
1995.
Net loss increased to $18.9 million in the three month period ended
June 30, 1996 from $16.7 million for the three months ended June 30,
1995.
The $2.2 million increase in the Company's consolidated loss for
the three month period ended June 30, 1996 versus June 30, 1995 is
primarily attributable to increases in operating losses at the Company's
Communications Group, corporate overhead and equity in net losses of
Joint Ventures, offset by decreases in operating losses at the Company's
Entertainment Group.
The improvement in the Entertainment Group's operations was a
result of the release of new film product, the sale of certain catalog
television products and a reduction in selling, general and
administrative expenses.
The Communications Group experienced increases in selling, general
and administrative expenses as it continues to expand its business and
due to the start up nature of many of its Joint Ventures. Corporate
overhead increased to $2.8 million in 1996 from zero in 1995 as a result
of the addition of MIG's corporate headquarters after the November 1,
1995 Mergers.
Interest expense decreased $.5 million to $7.7 million for the
three month period ended June 30, 1996. The decrease in interest
expense was primarily due to the refinancing of Orion's debt in
connection with the November 1 Mergers, partially offset by the increase
in interest expense at corporate headquarters on debt incurred in
connection with funding of MITI's operations and corporate overhead.
Interest income increased $.3 million to $1.2 million principally
as a result of MITI's increasing advances to the Joint Ventures for
their operating and investing cash requirements. The interest is
charged at rates ranging from the prime rate to the prime rate plus four
percent.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30,
1995.
Net loss increased to $38.0 million in the six month period ended
June 30, 1996 from $37.1 million for the six months ended June 30, 1995.
The $.9 million increase in the Company's consolidated loss for the
six month period ended June 30, 1996 versus June 30, 1995 is primarily
attributable to increases in operating losses at the Communications
Group, corporate overhead and equity in net losses of Joint Ventures,
offset by decreases in operating losses at the Company's Entertainment
Group.
The improvement in the Entertainment Group's operations was
primarily a result of writedowns of film inventory totaling
approximately $7.0 million in the first six months of 1995, compared to
nominal writedowns for the current six month period.
The Communications Group experienced increases in selling, general
and administrative expenses as it continues to expand its business and
due to start up of many of its Joint Ventures. Corporate overhead
increased to $4.4 million in 1996 from zero in 1995 as a result of the
addition of MIG's corporate headquarters after the November 1, 1995
Mergers.
<PAGE>
Page 24
Interest expense decreased $1.2 million to $16.0 million for the
six month period ended June 30, 1996. The decrease in interest expense
was primarily due to the refinancing of Orion's debt in connection with
the November 1 Mergers , partially offset by the increase in interest
expense at corporate headquarters on debt incurred in connection with
funding of MITI's operations and corporate overhead.
Interest income increased $.7 million to $2.4 million principally
as a result of MITI's increasing advances to the Joint Ventures for
their operating and investing cash requirements. The interest is
charged at rates ranging from the prime rate to the prime rate plus four
percent.
THE ENTERTAINMENT GROUP - RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 VERSUS THREE MONTHS ENDED JUNE 30, 1995
REVENUES
Total revenues for the three months ended June 30, 1996 were $35.2
million, a decrease of $3.3 million or 9% from the three months ended
June 30, 1995.
During the current quarter Orion released new product; however the
resulting increase in revenue from such product was not sufficient to
offset the decrease in revenues in home video, pay and free television,
which resulted from Orion's reduced theatrical schedule prior to the
November 1 Mergers. Orion anticipates that its reduced theatrical
release schedule will continue to have an adverse effect on its
revenues.
Theatrical revenues for the current quarter were $11.5 million, an
increase of $10.7 million from the previous year's second quarter. Such
increase was due to the theatrical release of four pictures during the
current quarter compared to no theatrical releases in the prior year's
second quarter. Of the four releases, approximately 85% of the current
quarter's domestic theatrical revenues were derived from the
distribution of two of these films, THE SUBSTITUTE and THE ARRIVAL.
Domestic home video revenues for the current quarter were $7.2
million, a decrease of $6.3 million or 47% from the previous year's
second quarter. The decrease in domestic home video revenue was due
primarily to Orion's reduced theatrical release schedule in 1995 as 52%
of the prior year's second quarter revenue was attributed to the release
of BLUE SKY to the home video marketplace with no comparable release in
the current quarter.
Home video subdistribution revenues for the second quarter and the
prior year's quarter were $0.9 million and $1.0 million, respectively,
due to Orion's reduced theatrical schedule in 1995.
Pay television revenues were $4.1 million in the current quarter, a
decrease of $3.8 million or 48% from the previous year's second quarter.
The decrease in pay television revenues was primarily due to no titles
becoming available during the current quarter in the domestic pay cable
market compared to two titles which became available in the previous
year's second quarter.
Free television revenues for the current quarter were $11.5
million, a decrease of $3.9 million or 25% from the previous year's
second quarter. In both the domestic and international marketplaces,
Orion derives significant revenue from the licensing of free television
rights.
<PAGE>
Page 25
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased $1.0 million
to $4.6 million during the current second quarter from $5.6 million
during the previous year's second quarter. The decrease resulted from a
reduction in insurance costs and outside computer consulting costs.
OPERATING INCOME (LOSS)
Operating income of $0.6 million in the current quarter was an
improvement over an operating loss of $2.3 million in the previous
year's second quarter. Such improvement was attributed to the domestic
theatrical release of THE SUBSTITUTE and THE ARRIVAL, the sale of
certain catalog television product and a reduction in selling, general
and administration expenses. However, results of operations continue to
be adversely affected by virtue of the fact that approximately two-
thirds of Orion's film inventories are stated at estimated realizable
value and do not generate gross profit upon recognition of revenues.
SIX MONTHS ENDED JUNE 30, 1996 VERSUS SIX MONTHS ENDED JUNE 30, 1995
REVENUES
Total revenues for the six months ended June 30, 1996 were $62.9
million, a decrease of $12.3 million or 16% from the six months ended
June 30, 1995.
Although Orion released new product during the current six month
period, the revenue from such product was not sufficient to offset the
decrease in revenues in home video, pay television and free television,
which resulted from Orion's reduced theatrical schedule prior to the
November 1 Mergers. Orion anticipates that its reduced theatrical
release schedule will continue to have an adverse effect on revenues.
Theatrical revenues for the current six months were $11.7 million,
an increase of $10.5 million from the previous year's six months. Such
increase was due to the theatrical release of four pictures during the
current quarter compared to no theatrical releases in the previous
year's six month period. Of the four releases, approximately 83% of the
current six months domestic theatrical revenues were derived from the
distribution of two of these films, THE SUBSTITUTE and THE ARRIVAL.
Domestic home video revenues for the current six months were $12.8
million, a decrease of $9.9 million or 44% from the previous year's
first six months. The decrease in domestic home video revenue was due
primarily to Orion's reduced theatrical release schedule in 1995, as 31%
of the prior year's six months' revenue was attributed to the release of
BLUE SKY to the home video marketplace with no comparable releases in
the current year's six months.
Home video subdistribution revenues for the current six months were
$3.2 million, an increase of $2.1 million from the previous year's first
six months. These revenues are primarily generated in the foreign
marketplace through a subdistribution agreement with Sony Pictures
Entertainment, Inc. The increase was primarily due to the release of the
last titles under this agreement in some major territories during the
first quarter of 1996. All 23 pictures covered by this agreement have
been released theatrically.
<PAGE>
Page 26
Pay television revenues were $11.4 million in the current six
months, a decrease of $6.4 million or 36% from the previous year's first
six months. The decrease in pay television revenues was primarily due
to no titles becoming available during the current six month period in
the domestic pay cable market compared to four titles becoming available
during the previous year's six months. This decrease was partially
offset by an increase in the number of titles that became available
under the British Sky Broadcasting, Ltd. pay cable agreement in the U.K.
Free television revenues for the current six months were $23.8
million, a decrease of $8.5 million or 26% from the previous year's
first six months. In both the domestic and international marketplaces,
Orion derives significant revenue from the licensing of free television
rights.
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased $1.5 million
to $9.5 million during the current six months from $11 million during
the previous year's first six months. The decrease resulted from a
reduction in insurance costs and outside computer consulting costs.
OPERATING LOSS
Operating loss decreased by $6.1 million in the current six months
to $2.1 million from an operating loss of $8.2 million in the previous
year's first six months. The previous year's first six months results
were adversely affected by writedowns to estimated net realizable value
of the carrying amounts on certain film product totaling approximately
$7.0 million compared to nominal writedowns for the current six months.
In addition, approximately two-thirds of Orion's film inventories are
stated at estimated realizable value and do not generate gross profit
upon recognition of revenues therefore adversely affecting results of
operations.
THE COMMUNICATIONS GROUP - RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE
30, 1995.
REVENUES
Revenues increased to $2.8 million in the three months ended June
30, 1996 from $2.2 million for the three months ended June 30, 1995.
This growth in revenue resulted primarily from an increase in paging
service operations in Romania and an increase in management and
licensing fees, partially offset by a decrease in radio operations in
Hungary. Radio paging services generated revenues of $.8 million for
the three months ended June 30, 1996 as compared to $.3 million for the
three months ended June 30, 1995. Management fees and licensing fees
increased to $.7 million in the three months ended June 30, 1996 from
$.1 million in the three months ended June 30, 1995. Revenue from radio
operations decreased to $1.4 million for the three months ended June 30,
1996 from $1.8 million for the three months ended June 30, 1995 due to a
change in accounting policy. During 1995 MITI changed its policy of
accounting for its majority owned and controlled Joint Ventures, such
that MITI's results of operations for the three months ended June 30,
1996 include the results of operations for these ventures for the three
months ended March 31, 1996. MITI's results of operations for the three
months ended June 30, 1995 included the results of operations for these
ventures for the three months ended June 30, 1995. Due to the seasonal
impact of revenues which decrease in the winter months, revenues would
actually have increased if not for the change in
<PAGE>
Page 27
accounting policy. Had
MITI applied this method from January 1, 1995 the net effect on reported
operating results for the three months ended June 30, 1995 would not
have been material.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense increased by $2.0
million or 29% for the three months ended June 30, 1996 as compared to
the three months ended June 30, 1995. The increase relates principally
to the hiring of additional staff and expenses associated with the
increase in the number of Joint Ventures and the need for MITI to
support and assist the operations of the Joint Ventures , and additional
staffing at the radio station and radio paging operations.
EQUITY IN LOSSES OF JOINT VENTURES
MITI recognized equity in losses of Joint Venture investees of
approximately $2.0 million for the three months ended June 30, 1996 as
compared to $1.6 million for the three months ended June 30, 1995. The
losses recorded for the three months ended June 30, 1996 and 1995
represent MITI's equity in losses of the venture operations for the
three months ended March 31, 1996 and 1995, respectively.
FOREIGN CURRENCY
MITI presently has limited foreign currency exposure as virtually
all revenues are billed and collected in United States dollars or an
equivalent local currency amount adjusted on a monthly basis for
currency fluctuation. MITI's Joint Ventures are generally permitted to
maintain US dollar accounts to service their dollar denominated credit
lines, thereby significantly reducing foreign currency exposure. As
MITI and its Joint Venture investees grow and become more dependent on
local currency based transactions, MITI expects its foreign currency
risk and exposure to increase. MITI does not hedge against foreign
currency exchange rate risks at the current time.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30,
1995.
REVENUES
Revenues increased to $5.9 million in the six months ended June 30,
1996 from $3.3 million for the six months ended June 30, 1995. This
growth in revenue has resulted primarily from an increase in radio
operations in Hungary and paging service operations in Romania. During
1995 MITI changed its policy of accounting for majority owned and
controlled Joint Ventures, such that MITI's results of operations for
the six months ended June 30, 1996 include the results of operations for
these ventures for the six months ended March 31, 1996. MITI's results
from operations for the six months ended June 30, 1995 included the
results of operations for these ventures for the six months ended June
30, 1995. Due to the seasonality impact of revenues, which decrease in
the winter months, the increase in revenues would have been even greater
if not for the change in accounting policy. Had MITI applied this
method from January 1, 1995 the net effect on reported operating results
for the six months ended June 30, 1995 would not have been material.
Revenue from radio operations for the first six months of 1996 was $3.7
million as compared to $2.6 million in the first six months of 1995.
Radio paging services generated revenues of $1.3 million for the first
six months of 1996 as compared to $.5 million in the first six months of
1995. Income from management fees and licensing fees increased to $.9
million in the six months ended June 30, 1996 from $.3 million in the
six months ended June 30, 1995.
<PAGE>
Page 28
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE
Selling, general and administrative expense increased by $3.9
million or 31% for the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995. The increase relates principally to the
hiring of additional staff and expenses associated with the increase in
the number of Joint Ventures and the need for MITI to support and assist
the operations of the Joint Ventures, and additional staffing at the
radio station and radio paging operations.
EQUITY IN LOSSES OF JOINT VENTURES
MITI recognized equity in losses of its Joint Ventures of
approximately $3.8 million for the six months ended June 30, 1996 as
compared to $2.2 million for the six months ended June 30, 1995. The
losses recorded for the six months ended June 30, 1996 and 1995
represent MITI's equity in losses of the venture operations for the six
months ended March 31, 1996 and 1995 respectively.
As a result of the start up nature of many of the Joint Ventures,
additional losses are expected. However, due to the increased support
and assistance provided to the ventures by MITI, there has been
significant growth in the total number of subscribers for the paging and
cable TV ventures as follows:
<TABLE>
<CAPTION>
Wireless
CABLE TV PAGING
<S> <C> <C>
September 30, 1995 32,443 10,351
December 31, 1995 37,900 14,460
March 31, 1996 44,632 20,683
June 30, 1996 53,706 29,107
</TABLE>
The losses recorded for the six months ended June 30, 1996
represent MITI's equity in the losses of the ventures for the six months
ended March 31, 1996.
FOREIGN CURRENCY
MITI presently has limited foreign currency exposure as virtually
all revenues are billed and collected in United States dollars or an
equivalent local currency amount adjusted on a monthly basis for
currency fluctuation. MITI's Joint Ventures are generally permitted to
maintain US dollar accounts to service their dollar denominated credit
lines, thereby significantly reducing foreign currency exposure. As
MITI and its Joint Ventures grow and become more dependent on local
currency based transactions, MITI expects its foreign currency risk and
exposure to increase. MITI does not hedge against foreign currency
exchange rate risks at the current time.
<PAGE>
Page 29
LIQUIDITY AND CAPITAL RESOURCES
MIG CONSOLIDATED
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operating activities was $.9 million for the six month
period ended June 30, 1996 as compared to cash provided by operating
activities of $16.8 million for the six month period ended June 30,
1995, a decrease in cash from operations of $17.7 million.
Losses from operations include significant non-cash items of
depreciation, amortization and equity in losses of Joint Ventures. Non-
cash items decreased $21.5 million from $60.7 million to $39.2 for the
six month periods ended June 30, 1995 and 1996, respectively. The
decrease in non-cash items principally relates to amortization of film
costs and debt discounts which was partially offset by the increase in
equity losses of Joint Ventures and depreciation and amortization of
fixed and intangible assets. Net changes in assets and liabilities
decreased cash flows for the six months ended June 30,1996 and 1995 by
$2.1 and $6.9 million, respectively.
As discussed below, the decrease in cash flows for the six months
ended June 30, 1996 generally resulted from the reduction in revenues
caused by Orion's reduced theatrical release schedule and increased
losses in MITI's consolidated and equity Joint Ventures due to the
start-up nature of these operations, increases in selling, general and
administrative expenses at MITI and corporate headquarters. Net
interest expense has decreased principally due to the refinancing of
Orion's debt in November 1995, offset by interest expense relating to
debt acquired in the November 1 Mergers. The Orion reduced theatrical
release schedule, which is the result of the restrictions imposed upon
Orion while operating under the Plan, has negatively impacted and will
continue to negatively impact cash provided from operations. As a
result of the removal of the restrictions on the Entertainment Group to
finance, produce and distribute entertainment product as a result of the
November 1 Mergers, the Entertainment Group intends to acquire and
produce new theatrical product. During the first quarter of 1996, Orion
made a $5.0 million payment to a subdistributor under an agreement
entered into in connection with the Plan.
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used in investing activities was $29.0 million and $14.1
million for the six months ended June 30, 1996 and 1995, respectively.
During the six months ended June 30, 1995, the principal use of cash in
investing activities was $11.0 million invested or advanced to Joint
Ventures. During the six months ended June 30, 1996 the Company
collected $5.4 million from Snapper as repayment of outstanding advances
and approximately $5.4 million from the proceeds from sale of short-term
investments and paid $12.1 million, $22.4 million and $2.3 million for
investments in Joint Ventures, film inventories and property, plant and
equipment, respectively.
The increase in investment in film inventories reflects increased
investment activities in new film product and advances to producers for
certain distribution rights. The November 1 Mergers effectively removed
the restrictions in the Plan relating to the production of new product
by Orion.
<PAGE>
Page 30
CASH FLOWS FROM FINANCING ACTIVITIES
Cash provided by financing activities was $6.4 million for the six
months ended June 30, 1996 as compared to cash used in financing
activities of $2.4 million for the six months ended June 30, 1995.
For the six months ended June 30, 1995 the $22.2 million of
proceeds from issuance of long-term debt was for funds received to
finance MITI's operations and investments in and advances to Joint
Ventures. Payments on notes and subordinated debt were principally
related to payments on Orion's bank debt of $24.4 million. For the six
months ended June 30, 1996 the proceeds from issuance of long-term debt
of $38.3 million, was principally from Orion's revolver and a loan from
Metromedia Company. Payments of $24.3 million on notes and subordinated
debt are principally payments by Orion on its bank debt. In addition,
Orion made payments of deferred financing costs in connection with the
November 1 Mergers as well as its new credit facility of $7.9 million.
THE COMPANY
On July 2, 1996 the Company completed a public offering of 18.4
million shares of common stock. Net proceeds from the public offering
were $191.3 million. In addition, on July 2, 1996 Orion entered into
the $300 million Orion Credit Facility. Proceeds from the Orion Credit
Facility were used, in part, to refinance indebtedness of Orion and
certain indebtedness related to the Goldwyn Merger and the MPCA Merger.
Immediately after the completion of the public offering,
consummation of the Goldwyn Merger and MPCA Merger and the consummation
of the Orion Credit Facility, MIG had approximately $155 million of cash
on hand and the Entertainment Group under the Orion Credit Facility had
borrowing capacity of approximately $85 million. The Company intends to
use these available funds together with cash flow from operations to
fund its businesses, including (i) the Communications Group's further
expansion in Eastern Europe, the former Soviet Republics and the Pacific
Rim and (ii) the Entertainment Group's production and acquisition of
entertainment product. MIG believes that these resources will enable it
to realize the value of its assets, by providing capital necessary to
operate such businesses.
MIG is a holding company which operates through its subsidiaries
and, therefore, does not generate cash flow on its own. In addition to
providing funds to its operating subsidiaries, MIG is obligated to make
principal and interest payments under its various indentures in addition
to funding its working capital needs, which consist principally of
corporate overhead and payments on self-insurance claims. For the
remainder of the year ended December 31, 1996 and in the years ended
December 31, 1997 and 1998, MIG will be required to make principal
payments of approximately $0.9 million, $15 million and $60 million,
respectively, to meet the scheduled maturities of its outstanding long-
term debt. MIG does not currently anticipate receiving dividends from
its subsidiaries but intends to use its cash on hand and proceeds from
asset sales described below to meet these cash requirements.
During December 1995, the Company adopted a formal plan to dispose
of Snapper. At June 30, 1996 the carrying value of Snapper was $73.8
million. The carrying value of Snapper represents the Company's
estimated proceeds from the sale of Snapper and the projected cash flows
from the operations of Snapper, primarily repayment of intercompany
loans, through the date of sale. Management believes that Snapper will
be disposed of by November 1996. In addition, the Company
<PAGE>
Page 31
anticipates
disposing of its investment in Roadmaster by November 1996. The
carrying value of the Company's investment in Roadmaster at June 30,
1996 was $47.5 million. There can be no assurance that MIG will dispose
of these assets during the time period anticipated or that it will
realize proceeds upon such sales equal to the carrying value of its
investments.
The Company's Entertainment Group requires capital to fund the
production of filmed entertainment product and to meet its general
working capital needs, including interest and principal payments
required under the Entertainment Group Credit Facility. After the
consummation of the public offering, the Goldwyn and MPCA acquisitions
and the Orion Credit Facility, the Entertainment Group has approximately
$215.0 million outstanding indebtedness under the Entertainment Group
Credit Facility and borrowing capacity of approximately $85.0 million on
a revolving basis to fund its working capital and production needs. MIG
believes that the amounts available under the Entertainment Group Credit
Facility together with cash generated from operations will provide the
Entertainment Group with sufficient working capital to implement its
production and distribution activities and to meet debt obligations
during 1996 and 1997. The Entertainment Group Credit Facility restricts
the Entertainment Group's ability to pay dividends to MIG.
The Communications Group is in the early stages of constructing and
developing its communications businesses. As a result, the
communications Group does not generate operating cash flow and is
dependent upon MIG for the capital required to fund its businesses. MIG
estimates that the Communications Group's funding requirements are
currently approximately $40 million for 1996. MIG believes that the
remaining proceeds of the public offering, after satisfying its own
working capital needs and its debt service obligations, will enable MIG
to provide the Communications Group with the capital it requires for
the anticipated funding needs for its existing and planned projects
during 1996 and 1997. However, the Communication Group's capital needs
could vary substantially depending upon the stage of development of its
existing projects and its acquisition of new licenses or businesses.
The Company believes that it will report significant operating
losses for the fiscal year ended December 31, 1996. In addition,
because its communications business is in the early stages of
development, the Company expects the Communication's Group to continue
to generate significant net losses as it continues to build out and
market its services. Accordingly, the Company expects to generate
consolidated net losses for the foreseeable future.
THE ENTERTAINMENT GROUP
Since the consummation of the Goldwyn Merger and the MPCA Merger on
July 2, 1996, the Entertainment Group's strategy is to (i) expand its
production of feature films, (ii) exploit its film and television
library and (iii) enhance the value of its theatre circuit.
MOTION PICTURE PRODUCTION: The Entertainment Group plans to
maintain a conservative theatrical production, acquisition and
distribution strategy which it believes will generate more stable
cash flows than the approach of the major motion picture studios.
The Entertainment Group intends to produce or acquire and release
10 to 14 theatrical features per year, consisting primarily of
commercial and specialized films with a well-defined target
audience and marketing campaign and with The Entertainment Group's
portion of the production cost generally ranging from $5.0 million
to $10.0 million per picture. The Entertainment Group also expects
to spend between $4.0 million and $8.0 million in domestic print
and advertising costs for each film it produces or acquires. This
production strategy has been used by and
<PAGE>
Page 32
is based on the prior
success of the management of MPCA. The Entertainment Group also
plans to continue to be a leader in the production acquisition and
distribution of specialized motion pictures and art films,
including those films management believes may have crossover
commercial potential. In order to expand its production
capabilities and reduce its exposure to the performance of any
particular film, The Entertainment Group intends to finance a
significant portion of each film's budget by relicensing foreign
distribution rights.
EXPLOITING THE EXISTING LIBRARY: The Entertainment Group expects
its library to generate significant cash flow due to existing,
long-term distribution contracts and from further exploitation of
its film and television library in traditional domestic and
international media, such as free and pay television and home
video. In addition, as The Entertainment Group expands its
production business, it expects the cash flows from and value of
its existing library to increase as it will be able to market new
films together with its existing library.
MOTION PICTURE EXHIBITION: The Entertainment Group believes it is
the largest exhibitor of specialized motion pictures and art films
in the United States. The Company's theatre circuit currently
consists of 52 theatres with a total of 140 screens. The
Entertainment Group's strategy is to: (i) expand in existing and
new major markets through internal growth and acquisitions, (ii)
upgrade and multiplex existing locations where there is demand for
additional screens and (iii) continue to reduce operating and
overhead costs as a percentage of revenue.
Prior to the consummation of the November 1 Mergers, Orion's
ability to produce or acquire new theatrical product was severely
limited by agreements entered into in connection with the Plan. At the
filing date, all new production was halted, leaving Orion with only 12
largely completed but unreleased motion pictures. Accordingly, Orion
released six, three and three theatrical motion pictures in the domestic
marketplace in 1994, 1993 and 1992, respectively. In 1995, there were
no theatrical releases that were fully or substantially financed by
Orion. This reduced release schedule has had and will continue to have
an adverse impact on results of operations for the immediately
foreseeable future.
In connection with the consummation of the November 1 Mergers, the
restrictions imposed by the agreements entered into in connection with
the Plan which hindered Orion's ability to produce and acquire new
motion picture product were eliminated. As a result, Orion has begun
producing, acquiring and financing theatrical films consistent with the
covenants set forth in the credit agreement relating to the Orion Credit
Facility. The principal sources of funds required for Orion's motion
picture production, acquisition and distribution activities will be cash
generated from operations, proceeds from the presale of subdistribution
and exhibition rights, primarily in foreign markets, and borrowings
under Orion's Revolving Credit Facility.
The cost of producing theatrical films varies depending on the type
of film produced, casting of stars or established actors, and many other
factors. The industry-wide trend over recent years has been an increase
in the average cost of producing and releasing films. The revenues
derived from the production and distribution of a motion picture depend
primarily upon its acceptance by the public, which cannot be predicted
and does not necessarily correlate to the production or distribution
costs incurred. The Company will attempt to reduce the risks inherent
in its motion picture production activities by closely monitoring the
production and distribution costs of individual films and limiting
Orion's investment in any single film.
<PAGE>
Page 33
The Orion Credit Facility consists of a $200 million Term Loan,
which requires quarterly repayments of $7.5 million commencing
September, 1996 at a final payment of $50 million on maturity (June 30,
2001), and the Revolving Credit Facility, which has a final maturity of
June 30, 2001. For the remainder of the year ended December 31, 1996
and in the years ended December 31, 1997 and 1998, Orion will be
required to make principal payments of approximately $18.1 million,
$31.6 million, and $31.4 million, respectively, to meet the scheduled
maturities of its outstanding long-term debt.
The credit agreement relating to the Orion Credit Facility contains
customary covenants, including limitations on the incurrence of
additional indebtedness and guarantees, the creation of new liens,
restrictions on the development costs and budgets for new films,
limitations on the aggregate amount of unrecouped print and advertising
costs Orion may incur, limitations on the amount of Orion's leases,
capital and overhead expenses, (including specific limitations on
Orion's theatre group subsidiary's capital expenditures) prohibitions on
the declaration of dividends or distributions by Orion to MIG (other
than $15 million of subordinated loans which may be repaid to MIG),
limitations on the merger or consolidation of Orion or the sale by Orion
of any substantial portion of its assets or stock and restrictions on
Orion's line of business, other than activities relating to the
production and distribution of entertainment product and other covenants
and provisions described above. See Note 4 to the Notes to the
Consolidated Condensed Financial Statements.
Management believes that the Orion Revolver, together with cash
generated from operations, will provide Orion with sufficient resources
to finance anticipated levels of production and distribution activities
and to meet debt obligations as they become due during 1996.
THE COMMUNICATIONS GROUP
MITI has invested significantly (through capital
contributions, loans and management assistance and training) in its
Joint Ventures. MITI has also incurred significant expenses in
identifying, negotiating and pursuing new wireless telecommunications
opportunities in emerging markets. MITI and the majority of its Joint
Ventures are experiencing continuing losses and negative operating cash
flow since the businesses are in the development and start up phase of
operations.
The wireless cable television, paging, fixed wireless loop
telephony, and international toll calling businesses are capital
intensive. MITI generally provides the primary source of funding for
both its Joint Ventures' working capital and capital expenditures.
MITI's Joint Venture agreements generally provide for the initial
contribution of assets or cash by the Joint Venture partners, and for
the provision of a line of credit from MITI to the Joint Venture. Under
a typical arrangement, MITI's Joint Venture partner contributes the
necessary licenses or permits under which the Joint Venture will conduct
its business, studio or office space, transmitting tower rights and
other equipment. MITI's contribution is generally cash and equipment,
but may consist of other specific assets as required by the Joint
Venture agreement.
Credit agreements with the Joint Ventures are intended to provide
sufficient funds for operations and equipment purchases. The credit
agreements generally provide for interest to be accrued at the Company's
current cost of borrowing in the United States and for payment of
principal and interest from 90% of the Joint Venture's available cash
flow, as defined, prior to any distributions of dividends to MITI or its
partners. The credit agreements also often provide MITI the right to
appoint the general director of the Joint Venture and the right to
approve the annual business plan of the Joint Venture. Advances under
the credit agreements are made to the Joint Ventures in
<PAGE>
Page 34
the form of
cash, for working capital purposes, as direct payment of expenses or
expenditures, or in the form of equipment, at the cost of the equipment
plus cost of shipping. As of June 30, 1996 and December 31, 1995, MITI
was committed to provide funding under the various credit lines in an
aggregate amount of approximately $55.5 million and $46.8 million,
respectively, of which $9.2 million and $16.9 million, respectively,
remains unfunded. MITI's funding commitments under a credit agreement
are contingent upon its approval of the Joint Venture's business plan
and the attainment of such business plans. MITI reviews the actual
results compared to the approved business plan on a periodic basis. If
the review indicates a material variance from the approved business
plan, MITI may terminate or revise its commitment to fund the credit
agreements.
MITI's consolidated and unconsolidated Joint Ventures' ability to
generate positive operating results is dependent upon the sale of
commercial advertising time, the ability to attract subscribers to its
systems and its ability to control operating expenses. Management's
current plans with respect to the Joint Ventures are to increase
subscriber and advertiser bases and thereby their operating revenues by
developing a broader band of programming packages for wireless cable and
radio broadcasting and offering additional services and options for
paging and telephony services. By offering the large local populations
of the countries in which the Joint Ventures operate desired services at
attractive prices, management believes that the Joint Ventures can
increase their subscriber and advertiser bases and generate positive
operating cash flow, reducing their dependence on MITI for funding of
working capital. Additionally, advances in wireless subscriber
equipment technology are expected to reduce capital requirements per
subscriber. Further initiatives to develop and establish profitable
operations include reducing operating costs as a percentage of revenue
and assisting Joint Ventures to develop management information systems
and automated customer care and service systems.
MITI's investments in the Joint Ventures are not expected to become
profitable or generate significant cash flows in the near future.
Additionally, if the Joint Ventures do become profitable and generate
sufficient cash flows in the future, there can be no assurance that the
Joint Ventures will pay dividends or return capital to MITI at any time.
The ability of MITI and its consolidated and unconsolidated Joint
Ventures to establish profitable operations is also subject to special
political, economic and social risks inherent in doing business in
emerging markets such as Eastern Europe, the former Soviet Republics and
the Pacific Rim. These include matters arising out of government
policies, economic conditions, imposition of or changes to taxes or
other similar charges by governmental bodies, foreign exchange
fluctuations and controls, civil disturbances, deprivation or
unenforceability of contractual rights, and taking of property without
fair compensation.
Prior to the November 1 Mergers, MITI had relied on certain
stockholders for capital, in the form of both debt and equity, to fund
its operating and capital requirements. Through 1995, MITI's primary
sources of funds included the issuance of notes payable and equity
contributions. Notes payable were due within one year of the note and
carried interest rates ranging from the prime rate to the prime rate
plus 2%.
On November 1, 1995, MITI received equity contributions of
approximately $62.0 million from the Company, representing cash and
notes payable to a Metromedia Company affiliate, that were converted
into equity of the Company at the time of the November 1 Mergers.
<PAGE>
Page 35
Proceeds of MITI's borrowings and equity issuances were used, in
part, to purchase and provide equipment to its Joint Ventures under
credit lines, to fund initial equity contributions to Joint Ventures and
for MITI's operating activities, primarily selling, general and
administrative expenses.
Funds invested in Joint Ventures for the six months ended June
30,1996 were to fund MITI's capital contributions as required by the
respective Joint Venture agreements and to provide equipment and working
capital under lines of credit. These capital requirements amounted to
approximately $9.3 million for the first six months of 1996. MITI
continues to seek out and enter into arrangements whereby it can offer
communications services through Joint Venture arrangements. Additional
Joint Ventures are presently being planned in countries in which MITI
currently has investments and in new target markets in the Far East.
Capital expenditures for MITI for the first six months of 1996 as well
as capital expenditures in 1995 were primarily the result of expanding
MITI's operations and establishing offices in Moscow, Russia, Vienna,
Austria, Budapest, Hungary and Hong Kong.
MITI's capital commitments for fiscal years 1996 and 1995 were
comprised of four primary categories: (i) subscriber equipment, (ii)
working capital advances, (iii) expansion of existing facilities and
(iv) new construction. Most of MITI's Joint Ventures, once operational,
require subscriber equipment and working capital infusions for a
significant period of time until funds generated by operations are
sufficient to cover operating expenses and capital expenditure
requirements. In some cases, the Joint Venture and MITI agree to expand
the existing facilities to increase or enhance existing services. In
those cases, where the Joint Venture cannot provide these funds from
operations, MITI provides the funds required to build out the project.
MITI's actual capital commitments to its Joint Ventures for the
fiscal year 1995, its anticipated funding amounts for fiscal year 1996
and actual expenditures for the six months ending June 30, 1996 are
detailed below.
<TABLE>
<CAPTION>
CAPITAL REQUIREMENTS FOR JOINT VENTURES
<S> <C> <C> <C>
1995 1996 Six Months
ACTUAL FORECASTED 1996
ACTUAL
Cable TV $12.2 $15.5 $6.8
Paging 3.3 5.4 2.6
Broadcast Radio 1.3 .9 1.0
Telephony 1.9 1.2 .1
Other 2.5 - 1.6
$21.2 $23.0 $12.1
</TABLE>
For the six months ended June 30, 1996, MITI's primary source of
funds were from the Company in the form of non-interest bearing
intercompany loans. In addition, Metromedia Company made available to
MITI up to $15.0 million of revolving credit (the "MITI Bridge Loan") in
order to satisfy its commitments and working capital requirements. The
proceeds of loans under this agreement were used for general corporate
and working capital purposes. As of June 30, 1996, MITI
<PAGE>
Page 36
had borrowings
in the amount of $6.2 million under the MITI Bridge Loan. Interest was
payable on all loans made pursuant to the MITI Bridge Loan at a rate
equal to Chase's prime rate plus 2%.On July 2, 1996, the outstanding
principal amount and accrued interest were paid by MITI to Metromedia
Company.
Until MITI's consolidated and unconsolidated operations generate
positive cash flow, MITI will require significant capital to fund its
operations, and to make capital contributions and loans to its Joint
Ventures. MITI relies on the Company to provide the financing for these
activities. The Company believes that as more of MITI's Joint Ventures
commence operations and reduce their dependence on MITI for funding,
MITI will be able to finance its own operations and commitments from its
operating cash flow and MITI will be able to attract its own financing
from third parties. There can, however, be no assurance that additional
capital in the form of debt or equity will be available to MITI at all
or on terms and conditions that are acceptable to the Company, and as a
result, MITI will continue to depend upon the Company for its financing
needs.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and elsewhere in this report constitute "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Reform Act"). Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of the
Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, which will, among
other things, impact demand for the Company's products and services;
industry capacity, which tends to increase during strong years of the
business cycle; changes in public taste, industry trends and demographic
changes, which may influence the exhibition of films in certain areas;
competition from other entertainment and communications companies, which
may affect the Company's ability to generate revenues; political, social
and economic conditions and laws, rules and regulations, particularly in
Eastern Europe, the former Soviet Republics and other emerging markets,
which may affect the Company's results of operations; timely completion
of construction projects for new systems for the joint ventures in which
the Company has invested, which may impact the costs of such projects;
developing legal structures in Eastern Europe, the former Soviet
Republics and other emerging markets which may affect the Company's
results of operations; cooperation of local partners for the Company's
communications investments in Eastern Europe and the former Soviet
Republics; former Soviet Republics; the loss of any significant
customers; changes in business strategy or development plans, which may,
among other things, prolong the time it takes to achieve the performance
results included herein; the significant indebtedness of the Company,
including the Company's ability to service its indebtedness and to
comply with certain restrictive covenants; quality of management;
availability of qualified personnel; changes in, or the failure to
comply with government regulations; and other factors referenced in this
report.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
For a description of legal proceedings, reference is made to the
Company's quarterly report of Form 10-Q for the quarter ended March 31,
1996.
<PAGE>
Page 37
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
(a) EXHIBITS
<S> <C> <C>
Exhibit NUMBER
DESCRIPTION
10.42 Amended and Restated Credit, Security and Guaranty
Agreement, dated as of November 1, 1995, as amended
and restated as of June 27, 1996, by and among
Orion Pictures Corporation, the Corporate
Guarantors referred to therein, the Lenders
referred to therein, and Chemical Bank, as Agent
for the Lenders
10.43 Metromedia International Group/Motion Picture
Corporation of America Restricted Stock Plan
11 Computation of Earnings Per Share
27 Financial Data Schedule
</TABLE>
(b) REPORTS ON FORM 8-K
The Company's Current Report on Form 8-K, dated July 2, 1996,
announcing the consummation of the Goldwyn Merger and the MPCA Merger,
the completion of an equity offering and Orion's $300 million credit
facility.
<PAGE>
Page 38
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /s/ Silvia Kessel
----------------------------
Name: Silvia Kessel
Title: Senior Vice President, Chief
Financial Officer and Treasurer
Dated: August 15, 1996
AMENDED AND RESTATED CREDIT, SECURITY AND GUARANTY AGREEMENT
Dated as of November 1, 1995
As amended and restated as of June 27, 1996
Among
ORION PICTURES CORPORATION
as Borrower
and
THE CORPORATE GUARANTORS REFERRED TO HEREIN
and
THE LENDERS REFERRED TO HEREIN
and
CHEMICAL BANK
as Agent
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TABLE OF CONTENTS
INTRODUCTORY STATEMENT........................................ 1
1. DEFINITIONS............................................... 3
2. THE LOANS................................................. 34
SECTION 2.1. Revolving Credit Loans................ 34
SECTION 2.2. Term Loans............................ 34
SECTION 2.3. Making of Loans....................... 35
SECTION 2.4. Letters of Credit..................... 36
SECTION 2.5. Notes; Repayment...................... 41
SECTION 2.6. Interest on Loans..................... 42
SECTION 2.7. Commitment Fees and Other Fees........ 43
SECTION 2.8. Optional and Mandatory Termination or
Reduction of Commitments....................... 43
SECTION 2.9. Default Interest; Alternate Rate of
Interest....................................... 44
SECTION 2.10. Interest Adjustments................. 45
SECTION 2.11. Continuation and Conversion of Loans. 46
SECTION 2.12. Prepayment of Loans; Reimbursement of
Lenders........................................ 47
SECTION 2.13. Change in Circumstances.............. 50
SECTION 2.14. Change in Legality................... 53
SECTION 2.15. Manner of Payments................... 54
SECTION 2.16. United States Withholdings........... 54
SECTION 2.17. Provisions Relating to the Borrowing
Base........................................... 56
SECTION 2.18. Supplemental Payments................ 57
3. REPRESENTATIONS AND WARRANTIES............................ 57
SECTION 3.1. Corporate Existence and Power......... 57
SECTION 3.2. Corporate Authority and No Violation.. 58
SECTION 3.3. Governmental Approval................. 58
SECTION 3.4. Financial Condition................... 59
SECTION 3.5. No Material Adverse Change............ 59
SECTION 3.6. Title to Properties................... 60
SECTION 3.7. UCC Filing Information................ 60
SECTION 3.8. Litigation............................ 61
SECTION 3.9. Federal Reserve Regulations........... 61
SECTION 3.10. Investment Company Act................ 61
SECTION 3.11. Enforceability........................ 61
SECTION 3.12. Taxes................................. 62
SECTION 3.13. Compliance with ERISA................. 62
SECTION 3.14. Agreements............................ 64
SECTION 3.15. True and Complete Disclosure.......... 64
SECTION 3.16. Security Interests; Other Security.... 65
SECTION 3.17. Ownership of Pledged Securities, Inactive
Subsidiaries, etc.............................. 65
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SECTION 3.18. Ownership of Product; Copyrights and
Other Rights................................... 65
SECTION 3.19. Distribution Rights................... 66
SECTION 3.20. Fictitious Names...................... 66
SECTION 3.21. Compliance with Laws.................. 66
SECTION 3.22. Environmental Liabilities............. 67
4. CONDITIONS ............................................... 67
SECTION 4.1. Conditions Precedent to Effectiveness of
this Amendment and Restatement................. 68
SECTION 4.2. Condition Precedent to Each Loan and Each
Letter of Credit............................... 72
5. AFFIRMATIVE COVENANTS..................................... 72
SECTION 5.1. Financial Statements, Reports, etc.... 73
SECTION 5.2. Corporate Existence; Compliance with
Statutes....................................... 77
SECTION 5.3. Insurance............................. 77
SECTION 5.4. Completion Guaranties................. 79
SECTION 5.5. Taxes and Charges; Obligations in
Ordinary Course of Business.................... 79
SECTION 5.6. Chief Executive Office; Corporate Name 79
SECTION 5.7. ERISA Compliance and Reports.......... 80
SECTION 5.8. Use of Proceeds....................... 81
SECTION 5.9. Access to Books and Records;
Examinations................................... 82
SECTION 5.10. Third Party Audit Rights.............. 82
SECTION 5.11. Maintenance of Properties............. 83
SECTION 5.12. Material Adverse Effect............... 83
SECTION 5.13. Further Assurances; Security Interests 83
SECTION 5.14. Performance of Obligations............ 84
SECTION 5.15. Copyright............................. 84
SECTION 5.16. Film Properties and Rights; Credit
Parties to Act as Pledgeholder................. 85
SECTION 5.17. Laboratories; No Removal.............. 86
SECTION 5.18. Lab Access Letter..................... 86
SECTION 5.19. Cash Receipts......................... 86
SECTION 5.20. Subsidiaries.......................... 87
SECTION 5.21. Security Agreements with the Guilds... 87
SECTION 5.22. Bank Accounts......................... 87
SECTION 5.23. Liens................................. 87
SECTION 5.24. Production............................ 87
SECTION 5.25. Music................................. 88
SECTION 5.26. Distribution Agreements; Negative
Pickups; etc................................... 88
SECTION 5.27. Separate Corporate Structures......... 89
SECTION 5.28. Environmental Laws.................... 90
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6. NEGATIVE COVENANTS........................................ 91
SECTION 6.1. Limitation on Indebtedness............ 91
SECTION 6.2. Limitation on Guaranties.............. 92
SECTION 6.3. No Change in Business................. 92
SECTION 6.4. Consolidation, Merger, Sale or Purchase
of Assets, etc................................. 93
SECTION 6.5. Limitation on Loans and Investments... 93
SECTION 6.6. Limitation On Liens................... 93
SECTION 6.7. Restricted Payments................... 95
SECTION 6.8. Limitation on Leases...................95
SECTION 6.9. Receivables........................... 95
SECTION 6.10. Sale and Leaseback.................... 95
SECTION 6.11. ERISA Compliance...................... 95
SECTION 6.12. Transactions with Affiliates.......... 96
SECTION 6.13. Hazardous Materials................... 96
SECTION 6.14. Use of Proceeds of Loans and Requests for
Letters of Credit.............................. 97
SECTION 6.15. Budgeted Negative Cost; etc........... 97
SECTION 6.16. Unrecouped Print and Advertising
Expenses ...................................... 97
SECTION 6.17. Development Costs..................... 97
SECTION 6.18. Joint Venture; Co-Production.......... 98
SECTION 6.19. Cumulative Free Cash Flow Ratio....... 98
SECTION 6.20. Limitations on Capital Expenditures... 98
SECTION 6.21. Cumulative Film Investment............ 99
SECTION 6.22. Overhead Expenses..................... 99
SECTION 6.23. Theater Group EBITDA Ratio............ 99
SECTION 6.24. Fiscal Year........................... 99
SECTION 6.25. Special Purpose Distributors.......... 99
SECTION 6.26. Interest Rate Protection
Agreements, etc.................................99
7. EVENTS OF DEFAULT.........................................100
SECTION 7.1. Term Loan Events of Default...........100
SECTION 7.2. Revolving Loan Events of Default......103
8. SECURITY..................................................105
SECTION 8.1. Security Interest.....................105
SECTION 8.2. Use of Collateral.....................105
SECTION 8.3. Collection Accounts...................105
SECTION 8.4. Credit Parties to Hold in Trust.......106
SECTION 8.5. Collections...........................106
SECTION 8.6. Possession, Sale of Collateral........107
SECTION 8.7. Application of Proceeds...............108
SECTION 8.8. Power of Attorney.....................109
SECTION 8.9. Financing Statements and Payment
Directions.....................................110
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SECTION 8.10. Further Assurances....................110
SECTION 8.11. Remedies Not Exclusive................110
SECTION 8.12. Termination...........................111
SECTION 8.13. Quiet Enjoyment.......................111
SECTION 8.14. Release of Collateral.................111
9. GUARANTY..................................................112
SECTION 9.1. Guaranty..............................112
SECTION 9.2. No Impairment of Guaranty.............113
SECTION 9.3. Continuation and Reinstatement, etc...113
SECTION 9.4. Limitation on Guaranteed Amount.......115
SECTION 9.5. Termination...........................115
SECTION 9.6. Release of Corporate Guarantor........115
10. CASH COLLATERAL..........................................115
SECTION 10.1. Cash Collateral Account...............115
SECTION 10.2. Investment of Funds...................115
SECTION 10.3. Grant of Security Interest............116
SECTION 10.4. Remedies..............................117
11. THE AGENT AND THE ISSUING BANK...........................117
SECTION 11.1. Administration by Agent..............117
SECTION 11.2. Advances and Payments................118
SECTION 11.3. Sharing of Setoffs...................119
SECTION 11.4. Agreement of Required Lenders........120
SECTION 11.5. Notice to Lenders....................120
SECTION 11.6. Liability of Agent and Issuing Bank..120
SECTION 11.7. Reimbursement and Indemnification....122
SECTION 11.8. Rights of Agent......................122
SECTION 11.9. Independent Investigation by Lenders.123
SECTION 11.10. Notice of Transfer...................123
SECTION 11.11. Successor Agent......................123
SECTION 11.12. Dissemination of Information.........124
12. MISCELLANEOUS............................................124
SECTION 12.1. Notices..............................124
SECTION 12.2. Survival of Agreement, Representations
and Warranties, etc............................124
SECTION 12.3. Successors and Assigns; Syndications;
Loan Sales; Participations.....................125
SECTION 12.4. Expenses; Documentary Taxes..........128
SECTION 12.5. Indemnity............................129
SECTION 12.6. CHOICE OF LAW........................131
SECTION 12.7. No Waiver............................131
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SECTION 12.8. Extension of Maturity................131
SECTION 12.9. Amendments; Waivers..................132
SECTION 12.10. Severability.........................132
SECTION 12.11. WAIVER OF JURY TRIAL.................133
SECTION 12.12. SERVICE OF PROCESS...................133
SECTION 12.13. Headings.............................134
SECTION 12.14. Execution in Counterparts............134
SECTION 12.15. Termination of Agreement.............134
SECTION 12.16. Confidentiality......................134
SECTION 12.17. Subordination of Intercompany
Advances.............................135
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SCHEDULES
1 Schedule of Commitments
2 Approved Account Debtors/Allowable Amounts
3 Home Video Model
3.2 Stock Transfer Restrictions
3.7 Chief Executive Offices; Location of Collateral
3.8 Litigation
3.13 ERISA
3.14 Material Agreements and Contracts
3.17(a) Partnerships Interests; Etc.
3.17(b) Subsidiaries
3.17(c) Inactive Subsidiaries
3.18(a) Product
3.18(b) Copyrights
3.20 Fictitious Names
6.1 Indebtedness
6.6 Liens
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Term Note
Exhibit B-1 - Form of Copyright Security Agreement
Exhibit B-2 - Form of Copyright Security Agreement Supplement
Exhibit C-1 - Form of Pledgeholder Agreement (Uncompleted Product)
Exhibit C-2 - Form of Pledgeholder Agreement (Completed Product)
Exhibit D-1 - Form of Borrower Pledge Agreement
Exhibit D-2 - Form of Parent Pledge Agreement
Exhibit D-3 - Form of Subsidiary Pledge Agreement
Exhibit D-4 - Form of Pledge Agreement Supplement
Exhibit E-1 - Form of Guarantors Subordination Agreement
Exhibit E-2 - Form of Affiliate Subordination Agreement
Exhibit F - Form of Laboratory Access Letter
Exhibit G - Form of Assignment and Acceptance
Exhibit H-1 - Opinion of Counsel to the Credit Parties
Exhibit H-2 - Opinion of Counsel to the Credit Parties
Exhibit H-3 - Opinion of Counsel to the Credit Parties
Exhibit I - Form of Compliance Certificate
Exhibit J - Form of Borrowing Base Certificate
Exhibit K - Form of Borrowing Certificate
Exhibit L - Form of Priority and Contribution Agreement
Exhibit M - Form of Guaranty Agreement
Exhibit N - Form of Instrument of Assumption and Joinder
Exhibit O - Form of Notice of Assignment and Irrevocable
Instructions
<PAGE>
AMENDED AND RESTATED CREDIT, SECURITY AND GUARANTY
AGREEMENT, dated as of November 1, 1995 as amended and
restated as of June 27, 1996 among (i) ORION PICTURES
CORPORATION, a Delaware corporation (the "Borrower"), (ii)
the Corporate Guarantors referred to herein, (iii) the
Lenders referred to herein and (iv) CHEMICAL BANK, a New
York banking corporation, as agent for the Lenders (in such
capacity, the "Agent") and as Issuing Bank.
INTRODUCTORY STATEMENT
All defined terms not otherwise defined above or in this
Introductory Statement are as defined in Article 1 hereof, or as defined
elsewhere herein.
On November 1, 1995 the Borrower, certain of the Corporate
Guarantors, the Agent and certain lenders entered into a Credit, Security
and Guaranty Agreement providing for a $185,000,000 five-year secured
credit facility (the "Existing Credit Agreement").
The Borrower's sole stockholder, Metromedia International Group,
Inc. (the "Parent"), is a party to agreements providing for: (i) the
merger (the "Goldwyn Merger") of SGC Merger Corp., a Delaware corporation
and a wholly-owned, newly formed subsidiary of the Parent, with and into
The Samuel Goldwyn Company, a Delaware corporation ("Goldwyn"), with
Goldwyn being the survivor of the Goldwyn Merger; and (ii) the merger (the
"MPCA Merger" and together with the Goldwyn Merger, the "Mergers"), of MPCA
Merger Corp., a Delaware corporation and a wholly-owned, newly formed
subsidiary of the Parent, with and into Motion Picture Corporation of
America, a Delaware corporation ("MPCA"), with MPCA being the survivor of
the MPCA Merger. It is a condition to the closing of the transactions
contemplated by this Agreement that the Mergers shall have been consummated
and all of the stock of Goldwyn and MPCA outstanding following the
consummation of the Mergers shall have been transferred to the Borrower.
The Borrower has requested that the Lenders amend and restate the
Existing Credit Agreement in order to, among other things, make available a
$300,000,000 five-year secured credit facility consisting of a term loan of
$200,000,000 and a revolving credit facility of $100,000,000. The proceeds
of the term loan will be used to refinance certain existing debt of the
Borrower, Goldwyn and MPCA. The proceeds of the revolving credit facility
will be used (i) to refinance up to $24,000,000
<PAGE>
of indebtedness under the Existing Credit Agreement and indebtedness of Goldwyn
and MPCA, (ii) to finance the Borrower's and its Subsidiaries' development,
production, acquisition, exploitation and worldwide distribution of motion
pictures, video product, interactive product and made-for-television product
(other than the production of newly created deficit-financed episodic made-for-
television programming), in each case, including ancillary rights relating
thereto, (iii) to finance its domestic theatrical exhibition business and
(iv) for general working capital purposes.
To provide assurance and security for the repayment of the Loans
and other Obligations of the Borrower hereunder, the Parent, the Borrower
and the Corporate Guarantors will provide or will cause to be provided to
the Agent for the benefit of 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 of the Borrower pursuant
to Article 9 hereof;
(iii) a pledge of the capital stock of the Corporate
Guarantors pursuant to the Borrower Pledge Agreement or the
Subsidiary Pledge Agreement, as the case may be; and
(iv) a pledge of the capital stock of the Borrower pursuant
to the Parent Pledge Agreement.
A major shareholder of the Parent is Metromedia Company, a
Delaware general partnership ("Metromedia"), whose general partners are
John W. Kluge ("Kluge" and together with Metromedia, the "Guarantors") and
Stuart Subotnick . To provide further assurance and in order to induce the
Agent and the Lenders to enter into this Agreement, the Guarantors will
provide to the Agent for the benefit of the Lenders, pursuant to the
Guaranty Agreement, an unconditional guaranty of payment of the Obligations
under the revolving credit facility, subject to the limitations set forth
therein.
Subject to the terms and conditions set forth herein, the 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 an
aggregate amount not in excess of its Commitment hereunder.
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Accordingly, the parties hereby agree that, effective on the
Closing Date, the Existing Credit Agreement is amended in its entirety to
read 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 content otherwise requires, any of the following
terms may be used in the singular or the plural, depending on the
references:
"ACCEPTABLE L/C" shall mean an irrevocable letter of credit in
form and on terms acceptable to the Agent, payable in Dollars in New York
City (or another city acceptable to the Agent) and issued or confirmed by
(i) any of the Lenders or (ii) 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 (iii) any other bank which the Agent may
in its discretion determine to be of acceptable credit quality.
"ACTIVE PREPRODUCTION" shall be defined with respect to any item
of Product as commencing upon the earlier of (i) eight weeks prior to the
scheduled date on which principal photography with respect to such item of
Product is to commence or (ii) the date that such item of Product has been
"greenlighted" as such term is understood in the motion picture industry.
"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.
"AGENT" shall mean Chemical Bank, in its capacity as agent for
the Lenders hereunder, or such successor Agent as may be appointed pursuant
to Section 11.11.
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"AGGREGATE CREDIT EXPOSURE" shall mean the aggregate Credit
Exposure of all of the Lenders.
"AGREEMENT" shall mean this Amended and Restated Credit, Security
and Guaranty Agreement, as amended, supplemented, or restated from time to
time in accordance with the provisions hereof.
"ALLOWABLE AMOUNT" shall mean, with respect to any Person or
Affiliated Group, such amount as may be specified as the maximum aggregate
exposure for an Approved Account Debtor on Schedule 2, PROVIDED, HOWEVER,
that (i) the Agent may from time to time by written notice to the Borrower
(which notice shall be prospective only, i.e., to the extent that reducing
such Allowable Amount for any Approved Account Debtor would otherwise
result in a mandatory prepayment by the Borrower under Section 2.12, such
reduction shall not be given effect for purposes of such Section, but such
reduction shall nevertheless be effective for all other purposes under this
Agreement immediately upon the Borrower's receipt of such notice), decrease
such amount as the Agent, acting in good faith, may in its reasonable
discretion deem appropriate or (ii) the Required Lenders may, by written
notice to the Borrower, increase such amount as they may in their
discretion deem appropriate.
"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 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 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
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
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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 of
Governors of the Federal Reserve System of the United States and any other
banking authority to which the 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 Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the 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 without limitation the
inability or failure of the Agent to obtain sufficient quotations in
accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate
or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Prime Rate, the Three-Month Secondary CD Rate or
the Federal Funds Effective Rate, respectively.
"ALTERNATE BASE RATE LOAN" shall mean a Loan based on the
Alternate Base Rate in accordance with the provisions of Article 2.
"APPLICABLE LAW" shall mean all provisions of statutes, rules,
regulations and orders of a Governmental Authority applicable to a Person
and decisional authorities, and all effective orders and decrees of all
courts and arbitrators of Governmental Authorities in proceedings or
actions in which the Person in question is a party.
"APPLICABLE MARGIN" shall mean (i) as to the Term Loans (x) in
the case of Alternate Base Rate Loans, 1-1/2% per annum and (y) in the case
of Eurodollar Loans, 2-1/2% per annum and (ii) as to Revolving Credit Loans
(x) in the case of Alternate Base Rate Loans, 0% per annum and (y) in the
case of Eurodollar Loans, 1% per annum.
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"APPROVED ACCOUNT DEBTOR" shall mean any Person or Affiliated
Group identified as such on Schedule 2 hereto; PROVIDED, HOWEVER, that (i)
the Agent may from time to time by written notice to the Borrower (which
notice shall be prospective only, i.e., to the extent that removing such
Person or Affiliated Group from the Approved Account Debtor list would
otherwise result in a mandatory prepayment by the Borrower under Section
2.12, such removal shall not be given effect for purposes of such Section,
but such removal shall nevertheless be effective for all other purposes
under this Agreement immediately upon the Borrower's receipt of such
notice) delete such Persons or Affiliated Groups as the Agent, acting in
good faith may in its reasonable discretion deem appropriate and (ii) the
Required Lenders may add, by written notice to the Borrower, a Person or an
Affiliated Group to the list of Approved Account Debtors as they may in
their discretion deem appropriate.
"APPROVED COMPLETION GUARANTOR" shall mean a financially sound
and reputable completion guarantor approved by the Required Lenders in
their reasonable discretion. Fireman's Fund Insurance Company acting
through its agent International Film Guarantors, L.P. (the general partner
of which is International Film Guarantors Inc.), Motion Picture Guarantors
Ltd. (to the extent the Completion Guaranty is accompanied by a Wellington
Insurance Company "cut-through"), Film Finances, Inc. (to the extent the
Completion Guaranty is accompanied by a Lloyds of London "cut-through") and
Cinema Completions International, Inc./Continental Casualty Company are
hereby pre-approved as completion guarantors; PROVIDED, HOWEVER, that such
pre-approval may be revoked by the Agent if deemed appropriate in its sole
discretion or if so instructed by the Required Lenders, at any time upon 30
days prior written notice to the Borrower; but FURTHER, PROVIDED, that such
pre-approval may not be revoked with regard to any item of Product if a
Completion Guaranty has already been issued for such item of Product.
"ASSESSMENT RATE" shall mean, for any day, the annual assessment
rate (rounded upwards, if necessary, to the next higher 1/100 of 1%) most
recently estimated by the Agent as the then current net annual assessment
rate that will be employed in determining amounts payable by the 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 Agent's domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an agreement in the form
of Exhibit G hereto, executed by the assignor, assignee and other parties
as contemplated thereby.
"AUTHORIZED OFFICER" shall mean, with respect to any Person, its
chairman, president, chief financial officer, treasurer or secretary.
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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. <section> 101
ET SEQ.
"BOARD" shall mean the Board of Governors of the Federal Reserve
System.
"BORROWER PLEDGE AGREEMENT" shall mean the Pledge Agreement,
dated the date hereof, delivered by the Borrower to the Agent for the
benefit of the Lenders, substantially in the form of Exhibit D-1 as the
same may be amended, modified or otherwise supplemented.
"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
date.
"BORROWING BASE" shall mean an amount equal to the sum, without
double-counting, of:
(a) 100% of the Other Receivables which are guaranteed by
Metromedia; provided that the amount included in the
Borrowing Base at any time shall not exceed $20,000,000 in
the aggregate for all such receivables; PLUS
(b) 100% of the Other Receivables which are supported by an
Acceptable L/C; PLUS
(c) 90% of the Domestic Receivables; PLUS
(d) 85% of the Foreign Receivables; PLUS
(e) 50% of Other Receivables from obligors which are not
Approved Account Debtors and are not included in clause (a)
or (b) above; provided that the amount included in the
Borrowing Base at any time pursuant to this clause shall not
exceed $5,000,000 in the aggregate for all such receivables
or $250,000 for any obligor; PLUS
(f) the Theater Credit; PLUS
(g) 50% of the Library Credit; PLUS
(h) 50% of the Domestic Home Video Credit; PLUS
(i) 50% of the Domestic Free TV Credit; PLUS
(j) 90% of the Domestic Pay TV Credit;
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provided, however, that the portion of the Borrowing Base attributable to
the Library Credit, the Domestic Home Video Credit, the Domestic Free TV
Credit and the Domestic Pay TV Credit shall not in the aggregate account
for more than 50% of the Borrowing Base at any time prior to December 31,
1999, 40% of the Borrowing Base at any time on or after December 31, 1999
but prior to December 31, 2000, or 35% at any time on or after December 31,
2000.
"BORROWING BASE CALCULATION DATE" shall mean the monthly closing
date of the Borrower for accounting purposes, but such date shall be no
later than the last Business Day of each month.
"BORROWING BASE CERTIFICATE" shall be as defined in Section
5.1(e).
"BORROWING BASE DELIVERY DATE" shall mean the 20th day of each
calendar month after the date hereof based upon the prior month's Borrowing
Base Calculation Date PROVIDED that if any such day shall not be a Business
Day, the Borrowing Base Delivery Date shall be the next succeeding Business
Day and provided further that the Borrower may, at its option and shall, if
reasonably requested by the Agent, deliver Borrowing Base Certificates more
frequently.
"BORROWING CERTIFICATE" shall mean the borrowing certificate,
substantially in the form of Exhibit K hereto, to be delivered by the
Borrower to the 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 Dollars) for such item of
Product including all costs customarily included in connection with the
acquisition of all underlying literary and musical rights with respect to
such item of Product and in connection with the preparation, production and
completion of such item of Product including costs of materials, equipment,
physical properties, personnel and services utilized in connection with
such item of Product, both "above-the-line" and "below-the-line", any
Completion Guaranty fee, and all other items customarily included in
negative costs, but excluding a contingency of up to 10%, production fees
and overhead charges payable to a Credit Party, finance charges and
interest expense.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or other day on which banks are permitted to close in the State of New
York, the State of California or in Amsterdam, The Netherlands; PROVIDED,
HOWEVER, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall
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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 sum of the aggregate of all expenditures (whether paid in
cash or accrued as a liability) by such Person during that period which, in
accordance with GAAP, are or should be included in "additions to property,
plant or equipment or similar items included in cash flows" (including
Capital Leases); PROVIDED, HOWEVER, that Capital Expenditures shall not
include expenditures of proceeds of insurance settlements in respect of
lost, destroyed or damaged assets, equipment or other property to the
extent such expenditures are made to replace or repair such lost, destroyed
or damaged assets, equipment or other property within twelve months of such
destruction or damage.
"CAPITAL LEASE" shall mean, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a capital
lease on the balance sheet of that Person.
"CASH COLLATERAL ACCOUNT" shall be as defined in Section 10.1.
"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, certificates of deposit or acceptances of
a Lender, or any commercial bank having a short-term deposit rating of at
least A-1 or the equivalent thereof by Standard & Poor's Corporation or at
least P-1 or the equivalent thereof by Moody's Investors Service, Inc. with
maturities of not more than twelve months from the date of acquisition, or
(iii) commercial paper rated at least A-2 or the equivalent thereof by
Standard & Poor's Corporation or at least P-2 or the equivalent thereof by
Moody's Investors Service, Inc. and in each case maturing within twelve
months after the date of acquisition.
"CHEMICAL CLEARING ACCOUNT" shall mean the account of the Agent
(for the benefit of the Lenders) maintained at the office of the Agent at
270 Park Avenue, New York, New York 10017-2070, designated as the "Orion
Pictures Corporation Agent Bank Clearing Account", Account No. 144-816770.
"CLOSING DATE" shall mean July 2, 1996 or such other date by
which (i) the Agent shall have received counterparts of this Agreement
executed by the Borrower, each of the Corporate
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Guarantors as of such date, the Agent and each of the Lenders as of such date,
and (ii) the conditions precedent set forth in Section 4.1 hereof have been
satisfied.
"CODE" shall mean the Internal Revenue Code of 1986 and the
rules, regulations and notices issued thereunder, as heretofore and
hereafter amended, as codified at 26 U.S.C. <section> 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
or hereafter acquired by such Credit Party, including but not limited to
all goods, accounts, intercompany obligations, contract rights, general
intangibles, equipment, copyrights and any proceeds thereon or income
therefrom, further including but not limited to all of such Credit Party's
right, title and interest in and to each and every item of Product, the
scenario, screenplay or script upon which an item of Product is based, all
of the properties thereof, tangible and intangible, and all domestic and
foreign copyrights and all other rights therein and thereto, of every kind
and character, whether now in existence or hereafter to be made or
produced, and whether or not in possession of such Credit Party, including
with respect to each and every item of Product and without limiting the
foregoing language, each and all of the following particular rights and
properties (to the extent they are owned or hereafter created or acquired
by such Credit Party):
(i) all scenarios, screenplays and/or scripts at every
stage thereof;
(ii) all common law and/or statutory copyright and other
rights in all literary and other properties (hereinafter called
"said literary properties") which form the basis of each item of
Product and/or which are and/or will be incorporated into each
item of Product, all component parts of each item of Product
consisting of said literary properties, all motion picture rights
in and to the story, all treatments of said story and other
literary properties, together with all preliminary and final
screenplays used and to be used in connection with each item of
Product, and all other literary material upon which each item of
Product is based or from which it is adapted;
(iii) all motion picture rights in and to all music and
musical compositions used and to be used in each item of Product,
including, 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;
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(iv) all tangible personal property relating to each item of
Product, including, without limitation, all exposed film,
developed film, positives, negatives, prints, positive prints,
answer prints, special effects, preparing materials (including
interpositives, duplicate negatives, internegatives, color
reversals, intermediates, lavenders, fine grain master prints and
matrices, and all other forms of pre-print elements), sound
tracks, cutouts, trims and any and all other physical properties
of every kind and nature relating to such item of Product,
whether in completed form or in some state of completion, and all
masters, duplicates, drafts, versions, variations and copies of
each thereof, in all formats whether on film, videotape, disk or
otherwise and all music sheets and promotional materials relating
to such item of Product (collectively, the "PHYSICAL MATERIALS");
(v) all collateral, allied, subsidiary and merchandising
rights appurtenant or related to each item of Product including,
without limitation, the following rights: all rights to produce
remakes or sequels to each item of Product based upon each item
of Product, said literary properties or the theme of each 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 item of Product or any remake or sequel to such 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 other recording device or medium now known or
hereafter devised, based upon each item of Product, said literary
properties or any part thereof, including, without limitation,
all properties based upon any script, scenario or the like used
in each 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 tieups of any kind
arising out of or connected with said literary properties, each
item of Product, the title or titles of each item of Product, the
characters of each 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 item of
Product, any remake or sequel thereof and/or said literary
properties;
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(vi) all statutory copyrights, domestic and foreign,
obtained or to be obtained on the initial item of Product,
together with any and all copyrights obtained or to be obtained
in connection with each item of Product or any underlying or
component elements of such item of Product, including, in each
case, without limitation, all copyrights on the property
described in subparagraphs (i) through (v) inclusive, of this
paragraph, together with the right to copyright (and all rights
to renew or extend such copyrights) and the right to sue for
past, present and future infringements of copyrights;
(vii) all insurance policies connected with each 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 item
of Product, the Physical Materials and motion picture rights in
and to said story, other literary material upon which each item
of Product is based or from which it is adapted, and said music
and musical compositions used or to be used in each item of
Product;
(ix) any and all sums, proceeds, money, products, profits
or increases, including money profits or increases (as those
terms are used in the UCC or otherwise) or other property
obtained or to be obtained from the distribution, exhibition,
sale or other uses or dispositions of each item of Product or any
part of each 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 item of
Product and/or any of the elements of each item of Product
including from collateral, allied, subsidiary and merchandising
rights;
(x) the dramatic, nondramatic, stage, television, radio and
publishing rights, title and interest in and to each item of
Product, and the right to obtain copyrights and renewals of
copyrights therein;
(xi) the name or title of each item of Product and all
rights of such Credit Party to the use thereof, including,
without limitation, rights protected pursuant to trademark,
service mark, unfair competition and/or the rules and principles
of law and of any other applicable statutory, common law, or
other rule or principle of law;
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(xii) any and all contract rights and/or chattel paper
which may arise in connection with each 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 item of Product, and from exploitation of
any and all of the collateral, allied, subsidiary, merchandising
and other rights in connection with each 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 item of Product, any and all general
intangible rights in favor of such Credit Party relating to
licenses of sound or other equipment, and licenses for
photographic or other processes, and any and all general
intangibles related to the distribution or exploitation of each
item of Product including general intangibles related to or which
grow out of the exhibition of each item of Product and the
exploitation of any and all other rights in each item of Product
set out in this definition;
(xv) any and all goods including inventory (as that term is
defined in the UCC) which may arise in connection with the
creation, production or delivery of each item of Product and
which goods pursuant to any production or distribution agreement
or otherwise are owned by such Credit Party;
(xvi) all and each of the rights, regardless of
denomination, which arise in connection with the creation,
production, completion of production, delivery, distribution, or
other exploitation of each 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 in the
opinion of the Agent, in order to complete production
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of each item of Product in the event that the Agent exercises any
rights it may have to take over and complete production of each item
of Product;
(xvii) any and all documents issued by any pledgeholder or
bailee with respect to each item of Product or any Physical
Materials (whether or not in completed form) with respect
thereto;
(xviii) any and all production accounts or other bank
accounts established by such Credit Party with respect to such
item of Product;
(xix) any and all rights of such Credit Party under
contracts relating to the production or acquisition of each item
of Product;
(xx) any and all rights of such Credit Party under
Distribution Agreements relating to each item of Product; and
(xxi) the Pledged Securities.
"COLLECTION ACCOUNT" shall mean each account of the Borrower
maintained either at the office of the Agent at 270 Park Avenue, New York,
New York 10017-2070 or at the office of a Collection Bank, other than the
Concentration Account.
"COLLECTION BANK" shall mean a bank acceptable to the Agent.
"COLLECTION ACCOUNT LETTER" shall mean a collection account
letter in form and substance satisfactory to the Agent, which letter shall
be executed with respect to a Collection Account by a Credit Party or a
Special Purpose Distributor in order to effectuate the provisions of
Section 8.3 hereof.
"COMMITMENT" shall mean the Term Loan Commitment and the
Revolving Credit Commitment of each Lender 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 hereto, or (ii) in any applicable Assignment and
Acceptance(s) to which it may be a party, as the case may be, as such
amount may be reduced from time to time in accordance with the terms of
this Agreement.
"COMMITMENT FEE" shall be as defined in Section 2.7.
"COMPLETED" and "COMPLETION" shall mean, with respect to any item
of Product, that (i) sufficient elements have been delivered to, and
accepted by, a Person (other than the Borrower
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or an Affiliate thereof) to permit such Person to exhibit or distribute the
item of Product in the initial market for which the item of Product is intended
to be exhibited or distributed or (ii) (x) if the item of Product is initially
intended to be exhibited or distributed in the theatrical market, the Borrower
has certified to the Agent that an independent Laboratory has in its possession
a complete final 35-mm composite positive print 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 theatrical exhibition and distribution or (y)
if the item of Product is initially intended to be exhibited or distributed
to the television or home video market, the Borrower has certified to the
Agent that an independent Laboratory has in its possession a video master
of the item of Product that is fit and ready for television and/or home
video exhibition and distribution, provided that, in either case, if such
certification shall not be verified to the Agent by such independent
laboratory within 20 Business Days thereafter, such item of Product shall
revert to being un-completed until the Agent receives such verification or
(iii) the item of Product has been actually exhibited or distributed in the
market for which it was intended to be initially exhibited or distributed.
"COMPLETION GUARANTY" shall mean a motion picture completion
guaranty, in form and substance satisfactory to the Agent, issued by an
Approved Completion Guarantor which guarantees that the item of Product
will be Completed in a timely manner, or else payment made to the Agent on
behalf of the Lenders of an amount at least equal to the aggregate amount
expended on the production of such item of Product by or on behalf of any
Credit Party plus interest on, and other bank charges with respect to, such
amount.
"CONCENTRATION ACCOUNT" shall mean the account of the Borrower
maintained at the office of the Agent at 270 Park Avenue, New York, New
York 10017-2070 designated as Orion Pictures Corporation Concentration
Account, Account No. 323-212050.
"CONSOLIDATED SUBSIDIARIES" shall mean all Subsidiaries of the
Borrower that are required to be consolidated with the Borrower for
financial reporting purposes in accordance with GAAP.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower and its
Subsidiaries, are treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code.
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"COPYRIGHT SECURITY AGREEMENT" shall mean a Copyright Security
Agreement, substantially in the form of Exhibit B-1, 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 Copyright
Security Agreement Supplement, substantially in the form of Exhibit B-2.
"CORPORATE GUARANTORS" shall mean all corporate Subsidiaries of
the Borrower (other than the Excluded Subsidiaries) now existing or
hereafter acquired or formed.
"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 by which the sum of such Lender's Revolving Credit Commitment
exceeds the sum of its Revolving Credit Loans plus its Pro Rata Share of
the then current L/C Exposure.
"CREDIT PARTY" shall mean the Borrower or any of the Corporate
Guarantors.
"CUMULATIVE FILM INVESTMENT" shall mean, at any date for which it
is to be determined, the aggregate amount of the Borrower's and its
Consolidated Subsidiaries' investment in Product (including capitalized
distribution expenditures) from July 2, 1996 through such date treated as a
single accounting period as determined in accordance with GAAP.
"CUMULATIVE FREE CASH FLOW" shall mean, at any date for which it
is to be determined, the aggregate amount of the Borrower's and its
Consolidated Subsidiaries' Operating Cash Flow plus any net investment
(whether as equity or Subordinated Indebtedness, but excluding Parent Line
of Credit Loans) by the Parent in the Borrower, minus the sum of (i) all
Capital Expenditures and Investments (other than Investments in Product)
and (ii) actual debt repayments (other than repayments of Revolving Credit
Loans and Parent Line of Credit Loans), from July 2, 1996 through such date
treated as a single accounting period as determined in accordance with
GAAP.
"CURRENCY AGREEMENT" shall mean any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap
or other similar agreement designed to protect the Credit Party against
fluctuations in currency values.
"DEFAULT" shall mean a Term Loan Default or a Revolving Loan
Default, as the context requires.
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"DEPARTMENT OF LABOR" shall mean the United States Department of
Labor.
"DISTRIBUTION AGREEMENT" shall mean any agreement entered into by
the Borrower or a Subsidiary of the Borrower or a Special Purpose
Distributor pursuant to which the Borrower or such Subsidiary or such
Special Purpose Distributor has licensed, leased, assigned or sold
distribution, exhibition or other exploitation rights to any item of
Product in any media or territory to an un-Affiliated Person.
"DISTRIBUTOR SECURITY DOCUMENTS" shall mean individually or
together, as the context so requires, any and all assignment agreement(s),
security Agreement(s), pledge agreement(s), film lease agreement(s) or
other documentation pursuant to which a Person who is hereafter approved by
the Agent to be a Special Purpose Distributor grants a security interest
in, or grants any right(s) relating to, an item of Product to a Credit
Party, another Special Purpose Distributor or the Agent (for the benefit of
the Lenders) and/or pursuant to which any such security interest or other
right(s) is assigned to a Credit Party or the Agent for the benefit of the
Lenders, PROVIDED, that any and all such agreement(s) and document(s) are
in form and substance satisfactory to the Agent.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"DOMESTIC FREE TV CREDIT" shall mean the sum of $250,000 for each
item of Completed Product which was initially theatrically released after
March 31, 1996, reduced by the amount of any advance or other payment which
may theretofore have been paid, or committed to be paid (including, without
limitation, any Eligible Receivables), to any Credit Party with respect to
the exhibition of such item of Product on network or syndicated television.
"DOMESTIC HOME VIDEO CREDIT" shall mean, at any date at which the
amount thereof is to be determined, the aggregate for all items of Product
which are theatrically released after March 31, 1996 (other than "sell-
through" titles) for which any Credit Party has not yet made a sale or
received from the relevant home video distributor a royalty statement
reporting actual home video sales of the amounts equal to the product of
the unit sales forecast initially determined in accordance with Schedule 3
multiplied by $45 per unit, net of any advance which may theretofore have
been paid to any Credit Party with respect to such item of Product in such
media.
"DOMESTIC PAY TV CREDIT" shall mean, at any date for which it is
to be determined, an amount equal to 35% (or such lesser percentage as
would be applicable with respect to an item
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of Product pursuant to the Borrower's existing agreement with Showtime
Networks, Inc. or any replacement agreement) of the aggregate domestic
theatrical exhibition rentals received by any Credit Party for all items of
Product which are initially theatrically released after March 31, 1996,
reduced by the amount of any advance or other payment which may theretofore
have been paid, or committed to be paid (including, without limitation, any
Eligible Receivables), to any Credit Party with respect to the exhibition of
such Product on pay television.
"DOMESTIC RECEIVABLES" shall mean Eligible Receivables from
Approved Account Debtors whose principal place of business and jurisdiction
of incorporation or formation are located within the United States.
"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 an annual
basis by a rate of interest equal to the greater of (x) the Alternate Base
Rate in effect on the date of the computation or (y) 10% per annum) of (a)
all net amounts which pursuant to a binding agreement are contractually
obligated to be paid to any Credit Party (either directly or through a
Special Purpose Distributor) either unconditionally or subject only to
normal delivery requirements or other conditions solely within the Credit
Party's control, and which are reasonably expected by the Credit Party to
be payable and collected from Approved Account Debtors (including, without
limitation, amounts which a distributor has reported to the Credit Party in
writing (specifically including, but only in the case of Hallmark
Entertainment, Inc., a sales estimate based on actual home video units
shipped) (and such report has been forwarded to the Agent) will be paid to
the Credit Party following receipt by the distributor of sums contractually
obligated to be paid to the distributor from third parties) minus (except
in the case of Other Receivables which are included in the Borrowing Base
pursuant to clause (e) of the definition of the Borrowing Base) (b) the sum
of (i) the following items attributable to the amounts referred to in
clause (a) (based on the Credit Party's then best estimates): minimum
guarantees or advances payable by the Credit Party, third party profit
participations, residuals, commissions, foreign withholding, remittance and
similar taxes chargeable in respect of such accounts receivable, and (ii)
the outstanding amount of unrecouped advances to the extent subject to
repayment or adjustment from the amounts referred to in clause (a) pursuant
to approved Distribution Agreements, but Eligible Receivables shall not
include:
(i) amounts which in the aggregate due from a
single Affiliated Group are in excess of
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the Allowable Amount with respect to such Affiliated Group;
(ii) the extent to which such receivables are more
than 90 days past due in the case of a domestic Approved
Account Debtor and 120 days past due in the case of a
foreign Approved Account Debtor;
(iii) the portion of any receivable which is not
payable by its terms within five (5) years after the date at
which the Borrowing Base is being computed;
(iv) amounts which are in excess of 7-1/2% of the
receivables portion of the Borrowing Base if they are to be
paid in a currency other than United States Dollars;
(v) amounts which may not be freely withdrawn
from the country where paid;
(vi) amounts which have been included in the
Borrower's estimated bad debts;
(vii) any receivable amount from any (x) domestic
obligor which has any receivable amount from such obligor
120 or more days past due or (y) any foreign obligor which
has any receivable amount from such obligor 150 or more days
past due (excluding for purposes hereof any receivable
designated by the Borrower on the Closing Date as a
"disputed receivable", any receivable amount designated by
the Borrower after the Closing Date as such provided that
such amount does not exceed $20,000 for any obligor or any
receivable amount that is being disputed or contested in
good faith);
(viii) amounts for which there is bona fide request
for a material credit, adjustment, compromise, offset,
counterclaim or dispute; PROVIDED, HOWEVER, that only the
amount in question shall be excluded from such receivable;
(ix) amounts which are attributable to an item of
Product in which the Borrower cannot warrant sufficient
title to the underlying rights to justify such receivable;
(x) amounts which are attributable to an item of
Product that was acquired from a third
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party (other than The Samuel Goldwyn, Jr. Family Trust) and (x)
the entire acquisition price or minimum advance for such item of
Product shall not have been paid to the extent then due or
(y) the third party has a contractual right to terminate the
acquisition agreement with respect to underlying rights
giving rise to such amounts;
(xi) any receivable as to which the Agent (for the
benefit of the Lenders) does not have a first perfected
security interest in such receivable subject only to (x)
guild liens on certain Product securing only residuals
payable on each such item of Product on a non-
crosscollateralized basis and (y) a lien to be released no
later than November 1, 1996 which was granted pursuant to
Section 8.9 of the Collateral Trust Agreement dated October
20, 1992 on $20,000,000 worth of collateral which secures
certain post-confirmation talent claims;
(xii) amounts which relate to Product as to which
the Agent has not received two fully executed copies of a
Laboratory Access Letter or a Pledgeholder Agreement for
Laboratories holding physical elements sufficient to fully
exploit the rights held by the Credit Party in such Product;
(xiii) any receivable (x) attributable to an item of
Product which is subject to reduction because the obligor
thereunder has not recouped a minimum advance that such
obligor paid with respect to another item of Product or (y)
that is otherwise subject to contractual rights of offset or
reduction by the obligor;
(xiv) amounts which are attributable to Product
which has not been Completed;
(xv) receivables which in the sole and reasonable
discretion of the Agent, contain a material performance
obligation on the part of the Credit Party where such
obligation is contingent upon future events not within the
Credit Party's absolute control; or
(xvi) any other receivable which is reasonably
determined by the Agent or Required Lenders to be
unacceptable.
"ENVIRONMENTAL LAWS" shall mean any and all federal, state, local
or municipal laws, rules, orders, regulations,
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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, without limitation, the Clean Water Act also known as the Federal Water
Pollution Control Act ("FWPCA"), 33 U.S.C. <section> 1251 ET SEQ., the Clean
Air Act ("CAA"), 42 U.S.C. <section><section> 7401 ET SEQ., the Federal
Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C.
<section><section> 136 ET SEQ., the Surface Mining Control and Reclamation
Act ("SMCRA"), 30 U.S.C. <section><section> 1201 ET SEQ. the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. <section> 9601 ET SEQ., the Superfund Amendment and Reauthorization
Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Emergency
Planning and Community Right to Know Act ("ECPCRKA"), 42 U.S.C. <section>
11001 ET SEQ., the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. <section> 6901 ET SEQ., the Occupational Safety and Health Act, as
amended ("OSHA"), 29 U.S.C. <section> 655 and <section> 657, together, in
each case, with any amendment thereof, and the regulations adopted and the
publications promulgated thereunder and all substitutions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974 and the regulations promulgated thereunder, in each case, as amended
from time to time.
"EURODOLLAR LOAN" shall mean a loan based on the LIBO Rate in
accordance with the provisions of Article 2.
"EVENT OF DEFAULT" shall mean a Term Loan Event of Default or a
Revolving Loan Event of Default, as the context requires.
"EXECUTIVE OFFICER" shall mean an "executive officer", as such
term is defined for purposes of Regulation S-K under the Securities
Exchange Act of 1934, as amended.
"EXCLUDED SUBSIDIARIES" shall mean (i) Mintaka Films B.V., a
wholly-owned subsidiary of the Borrower, organized under the laws of the
Netherlands and (ii) each Inactive Subsidiary.
"FEE LETTER" shall mean that certain letter agreement dated May
30, 1996 between the Borrower and the Agent.
"FOREIGN RECEIVABLES" shall mean all Eligible Receivables which
are not Domestic Receivables.
"FUNDAMENTAL DOCUMENTS" shall mean this Agreement, the Notes, the
Pledgeholder Agreements, the Copyright Security Agreement, the Copyright
Security Agreement Supplements, the Pledge Agreements, the Pledge Agreement
Supplements, the Subordination Agreements, the Guaranty Agreement, the
Instruments
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of Assumption and Joinder, the Notices of Assignment and Irrevocable
Instruction, the Distributor Security Documents, or any other ancillary
document which is required or otherwise executed in connection
with this Agreement or any other Fundamental Document.
"GAAP" shall mean generally accepted accounting principles
consistently applied (except for accounting changes in response to FASB
releases or other authoritative pronouncements) in effect on May 21, 1996.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, municipal
or other governmental department, commission, board, bureau, agency, or
instrumentality, or other court or arbitrator, in each case whether of the
United States or a foreign jurisdiction.
"GUARANTEED COMMITMENT" shall mean, that portion of the Revolving
Credit Commitments remaining in effect after the occurrence and during the
continuance of a Term Loan Event of Default. The aggregate amount of the
Guaranteed Commitment shall be an amount equal to the amount of the
Revolving Credit Commitments in effect immediately prior to the occurence
of such Term Loan Event of Default, reduced by an amount equal to the
amount, if any, by which the Borrowing Base exceeds the outstanding Term
Loans (together with interest and fees thereon), each calculated at the
date of occurrence of such Term Loan Event of Default.
"GUARANTEED OBLIGATIONS" shall mean all the Obligations of the
Borrower.
"GUARANTOR" shall be as defined in the Introductory Statement.
"GUARANTY" shall mean, as to any Person, any direct or indirect
obligation of such Person guaranteeing any Indebtedness, Capital Lease,
dividend or other monetary obligation ("PRIMARY OBLIGATION") of any other
Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, 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 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, (iii) to purchase property, securities or services, in
each case, primarily for the purpose of assuring the owner of any such
primary obligation of the repayment of such primary obligation or (iv) as a
general partner of a partnership or a joint venturer of a joint venture in
respect of Indebtedness of such partnership or
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such joint venture which is treated as a general partnership for purposes of
Applicable Law except to the extent that such Indebtedness of such partnership
or joint venture is nonrecourse to such Person. The amount of any Guaranty
shall be deemed to be an amount equal to 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). The term
"Guaranty" shall not include the endorsement for deposit or collection in
the ordinary course of business.
"GUARANTY AGREEMENT" shall mean the Amended and Restated Guaranty
Agreement, dated as of November 1, 1995 as amended and restated as of the
date hereof, delivered by the Guarantors to the Agent for the benefit of
the Lenders, substantially in the form of Exhibit M, as the same may be
amended, modified or otherwise supplemented.
"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.
"INACTIVE SUBSIDIARY" shall mean each Subsidiary of the Borrower
listed on Schedule 3.17(c).
"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 accrued expenses and trade
payables (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 and (iv) indebtedness
of others of the type described in clauses (i), (ii) and (iii) hereof which
such Person has (a) directly or indirectly assumed or guaranteed in
connection with a Guaranty or (b) secured by a Lien (other than Liens of
carriers, warehousemens, mechanics, repairmens or other similar non-
consensual Liens arising in the ordinary course of business) on the assets
of such Person, whether or not such Person has assumed such indebtedness.
"INITIAL DATE" shall mean (i) in the case of the Agent, the date
hereof, (ii) in the case of each Lender which is an original party to this
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.
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"INSTRUMENT OF ASSUMPTION AND JOINDER" shall mean the Instrument
of Assumption and Joinder substantially in the form of Exhibit N pursuant
to which Subsidiaries of the Borrower become parties to this Agreement as
contemplated by Section 5.20.
"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 six months or more, the last day of an Interest Period and, in addition,
each day during such Interest Period that would have been an Interest
Payment Date had successive Interest Periods of three months' duration been
applicable to such Eurodollar Loan, and (iii) as to Alternate Base Rate
Loans, the last Business Day of each September, December, March and June.
"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 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 with respect to Eurodollar Loans only,
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.
"INTEREST RATE PROTECTION AGREEMENTS" shall mean any interest
rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect the Credit Parties against
fluctuations in interest rates.
"INTEREST RATE TYPE" shall be as defined in Section 2.3.
"INVESTMENT" shall include any stock, evidence of indebtedness or
other security of any Person, any loan, advance, contribution of capital
(including obligations of a partner or joint venturer to satisfy additional
capital calls), extension of credit or commitment therefor (except for
current trade and customer accounts receivable for services rendered in the
ordinary course of business and payable in accordance with customary
trading terms in the ordinary course of business), and any purchase of (i)
any security of another Person or (ii) any business or undertaking of any
Person or any commitment to make any such purchase, or any other
investment.
"ISSUING BANK" shall mean Chemical Bank, a New York banking
corporation.
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"LABORATORY" shall mean any laboratory which is located in the
United States, Canada or United Kingdom and is reasonably acceptable to the
Agent.
"LABORATORY ACCESS LETTER" shall mean a letter agreement among
(i) a laboratory holding any elements of an item of Product to which any
Credit Party has the right of access, (ii) such Credit Party and (iii) the
Agent, substantially in the form of Exhibit F or a form otherwise
acceptable to the Agent.
"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 presented by beneficiaries under all Letters of Credit then
outstanding plus (without duplication) the face amount of all drafts which
have been presented under Letters of Credit but have not yet been paid or
have been paid but not reimbursed, whether directly or from the proceeds of
a Loan.
"LENDER" and "LENDERS" shall mean the financial institutions
whose names appear on the signature pages hereof on the date hereof and any
assignee of a Lender pursuant to Section 12.3.
"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 Agent from time to time.
"LETTER OF CREDIT" shall mean a letter of credit issued pursuant
to Section 2.4.
"LIBO RATE" shall mean, with respect to the Interest Period for a
Eurodollar Loan, an interest rate per annum equal to the quotient (rounded
upwards to the next 1/16 of 1%) of (A) the rate at which Dollar deposits
approximately equal in principal amount to the Agent's portion of such
Eurodollar Loan and for a maturity equal to the applicable Interest Period
are offered to the Eurodollar Lending Office of the Agent in immediately
available funds in the London Interbank Market for Eurodollars at
approximately 11:00 A.M., London time, two Business Days prior to the
commencement of such Interest Period divided by (B) one minus the
applicable statutory reserve requirements of the Agent, expressed as a
decimal (including, without duplication or limitation, basic, supplemental,
marginal and emergency reserves), from time to time in effect under
Regulation D or similar regulations of the Board of Governors of the
Federal Reserve System of the United States. It is agreed that for
purposes of this definition, Eurodollar Loans made hereunder
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shall be deemed to constitute Eurocurrency Liabilities as defined in
Regulation D and to be subject to the reserve requirements of Regulation D.
"LIBRARY CREDIT" shall mean the aggregate of the amounts for each
existing item of Product as set forth in those certain library valuations
dated May 1996 for the Borrower and May 1996 for Goldwyn, representing the
estimated value of the unsold rights in various markets and territories for
such Product as of March 31, 1996, in each case as reduced to reflect
subsequent sales or licenses.
"LIEN" shall mean any mortgage, copyright mortgage, pledge,
security interest, encumbrance, lien or charge of any kind whatsoever
(including any conditional sale or other title retention agreement, 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).
"LOANS" shall mean the Term Loans and the Revolving Credit 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 have the meaning given to such term 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 Borrower individually or of the
Borrower and its Subsidiaries, taken as a whole, (b) materially impairs the
ability of the Credit Parties to perform their respective obligations under
the Fundamental Documents to which it is a party or (c) materially impairs
the validity or enforceability of, or materially impairs the rights,
remedies or benefits available to the Lenders under, the Fundamental
Documents; PROVIDED, HOWEVER, that any change or effect will be deemed to
have a "Material Adverse Effect" if and only if such change or effect when
taken together with all other current changes and effects (both positive
and negative) with respect to the Borrower and its Subsidiaries, taken as a
whole, as the context requires (including all other changes and effects
which would cause such representation or warranty to be untrue or such
covenant to be breached but for the fact that such representation, warranty
or covenant is subject to a "Material Adverse Effect" exception) would
result in a "Material Adverse Effect", even though, individually, such
change or effect might not do so.
"METROMEDIA HOLDERS" shall mean collectively the Metromedia
Primary Holders and any executive officer of the Parent, the Borrower or
Goldwyn (or its successor).
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"METROMEDIA PRIMARY HOLDERS" shall mean collectively Metromedia
Company, John W. Kluge, Stuart Subotnick and Met Telcell, Inc. or any of
the their Affiliates.
"MULTIEMPLOYER PLAN" means a Plan which is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"NEGATIVE PICKUP" shall mean, 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 a Credit Party in order to obtain ownership or
distribution rights in such item of Product, but which does not require any
payment unless such person has received delivery of all items necessary to
exploit the distribution rights.
"NET INCOME" shall mean, for any period, the net income (or loss)
of the Theater Group for such period as determined in accordance with GAAP.
"NOTES" shall mean the Term Notes and the Revolving Credit Notes.
"NOTICE OF ASSIGNMENT AND IRREVOCABLE INSTRUCTIONS" shall mean
the Notice of Assignment and Irrevocable Instructions substantially in the
form of Exhibit O or in such other form as shall be acceptable to the
Agent, including without limitation the inclusion of such notice and
instructions in a Distribution Agreement.
"OBLIGATIONS" shall mean (i) with respect to the Borrower, the
obligation to make due and punctual payment of principal of and interest on
the Loans, the Commitment Fees, reimbursement obligations in respect of
Letters of Credit, costs and attorneys' fees and all other monetary
obligations of the Borrower to the Agent, the Issuing Bank or any Lender
under this Agreement, the Notes or the other Fundamental Documents or the
Fee Letter and all amounts payable by the Borrower to any Lender under a
Currency Agreement or Interest Rate Protection Agreement (ii) with respect
to each Corporate Guarantor, its guaranty of the Obligations of the
Borrower pursuant to Article 9 hereof.
"OLD GOLDWYN CREDIT AGREEMENT" shall mean the Second Amended and
Restated Credit Agreement, dated April 28, 1995, as amended, between Bank
of America NT&SA, Yasuda Trust and Banking Co., Ltd., National Westminster
Bank, PLC and The Samuel Goldwyn Company.
"OLD MPCA CREDIT AGREEMENT" shall mean the Facility Agreement
dated ____________ between Coutts & Co. and Motion Picture Corporation of
America.
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"OPERATING CASH FLOW" shall mean, for any period for which it is
to be determined, the amount of cash as set forth on the most recent
statement of cash flows of the Borrower and its Consolidated Subsidiaries
as determined in accordance with GAAP.
"OTHER RECEIVABLES" shall mean those receivables that meet all of
the requirements of an "Eligible Receivable" other than that the obligor is
not an Approved Account Debtor or the amount of such receivables exceeds
the Allowable Amount with respect to an Approved Account Debtor.
"PARENT LINE OF CREDIT LOANS" shall mean subordinated loans made
by the Parent, as evidenced by a notice to the Agent, from time to time
after the Closing Date pursuant to an uncommitted revolving line of credit
in an aggregate principal amount not to exceed $15,000,000 at any one time
outstanding.
"PARENT PLEDGE AGREEMENT" shall mean the Pledge Agreement,
delivered by the Parent to the Agent for the benefit of the Lenders,
substantially in the form of Exhibit D-2 as the same may be amended,
modified or otherwise supplemented.
"PBGC" means 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 dividing the
applicable Commitment of such Lender by the applicable aggregate
Commitments of the Lenders.
"PERMITTED INDEBTEDNESS" shall mean the Indebtedness permitted
under Section 6.1.
"PERMITTED ENCUMBRANCES" shall mean Liens permitted under Section
6.6.
"PERSON" shall mean any natural person, corporation, division of
a corporation, limited liability company, partnership, trust, joint
venture, association, company, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"PLAN" shall mean an "employee pension benefit plan" as defined
in Section 3(2) of ERISA maintained by the Borrower or any member of the
Controlled Group, or to which the Borrower or any member of the Controlled
Group contributes or is required to contribute or any other plan covered by
Title IV of ERISA.
"PLEDGE AGREEMENTS" shall mean collectively (i) the Parent Pledge
Agreement, (ii) the Borrower Pledge Agreement and (iii) the Subsidiary
Pledge Agreements.
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"PLEDGE AGREEMENT SUPPLEMENT" shall mean a Pledge Agreement
Supplement, substantially in the form of Exhibit D-4.
"PLEDGED SECURITIES" shall be as defined in the Pledge
Agreements.
"PLEDGEHOLDER AGREEMENT" shall mean a laboratory pledgeholder
agreement with respect to an item of Product among the appropriate Credit
Party, the Agent, an Approved Completion Guarantor for such item of Product
(if the Product is not completed) and one or more laboratories
substantially in the form of Exhibit C-1 or Exhibit C-2, as the case may
be, or in such other form as shall be acceptable to the Agent.
"PRIORITY AND CONTRIBUTION AGREEMENT" shall mean the Amended and
Restated Priority and Contribution Agreement dated as of November 1, 1995
as amended and restated as of June 27, 1996, substantially in the form of
Exhibit L, as such Priority and Contribution Agreement may be amended,
supplemented or otherwise modified from time to time.
"PRODUCT" shall mean any motion picture, film, video tape or
interactive product produced for theatrical, non-theatrical, television or
video 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 a Credit Party (i) is the copyright owner
or (ii) has acquired or has contracted to acquire an equity interest or
distribution rights. The term "item of Product" shall include, without
limitation, the scenario, screenplay or script upon which such Product is
based, all of the properties thereof, tangible and intangible, and whether
now in existence or hereafter to be made or produced, whether or not in
possession of the Credit Parties, and all rights therein and thereto, of
every kind and character.
"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 be as defined in Section 8.13.
"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 G" shall mean Regulation G of the Board as from time
to time in effect and all official rulings and interpretations thereunder
or thereof.
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"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 of ERISA.
"REQUIRED LENDERS" shall mean Lenders whose then outstanding
Credit Exposure collectively equals at least 66-2/3% of the Aggregate
Credit Exposure; except in the case of waivers or amendments affecting
Section 6.15(a) and Section 6.17, in which event Required Lenders shall
equal at least 51%.
"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, other than a dividend, distribution or other payment payable solely
in additional shares of common stock, (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 or an Affiliate,
now or hereafter outstanding, (iii) any payment made to retire, or obtain
the surrender of any outstanding warrants, puts or options or other rights
to purchase or acquire shares of any class of stock of, or any equity
interest of 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 Indebtedness now or
hereafter outstanding.
"REVOLVING CREDIT COMMITMENT" shall mean the commitment of each
Lender to make Revolving Credit Loans to the Borrower and to participate in
Letters of Credit from the Initial Date applicable to such Lender through
the Revolving Credit 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 "Revolving Credit Commitment" in the
Schedule of Commitments appearing in Schedule 1, 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 Agreement.
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"REVOLVING CREDIT COMMITMENT TERMINATION DATE" shall mean the
earliest to occur of: (i) June 30, 2001 or (ii) such earlier date on which
the Revolving Credit Commitment shall terminate in accordance with Section
2.8 or Section 7.2.
"REVOLVING CREDIT LOANS" shall be as defined in Section 2.1.
"REVOLVING CREDIT NOTES" shall be as defined in Section 2.5.
"REVOLVING LOAN DEFAULT" shall mean any event, act or condition
which, with notice or lapse of time, or both, would constitute a Revolving
Loan Event of Default.
"REVOLVING LOAN EVENTS OF DEFAULT" shall have the meaning given
such term in Section 7.2.
"SEC FILINGS" shall mean collectively:
(i) the Parent's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 and Form 10-K/A Amendment No. 1 and Form 10-K/A
Amendment No. 2 filed on April 29, 1996 and May 29, 1996 respectively,
amending the Parent's Form 10-K for the fiscal year ended December 31,
1995;
(ii) the Parent's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996;
(iii) the Parent's Current Report on Form 8-K dated January 31,
1996;
(iv) the Parent's Current Report on Form 8-K dated April 29,
1996; and
(v) the Parent's Registration Statement on Form S-3 dated May 8,
1996, as amended relating to the registration of 17,250,000 shares of
Common Stock; and
(vi) the Parent's Registration Statement on Form S-4 dated June
3, 1996 relating to the Goldwyn Merger.
"SPECIAL PURPOSE DISTRIBUTOR" shall mean any Person that pursuant
to Section 6.25 hereof, is hereafter approved by the Agent to be a Special
Purpose Distributor.
"SUBORDINATED INDEBTEDNESS" shall mean any Indebtedness of the
Borrower as to which the obligee of such Indebtedness has agreed in
writing, pursuant to the Subordination Agreement or on terms otherwise
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.
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"SUBORDINATION AGREEMENT" shall mean collectively (i) the Amended
and Restated Subordination Agreement dated as of November 1, 1995, as
amended and restated as of the date hereof, among the Borrower, Metromedia,
Kluge and the Agent and (ii) the Subordination Agreement dated as of
November 1, 1995, as amended and restated as of the date hereof, among the
Borrower, certain Affiliates of the Borrower party thereto and the Agent,
substantially in the form of Exhibit E-1 and E-2, respectively, as the same
may be amended, supplemented or modified by from time to time.
"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.
"SUBSIDIARY PLEDGE AGREEMENTS" shall mean the Pledge Agreements,
delivered by each Corporate Guarantor that owns a Subsidiary to the Agent
for the benefit of the Lenders, each substantially in the form of Exhibit
D-3, as the same may be amended, modified or otherwise supplemented.
"TERM LOAN COMMITMENT" shall mean the commitment of each Lender
to make a Term Loan to the Borrower up to an aggregate amount not in excess
of the amount set forth (i) opposite its name under the column entitled
"Term Loan Commitment" in the Schedule of Commitments appearing in Schedule
1, 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 Agreement.
"TERM LOAN DEFAULT" shall mean any event, act or condition which,
with notice or lapse of time, or both, would constitute an Event of
Default.
"TERM LOAN EVENTS OF DEFAULT" shall have the meaning given such
term in Section 7.1.
"TERM LOANS" shall be as defined in Section 2.2.
"TERM NOTES" shall be as defined in Section 2.5.
"THEATER CREDIT" shall mean, at any day for which it is to be
determined, an amount equal to Theater Group EBITDA for the most recent
rolling four quarter period for which financial
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statements are available multiplied initially by 4.0 and reducing to 3.75 at
December 31, 1999 and further reducing to 3.5 at December 31, 2000.
"THEATER GROUP" shall mean those Subsidiaries of the Borrower
through which it conducts its theatrical exhibition business considered as
a single Person for financial reporting purposes with expenses allocated in
a manner consistent with the business plan previously presented to the
Agent.
"THEATER GROUP CAPITAL EXPENDITURES" shall mean Capital
Expenditures for the Theater Group.
"THEATER GROUP EBITDA" shall mean, for any rolling four quarters,
for the Theater Group, the sum for such period of (i) Net Income, (ii)
depreciation, amortization and other non-cash expenses, (iii) interest
expense and (iv) provision for income taxes during such period, all as
determined for such period in conformity with GAAP.
"THEATER GROUP OCCUPANCY CHARGES" shall mean all expenses for the
use or occupancy of theaters and office space allocable for the Theater
Group, including without limitation all payments under capital leases and
operating leases of the Theater Group, regularly scheduled principal and
interest payments on Indebtedness of the Theater Group secured by such
facilities, common area charges, property insurance and property taxes, but
excluding any percentage rents.
"TOTAL COMMITMENT" 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 Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect in the
State of New York on the date of execution of this Agreement.
"UNRECOUPED PRINT AND ADVERTISING EXPENSE" shall mean, with
respect to an item of Product initially released after July 2, 1996, an
amount equal to (a) total print and advertising expenses minus (b) the sum
of (i) total billed receivables, plus (ii) total receipts plus (iii)
estimated receivables computed on the basis of 40% of reported box office
receipts for engagements which have not yet been billed or collected minus
(c) any such expenses which have been written off.
"WELFARE PLAN" shall mean each "employee welfare benefit plan" as
defined in Section 3(1) of ERISA maintained by the Borrower or any member
of the Controlled Group, or to which the Borrower or any member of the
Controlled Group contributes or is required to contribute.
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2. THE LOANS
SECTION 2.1. REVOLVING CREDIT LOANS.
(a) Each Lender, severally and not jointly, agrees, upon the
terms and subject to the conditions hereof, to make loans (the "Revolving
Credit Loans") to the Borrower, on any Business Day and from time to time
from the Closing Date to but excluding the Revolving Credit Commitment
Termination Date, each in an aggregate principal amount which when added to
the aggregate principal amount of all Revolving Credit 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
Revolving Credit Commitment (after giving effect to all Revolving Credit
Loans repaid and all reimbursements of Letters of Credit made concurrently
with the making of any Revolving Credit Loans). Subject to Section 2.3,
the Loans shall be made at such times as the Borrower shall request.
(b) Subject to the terms and conditions hereof, the Borrower may
borrow, repay and re-borrow amounts constituting the Revolving Credit
Commitments.
(c) No Revolving Credit Loan shall be made which would result in
the sum of the aggregate amount of all outstanding Revolving Credit Loans,
PLUS the then current L/C Exposure exceeding the total Revolving Credit
Commitment then in effect (after giving effect to all Revolving Credit
Loans repaid and all reimbursements of Letters of Credit made concurrently
with the making of any Revolving Credit Loans).
(d) During the continuation of a Term Loan Event of Default, no
Revolving Credit Loan shall be made which would result in the sum of the
aggregate amount of all Revolving Credit Loans PLUS the then current L/C
Exposure exceeding the Guaranteed Commitment then in effect (after giving
effect to all Revolving Credit Loans repaid and all reimbursements of
Letters of Credit made concurrently with the making of any Revolving Credit
Loans).
SECTION 2.2. TERM LOANS.
(a) Each Lender, severally and not jointly, agrees, upon the
terms and subject to the conditions hereof, to make loans (the "Term
Loans") to the Borrower on the Closing Date in a total principal amount not
exceeding the amount of such Lender's Term Loan Commitment. The aggregate
amount of the Term Loans outstanding at any time shall not exceed the
lesser of (i) the Borrowing Base then in effect and (ii) the aggregate
amount of the Term Loan Commitment then in effect.
(b) Once repaid, amounts constituting the Term Loan Commitment
may not be reborrowed.
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SECTION 2.3. 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; PROVIDED that no more than an aggregate of twenty
separate Eurodollar Loans would be outstanding with respect to any Lender
(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). Subject to Section 2.13(d), 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 relevant
Note. Subject to the other provisions of this Section, Section 2.9(b) and
Section 2.14, Loans of more than one Interest Rate Type may be outstanding
at the same time.
(b) The Borrower hereby requests the Lenders to make the Term
Loan, upon satisfaction of all the conditions hereof, in the principal
amount set forth on the initial Borrowing Certificate.
(c) The Borrower shall give the Agent prior written, telecopier
or telephonic (promptly confirmed in writing) notice of each Borrowing
consisting of a Revolving Credit Loan hereunder; such notice shall be
irrevocable and to be effective, must be received by the Agent not later
than 12:30 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.
(d) Each Loan requested hereunder on any date shall be made by
each Lender in accordance with its respective Percentage.
(e) The Agent shall promptly notify each Lender of its
proportionate share of each Borrowing, the date of such
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Borrowing, the type or types of Loans 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
Chemical Bank, Agent Bank Services Department, 140 East 45th Street, 29th
Floor, New York, New York 10017-2070, Attention: Donna Montgomery, for
credit to the Chemical 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 Agent shall disburse such funds by depositing them
into an account of the Borrower maintained by the Agent.
(f) The aggregate amount of any Borrowing consisting of
Eurodollar Loans shall be in a minimum aggregate principal amount of
$1,000,000 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 available but unused portion
of the aggregate Commitments, then in effect or (ii) the amount of any
Borrowing to fund drawings under Letters of Credit).
SECTION 2.4. LETTERS OF CREDIT.
(a) (i) Upon the terms and subject to the conditions hereof, the
Issuing Bank agrees to issue Letters of Credit payable in Dollars from time
to time after the Closing Date and prior to the Revolving Credit Commitment
Termination Date upon the request of the Borrower, PROVIDED that (A) the
Borrower shall not request that any Letter of Credit be issued if, after
giving effect thereto, the sum of the then current L/C Exposure PLUS the
aggregate Revolving Credit Loans then outstanding would exceed the
Revolving Credit Commitment (or if a Term Loan Event of Default shall then
be continuing, such lesser amount as shall equal the Guaranteed
Commitment), (B) the Borrower shall not request that any Letter of Credit
be issued if, after giving effect thereto, the L/C Exposure would exceed
$10,000,000, and (C) in no event shall the Issuing Bank issue (x) any
Letter of Credit having an expiration date later than the tenth day prior
to the Revolving Credit Commitment Termination Date or (y) any Letter of
Credit having an expiration date more than two years 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 of the Revolving Credit
Commitment.
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(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 of a
Revolving Loan 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 shall deposit the funds in question in an 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, paid over 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 Agreement as a drawing duly honored by such 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 Agent a written notice no later than 1:00
p.m. New York time at least five Business Days prior to the proposed date
of issuance. That notice shall specify (i) the proposed date of issuance
(which shall be a Business Day under the laws of the jurisdiction of the
Issuing Bank), (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, 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 that the Issuing Bank, in its reasonable
discretion, may require changes in any such documents and certificates.
Upon issuance, the Issuing Bank shall notify the Agent of the issuance of
such Letter of Credit. Promptly after receipt of such notice, the Agent
shall notify each Lender of the issuance and the amount of each such
Lender's respective participation therein.
(c) The acceptance or payment of drafts under any Letter of
Credit shall be made in accordance with the terms of such Letter of Credit
and, in that connection, 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
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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, the Issuing Bank shall give notice of
such payment to the Agent and 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. If 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) If any draft is presented under a Letter of Credit, the
payment of which is required to be made at any time on or before the
Revolving Credit Commitment Termination Date, then a payment by the Issuing
Bank on such draft shall constitute an Alternate Base Rate Loan, and
interest shall accrue from the date the Issuing Bank makes payment on such
draft under such Letter of Credit. If any draft is presented under a
Letter of Credit, the payment of which is required to be made after the
Revolving Credit Commitment Termination Date or at the time when a
Revolving Loan Event of Default or a Revolving Loan Default shall have
occurred and then be continuing, then the Borrower shall upon demand by the
Issuing Bank immediately pay to the Issuing Bank, in immediately available
funds, the full amount of such draft together with interest thereon at the
rate per annum of 2% in excess of the Alternate Base Rate from the date on
which the Issuing Bank makes such payment of such draft until the date it
receives full reimbursement for such payment from the Borrower. The
Borrower further agrees that the Issuing Bank may reimburse itself for such
drawing from the balance in the Concentration 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:
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(A) with respect to the issuance, amendment or transfer of
each Letter of Credit and each drawing made thereunder,
documentary and processing charges in accordance with such
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, computed at a rate equal to 1/4 of 1%
per annum of the daily average face amount of each outstanding
Letter of Credit issued by the Issuing Bank, such fee to be due
and payable quarterly in arrears on and through the last Business
Day of each September, December, March and June (commencing the
last business day of September 1996) prior to the Revolving
Credit Commitment Termination Date, on the Revolving Credit
Commitment Termination Date and on the expiration of the last
outstanding Letter of Credit.
(ii) The Borrower agrees to pay to the Agent for distribution
to each Lender in respect of all Letters of Credit outstanding such
Lender's Pro Rata Share of a commission equal to the product of (A) a per
annum percentage rate equal to 1% multiplied by (B) the average daily
amount available from time to time to be drawn under such outstanding
Letters of Credit. Such commission shall be payable quarterly in arrears
on and through the last Business Day of each September, December, March and
June (commencing the last business day of September 1996) prior to the
Revolving Credit Commitment Termination Date, and on the later of the
Revolving Credit Commitment Termination Date and the expiration of the last
outstanding Letter of Credit; and
(iii) Promptly upon receipt by the Issuing Bank or the Agent of
any amount described in clause (ii) of this Section 2.4(f), or any amount
described in Section 2.4(e) previously reimbursed to the Issuing Bank by
the Lenders, the Issuing Bank or Agent shall distribute to each Lender its
Pro Rata Share of such amount. Amounts payable under clauses (i)(A) and
(i)(B) of this Section 2.4(f) shall be paid directly to the Issuing Bank
and shall be for its exclusive use.
(g) If by reason of (i) any change after the date hereof 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 (ii) compliance by the Issuing
Bank or any Lender with any direction, request or requirement (whether or
not having the force of law) issued after the date hereof by any
Governmental Authority or monetary authority (including any change whether
or not proposed or published prior to the date hereof), including, without
limitation, Regulation D:
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(A) the Issuing Bank or any Lender shall be subject to any
tax, levy, charge or withholding of any nature (other than
withholding tax imposed by the United States of America or
political subdivision or taxing authority thereof or therein or
any other tax, levy, charge or withholding (i) that is measured
with respect to the overall net income of the Issuing Bank or
such Lender (or is imposed in lieu of a tax on net income) 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, nonresidence, or to make any other claim
for exemption, or otherwise to comply with any certification,
identification, information, documentation or reporting
requirements prescribed under the laws of the relevant
jurisdiction, in those cases where the Issuing Bank or such
Lender may properly make the declaration or claim or so establish
nonresidence 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 2.4, whether directly or by
such being imposed on or suffered by the Issuing Bank or any
Lender;
(B) 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
(C) there shall be imposed on the Issuing Bank or any
Lender any other condition regarding this Section 2.4, any Letter
of Credit issued pursuant to this Section 2.4 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
pay on demand such amounts as the Issuing Bank or such Lender may specify
to be necessary to compensate the Issuing Bank or such
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Lender for such additional cost or reduced receipt. The determination by the
Issuing Bank or any Lender, as the case may be, of any amount due pursuant to
this Section 2.4 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 a Revolving Loan Event of Default shall
have occurred and be continuing, any Letters of Credit shall remain
outstanding, then the 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 acceptable to the Agent and the Issuing Bank. If at any
time when a Term Loan Event of Default shall have occurred and be
continuing, any Letters of Credit shall remain outstanding, then the 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
amount, if any, by which the L/C Exposure exceeds the Guaranteed Commitment
or to furnish other security acceptable to the 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
Revolving Credit Commitment Termination Date, (i) no Revolving Loan Event
of Default or Term Loan Event of Default, as the case may be, is then
continuing, the Issuing Bank shall return all of such collateral relating
to such deposit to the Borrower if requested by them 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 L/C Exposure, then such excess shall first be applied to pay any
Obligations then due under this 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
2.4 shall remain in full force and effect until the Agent, the Issuing Bank
and the Lenders shall have been irrevocably released from their obligations
with regard to any and all Letters of Credit.
(j) This Section 2.4 shall not be amended without the written
consent of the Issuing Bank and the Agent.
SECTION 2.5. NOTES; REPAYMENT.
(a) The Revolving Credit Loans made by each Lender hereunder
shall be evidenced by a Revolving Credit promissory note substantially in
the form of Exhibit A-1 (each a "REVOLVING CREDIT NOTE") in the face amount
of such Lender's Revolving Credit Commitment, payable to the order of such
Lender, duly
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executed on behalf of the Borrower and dated the date hereof.
The outstanding principal balance of each Revolving Credit Loan as
evidenced by a Revolving Credit Note shall be payable on the Revolving
Credit Commitment Termination Date.
(b) The Term Loans made by each Lender hereunder shall be
evidenced by a promissory note substantially in the form of Exhibit A-2
(each a "TERM NOTE") in the face amount of such Lender's Term Loan
Commitment, payable to the order of such Lender, duly executed on behalf of
the Borrower and dated the date hereof. The principal amount of the Term
Loans as evidenced by the Term Notes shall be payable in twenty (20)
quarterly installments of $7,500,000 payable on the last Business Day of
each March, June, September and December commencing September 1996 with the
balance of the Term Loans payable in full on June 30, 2001.
(c) Each of the Notes shall bear interest on the outstanding
principal balance thereof as set forth in Section 2.6 hereof. Each Lender
and the 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 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.
SECTION 2.6. INTEREST ON LOANS.
(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. Interest shall be payable in arrears on each Eurodollar Loan on
each applicable Interest Payment Date, at maturity and on the date of a
conversion of such Eurodollar Loan to an Alternate Base Rate Loan. The
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 or 366 days, as the case may be) equal
to the Alternate Base Rate plus the Applicable Margin. Interest shall be
payable in arrears on each Alternate Base Rate Loan on each applicable
Interest
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Payment Date, on the Revolving Credit Commitment Termination Date
and at maturity.
(c) Anything in this Agreement or the Notes to the contrary
notwithstanding, the interest rate on the Loans or with respect to any
drawing under a Letter of Credit shall in no event be in excess of the
maximum rate permitted by Applicable Law.
(d) Interest in respect of any Loan hereunder shall accrue from
and including the date of such Loan to but excluding the date on which such
Loan is paid or, if applicable, converted to a Loan of a different Interest
Rate Type.
SECTION 2.7. COMMITMENT FEES AND OTHER FEES.
(a) The Borrower agrees to pay to the Agent quarterly in arrears
for the account of each Lender in accordance with its Percentage, on the
last Business Day of each March, June, September and December in each year
(commencing September 1996) prior to the Revolving Credit Commitment
Termination Date, and on the Revolving Credit Commitment Termination Date,
an aggregate fee (the "COMMITMENT FEE") of 3/8 of 1% per annum on the
average daily amount by which such Lender's Revolving Credit Commitment
exceeds the sum of the principal balance of such Lender's Revolving Credit
Loans outstanding plus such Lender's Pro Rata Share of the L/C Exposure
during the period then ended, computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be. Such
Commitment Fees shall commence to accrue on the date this Agreement is
fully executed and shall cease to accrue on June 30, 2001.
(b) In addition, the Borrower agrees to pay to the Agent, on the
date this Agreement is executed by all the parties hereto, any and all fees
that are then due and payable pursuant to the Fee Letter.
SECTION 2.8. OPTIONAL AND MANDATORY TERMINATION OR REDUCTION OF
COMMITMENTS.
(a) Upon at least three Business Days' prior written,
telegraphic or telephonic notice (provided that such telephonic notice is
immediately followed by written confirmation) to the Agent, the Borrower
may at any time in whole permanently terminate, or from time to time in
part permanently reduce, the aggregate Revolving Credit Commitment. In the
case of a partial reduction, each such reduction of the Revolving Credit
Commitment shall be in a minimum aggregate principal amount of $2,500,000
or an integral multiple thereof; PROVIDED, HOWEVER, that the aggregate
Revolving Credit Commitment may not be reduced by more than the amount of
the then unused Revolving Credit Commitment and may not be reduced to an
amount less than the aggregate
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principal amount of the Revolving Credit Loans outstanding PLUS the then
current L/C Exposure.
(b) The Revolving Credit Commitment shall be permanently reduced
in an amount equal to the amount of any equity investment or subordinated
loans (other than loans identified as Parent Line of Credit Loans) made by
the Parent in or to the Borrower on or after the Closing Date, up to a
maximum reduction of $50,000,000. In the event that on any date the
Revolving Credit Commitment is reduced pursuant to this Section 2.8(b) so
that the aggregate amount of the outstanding Revolving Credit Loans PLUS
the then current L/C Exposure would exceed the Revolving Credit Commitment
in effect on such date after giving effect to such reduction in the
Revolving Credit Commitment, the Borrower shall, on such date, make a
mandatory prepayment of the Revolving Credit Loans in a principal amount
equal to such excess, so that after giving effect to such prepayment, the
aggregate principal amount of the Revolving Credit Loans outstanding PLUS
the then current L/C Exposure does not exceed the Revolving Credit
Commitment then in effect. All such prepayments shall be accompanied by
accrued but unpaid interest on the principal amount being prepaid.
(c) Simultaneously with each such termination or reduction of
the Revolving Credit Commitment, the Borrower shall pay to the Agent for
the benefit of each Lender all accrued and unpaid Commitment Fees on the
amount of the Revolving Credit Commitment so terminated or reduced through
the date of such termination or reduction.
(d) Any reduction of the Revolving Credit Commitment pursuant to
this Section shall be applied to reduce the Revolving Credit Commitment of
each Lender in accordance with its respective Percentage.
SECTION 2.9. DEFAULT INTEREST; ALTERNATE RATE OF INTEREST.
(a) If the Borrower shall default in the payment of the
principal of, or interest on any Loan or any other amount becoming due
hereunder, whether at stated maturity, by acceleration or otherwise, the
Borrower shall on demand from time to time pay interest, to the extent
permitted by Applicable Law on all Loans and overdue amounts outstanding up
to the date of actual payment of such defaulted amount (after as well as
before judgment) at the following rates per annum: (i) for the remainder
of the then current Interest Period for each Eurodollar Loan, the rate
applicable to such Loan plus 2% per annum and (ii) in the case of any other
amount, the rate that would be applicable to an Alternate Base Rate Loan
plus 2% per annum.
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(b) In the event, and on each occasion, that on the day two
Business Days prior to the commencement of any Interest Period for a
Eurodollar Loan, (i) the 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 Eurodollar Loan are not generally available in the London
Interbank Market, or (ii) the Agent shall have determined that reasonable
means do not exist for ascertaining the applicable LIBO Rate, the Agent
shall, as soon as practicable thereafter, give written or telegraphic
notice of such determination to the Borrower and the Lenders, such request
and any further request by the Borrower for a Eurodollar Loan (or
conversion to or continuation as a Eurodollar Loan pursuant to Section
2.11), made after receipt of such notice, shall be deemed 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. After such notice shall have been given
and until the circumstances giving rise to such notice no longer exist,
each request (or portion thereof, as the case may be) for a Eurodollar
Loan, to the extent such request relates to such affected Lender's portion,
shall be deemed to be a request for an Alternate Base Rate Loan.
SECTION 2.10. INTEREST ADJUSTMENTS.
If the provisions of this Agreement or the Notes would at any
time require payment by the Borrower to any Lender of any amount of
interest in excess of the maximum amount then permitted by the law
applicable to the Loans, the interest payments to such Lender shall be
reduced to the extent and in such a manner as is necessary in order that
the Lenders not receive interest in excess of such maximum amount. To the
extent that, pursuant to the foregoing sentence, the Lenders shall receive
interest payments hereunder or under the Notes in an amount less than the
amount otherwise provided hereunder, such deficit (hereinafter called the
"INTEREST DEFICIT") will cumulate and will be carried forward (without
interest) until the termination of this Agreement. Interest otherwise
payable to the Lenders hereunder and under the Notes for any subsequent
period shall be increased by the maximum amount of the Interest Deficit
that may be so added without causing the Lenders to receive interest in
excess of the maximum amount then permitted by the law applicable to the
Loans. The amount of the Interest Deficit relating to the Loans and the
Notes shall be treated as a prepayment penalty and paid in full at the time
of any optional prepayment by the Borrower to the Lenders of all the Loans
at the time outstanding pursuant to Section 2.12(a) hereof. The amount of
the Interest Deficit relating to the Loans and the Notes at the time of any
complete payment of the Loans at that time outstanding (other than an
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optional prepayment thereof pursuant to Section 2.12(a)) shall be cancelled
and not paid.
SECTION 2.11. CONTINUATION AND CONVERSION OF LOANS.
The Borrower shall have the right, at any time, to convert any
Loan or portion thereof to a Loan of a different Interest Rate Type or to
continue a Eurodollar Loan for a successive Interest Period, subject to the
following:
(a) the Borrower shall give the Agent prior notice of each
continuation or conversion hereunder of at least three Business Days; such
notice shall be irrevocable and to be effective, must be received by the
Agent not later than 12:30 p.m. New York City time;
(b) no Event of Default or Default shall have occurred and be
continuing at the time of any conversion to a Eurodollar Loan or
continuation of any such Loan into a subsequent Interest Period, except
that so long as no Revolving Loan Event of Default or Revolving Loan
Default shall have occurred and be continuing, Borrower may convert or
continue Revolving Credit Loans made pursuant to the Guaranteed Obligations
into subsequent Interest Periods;
(c) no Loan (or portion thereof) may be converted to a
Eurodollar Loan if, after such conversion, and after giving effect to any
concurrent prepayment of Loans, an aggregate of more than twenty separate
Eurodollar Loans would be outstanding with respect to any Lender (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 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 continuation or
conversion, shall not be less than $1,000,000 or such greater amount which
is an integral multiple of $100,000;
(f) 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;
(g) if a Eurodollar Loan is converted to an Alternate Base Rate
Loan other than on the last day of the Interest Period
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with respect thereto, the amounts required by Section 2.12 shall be paid upon
such conversion;
(h) 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; and
(i) accrued interest on a Eurodollar Loan (or portion thereof)
being converted to an Alternate Base Rate Loan shall be paid by the
Borrower at the time of conversion.
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 continued as a Eurodollar Loan with an Interest
Period of one month at the expiration of the then current Interest Period.
The Agent shall, after it receives notice from the Borrower, promptly give
the Lenders notice of any continuation or conversion. It is understood by
all parties to this Agreement that the continuation or conversion of any
Loan pursuant to this Section 2.11 does not constitute a repayment and a
reborrowing hereunder and is not subject to the conditions set forth in
Section 4.2 and that the designation of a Loan as an Alternate Base Rate
Loan or Eurodollar Loan, and the designation of applicable Interest
Periods, is solely a mechanism for determining the interest rate applicable
to such Loan.
SECTION 2.12. PREPAYMENT OF LOANS; REIMBURSEMENT OF LENDERS.
(a) Subject to the terms of paragraph (b) of this Section 2.12,
the Borrower shall have the right at any time and from time to time to
prepay any (i) Alternate Base Rate Loan, in whole or in part, upon at least
one Business Day's prior written, telephonic (provided that such
telephonic notice is immediately followed by written confirmation) or
telegraphic notice to the Agent in the minimum principal amount of $500,000
or such greater amount which is an integral multiple of $100,000 and
(ii) any Eurodollar Loan, in whole or in part, upon at least three Business
Days' written notice to the Agent, in the principal amount of $1,000,000 or
such greater amount which is an integral multiple of $100,000. Each notice
of prepayment shall specify the prepayment date, the principal amount to be
prepaid and the Loans to be prepaid, shall be irrevocable and shall commit
the Borrower to prepay each such Loan in the amount and on the date stated
therein. All prepayments under this Section 2.12(a) shall be accompanied
by accrued but unpaid interest on the principal amount being prepaid to the
date of (but not including) prepayment. All prepayments made pursuant to
Section 2.12(g) shall be applied against the remaining scheduled
amortization payments as follows: first, to the next four scheduled
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amortization payments in order of maturity, and the remainder, if any,
credited ratably against the remaining scheduled amortization payments.
All other prepayments under this Section 2.12 with regard to the Term Loan
shall be applied against the remaining scheduled amortization payments in
order of maturity.
(b) The Borrower shall reimburse each Lender on demand for any
loss incurred or to be incurred by it in the reemployment of the funds
released (i) by any prepayment or conversion (for any reason whatsoever) of
a Eurodollar Loan required or permitted under this Agreement, if such Loan
is prepaid or converted other than on 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 2.3(c) or notice of continuation or
conversion in respect of Eurodollar Loans, such Loan is not made on the
first day of the Interest Period specified in such notice of Borrowing for
any reason other than (A) a suspension or limitation under Section 2.9(b)
of the right of the Borrower to select a Eurodollar Loan or (B) a breach by
the Lenders of their obligations hereunder. Such loss shall be the amount
as reasonably determined by such Lender as the excess, if any, of (I) 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 2.6 hereof
for the period from the date of such payment or failure to borrow, continue
or convert to the last day (x) in the case of a payment other than on the
last day of the Interest Period for such Loan, 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 by such Lender in reemploying the funds not
advanced or the funds received in prepayment or realized from the Loan so
continued or converted during the period referred to above. Each Lender
shall deliver to the Borrower 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.
(c) In the event the Borrower fails to prepay any Loan on the
date specified in any prepayment notice delivered pursuant to Section
2.12(a), the Borrower on demand by any Lender shall pay to the Agent for
the account of such Lender any amounts required to compensate such Lender
for any actual loss reasonably incurred by such Lender as a result of such
failure to prepay, including, without limitation, any actual loss, cost or
expenses incurred by reason of the acquisition of deposits or other funds
by such Lender to fulfill deposit obligations incurred in anticipation of
such prepayment. Each Lender shall deliver to the Borrower and the Agent
promptly after such prepayment one or
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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.
(d) Within five (5) days after the delivery to the Agent of each
Borrowing Base Certificate, the Borrower shall prepay the Term Loans to the
extent, if any, that the sum of the Term Loans outstanding exceeds the
Borrowing Base as set forth on such Borrowing Base Certificate.
(e) Simultaneously with each termination and/or optional
reduction of the Revolving Credit Commitment pursuant to Section 2.8, the
Borrower shall pay to the Agent for the benefit of the Lenders the excess
of the aggregate outstanding principal amount of the Revolving Credit Loans
over the reduced Revolving Credit Commitment, all accrued and unpaid
interest thereon and the Commitment Fees on the amount of the Revolving
Credit Commitment so terminated or reduced through the date thereof.
(f) If at any time the amount of the Revolving Credit Loans
outstanding PLUS the L/C Exposure shall ever exceed the Revolving Credit
Commitment hereunder, the Borrower will immediately prepay Revolving Credit
Loans to the extent the outstanding Revolving Credit Loans PLUS the L/C
Exposure exceed the Revolving Credit Commitment.
(g) An amount equal to 100% of the net cash proceeds of all
issuances by the Borrower of any additional debt or equity securities to
any Person that is not an Affiliate of the Borrower shall be applied to
prepay the Term Loan, and subsequent to the repayment in full of the Term
Loan, shall be applied to repay the Revolving Credit Loans with a
corresponding permanent reduction in the Revolving Credit Commitment.
(h) An amount equal to 100% of any additional equity investment
or loan (other than Parent Line of Credit Loans) made by the Parent in or
to the Borrower on or after the Closing Date in excess of $50,000,000 shall
be applied to prepay the Term Loans and subsequent to the repayment in full
of the Term Loans, shall be applied to repay the Revolving Credit Loans
with a corresponding permanent reduction in the Revolving Credit
Commitment.
(i) 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.
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(j) If on any day on which Loans would otherwise be required to
be prepaid under this Section but for the operation of this Section 2.12(j)
(each a "PREPAYMENT DATE"), the amount of such required prepayment exceeds
the then outstanding aggregate principal amount of Loans which consist 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
after such Prepayment Date the 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 2.12(j).
SECTION 2.13. CHANGE IN CIRCUMSTANCES.
(a) In the event that after the date hereof 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 clause (ii),
(iii) or (iv) below any change in conditions, shall occur which shall:
(i) subject any Lender to, or increase the net amount of,
any tax, levy, impost, duty, charge, fee, deduction or
withholding with respect to any Eurodollar Loan (other than
withholding tax imposed by the United States of America or any
political subdivision or taxing authority thereof or therein or
any other tax, levy, impost, duty, charge, fee, deduction or
withholding (x) that is measured with respect to the overall net
income of such Lender (or is imposed in lieu of a tax on net
income) 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, (y)
that is imposed solely by reason of any Lender failing to make a
declaration of, or otherwise to establish, nonresidence, or to
make any other claim for exemption, or otherwise to comply with
any certification, identification, information, documentation or
reporting requirements prescribed
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under the laws of the relevantjurisdiction, in those cases where a
Lender may properly make such declaration or claim or so establish
nonresidence or otherwise comply); or
(ii) change the basis of taxation of any payment to any
Lender of principal of or interest on any Eurodollar Loan or
other fees and amounts payable to any Lender hereunder, or any
combination of the foregoing; other than taxes imposed on the
overall net income of any Lender for any Eurodollar Loan by any
jurisdiction where its Lending Office is located; or
(iii) impose, modify or deem applicable any reserve,
special deposit or similar requirement against any assets of,
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
Agreement;
and the result of any of the foregoing shall be to, directly or indirectly,
increase the 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, or
to require such Lender to make any payment in connection with any
Eurodollar Loan, 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
agrees to pay to the Agent for the account of such Lender, as provided in
paragraph (c) below, such amounts as shall be necessary (after adjusting,
if necessary, to avoid double counting) to compensate such Lender for such
cost, reduction or payment.
(b) If any Lender shall have determined that the applicability
of any law, rule, regulation or guideline adopted pursuant to or arising
out of the July 1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards", or the adoption after the date hereof
of any law, rule, regulation or guideline regarding capital adequacy, or
any change after the date hereof 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 any Lender's holding company with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency,
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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 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 in its sole judgment to be material, then from time to time the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such
reduction suffered to the extent attributable to this Agreement or the
Loans made pursuant hereto.
(c) Each Lender shall deliver to the Borrower and the Agent,
with reasonable promptness, after it becomes aware of an event set forth in
paragraph (a) or (b) above, one or more certificates setting forth the
amounts due to such Lender under paragraphs (a) and (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 Agent for the account of
each such Lender the amounts shown as due on any such certificate within
ten Business Days after its 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 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 thereunder.
(d) Each Lender agrees that, with reasonable promptness, after
it becomes aware of the occurrence of an event or the existence of a
condition that (i) would cause it to incur any material increased cost
hereunder or render it unable to perform its agreements hereunder for the
reasons specifically set forth in Section 2.4(g) or Section 2.9(b) or this
Section 2.13 or Section 2.16 or (ii) would require the Borrower to pay an
increased amount under Section 2.4(g), Section 2.9(b), this Section 2.13 or
Section 2.16, it will notify the Borrower as promptly as practicable of
such event or condition and, to the extent not inconsistent with such
Lender's internal policies, will use its reasonable efforts to make, fund
or maintain the affected Eurodollar Loans of such Lender, or, if
applicable, to participate in Letters of Credit as required under Section
2.4, 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
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in respect of such Loans 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 pursuant to Section 2.4(g),
Section 2.9(b), this Section 2.13 or Section 2.16 would be materially reduced
or the taxes or other amounts otherwise payable under Section 2.4(g), Section
2.9(b), this Section 2.13 or Section 2.16 would be materially reduced, and if,
as determined by such Lender, in its discretion, the making, funding or
maintaining of such Loans through such other Lending Office would not
otherwise materially adversely affect such Loans or such Lender.
(e) If the Borrower shall receive notice from any Lender that
Eurodollar Loans are no longer available from such Lender pursuant to
Section 2.14 that amounts are due to such Lender pursuant to paragraph (c)
hereof or that any of the events designated in paragraph (d) hereof have
occurred, the Borrower may (but subject in any such case to the payments
required by Sections 2.12(b) and 2.12(c)), upon at least five Business
Days' prior written or telecopier notice to such Lender and the Agent, but
not more than 60 days after receipt of notice from such Lender, identify to
the Agent a lending institution acceptable to the Borrower and the Agent,
which will purchase the Commitments, the amount of outstanding Loans, any
participations in Letters of Credit from the Lender providing such notice
and such Lender shall thereupon assign its Commitment, any Loans owing to
such Lender, any participations in Letters of Credit and the Notes held by
such Lender to such replacement lending institution pursuant to Section
13.3.
SECTION 2.14. CHANGE IN LEGALITY.
(a) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, if any change after the date hereof in Applicable Law or
guideline, or change 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 Agent, such Lender may (i)
declare that Eurodollar Loans will not thereafter be made by such Lender
hereunder whereupon such Lender's Percentage of any subsequent Eurodollar
Loan shall, instead, be an Alternate Base Rate Loan unless such declaration
is subsequently withdrawn and/or (ii) require that, subject to Section
2.12(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. If the Commitment
of any Lender with respect to any Eurodollar Loan is suspended pursuant to
this Section 2.14 and such Lender shall notify the Agent and the
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Borrower that it is once again legal for such Lender to make or maintain
Eurodollar Loans, such Lender's Commitment to make or maintain Eurodollar Loans
shall be reinstated.
(b) A notice to the Borrower by any Lender pursuant to paragraph
(a) above shall be effective for purposes of clause (ii) thereof, (i) on
the last day of the current Interest Period for each outstanding Eurodollar
Loan if it shall be lawful for such Eurodollar Loans to remain outstanding
and (ii) on the date of receipt of such notice by the Borrower in all other
cases.
SECTION 15.b. MANNER OF PAYMENTS.
All payments of interest and repayments of principal in respect
of any Loans shall be pro rata among the Lenders in accordance with their
Percentage. Payments of Commitment Fees shall be allocated among Lenders
in accordance with Section 2.7. All payments by the Borrower hereunder and
under the Notes shall be made in Dollars in immediately available funds at
the office of Chemical Bank, the Agent Bank Services Department, 140 East
45th Street, 29th Floor, New York, New York 10017-2070, Attention: Janet
M. Belden, for credit to the Chemical Clearing Account in each case by
12:00 noon, New York City time, on the date on which such payment shall be
due.
SECTION 2.16. UNITED STATES WITHHOLDINGS.
(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 becoming a Lender after the date hereof, and from
time to time thereafter if requested by the Borrower or the 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
organized under the laws of a jurisdiction outside the United States shall
provide, if applicable, the 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 exemption
from, or entitlement to a reduced rate of, United States withholding taxes
(including backup withholding taxes) with respect to all payments to be
made to such Lender hereunder and under the Notes.
(b) The Borrower and the 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 hereunder or under the
Notes, if and to the extent that the Borrower or the Agent in good faith
determine 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 the Borrower or the Agent shall
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so determine that deduction or withholding of taxes is required, they shall
advise the affected Lender as to the basis of such determination prior to
actually deducting and withholding such taxes. In the event the Borrower or
the Agent shall so deduct or withhold taxes from amounts payable hereunder,
such party (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 from whom the taxes were deducted or withheld; and (iii) shall
forward to such Lenders 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 Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under any Note
are not subject to United States withholding tax or are subject to such tax
at a rate reduced by an applicable tax treaty, the Borrower or the Agent
may withhold taxes from such payments at the applicable statutory rate in
the case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.
(c) Each Lender agrees (i) that as between it and the Borrower
or the Agent, it shall be the Person to deduct and withhold taxes, and to
the extent required by law it shall deduct and withhold taxes, on amounts
that such Lender may remit to any other Person(s) by reason of any
undisclosed transfer or assignment of an interest in this Agreement to such
other Person(s) pursuant to Section 13.3(g); and (ii) to indemnify the
Borrower and the Agent and any officers, directors, agents, or employees of
the Borrower or the Agent against and to hold them harmless from any tax,
interest, additions to tax, penalties, reasonable counsel and accountants'
fees and disbursements arising from the assertion by any appropriate United
States 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).
(d) Each assignee of a Lender's interest in this Agreement in
conformity with Section 13.3 shall be bound by this Section 2.16, 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 2.16.
(e) Notwithstanding the foregoing, in the event that any
withholding taxes shall become payable solely as a result of any change in
any statute, treaty, ruling, determination or
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regulation occurring after the Initial Date in respect of any sum payable
hereunder or under any other Fundamental Document to any Lender or the 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 2.16) such Lender or the 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 and
(iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with Applicable Law.
(f) In the event that a Lender receives a refund of or credit
for taxes withheld pursuant to clause (e) of this Section, which credit or
refund is identifiable by such Lender as being a result of taxes withheld
in connection with sums payable hereunder, such Lender shall promptly
notify the Agent and the Borrower and shall remit to the Borrower the
amount of such refund or credit allocable to payments made hereunder.
SECTION 2.17. PROVISIONS RELATING TO THE BORROWING BASE.
In the event the Agent notifies the Borrower that a Person is to
be deleted as an Approved Account Debtor in accordance with the definition
thereof, no additional Eligible Receivables from such Person may be
included in the Borrowing Base subsequent to such notice unless fully
secured by an Acceptable L/C or guaranteed by Metromedia (to the extent
such guaranteed amount does not exceed the aggregate amount permitted for
receivables guaranteed by Metromedia) or the Agent thereafter notifies the
Borrower that such Person is reinstated as an Approved Account Debtor in
accordance with the definition thereof. In the event the Agent notifies
the Borrower that the Allowable Amount with respect to an Approved Account
Debtor is to be reduced in accordance with the definition of Approved
Account Debtor, no additional Eligible Receivables from such Approved
Account Debtor 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 Approved Account Debtor being in excess of the
Allowable Amount after giving effect to such reduction unless the Agent
thereafter notifies the Borrower that the Allowable Amount may be increased
in accordance with the definition of Approved Account Debtor or unless any
such excess amount is supported by an Acceptable L/C or guaranteed by
Metromedia (to the extent such guaranteed amount does not exceed the
aggregate amount permitted for receivables guaranteed by Metromedia).
Notwithstanding the foregoing, even if a Person is deleted as an Approved
Account Debtor or the Allowable Amount set forth in Schedule 2 hereto with
respect to an Approved Account Debtor has been reduced, an item that was
included as an Eligible Receivable on the most recent Borrowing Base
Certificate received
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by the Agent prior to any such deletion or reduction,
may continue to be included as an Eligible Receivable in any subsequent
Borrowing Base Certificate.
SECTION 2.18. SUPPLEMENTAL PAYMENTS.
The Borrower agrees to pay to the Agent quarterly in arrears for
the account of each Lender in accordance with its Percentage of the
Revolving Credit Commitments, on the last Business Day of each March, June,
September and December in each year (commencing September 1996)
supplemental payments at a rate per annum (computed in the same manner as
interest on the basis of the actual number of days elapsed over a year of
365 or 366 days, as the case may be) equal to 1-1/2% of the lesser of (x)
the average daily amount by which the Borrowing Base exceeds the Term Loans
outstanding during the period then ended or (y) the average daily amount of
the sum of the principal balance of Revolving Credit Loans outstanding plus
the aggregate L/C Exposure during the period then ended.
3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Issuing Bank to enter into
this Agreement and to make the Loans and issue, and purchase participations
in the Letters of Credit as provided herein, the Credit Parties, jointly
and severally, hereby make the following representations and warranties to
the Lenders:
SECTION 3.1. CORPORATE EXISTENCE AND POWER.
Each of the Credit Parties has been duly organized, is 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 the nature of its properties or business so requires,
including, without limitation, in any jurisdiction in which the failure to
be in good standing would render any Eligible Receivable otherwise
unenforceable or would give rise to a material liability of any Credit
Party. Each of the Credit Parties has the corporate power to own its
respective properties and carry on its businesses as now being conducted,
and in the case of each Credit Party to execute, deliver and perform its
obligations under the Fundamental Documents and all other documents
contemplated hereby to which it is or will be a party as provided herein,
in the case of the Borrower to borrow and execute and deliver the Notes
hereunder, and in the case of each Credit Party to grant to the Agent for
the benefit of the Lenders, a security interest in the Collateral as
contemplated by Article 8 hereof and by the Fundamental Documents to which
it is or will be a party and in the case of each Corporate Guarantor to
guaranty the Obligations as contemplated by Article 9 hereof.
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SECTION 3.2. CORPORATE AUTHORITY AND NO VIOLATION.
(a) The consummation of the Mergers and the execution, delivery
and performance of this Agreement and the other Fundamental Documents to
which it is a party, by each Credit Party, in the case of the Borrower, the
borrowings hereunder and the execution and delivery of the Notes; in the
case of each Credit Party, the grant to the Agent for the benefit of the
Lenders of the security interests contemplated by Article 8 hereof; in the
case of each Corporate Guarantor, the guaranty 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 violate any provision of any Applicable Law applicable to any of the
Credit Parties or any of their respective properties or assets, (iii) will
not violate any provision of the Certificate of Incorporation or By-Laws of
any of the Credit Parties, (iv) after giving effect to the Mergers and the
other transactions contemplated hereby to occur on the Closing Date, will
not violate, conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any provision of any
Distribution Agreement, indenture, agreement, bond, note, or other similar
instrument to which any Credit Party is a party or by which any such party
or any of their respective properties or assets are bound, and (v) will not
result in the creation or imposition of any Lien upon any property or
assets of any Credit Party other than as a result of this Agreement and the
other Fundamental Documents to which it is a party, except to the extent,
with respect to clauses (ii), (iv) and (v), as does not and will not have a
Material Adverse Effect.
(b) Except as set forth on Schedule 3.2, after giving effect to
the Mergers and the transactions contemplated hereby, there are no
restrictions on the transfer of any of the Pledged Securities subject to
the Pledge Agreements other than as a result of this Agreement or the
Pledge Agreements or the Hart-Scott-Rodino Act, similar statutes or
applicable securities laws and the regulations promulgated thereunder.
SECTION 3.3. GOVERNMENTAL APPROVAL.
All authorizations, approvals, registrations or filings with any
governmental or public regulatory body or authority of the United States or
any state thereof (other than UCC financing statements and the Copyright
Security Agreement, which have been delivered to the 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 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
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and effect, and if any such further authorizations, approvals, registrations
or filings should hereafter become necessary, the Credit Parties will use
their best efforts to obtain or make all such authorizations, approvals,
registrations or filings.
SECTION 3.4. FINANCIAL CONDITION.
(i) The audited consolidated balance sheet of each of the Parent
and its consolidated subsidiaries and the Borrower and its Consolidated
Subsidiaries at the fiscal year ended December 31, 1995 and (ii) the
unaudited consolidated and consolidating balance sheet of each of the
Parent and its consolidated subsidiaries and the Borrower and its
Consolidated Subsidiaries for the quarter ended March 31, 1996, together
with the related statements of cash flows and the related notes and
supplemental information for the audited statements, have been prepared in
accordance with GAAP in effect as of such date consistently applied, except
as otherwise indicated in the notes to such financial statements and
subject in the case of unaudited statements to changes resulting from
year-end and audit adjustments. All of such financial statements fairly
present the financial position or the results of operations of the Parent
and its consolidated subsidiaries and the Borrower and its Consolidated
Subsidiaries on a consolidated basis at the dates or for the periods
indicated, subject to year-end and audit adjustments in the case of
unaudited statements, and reflect all known liabilities, contingent or
otherwise, that GAAP require, as of such dates, to be shown or reserved
against.
SECTION 3.5. NO MATERIAL ADVERSE CHANGE.
(a) Since December 31, 1995, except as described in the SEC
Filings, there has been no event or events which have had a Material
Adverse Effect. At the Closing Date, there has not been any material
change in the information contained in the Confidential Information
Memorandum dated June 1996, which change has not been previously disclosed
to the Lenders in writing.
(b) No Credit Party prior to or at or after the date hereof 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 date hereof,
on a pro forma basis after giving effect to all Indebtedness and the
transactions contemplated by this Agreement (including the Loans) (w) each
Credit Party expects the cash available to such Credit Party (including the
Revolving Credit Commitments), 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 (y) of this Section 3.5(b)),
will be sufficient to satisfy all final judgments for money damages which
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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); (x) 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); (y) 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 (w)); and (z) each
Credit Party 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 3.5, "debt" means any
liability on a claim, and "claim" means (i) right to payment whether or not
such right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed (other than those being disputed
in good faith), undisputed, legal, equitable, secured or unsecured, or
(ii) 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 3.6. TITLE TO PROPERTIES.
After giving effect to the Mergers and the transactions
contemplated hereby, each of the Borrower and its Subsidiaries has title or
valid leasehold interests to each of its material properties and assets
reflected on the balance sheets referred to in Section 3.4, and all such
properties and assets are free and clear of Liens, except Permitted
Encumbrances.
SECTION 3.7. UCC FILING INFORMATION.
The chief executive offices of each Credit Party are on the date
hereof as set forth on Schedule 3.7 hereto, which offices are the places
where each of such Persons are "located" for the purpose of Section
9-103(3)(d) of the UCC in effect in the State of New York and any State in
which any such Person is so located, and the places in which each such
Person 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 3.7 hereto.
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SECTION 3.8. LITIGATION.
Except as set forth in Schedule 3.8 or as disclosed in the SEC
Filings, there are no judgments, orders, lawsuits, actions, suits or other
proceedings pending at law or in equity, or, to the knowledge of the Credit
Parties, threatened, against or affecting the Borrower, its Subsidiaries or
any of their respective properties, by or before any Governmental Authority
or arbitrator, which would reasonably be expected to have a Material
Adverse Effect or which involve this Agreement or any of the lending
transactions contemplated hereby. Except as disclosed on Schedule 3.8,
neither the Borrower nor any of its Subsidiaries is in default with respect
to any order, writ, injunction, decree, rule or regulation of any
Governmental Authority, which would reasonably be expected to have a
Material Adverse Effect.
SECTION 3.9. FEDERAL RESERVE REGULATIONS.
Neither the Borrower nor any of its Subsidiaries 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, whether
immediately, incidentally or ultimately, to purchase or carry any Margin
Stock, to extend credit to others for the purpose of purchasing or carrying
any Margin Stock or for any other purpose violative of or inconsistent with
any of the provisions of Regulation G, T, U or X of the Board.
SECTION 3.10. INVESTMENT COMPANY ACT.
None of the Credit Parties are, or will during the term of this
Agreement be, (x) an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended, or (y) subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act or any foreign, federal
or local statute or regulation limiting its ability to incur indebtedness
for money borrowed or guarantee such indebtedness as contemplated hereby or
by any other Fundamental Document.
SECTION 3.11. ENFORCEABILITY.
This Agreement and each other Fundamental Document will
constitute legal, valid and enforceable obligations of each Credit Party
which is a party thereto (subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and to general
principles of equity).
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SECTION 3.12. TAXES.
The Borrower and each of its Subsidiaries has filed or caused to
be filed all federal, state and local tax returns which are required to be
filed in all jurisdictions which are significant to the business of the
Credit Parties, and have paid or have 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 5.5
hereof. No Credit Party knows of any material additional assessments or
any basis therefor. The charges, accruals and reserves on the books of
each Credit Party in respect of taxes or other governmental charges are
adequate in all material respects.
SECTION 3.13. COMPLIANCE WITH ERISA.
The Borrower and each member of the Controlled Group is in
compliance in all material respects with the applicable provisions of ERISA
and the Code. Except as set forth in Schedule 3.13 hereto: (i) each Plan,
and to the best of the knowledge of the Borrower and every member of the
Controlled Group, each Plan which is a Multiemployer Plan, which is
intended to be tax qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to qualify under Section 401 of
the Code, and the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501 of the Code (except
with respect to amendments required by legislation or regulations for which
the remedial amendment period has not lapsed), and to the knowledge of the
Borrower and every member of the Controlled Group nothing has occurred
which would cause the loss of such qualification or the imposition of any
tax liability or penalty under the Code or ERISA; (ii) with respect to each
Plan (other than a Multiemployer Plan), and each Welfare Plan, all reports
required under ERISA, the Code or any other applicable law or regulation to
be filed by the Borrower or any member of the Controlled Group with the
relevant governmental authority have been duly filed to the knowledge of
the Borrower and every member of the Controlled Group and all such reports
are true and correct in all material respects as of the date given;
(iii) neither the Borrower nor any member of the Controlled Group has
engaged in a "prohibited transaction", as such term is defined in Section
4975 of the Code or in a transaction prohibited by Section 406 of ERISA, in
connection with any Plan or Welfare Plan which would subject the Borrower
or any member of the Controlled Group (after giving effect to any statutory
and regulatory exemption) to the tax on prohibited transactions imposed by
Section 4975 of the Code or any other liability; (iv) no Plan which is not
a Multiemployer Plan has been, or is in the process of being, terminated
nor has any material accumulated funding deficiency (as defined in Section
412(a) of the Code) been incurred (without regard to any waiver granted
under Section 412 of the Code), nor has any such
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funding waiver from the Internal Revenue Service been received or requested,
nor has the Borrower nor any member of the Controlled Group failed to make any
contributions or to pay any amounts due and owing as required by the terms of
any Plan and not within a reasonable time cured such failure; (v) the value of
the assets of each Plan (other than a Multiemployer Plan) equalled or exceeded
the present value of the accrued benefits of each such Plan as of the end
of the preceding plan year using Plan actuarial assumptions as in effect
for such plan year which assumptions are reasonable; (vi) there has not
been any Reportable Event (other than a Reportable Event for which the 30
day notice requirement to the PBGC has been waived under regulations issued
under ERISA) or any event requiring disclosure under Section 4041(c)(3)(C)
or 4063(a) of ERISA with respect to any Plan (other than a Multiemployer
Plan); (vii) there are no claims (other than claims for benefits in the
normal course), actions or lawsuits asserted or instituted against, and
neither the Borrower nor any member of the Controlled Group has knowledge
of any threatened litigation or claims or any event which could reasonable
be expected to result in litigation or claims against (a) the assets of any
Plan (other than a Multiemployer Plan) or against any fiduciary of such
Plan with respect to the operation of such Plan or (b) the assets of any
Welfare Plan or against any fiduciary thereof with respect to the operation
of any such Welfare Plan; (viii) neither the Borrower nor any member of the
Controlled Group has incurred (a) any material withdrawal liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) as determined under Section 4201 of
ERISA as a result of a complete or partial withdrawal (within the meaning
of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (b) any
material liability (and no event has occurred which would result in such
liability) under ERISA Section 4062, 4063 or 4064 to the PBGC, to a trust
established under ERISA Section 4041 or 4042 or to a trustee appointed
under ERISA Section 4042; (ix) to the best of the knowledge of the Borrower
and every member of the Controlled Group, if the Borrower or any member of
the Controlled Group were to withdraw or partially withdraw from a
Multiemployer Plan, no withdrawal liability, as determined under Section
4201 of ERISA, would result; (x) neither the Borrower nor any member of the
Controlled Group or any organization to which the Borrower or any member of
the Controlled Group is a successor or parent corporation within the
meaning of Section 4069(b) of ERISA has engaged in a transaction within the
meaning of Section 4069 of ERISA within the previous five years; and
(xi) neither the Borrower nor any member of the Controlled Group maintains
or has established any Welfare Plan which provides for continuing health
benefits or coverage for any participant or any beneficiary of a
participant after such participant's termination of employment, except as
may be required by Section 4980B of the Code or Sections 601 through 608 of
ERISA at the expense of the participant or the beneficiary of the
participant.
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SECTION 3.14. AGREEMENTS.
(a) After giving effect to the Mergers and the other
transactions contemplated hereby to occur on the Closing Date, neither the
Borrower nor any of the Borrower's Subsidiaries is in material default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument to which
it is a party, except to the extent any such default would not have a
Material Adverse Effect.
(b) Schedule 3.14 is a true and complete listing, after giving
effect to the Mergers and the transactions contemplated hereby, of (i) all
credit agreements, indentures, and other agreements related to any
Indebtedness for borrowed money of the Borrower and its Subsidiaries,
(ii) all joint venture and co-production agreements to which the Borrower
or any of its Subsidiaries is a party with respect to uncompleted Product,
all material output and multi-picture Distribution Agreements and other
Distribution Agreements giving rise to Eligible Receivables to which the
Borrower or any of its Subsidiaries is a party, and (iii) all other
contracts and agreements (other than chain-of-title documents and other
agreements entered into in the ordinary course of business which would not
require a Credit Party to pay more than $1,000,000 in any year or upon
termination) entered into by the Borrower or any of its Subsidiaries or by
which the Borrower or any of its Subsidiaries is bound. The agreements
listed on Schedule 3.14 have been made available to the Lenders.
SECTION 3.15. TRUE AND COMPLETE DISCLOSURE.
Neither this Agreement nor the Confidential Information
Memorandum dated June 1996 (other than the financial projections furnished
to the Lenders prior to the date hereof (the "Projections")) at the time it
was furnished, contained any untrue statement of a material fact or omitted
to state a material fact, under the circumstances under which it was made,
necessary in order to make the statements contained herein or therein not
misleading. The Projections are based on good faith estimates and
assumptions believed to be reasonable at the time made, PROVIDED, HOWEVER,
that the Borrower makes no representation or warranty that such assumptions
will prove in the future to be accurate or that the Borrower and its
Consolidated Subsidiaries will achieve the financial results reflected in
such Projections. Except as set forth in the SEC Filings, at the date
hereof, there is no fact known to the Borrower which materially and
adversely affects, or is reasonably expected to materially and adversely
affect the business, properties, assets, operations or condition (financial
or otherwise) of the Credit Parties, taken as a whole (excluding general
industry and economic conditions).
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SECTION 3.16. SECURITY INTERESTS; OTHER SECURITY.
(a) This 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 Agent for the benefit of the Lenders (upon the
filing of the appropriate UCC-1 financing statements and upon the filing of
the Copyright Security Agreement with the United States Copyright Office)
valid and perfected first priority perfected security interests in the
Collateral subject only to Permitted Encumbrances.
(b) No Person has, and on the date of each Borrowing hereunder
no Person will have, any right, title or interest in or to the Collateral
which is, or which shall be, prior, paramount, superior or equal to the
right, title and interest of the Agent for the benefit of the Lenders
therein or thereto, except for Permitted Encumbrances.
SECTION 3.17. OWNERSHIP OF PLEDGED SECURITIES, INACTIVE
SUBSIDIARIES, ETC.
(a) Except as set forth on Schedule 3.17(a) or Schedule 3.17(b),
after giving effect to the Mergers and the other transactions contemplated
hereby to occur on the Closing Date, neither the Borrower nor any
Subsidiary on the date hereof owns any voting stock, partnership interest
or any other beneficial equity interest in any other Person.
(b) Annexed hereto as Schedule 3.17(b) is a correct and complete
list, after giving effect to the Mergers and the other transactions
contemplated hereby to occur on the Closing Date, of each corporate
Subsidiary of the Borrower showing, as to each such Subsidiary of the
Borrower, its name, the jurisdiction of its incorporation, its authorized
capitalization, the number of shares of its capital stock outstanding, and
the ownership of the capital stock of each such Subsidiary of the Borrower.
(c) Annexed hereto as Schedule 3.17(c) is a correct and complete
list of each Inactive Subsidiary, after giving effect to the Mergers and
the other transactions contemplated hereby to occur on the Closing Date.
No Inactive Subsidiary owns any assets or engages in any business
activities of any nature.
SECTION 3.18. OWNERSHIP OF PRODUCT; COPYRIGHTS AND OTHER RIGHTS.
As of the Closing Date, the Product listed on Schedule 3.18(a)
comprises all of the Product in which the Borrower or any of its
Subsidiaries has any right, title or interest in or to (either directly or
through a joint venture or partnership). As to each item listed on
Schedule 3.18(b) hereto the party holding
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such interests has duly recorded its interests in the United States Copyright
Office and has delivered copies of all such recordation to the Agent. All
Product and all component parts thereof do not and will not violate or
infringe upon in any respect 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, except in each case
as could reasonably be expected to have a Material Adverse Effect. There is
no claim, suit, action or proceeding pending or to the knowledge of any Credit
Party, threatened against the Borrower or any of its Subsidiaries that involves
a claim of infringement of any copyright with respect to any Product listed
on Schedule 3.18(a) or Schedule 3.18(b) and no Credit Party has knowledge
of any existing infringement by any other Person of any copyright held by
the Borrower or any of its Subsidiaries with respect to any Product listed
on Schedule 3.18(a) or Schedule 3.18(b), which in each case could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.19. DISTRIBUTION RIGHTS.
Each Credit Party has sufficient right, title and interest in
each item of Product to enable it to enter into and perform all agreements
generating Eligible Receivables and accounts receivable reflected on the
most recently delivered balance sheet of the Borrower and is not in breach
of any of its obligations under such agreements, nor does the Borrower have
knowledge of any breach, including an anticipatory breach, of any other
parties thereto which, in the case of accounts receivable (other than
Eligible Receivables) such breach could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.20. FICTITIOUS NAMES.
Except as set forth on Schedule 3.20, no Credit Party has done
business within the last five years, is doing business or intends to do
business other than under its full corporate name, including, without
limitation, under any trade name or other doing business name.
SECTION 3.21. COMPLIANCE WITH LAWS.
Neither the Borrower nor any of its Subsidiaries is in violation
of any Applicable Law except for violations which could not reasonably be
expected to have a Material Adverse Effect. The borrowings hereunder, the
intended use of the proceeds of the Loans as described in the preamble
hereto and as contemplated by Section 5.8 and any other transactions
contemplated hereby will not violate any Applicable Law.
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SECTION 3.22. ENVIRONMENTAL LIABILITIES.
(a) No Credit Party has, to the best of its knowledge, used,
stored, treated, transported, manufactured, refined, handled, produced or
disposed of any Hazardous Materials on, under, at, from, or in any way
affecting, any of its properties or assets, or otherwise, in any manner
which at the time of the action in question violated any Environmental Law
governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials 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
violated any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal
of Hazardous Materials, except in each instance such violations as in the
aggregate would not have a Material Adverse Effect.
(b) To the best of the Credit Parties' knowledge, no Credit
Party has any obligations or liabilities, known or unknown, matured or not
matured, absolute or contingent, assessed or unassessed, where such would
reasonably be expected to have a Material Adverse Effect on any Credit
Party and no claims have been made against any Credit Party during the past
five years and no presently outstanding citations or notices have been
issued against any Credit Party, where such could reasonably be expected to
have a Material Adverse Effect on any Credit Party, which in either case
have been or are imposed by reason of or based upon any provision of any
Environmental Law, including, without limitation, any such obligations or
liabilities relating to or arising out of or attributable, in whole or in
part, to the manufacture, processing, distribution, use, treatment,
storage, disposal, transportation or handling of any Hazardous Materials by
any Credit Party or any of its employees, agents representatives or
predecessors in interest in connection with or in any way arising from or
relating to any Credit Party or any of its respective 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 Credit Party or
any other location where such could have a Material Adverse Effect.
4. CONDITIONS PRECEDENT
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SECTION 4.1. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS
AMENDMENT AND RESTATEMENT.
The effectiveness of this amendment and restatement of the
Existing Credit Agreement and the making of the Term Loan are subject to
the following conditions precedent:
(a) CORPORATE DOCUMENTS OF CREDIT PARTIES. On or prior to the
Closing Date, the Agent shall have received with respect to each Credit
Party (except for the items described in clause (iii) below), with copies
for each of the Lenders:
(i) a copy of such Credit Party's certificate of
incorporation certified as of a recent date by the Secretary of
State of the State of such Credit Party's incorporation;
(ii) a certificate of each such Secretary of State, dated
as of a recent date, as to the good standing of and payment of
taxes by such 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 the Borrower issued by the Secretary of State of
each jurisdiction in which the Borrower is qualified as a foreign
corporation;
(iv) a certificate of the Secretary of such Credit Party
dated the Closing Date and certifying (A) that attached thereto
is a true and complete copy of the by-laws of such Credit 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 Credit Party authorizing the
execution, delivery and performance in accordance with their
respective terms of the Fundamental Documents executed by such
Credit Party and any other documents required or contemplated
hereunder or thereunder, the grant of the security interests in
the Collateral, and in the case of the Borrower, the borrowings
hereunder and that such resolutions have not been amended,
rescinded or supplemented and are currently in effect, (C) that
the certificate of incorporation of such Credit 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 and (D) as to the incumbency and
specimen signature of each officer executing any Fundamental
Document on behalf of such Credit Party or any other document
delivered by it in connection herewith or therewith (such
certificate to
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contain a certification by another officer of such Credit 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 Agent or
its counsel or any Lender may reasonably request.
(b) NOTES. The Agent shall have received the Notes, dated as of
the date hereof, duly executed by the Borrower.
(c) SECURITY AND OTHER DOCUMENTATION. The Agent shall have
received (i) two duly executed original counterparts of a Copyright
Security Agreement Supplement listing each item of Product acquired or
created by any Credit Party since the date of the execution of the Existing
Credit Agreement, (ii) two duly executed original counterparts of a Pledge
Agreement Supplement accompanied by the Pledged Securities, with undated
stock powers executed in blank with respect to each Subsidiary acquired or
formed by any Credit Party since the date of the execution of the Existing
Credit Agreement and (iii) the appropriate UCC-1 financing statements
relating to the Collateral.
(d) SECURITY INTERESTS IN COPYRIGHTS AND OTHER COLLATERAL. The
Agent shall have received evidence reasonably satisfactory to it that the
Credit Parties have sufficient right, title and interest in and to the
Collateral which they purport to own (including appropriate licenses under
copyright), as set forth in their financial statements and in other
documents presented to the Lenders to enable them to perform the
Distribution Agreements and to grant to the Agent for the benefit of the
Lenders the security interests contemplated by this Agreement.
(e) SUBORDINATION AGREEMENTS. The Agent shall have received two
duly executed counterparts of each Subordination Agreement.
(f) GUARANTY AGREEMENT. The Agent shall have received two duly
executed counterparts of the Guaranty Agreement.
(g) MERGERS AND TRANSFERS COMPLETED. The Agent shall be
satisfied that (i) the Mergers and all related transactions are consummated
as described in the registration statement filed on Form S-4 as filed with
the Securities and Exchange Commission on June 3, 1996 and (ii) all of the
stock of Goldwyn and its Subsidiaries and MPCA and its Subsidiaries have
been transferred to the Borrower, such transfer to be satisfactory in all
respects to the Agent.
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(h) LABORATORY ACCESS LETTERS AND PLEDGEHOLDER AGREEMENTS. The
Agent shall have received, to the extent not already received, duly
executed Laboratory Access Letters from the Borrower's principal
Laboratories covering all Completed Product which the Credit Parties only
have access rights to and duly executed Pledgeholder Agreements for each
item of Product for which any Credit Party has control over any physical
elements thereof as listed on Schedule 3.18.
(i) OPINIONS OF COUNSEL. The Agent shall have received the
written opinions or updated dated the Closing Date and addressed to the
Agent and the Lenders (i) substantially in the forms attached hereto as
Exhibits H-1 and H-2, each in form and substance reasonably satisfactory to
the Agent, of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to the
Credit Parties and (ii) substantially in the form attached hereto as
Exhibit H-3, in form and substance reasonably satisfactory to the Agent, of
Gibson, Dunn & Crutcher, counsel to the Credit Parties.
(j) UCC FINANCING STATEMENTS. The Agent shall have received, in
form reasonably satisfactory to it, UCC financing statements executed on
behalf of each Credit Party for filing in all jurisdictions in which the
Agent deems necessary or desirable to make a filing in order to provide the
Agent (for the benefit of the Lenders) with a perfected security interest
in the Collateral.
(k) BORROWING BASE CERTIFICATE. The Agent shall have received
an initial Borrowing Base Certificate dated as of May 31, 1996
substantially in the form attached hereto as Exhibit J demonstrating in
detail that the Borrowing Base equals or exceeds $200,000,000.
(l) EXISTING INDEBTEDNESS. The Agent shall have received
evidence that all existing Indebtedness (other than certain scheduled
Indebtedness set forth on Schedule 6.1) of the Borrower, Goldwyn and MPCA
and their respective Subsidiaries shall have been paid in full, and all
security interests, liens and other Encumbrances granted thereunder shall
have been released except Permitted Encumbrances.
(m) PAYMENT OF FEES. The Borrower shall have paid all costs and
fees which the Agent and the Lenders are entitled to receive on the Closing
Date pursuant to the terms of this Agreement or the Fee Letter, which costs
and fees have theretofore been invoiced.
(n) PRIORITY AND CONTRIBUTION AGREEMENT. The Agent shall have
received the Priority and Contribution Agreement, duly executed by all
parties thereto.
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(o) NO MATERIAL ADVERSE CHANGE. Since March 31, 1996 there
shall have been no event or events which have had a Material Adverse Effect
which have not been disclosed in the SEC Filings.
(p) INSURANCE. The Borrower shall have furnished the Agent, to
the extent not already received, with (i) a summary of all existing
insurance coverage, (ii) evidence acceptable to the 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 Chemical
Bank, as Agent, as the certificate holder and shall evidence the Borrower's
compliance with Section 5.3(f) with respect to all insurance coverage
existing as of the Closing Date.
(q) DELIVERY OF AGREEMENTS. The Agent shall have received and
be satisfied with the terms and provisions of all agreements listed on
Schedule 3.14 to the extent requested by the Agent and to the extent not
scheduled in the Existing Credit Agreement.
(r) BORROWING CERTIFICATE. The Agent shall have received the
initial Borrowing Certificate duly executed on behalf of the Borrower by an
Authorized Officer.
(s) NOTICES OF ASSIGNMENT AND IRREVOCABLE INSTRUCTIONS. The
Agent shall have received, to the extent not already received, with respect
to each Eligible Receivable included in the initial Borrowing Base
Certificate, a Notice of Assignment and Irrevocable Instructions executed
by the appropriate Credit Party.
(t) REQUIRED CONSENTS AND APPROVALS. The Agent shall be
satisfied that all required consents and approvals have been obtained with
respect to the transactions contemplated hereby from all Governmental
Authorities with jurisdiction over the business and activities of any
Credit Party as of the date hereof, and from any other entity whose consent
or approval the Agent in its reasonable discretion deems necessary to
consummate the transactions contemplated hereby.
(u) APPROVAL OF COUNSEL TO THE AGENT. All legal matters
incident to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory to Morgan, Lewis & Bockius LLP, counsel to the
Agent.
(v) OTHER DOCUMENTS. The Agent shall have received such other
documentation as the Agent may reasonably request.
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SECTION 4.2. CONDITION PRECEDENT TO EACH LOAN AND EACH LETTER OF
CREDIT.
The obligations of the Lenders and the Issuing Bank to make each
Loan and to issue and purchase participations in each Letter of Credit are
subject to the following conditions precedent:
(a) NOTICE. The 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 Agent shall have received a
Borrowing Certificate with respect to such Borrowing, duly executed by an
Authorized Officer of the Borrower.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Article 3 hereof shall be true and correct in all
material respects on and as of the date of each Borrowing or the issuance
of each Letter of Credit hereunder (except to the extent that such
representations and warranties relate solely to an earlier date and except
as affected by transactions expressly contemplated hereby), with the same
effect as if made on and as of such date.
(d) NO REVOLVING LOAN EVENT OF DEFAULT. On the date of each
Borrowing or the issuance of each Letter of Credit, no Revolving Loan Event
of Default or Revolving Loan Default shall have occurred and be continuing.
On the date of each Borrowing or the issuance of each Letter of Credit
which would result in the sum of the aggregate amount of all Revolving
Credit Loans PLUS the then current L/C Exposure exceeding the Guaranteed
Commitment then in effect (after giving effect to all Revolving Credit
Loans repaid and all reimbursements of Letters of Credit made concurrently
with the making of any Revolving Credit Loans), no Term Loan Event of
Default or Term Loan Default shall have occurred and be continuing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the matters
and to the extent specified in paragraphs (b) through (d) of this Section.
5. AFFIRMATIVE COVENANTS
Each of the Credit Parties covenants and agrees that from the
date hereof and until (i) the payment in full of (x) all Commitment Fees
payable hereunder and (y) the principal of and the interest on the Notes,
(ii) the satisfaction of all other Obligations, (iii) the termination of
the Commitments (including any commitment to issue any Letter of Credit),
(iv) the
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expiration, termination or cancellation of all Letters of Credit
and (v) the termination of this Agreement, unless the Required Lenders
shall otherwise consent in writing, each of them will:
SECTION 5.1. FINANCIAL STATEMENTS, REPORTS, ETC.
(a) Furnish to the Lenders, as soon as available, but in any
event within 90 days after the end of each fiscal year of the Borrower
commencing with fiscal year ending December 31, 1996 the audited
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at the end of, and the related consolidated statements of
income, stockholders' equity and cash flows (along with the related notes
and supplemental information) for such year, and the comparative financial
statements as at the end of, and for, the preceding fiscal year, if any,
accompanied by an auditor's report and opinion of KPMG Peat Marwick LLP or
such other independent public accountants of nationally recognized standing
as shall be retained by the Borrower and reasonably acceptable to the
Agent, which report shall be prepared in accordance with generally accepted
auditing standards relating to reporting and which report shall be
unqualified as to the scope of audit and as to the status of the Borrower
as a going concern and shall state that such financial statements fairly
present the financial condition of the Borrower and its Consolidated
Subsidiaries as at the dates indicated and the results of its operations
and cash flows for the periods indicated in conformity with GAAP (except
for accounting changes in response to FASB releases or other authoritative
pronouncements with which such independent public accountants concur); and
an Authorized Officer of the Borrower shall certify that such financial
statements fairly present the financial condition of the Borrower on a
consolidated basis as at the dates indicated and the results of its
operations and cash flows for the periods indicated in conformity with
GAAP;
(b) Furnish to the Lenders, as soon as available, but in any
event within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, the unaudited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as at the
end of, and the related unaudited statements of income, cash flow and
stockholders' equity for, such quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter, in each case consistent with prior practice certified by an
Authorized Officer of the Borrower, to the effect that such financial
statements, although not examined by independent public accountants,
reflect all adjustments necessary to fairly present the financial position
of the Borrower as at the dates indicated and the results of their
operations for the periods indicated in conformity with GAAP, subject only
to year-end and audit adjustments;
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(c) Furnish to the Lenders, together with the delivery of the
statements referred to in paragraphs (a) and (b) of this Section 5.1, a
certificate of an Authorized Officer of the Borrower substantially in the
form of Exhibit I hereto (i) stating that the signer has reviewed the terms
of this Agreement and has made such examinations and investigations as are
deemed necessary to express an informed opinion whether any condition or
event which would constitute an Event of Default or Default and stating
whether or not he has knowledge of any such condition or event and, if so,
specifying each such condition or event of which he has knowledge and the
nature thereof and (ii) demonstrating in reasonable detail compliance with
the provisions of Sections 6.1(g), 6.1(h), 6.16, 6.17, 6.19, 6.21 and 6.23.
(d) Furnish to the Lenders, together with each set of audited
financial statements required by paragraph (a) above, a report from the
independent public accountants rendering the report thereon (i) stating
that such Person has made such examination or investigation as is necessary
to enable it to express an informed opinion as to the matters referred to
in clause (ii) of this Section 5.1(d), it being understood that no special
audit procedures are required hereby and (ii) 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 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;
(e) Deliver to the Agent, on or prior to each Borrowing Base
Delivery Date, a certificate substantially in the form of Exhibit J hereto
(a "BORROWING BASE CERTIFICATE") setting forth the amount of each component
to be included in the Borrowing Base as of the Borrowing Base Calculation
Date immediately preceding such Borrowing Base Delivery Date attached to
which shall be detailed information including the calculation of each such
component in the form attached to the Borrowing Base Certificate;
(f) Deliver to the Agent, within 10 days of receipt thereof,
copies of all reports submitted by independent public accountants to the
Borrower in connection with each annual, interim or special audit of the
financial statements of the Borrower, including, without limitation, the
comment letter submitted by such accountants to management in connection
with their annual audit;
(g) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available by the Parent, the Borrower or any of the Parent's Subsidiaries
to its security holders generally, of all
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regular and periodic reports and all registration statements and prospectuses,
if any, filed by any of them with any securities exchange or with the
Securities and Exchange Commission, or any comparable foreign bodies, and of
all press releases and other statements made available generally by any of them
to the public concerning material developments in the business of the Parent,
the Borrower or any of the Parent's Subsidiaries;
(h) Deliver to the Agent, promptly upon any Executive Officer of
any Credit Party obtaining knowledge (a) of any Default, or becoming aware
that any Lender has given notice or taken any other action with respect to
a claimed Event of Default or (b) that any Person has given any notice to
any Credit Party or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 7.1(f), a
certificate of an Authorized Officer of the Borrower, specifying the nature
and period of existence of any such condition or event, or specifying the
notice given or action taken by such holder or Person and the nature of
such claimed Event of Default or condition and what action the Borrower has
taken, is taking and proposes to take with respect thereto;
(i) Deliver to the Agent, promptly upon any Executive Officer of
the Borrower obtaining knowledge of (i) the institution of, or threat in
writing of, any action, suit, proceeding, investigation or arbitration by
any Governmental Authority or other Person against or affecting a Credit
Party or any of their respective assets which could reasonably be expected
to have a Material Adverse Effect, or (ii) any material development in any
such action, suit, proceeding, investigation or arbitration (whether or not
previously disclosed to the Lenders), notice thereof to the Agent and
provide such other information as may be reasonably available to it
(without waiver of any applicable evidentiary privilege) to enable the
Lenders to evaluate such matters; and, in addition to the requirements set
forth in clauses (i) and (ii) of this Section, the Borrower upon request
shall promptly give notice of the status of any action, suit, proceeding,
investigation or arbitration covered by a report delivered to the Agent
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;
(j) Deliver to the Lenders, within 90 days after the end of each
fiscal year, in the form previously delivered to the Agent, a net worth
certificate for either of the Guarantors, which net worth certificate shall
certify that either Metromedia or Kluge has a net worth of at least
$1,000,000,000;
(k) Deliver to the Agent, (a) not later than 5 days prior to the
commencement of principal photography of an item of Product to be produced
by a Credit Party or for which a Credit
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Party has a financial risk (i.e., payment by the Credit Party is not
conditioned upon delivery) (or such later date that is acceptable to the
Agent) and (b) not later than 5 days prior to payment of the acquisition cost
for a Negative Pickup (or such later date that is acceptable to the Agent) each
of the following to the extent applicable (it being understood that for
purposes of subparagraph (b), clauses (i), (viii) and (ix) shall not be
applicable), (i) the budget for such item of Product, (ii) a schedule
identifying all agreements executed by a Credit Party in connection with such
item of Product which provide for deferments of compensation or a gross or net
profit participation, (iii) copies of such of the foregoing agreements as the
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 Agent), including all forms of insurance coverage required
by Section 5.3 hereof for items of Product described in subparagraph (a) of
this Section 5.1(l) and the insurance coverage required by Section 5.3(d)
for items of Product described in subparagraph (b) of this Section 5.1(l),
(v) copies of all instruments of transfer or other instruments (in
recordable form) necessary to establish, to the reasonable satisfaction of
the 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 Agent the security interests therein
which are contemplated by this Agreement which documents shall evidence to
the Agent's reasonable 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) executed
Pledgeholder Agreements or Laboratory Access Letters, as appropriate, with
respect to such item of Product, (viii) a schedule of sources and uses
demonstrating in detail the sources and uses of all cash necessary to
complete and deliver the Product and (ix) a Completion Guaranty with
respect to such Product in form and substance satisfactory to the Agent
naming the Agent, for the benefit of the Lenders, as a beneficiary thereof
to the extent of the Borrower's financial interest in such Product;
(l) Deliver to the Agent, within 15 days of the end of each
calendar month with respect to each item of Product being produced by the
Borrower from the beginning of preproduction for such item of Product until
such item of Product is Completed, all periodic financial reports prepared
by or for any Credit Party with respect to each such item of Product,
including a monthly statement of the Borrower's cost basis in such item of
Product and the estimated cost to complete such item of Product;
(m) Deliver to the Agent within 30 days of the end of each June
30 and December 31, updated cash flow projections for the ensuing four
quarters in the format previously delivered to
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the Lenders demonstrating that sufficient cash will be available from
operations, borrowings under this Agreement and amounts committed to be funded
by third parties approved by the Agent, as and when needed to fund all
reasonably anticipated cash requirements;
(n) Deliver to the Agent, within 30 days after each theatrical
item of Product produced by a Credit Party is Completed, a tentative
negative cost statement, and within 120 days after each theatrical item of
Product is Completed, the final negative cost statement; and
(o) Deliver to the Agent, with reasonable promptness, such other
information and data with respect to the Credit Parties or any Special
Purpose Distributor from time to time as may be reasonably requested by the
Agent on behalf of the Lenders.
SECTION 5.2. CORPORATE EXISTENCE; COMPLIANCE WITH STATUTES.
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 required to conduct its businesses and
(ii) comply in all respects with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, any Governmental
Authority, except to the extent that the failure to do any of the foregoing
would not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.3. INSURANCE.
(a) Keep its assets which are of an insurable character insured
(to the extent and for time periods consistent with normal U.S. motion
picture industry practices) by financially sound and reputable insurers
against loss or damage by fire, explosion, theft or other hazards which are
included under extended coverage and in an amount 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. motion picture industry practices.
(b) Maintain with financially sound and reputable insurers,
insurance against loss or damage due to fire, explosion, theft or other
hazards and risks and liability to persons and property to the extent and
in the manner customary for major independent production companies in the
U.S. motion picture industry in connection with motion pictures of like
size and type as the Product; PROVIDED, HOWEVER, that workers' compensation
insurance or similar coverage may be effected with respect to its
operations in any particular state or other
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jurisdiction through an insurance fund operated by such state or jurisdiction.
(c) Upon the request of the Agent, the Borrower will render to
the Agent a statement in such detail as the Agent may request as to all
such insurance coverage.
(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, through the third anniversary of the
date on which such item of Product is completed in the U.S. and/or as
otherwise required by applicable contracts, an "Errors and Omissions"
policy to provide coverage to the extent and in such manner as is customary
in the U.S. motion picture industry for motion pictures of like type but,
at minimum, to the extent and in such manner as is required under all
applicable contracts relating thereto.
(e) 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 (1) until such time as the Agent shall
have been provided with satisfactory evidence of the existence of one
negative in one location and an interpositive or internegative in another
location of the final theatrical version of the Completed Product,
insurance on the negatives and sound tracks 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 (2) 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 in the U.S. motion picture industry for motion pictures of
a like type, but at minimum, to the extent required under all applicable
contracts relating thereto.
(f) Cause all such above-described insurance (excluding workers'
compensation insurance) to (1) provide for the benefit of the Lenders that
30 days' prior written notice of suspension, cancellation, termination,
modification, non-renewal or lapse or material change of coverage shall be
given to the Agent; (2) name the Agent for the benefit of the Lenders and
any other party providing financing for such item of Product as the 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 utilized to finance the production of such item of Product;
and (3) to the extent that neither the Agent nor the Lenders shall be
liable for premiums or calls, name the Agent for the benefit of the Lenders
as an additional insured including, without limitation, under any "Errors
and Omissions" policy.
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SECTION 5.4. COMPLETION GUARANTIES.
Obtain a Completion Guaranty from an Approved Completion
Guarantor on terms and conditions satisfactory to the Agent naming the
Agent for the benefit of the Lenders as a beneficiary thereunder to the
extent of the Credit Party's financial interest for all Product which a
Credit Party is producing or in which a Credit Party has an Investment
which is subject to completion risk.
SECTION 5.5. TAXES AND CHARGES; OBLIGATIONS IN ORDINARY COURSE
OF BUSINESS.
Duly pay and discharge, or cause to be paid and discharged,
before the same shall become delinquent and/or the basis for penalties
(monetary or otherwise) or interest assessment, all federal, state or local
taxes, assessments, levies and other governmental charges, imposed upon the
Borrower, any of its Subsidiaries (other than an Inactive Subsidiary) or
their respective 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
of the property of the Borrower or any Subsidiary (other than an Inactive
Subsidiary); 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 the Borrower
shall have set aside on its books proper reserves (to the extent required
by GAAP) adequate with respect thereto if reserves shall be deemed
necessary by such Person in accordance with GAAP; and PROVIDED, FURTHER,
that the Borrower will pay all such taxes, assessments, levies or other
governmental charges forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security therefor. Each
Credit Party will promptly pay and the Borrower shall cause each Excluded
Subsidiary to promptly pay when due all other obligations incident to its
respective operations; PROVIDED, HOWEVER, that any such obligations need
not be paid if the payment thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower shall have set aside
on its books proper reserves (to the extent required by GAAP) adequate with
respect thereto if reserves shall be deemed necessary; and PROVIDED,
FURTHER, the Borrower will pay all such obligations forthwith upon the
commencement of procedures to foreclose any Lien which may have attached as
security therefor.
SECTION 5.6. CHIEF EXECUTIVE OFFICE; CORPORATE NAME.
No Credit Party will change its name or the location of its chief
executive offices or any of the offices where any such entity keeps the
books and records (including records on Eligible
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Receivables) with respect to the Collateral owned by it or move any Collateral
from the locations presently kept (except as permitted in Section 5.17)
without (i) giving the Agent 15 days' written notice of such change or move
and (ii) filing any additional UCC financing statements and such other
documents reasonably requested by the Agent or which are otherwise necessary
or desirable to continue the first perfected security interest of the Agent
for the benefit of the Lenders in the Collateral.
SECTION 5.7. ERISA COMPLIANCE AND REPORTS.
(a) For each Plan (including each such Plan which is hereafter
adopted by the Borrower or any member of the Controlled Group) which is
intended to be tax qualified under Section 401(a) of the Code: the Borrower
shall, or shall cause such member of the Controlled Group to, (a) from and
after the adoption of any Plan, use its best efforts to cause such Plan to
be qualified within the meaning of Section 401(a) of the Code and to be
administered in all material respects in accordance with the requirements
of ERISA and Section 401(a) of the Code; and (b) not take any action which
would cause such Plan not to be qualified within the meaning of Section
401(a) of the Code or not to be administered in all material respects in
accordance with the requirements of ERISA and Section 401(a) of the Code.
(b) As soon as possible, and in any event within 10 Business
Days after the Borrower or any member of the Controlled Group knows or has
reason to know that the Borrower or any member of the Controlled Group
(i) will give or is required to give notice to the PBGC of any Reportable
Event with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any
such Reportable Event; or (ii) receives notice from the PBGC under Title IV
of ERISA of an intent to terminate or appoint a trustee to administer any
Plan, the Borrower shall, and shall cause such member of the Controlled
Group to, deliver to the Agent at the Borrower's expense, a statement of
the chief financial officer of the Borrower or such member of the
Controlled Group describing such event, together with a copy of the notice
of such Reportable Event given or required to be given to the PBGC or a
copy of such notice from the PBGC, and any correspondence with, or filings
made with, the PBGC or the Department of Labor, and the action, if any,
which the Borrower or such member of the Controlled Group proposes to take
with respect thereto.
(c) The Borrower shall and shall cause each member of the
Controlled Group to deliver to the Agent at the Borrower's expense: (i) if
requested by the Agent, promptly after the filing thereof by the Borrower
or such member of the Controlled
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Group with the Department of Labor or Internal Revenue Service or the PBGC,
copies of each annual and other report with respect to each Plan or Welfare
Plan; (ii) promptly after receipt thereof, a copy of any notice, determination
letter, ruling or opinion that the Borrower or such member of the Controlled
Group may receive from the PBGC, Department of Labor or Internal Revenue
Service with respect to any Plan or Welfare Plan (other than notices,
determination letters, rulings or opinions of general applicability);
(iii) promptly and in any event within 10 Business Days after receipt thereof,
a copy of any correspondence that the Borrower or such member of the
Controlled Group receives or receives from the Plan Sponsor (as defined by
Section 4001(a)(10) of ERISA) of any Plan concerning potential withdrawal
liability pursuant to Section 4219 of ERISA and/or Section 4202 of ERISA, and a
statement from the chief financial officer of the Borrower or such member
of the Controlled Group setting forth details as to the events giving rise
to such potential withdrawal liability and the action which the Borrower or
such member of the Controlled Group proposes to take with respect thereto;
(iv) notification within 10 Business Days of any intention of the Borrower
or any member of the Controlled Group to withdraw, in whole or in part,
from any Multiemployer Plan; (v) notification within 30 Business Days of
any material increases in the benefits of, or contributions to, any
existing Plan or Welfare Plan or the establishment of any new Plans or
Welfare Plans, or the commencement of contributions to any such Plan to
which the Borrower or such member of the Controlled Group was not
previously contributing; (vi) notification within 30 Business Days of any
Reportable Event with respect to any Plan (other than a Reportable Event
for which the 30 day notice requirement to the PBGC has been waived under
regulations issued under ERISA); and (vii) notification within 10 Business
Days of a request for a minimum funding waiver or the incurrence of an
accumulated funding deficiency under Section 412 of the Code with respect
to any Plan or any failure by the Borrower or any member of the Controlled
Group to make a required contribution to any Plan and not within a
reasonable time cured such deficiency.
SECTION 5.8. USE OF PROCEEDS.
(a) Use the proceeds of the Term Loans solely to refinance the
Existing Credit Agreement, the Old Goldwyn Credit Agreement and the Old
MPCA Credit Agreement.
(b) Use the proceeds of the Revolving Credit Loans solely (i) to
refinance up to $ 24,000,000 of outstanding Indebtedness of the Credit
Parties, (ii) to finance the Credit Parties' development, production,
acquisition, exploitation and worldwide distribution of motion pictures,
video product, interactive product and made-for-television product (other
than the production of newly created deficit-financed episodic made-for-
television programming), in each case, including ancillary
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rights therein, (iii) to finance the Borrower's domestic theatrical exhibition
business and (iv) for general working capital purposes.
SECTION 5.9. ACCESS TO BOOKS AND RECORDS; EXAMINATIONS.
(a) Maintain or cause to be maintained at all times true and
complete books and records of its financial operations (in accordance with
GAAP); and provide the Agent and its designated representatives access
after reasonable notice to all such books and records and to any of its
properties or assets during regular business hours, in order that the Agent
may make such examinations and make abstracts from such books, accounts,
records and other papers pertaining to the Collateral and may discuss the
affairs, finances and accounts with, and be advised as to the same by,
officers and independent accountants, all as the Agent may reasonably 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 Agent pursuant to this Agreement or for otherwise ascertaining
compliance with this Agreement or any other Fundamental Documents. Each of
the Credit Parties hereby authorizes the Agent following notice to the
Borrower to confirm with account debtors and other payors the amounts and
terms of all Eligible Receivables included in the Borrowing Base. Each of
the Credit Parties hereby agrees that, upon the occurrence and during the
continuance of an Event of Default, the Agent shall be entitled to confirm
directly with account debtors the amounts and terms of all accounts
receivable. The Agent hereby agrees to provide the applicable Credit Party
with copies of any written request sent by the Agent to such account
debtors.
(b) Provide the Agent and its representatives reasonable access
to any such material properties during regular business hours in order that
the Agent or its representatives may inspect such properties and may
discuss the affairs and finances and accounts with, and be advised as to
the same by, officers and (upon prior notice to the Borrower) independent
accountants, all as the Agent may deem appropriate for ascertaining
compliance with this Agreement.
SECTION 5.10. THIRD PARTY AUDIT RIGHTS.
Promptly notify the Agent of, and allow the Agent access to the
results of, all audits conducted by a Credit Party of any third party
licensee, partnership and joint venture under any material agreement with
respect to any item of Product included in the Collateral. Each Credit
Party will exercise its audit rights with respect to any third party
licensees, partnerships and joint ventures under any agreement with respect
to an item of Product included in the Collateral upon the
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reasonable request of the Agent, PROVIDED, HOWEVER, that if the Credit Party
shall object to performing such audit, the audit shall not be undertaken and
the receivables in the Borrowing Base from such third party licensee,
partnership or joint venture in connection with the item of Product shall
be eliminated from the Borrowing Base. After any Event of Default has
occurred and is continuing, the Agent shall have the right to exercise
through any Credit Party such Credit Party's right to audit any obligor
under an agreement with respect to any item of Product included in the
Collateral.
SECTION 5.11. MAINTENANCE OF PROPERTIES.
Keep its properties which are material to the business in good
repair, working order and condition and, from time to time, (i) make all
necessary and proper repairs, renewals, replacements, additions and
improvements thereto and (ii) comply at all times with the provisions of
all material leases and other material agreements to which it is a party so
as to prevent any loss or forfeiture thereof or thereunder unless
compliance therewith is being currently contested in good faith by
appropriate proceedings and appropriate reserves have been established in
accordance with GAAP.
SECTION 5.12. MATERIAL ADVERSE EFFECT.
Promptly report to the Agent and the Lenders, after any Executive
Officer of a Credit Party obtains knowledge of same, any event or series of
events which would have a Material Adverse Effect.
SECTION 5.13. FURTHER ASSURANCES; SECURITY INTERESTS.
(a) Upon the request of the Agent, duly execute and deliver, or
cause to be duly executed and delivered, at the cost and expense of the
Borrower, such further instruments as may be necessary or proper, in the
reasonable judgment of the Agent, to carry out the provisions and purposes
of this Agreement and the other Fundamental Documents, and to do, all
things necessary or proper, in the reasonable judgment of the Agent, to
provide, perfect or preserve the Liens hereunder and under the Fundamental
Documents, and in the Collateral, the Pledged Securities and any portion of
any of the foregoing.
(b) Upon the request of the Agent, promptly perform or cause to
be performed any and all acts and execute or cause to be executed, at the
cost and expense of Borrower, 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 statute, rule or regulation of any applicable
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foreign, federal, state or local jurisdiction, which are necessary or advisable
in the judgment of the Agent, from time to time, in order to grant and maintain
in favor of the Agent for the benefit of the Lenders as beneficiaries thereof
the perfected security interest in the Collateral contemplated by the
Fundamental Documents and a pledge of the Pledged Securities of the Credit
Parties as provided for in the Pledge Agreements and to carry out the
provisions and purposes of the Fundamental Documents.
(c) Promptly deliver or cause to be delivered to the Lenders
from time to time such other documentation, consents, authorizations and
approvals in form and substance reasonably satisfactory to the Agent, as
the Agent shall deem reasonably necessary or advisable to perfect or
maintain the Liens of the Agent for the benefit of the Lenders.
(d) With respect to each Distribution Agreement relating to
Product produced or acquired after the date hereof, as promptly as
practicable execute and cause each party thereto to duly execute and
deliver to the Agent an original Notice of Assignment and Irrevocable
Instructions.
(e) With respect to each Distribution Agreement relating to
Product on Schedule 3.18(a) or Schedule 3.18(b) (other than Distribution
Agreements giving rise to Eligible Receivables) use commercially reasonable
efforts to execute and cause each party thereto to duly execute and deliver
to the Agent an original Notice of Assignment and Irrevocable Instructions.
SECTION 5.14. PERFORMANCE OF OBLIGATIONS.
Duly observe and perform all material terms and conditions of all
production services agreements with respect to an item of Product, the
Distribution Agreements, the Completion Guaranty (and all related
agreements with an Approved Completion Guarantor), all agreements that are
included in the chain of title for an item of Product and all other
material agreements with respect to the production, development and/or
exploitation of an item of Product and diligently protect and enforce the
rights of any Credit Party under all such agreements in a manner consistent
with prudent business judgment.
SECTION 5.15. COPYRIGHT.
(a) In connection with each item of Product, with respect to
which a Credit Party is or becomes the copyright proprietor thereof or to
the extent such interest is obtained by a Credit Party, or a Credit Party
otherwise acquires a copyrightable interest in, take any and all actions
necessary to register the copyright for such item of Product in the name of
such Credit Party in conformity with the laws of the United
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States, and immediately deliver to the Agent (i) written evidence of the
registration of any and all such copyrights for inclusion in the Collateral
and (ii) a Copyright Security Agreement Supplement, relating to such item of
Product executed by such Credit Party and all other parties to the Copyright
Security Agreement; PROVIDED, THAT, notwithstanding the foregoing, no such
registration need be made with respect to a script or a screenplay unless
either the Credit Party has invested at least $500,000 in such item of
Product or the item of Product is scheduled to commence principal
photography.
(b) As soon as a completed item of Product can be copyrighted
(but in any event no later than 30 days after theatrical release of such
item of Product), to the extent a Credit Party is or becomes the copyright
proprietor thereof or to the extent such interest is obtained by a Credit
Party, or a Credit Party otherwise acquires a copyrightable interest in
such item of Product, take any and all actions reasonably necessary, to the
extent possible, to register the copyright for such item of Product
(including the underlying literary rights thereto) in the name of such
Credit Party, in conformity with the laws of the United States and such
other jurisdictions as the Agent may reasonably specify, and immediately
deliver to the Agent (i) written evidence of the registration of any and
all such copyrights for inclusion in the Collateral and (ii) a Copyright
Security Agreement Supplement relating to any such item executed by such
Credit Party and all other parties to the Copyright Security Agreement.
(c) Obtain instruments of transfer or other documents evidencing
the interests of the Credit Parties with respect to the copyrights relating
to Product in which the Credit Parties are not entitled to be the initial
copyright proprietor, and promptly record such instruments of transfer on
the United States Copyright Register and, to the extent possible, in such
other jurisdictions as the Agent may reasonably request.
SECTION 5.16. FILM PROPERTIES AND RIGHTS; CREDIT PARTIES TO ACT
AS PLEDGEHOLDER.
Subject to the rights of third parties, act as pledgeholder for
the Agent on behalf of the Lenders with the same effect as if the Agent for
the benefit of the Lenders were a pledgee in possession of all property
relating to Product which are now or hereafter in the (actual or
constructive) possession of any such Credit Party, subject to such access
as shall be necessary to produce and distribute such Product.
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SECTION 517.c. LABORATORIES; NO REMOVAL.
(a) To the extent any Credit Party has control over, or rights
to receive any of the physical elements of, any item of Product, deliver or
cause to be delivered to a Laboratory or Laboratories all negative and
preprint material and all sound track materials with respect to each such
item of Product; notwithstanding the foregoing, with respect to items of
Product in existence on the Closing Date that are (1) not related to
Eligible Receivables, (2) not included in the calculation of the Library
Credit and (3) not material in the aggregate to the Credit Parties, each
Credit Party shall use reasonable commercial efforts to cause the materials
relating to such items of Product to be delivered to a Laboratory. Prior
to requesting any such Laboratory to deliver such negative or other
preprint or sound track material to another Laboratory, such Credit Party
shall provide the Agent with a Laboratory Access Letter or a Pledgeholder
Agreement executed by such other Laboratory and all the other parties to
such Pledgeholder Agreement (other than the Agent). Each Credit Party
hereby agrees not to remove or cause the removal of the original negative
and film or sound materials 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, other than the United Kingdom or Canada
or (ii) to any state where UCC-1 financing statements (or in the case of
jurisdictions outside the United States, documents similar in purpose and
effect) 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 a
Credit Party, promptly deliver the exposed negative for such item of
Product to the appropriate Laboratory on a daily basis.
SECTION 5.18. LAB ACCESS LETTER.
Deliver to the Agent two fully executed copies of a Laboratory
Access Letter with respect to each item of Product, if any, for which such
Credit Party has rights of access to the physical elements of such item of
Product, but does not own such physical elements; notwithstanding the
foregoing, with respect to items of Product in existence on the Closing
Date that are (1) not related to Eligible Receivables, (2) not included in
the calculation of the Library Credit and (3) not material in the aggregate
to the Credit Parties, each Credit Party shall use reasonable commercial
efforts to deliver any such Laboratory Access Letters.
SECTION 5.19. CASH RECEIPTS.
In the event the Borrower receives (i) payment or payments from
any account debtor or obligor in excess of $10,000, which payment should
have been deposited in a Collection Account
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or (ii) the proceeds of any sale of Collateral in excess of $10,000, the
Borrower shall promptly remit such payment or proceeds to the Agent to be
applied in accordance with Section 8.3.
SECTION 5.20. SUBSIDIARIES.
Cause each (i) corporation which becomes a Subsidiary of the
Borrower after the date hereof and (ii) Inactive Subsidiary which becomes
active after the date hereof to deliver to the Agent as promptly as
practicable an Instrument of Assumption and Joinder duly executed by such
Subsidiary, appropriate UCC-1 financing statements executed by such
Subsidiary and to the extent the stock of such Subsidiary has not
previously been pledged to the Agent, a Pledge Agreement Supplement duly
executed by the Borrower accompanied by the stock certificates of such
Subsidiary together with undated stock powers executed in blank.
SECTION 5.21. SECURITY AGREEMENTS WITH THE GUILDS.
Furnish to the Agent duly executed copies of (i) each security
agreement relating to an item of Product entered into by a Credit Party
with any guild after the date hereof and (ii) a subordination agreement
from the applicable guild with respect to the security interest and other
rights granted to it pursuant to each such security agreement delivered to
the Agent pursuant to clause (i) above. Each such subordination agreement
shall be in the form customarily entered into by the Agent and the
applicable guild or in such other form as may be acceptable to the Agent.
SECTION 5.22. BANK ACCOUNTS.
Provide the Agent with a list of all bank accounts maintained by
any Credit Party.
SECTION 5.23. LIENS.
Defend the Collateral and the Pledged Securities against any and
all Liens, claims and other impediments howsoever arising, other than
Permitted Encumbrances.
SECTION 5.24. PRODUCTION.
Use its reasonable commercial efforts to cause any item of
Product being produced by any Credit Party or, in which any Credit Party
has an Investment of at least $250,000 to be produced in accordance with
the standards set forth in, and within the time period established in, all
acquisition and license agreements with respect to such item of Product to
which a Credit Party is a party.
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SECTION 5.25. MUSIC.
When an item of Product has been scored, if requested by the
Agent, deliver to the Agent (a) written evidence of the music
synchronization rights 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 5.26. DISTRIBUTION AGREEMENTS; NEGATIVE PICKUPS; ETC.
(a) Furnish to the Agent promptly upon receipt thereof copies of
all Negative Pickup agreements and all agreements relating to joint
ventures or co-productions which are entered into by a Credit Party and the
originals of all Acceptable L/C's (including any amendments thereto) which
are received by a Credit Party (whether pursuant to a Distribution
Agreement or otherwise) after the date hereof.
(b) Furnish to the Agent, concurrently with the delivery of each
Borrowing Base Certificate, a list in the form of Schedule 3.14 hereto of
all material Distribution Agreements and amendments to Distribution
Agreements that were previously delivered to the Agent or included on any
such list or included on Schedule 3.14 executed during the preceding month.
(c) From time to time (i) furnish to the Agent such information
and reports regarding the Distribution Agreements to which a Credit Party
is a party as the Agent may reasonably request and (ii) upon the occurrence
and continuation of an Event of Default and the reasonable request of the
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.
(e) In the case of each item of Product which is to be acquired
pursuant to a Negative Pickup arrangement, furnish to the Agent copies of
all instruments of transfer or other instruments (in recordable form)
("Chain of Title Documents") necessary to establish that the producer who
is party to such Negative Pickup agreement owns sufficient copyright rights
in the literary property upon which such item of Product is to be based to
enable such producer to produce such item of Product and to grant to the
Credit Party all rights being acquired pursuant to such Negative Pickup
agreement. The Borrower will deliver such
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Chain of Title Documents to the Agent five (5) days prior to the expiration of
any right to withhold payment of the minimum guaranty under such Negative
Pickup agreement on the basis of a defect in the chain of title for such item
of Product but no later than the first inclusion of such item of Product in
the Borrowing Base.
SECTION 5.27. SEPARATE CORPORATE STRUCTURES.
(a) Not permit all of the officers and directors of the Parent
and/or the Parent's other Subsidiaries to be officers or directors of the
Borrower (or any of its Subsidiaries).
(b) Cause, if any of the Borrower's Affiliates (other than its
Subsidiaries) have directors and/or officers in common with the Parent
and/or the Parent's other Subsidiaries, and if the Borrower and its
Subsidiaries share the same employees with the Parent and/or the Parent's
other Subsidiaries, the salaries and expenses related to providing benefits
to such officers, directors and employees to be fairly and nonarbitrarily
allocated among such entities, with the result that each such entity bears
its fair share of the salary and benefit costs associated with all such
common officers, directors and employees.
(c) Cause, if the Borrower (or its Subsidiaries) and the Parent
and/or the Parent's other Subsidiaries jointly contract to do business with
vendors or service providers, the costs incurred in so doing to be fairly
and nonarbitrarily allocated among such entities, with the result that each
such entity bears its fair share of such costs.
(d) Cause, if the Borrower (or any of its Subsidiaries) and the
Parent and/or the Parent's other Subsidiaries have offices in the same
location, the overhead expenses to be fairly and nonarbitrarily allocated
among such entities, with the result that each bears its fair share of such
overhead expenses.
(e) Cause the Borrower and each of its Subsidiaries to maintain
checking accounts with commercial banking institutions which are separate
from those of the Parent and/or the Parent's other Subsidiaries.
(f) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and By-Laws and to observe all necessary,
appropriate, and customary corporate and other organizational formalities,
including, but not limited to, keeping separate and accurate minutes of
meetings of its board of directors and shareholders passing all resolutions
or consents necessary to authorize actions to be taken, and maintaining
accurate and separate books, records and accounts and in a manner
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permitting its assets and liabilities to be easily separated and readily
ascertained.
(g) Cause each of the Borrower (and its Subsidiaries) and the
Parent and/or the Parent's other Subsidiaries not to hold itself out to the
public or to any of its individual creditors as being a unified entity with
common assets and liabilities with the other.
(h) Cause each of Borrower's and its Subsidiaries' operations to
be conducted without an intent to hinder, delay or defraud any creditors in
connection with its respective assets and operations.
(i) Not permit the Borrower to amend Section 11 of its
Certificate of Incorporation.
SECTION 5.28. ENVIRONMENTAL LAWS.
(a) Promptly notify the Agent upon any Credit Party becoming
aware of any violation or potential violation or noncompliance 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 on the Credit Parties, taken as
a whole, and promptly furnish to the 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 on the Credit Parties, taken as a whole.
(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 required by Environmental Laws.
(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.
(d) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective employees, agents, trustees, officers and
directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and
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expenses of whatever kind of 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, arising out of or resulting from (i) the gross
negligence or willful misconduct of such indemnified party or (ii) any acts
or omissions of any indemnified party occurring after such indemnified
party is in possession of, or controls the operation of, any property or
asset.
6. NEGATIVE COVENANTS
Each of the Credit Parties covenants and agrees that from the
date hereof and until (i) the payment in full of (x) the Commitment Fees
payable hereunder and (y) the principal of and interest on the Notes, (ii)
the satisfaction of all other Obligations, (iii) the termination of the
Commitments (including any commitment to issue any Letter of Credit), (iv)
the expiration, termination or cancellation of all Letters of Credit and
(v) the termination of this Agreement, unless the Required Lenders shall
otherwise consent in writing, each of them will not, directly or
indirectly:
SECTION 6.1. LIMITATION ON INDEBTEDNESS.
Incur, create, assume or suffer to exist any Indebtedness except:
(a) Indebtedness represented by the Notes and the other
Obligations;
(b) Indebtedness in existence on the date hereof which is listed
on Schedule 6.1, but not any increases, extensions or renewals thereof,
except for extensions or renewals on substantially the same terms;
(c) liabilities relating to participations, deferments, guild
residuals and similar payments payable in connection with the production of
Product;
(d) Guaranties permitted under Section 6.2;
(e) liabilities for acquisitions of rights or Product incurred
in the ordinary course of business and not otherwise prohibited hereunder;
(f) Indebtedness owed to a Credit Party by another Credit Party;
provided that (i) such Indebtedness is subordinated
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to the Obligations and (ii) each such Credit Party is organized under the laws
of a state in the United States;
(g) Subordinated Indebtedness (including the Parent Line of
Credit Loans);
(h) Indebtedness in respect of Negative Pickup transactions of
up to $7,000,000 per item of Product, except that three items of Product
per fiscal year may be up to $10,000,000 per item of Product for all items
of Product produced or acquired during that year, which are otherwise
permitted hereunder;
(i) purchase money Indebtedness (including Capital Leases and
mortgage Indebtedness) for the Theater Group, to the extent secured, if at
all, by a Lien permitted by Section 6.6; and
(j) purchase money Indebtedness (including Capital Leases, but
other than the Capital Leases and mortgage Indebtedness permitted for the
Theater Group pursuant to Section 6.1(i)), to the extent secured, if at
all, by a Lien permitted by Section 6.6, not in excess of $2,000,000
outstanding at any one time.
SECTION 6.2. LIMITATION ON GUARANTIES.
Provide any Guaranty (including any obligation as a general
partner of a partnership or as a joint venturer of a joint venture in
respect of Indebtedness of such partnership or joint venture), either
directly or indirectly, except:
(a) obligations with respect to investments in Product (whether
pursuant to a Negative Pickup or otherwise) to the extent otherwise
permitted hereunder;
(b) Guaranties of performance under guild agreements, or to
suppliers or Laboratories providing services in connection with the
production of Product, which are incurred in the ordinary course of
business;
(c) Guaranties by the Borrower of performance obligations of a
Corporate Guarantor incurred in the ordinary course of business; and
(d) Endorsements of negotiable instruments for deposit or
collection in the ordinary course of business.
SECTION 6.3. NO CHANGE IN BUSINESS.
Engage in any business activities other than (i) activities
relating to the development, production, acquisition, exploitation and
worldwide distribution of motion pictures, video
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product, interactive product and made-for-television product (other than the
production of newly created deficit-financed episodic made-for-television
programming), in each case, including the ancillary rights therein, and (ii)
the theatrical motion picture exhibition business within the United States and
Canada.
SECTION 6.4. CONSOLIDATION, 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 (other than by entering
into Distribution Agreements in the ordinary course of business consistent
with past practice) any substantial portion of the assets or capital stock
of the Borrower and its Subsidiaries, taken as a whole, or agree to do or
suffer any of the foregoing except that a Corporate Guarantor may merge
with and into (i) the Borrower or (ii) another Corporate Guarantor.
SECTION 6.5. LIMITATION ON LOANS AND INVESTMENTS.
Create, make or incur any non-Product-related Investment, loan or
advance except:
(a) Investments in Cash Equivalents, provided such securities
are deposited with the Agent to be held as Collateral;
(b) loans, investments or advances to a Credit Party to the
extent permitted by and as described in Section 6.1(f); and
(c) Investments existing on the date hereof as set forth on
Schedule 3.17(a).
SECTION 6.6. LIMITATION ON LIENS.
Create, incur, assume or cause to exist any Lien upon any asset
or revenue stream except:
(a) Liens pursuant to written security agreements in favor of
guilds which are required pursuant to the terms of collective bargaining
agreements on terms satisfactory to the Agent;
(b) deposits under workers' compensation, unemployment insurance
and Social Security laws or to secure statutory obligations or bonds
incurred in the ordinary course of business;
(c) Liens for taxes, assessments or other governmental charges
or levies due and payable, the validity or amount of
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which is currently being contested in good faith by appropriate proceedings
pursuant to the terms of Section 5.5 hereof;
(d) Liens on assets of the Credit Parties existing as of the
date hereof described in Schedule 6.6;
(e) possessory Liens incurred in the ordinary course of business
(including Liens in favor of Laboratories, landlords, mechanics, carriers,
warehousemen and suppliers of materials and equipment) which secure normal
trade debt not yet due and payable and do not secure obligations for
borrowed money; provided that the aggregate amount of such secured trade
payables which remain outstanding more than 60 days after creation shall
not exceed $2,500,000;
(f) Liens or rights in connection with an item of Product
granted to an Approved Completion Guarantor for such item of Product, which
Liens or grants of rights are in form and substance customary for the
industry or otherwise acceptable to the Agent;
(g) Liens pursuant to this Agreement and the other Fundamental
Documents;
(h) purchase money Liens granted to the vendor or Person
financing the acquisition of property, plant or equipment if (i) limited to
the specific assets acquired and, in the case of tangible assets, other
property which is an improvement to or is acquired for specific use in
connection with such acquired property or which is real property being
improved by such acquired property; (ii) the debt secured by the Lien is
the unpaid balance of or was used to finance all or a portion of the
acquisition cost of the specific assets on which the Lien is granted; and
(iii) such transaction does not otherwise violate this Agreement;
(i) Liens securing certain Subordinated Indebtedness made by any
of the Metromedia Holders which Indebtedness and Liens are subordinated
pursuant to a Subordination Agreement;
(j) Liens arising out of attachments, judgments or awards as to
which an appeal or other appropriate proceedings for contest or review are
promptly commenced (and as to which foreclosure and other enforcement
proceedings (i) shall not have been commenced (unless fully bonded or
otherwise effectively stayed) or (ii) in any event shall be promptly fully
bonded or otherwise effectively stayed);
(k) Liens granted to producers in connection with the
acquisition of Product provided that such Liens do not extend to any item
of Product other than the item of Product being acquired
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and the parties have entered into an intercreditor agreement with the Agent
satisfactory in form and substance to the Agent; and
(l) protective Liens granted to licensees under Distribution
Agreements provided such Liens solely secure the distribution rights
granted to the licensee pursuant to such Distribution Agreement.
SECTION 6.7. RESTRICTED PAYMENTS.
Pay, declare or become obligated to make any Restricted Payments
except Restricted Payments to the Borrower; provided, that so long as no
Event of Default, nor to the knowledge of any Executive Officer of the
Borrower any Default has occurred or is continuing before and after giving
effect to the payment, the Borrower may repay the Parent Line of Credit
Loans and interest thereon.
SECTION 6.8. LIMITATION ON LEASES.
Create, incur or assume Consolidated lease expense (but
specifically excluding amounts expended to create, acquire or distribute
Product and amounts included in Theater Group Occupancy Charges) for all
Credit Parties for (i) fiscal year 1996 in excess of $5,000,000 and (ii)
each fiscal year thereafter in excess of the amount permitted for the
immediately preceding fiscal year plus 5% of such amount.
SECTION 6.9. RECEIVABLES.
Sell, discount or otherwise dispose of notes, accounts receivable
or other obligations owing to a Credit Party except for the purpose of
collection in the ordinary course of business.
SECTION 6.10. SALE AND LEASEBACK.
Enter into any arrangement with any Person or Persons other than
a Credit Party, whereby in contemporaneous transactions a Credit Party
sells essentially all of its right, title and interest in an item of
Product and such Credit Party or another Credit Party 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.
SECTION 6.11. ERISA COMPLIANCE.
The Borrower shall not, directly or indirectly, nor permit any
member of the Controlled Group, directly or indirectly, to (i) engage in a
"prohibited transaction" as defined in Section 4975 of the Code or Section
406 of ERISA which could reasonably be expected to subject the Borrower or
such member of the Controlled Group (after giving effect to any
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statutory
and/or regulatory exemption), to the tax on prohibited transactions imposed
by Section 4975 of the Code or any other liability; (ii) terminate any Plan
subject to Title IV of ERISA; (iii) make a complete or partial withdrawal
(within the meaning of Section 4201 of ERISA) from any Multiemployer Plan
so as to result in any liability to the Borrower or any member of the
Controlled Group; (iv) enter into any new Plan or modify any existing Plan
or engage in any other action which would increase the Borrower's or any
member of the Controlled Group's obligations under any Plan; (v) enter any
new Welfare Plan or modify any existing Welfare Plan to provide for
continuing health benefits or coverage for any participant or any
beneficiary of a participant after such participant's termination of
employment, except as may be required by Section 4980B of the Code or
Sections 601 through 608 of ERISA; (vi) fail to make required contributions
to any Plan, Welfare Plan or Multiemployer Plan; (vii) permit the present
value of all accrued benefits under each Plan (using the actuarial
assumptions utilized by the PBGC upon termination of a plan) to exceed the
fair market value of Plan assets allocable to such benefits, all determined
as of the then most recent valuation date for each such Plan; (viii) breach
or permit any employee, officer, or director of the Borrower or any member
of the Controlled Group or any trustee or administrator of any Plan or
Welfare Plan to breach any fiduciary responsibility imposed under Title I
of ERISA with respect to any Plan or Welfare Plan; or (ix) engage or allow
any member of the Controlled Group to engage in any transaction which would
result in the incurrence of a liability under Section 4069 of ERISA.
SECTION 6.12. TRANSACTIONS WITH AFFILIATES.
Directly or indirectly enter into any transaction with an
Affiliate (other than a Credit Party) unless such transaction (i) occurs in
the ordinary course of business on an arm's-length basis, or (ii) is
approved by the Agent.
SECTION 13.l. HAZARDOUS MATERIALS.
Cause or permit any of its properties or assets to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance in
all material respects with all applicable Environmental Laws, nor release,
discharge, dispose of or permit or suffer any release or disposal as a
result of any intentional act or omission on its part of Hazardous Material
onto any such property or asset in material violation of any Environmental
Law.
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SECTION 6.14. USE OF PROCEEDS OF LOANS AND REQUESTS FOR LETTERS
OF CREDIT.
Use the proceeds of Loans or request any Letter of Credit
hereunder other than for the purposes set forth in, and as required by,
Section 5.8.
SECTION 6.15. BUDGETED NEGATIVE COST; ETC.
(a) Incur any obligation in connection with any item of Product
produced by a Credit Party with a Budgeted Negative Cost in excess of
$7,000,000, execute a Negative Pickup obligating the Borrower to pay a
minimum guarantee of more than $7,000,000 for any item of Product, incur
acquisition costs of more than $7,000,000 for any item of Product, except
that in any fiscal year up to three items of Product may be up to
$10,000,000 per item of Product.
(b) Incur after the Closing Date any "pay-or-play" obligations
(x) in excess of $5,000,000 in connection with any single item of Product
that has not commenced principal photography or (y) in excess of
$20,000,000 in the aggregate outstanding for all items of Product that have
not commenced principal photography, without the Agent's consent.
(c) Commence principal photography of any made-for-television
movie without the Agent's consent unless the aggregate amount of minimum
guarantees under executed pre-sale agreements with Approved Obligors due
within 15 months of Completion is at least equal to the Budgeted Negative
Cost of such item of Product; PROVIDED, HOWEVER, that the Borrower may
commence principal photography of up to four made-for-television movies in
each year which do not satisfy such criteria if (i) the Budgeted Negative
Cost of each such item of Product is not more than $5,000,000 and (ii) a
written pre-sale agreement has been executed with a broadcast or cable
television network which provides for minimum payments of at least 75% of
Budgeted Negative Cost.
SECTION 6.16. UNRECOUPED PRINT AND ADVERTISING EXPENSES.
Permit Unrecouped Print and Advertising Expenses in the aggregate
to exceed $20,000,000 at any time.
SECTION 6.17. DEVELOPMENT COSTS.
Permit development costs to exceed $8,000,000 in the aggregate at
any time or to exceed $1,000,000 per item of Product for which Active
Preproduction has not yet commenced which, in either case, have neither
been written off or capitalized as part of the cost of production of the
item of Product.
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SECTION 6.18. JOINT VENTURE; CO-PRODUCTION.
Enter into any joint venture agreement or co-production agreement
which exposes a Credit Party to a completion or funding risk without the
Agent's prior consent.
SECTION 6.19. CUMULATIVE FREE CASH FLOW RATIO.
As of the period ending dates indicated, the ratio of Cumulative
Free Cash Flow to Cumulative Film Investment shall never be less than:
PERIOD ENDING DATE RATIO
12/31/97, 3/31/98,
6/30/98 and 9/30/98 -0.10:1
12/31/98, 3/31/99,
6/30/99 and 9/30/99 0.35:1
12/31/99, 3/31/00
6/30/00 and 9/30/00 0.50:1
12/31/00 and 3/31/01 0.60:1
6/30/01 1:1
SECTION 6.20. LIMITATIONS ON CAPITAL EXPENDITURES.
Make or incur any obligation to make (i) Capital Expenditures for
any fiscal year in excess of $3,000,000 (but specifically excluding amounts
expended to create, acquire or distribute an item of Product, the Theater
Group Capital Expenditures (including leases and mortgages) and the
aggregate of all expenditures properly capitalized in accordance with GAAP
by a Person to acquire, by purchase or otherwise, the business, property or
fixed assets of, or stock, or other evidence of beneficial ownership, in
part or in whole, of any other Person other than the portion of such
expenditure allocable, in accordance with GAAP, to net current assets) or
(ii) Theater Group Capital Expenditures subsequent to the Closing Date
(excluding leases and mortgages) in any rolling four quarter period in
excess of the sum of (x) the Excess Capital Expenditure Basket PLUS (y)
Theater Group EBITDA for such rolling four quarter period; where the
"Excess Capital Expenditure Basket" is initially an amount equal to
$2,500,000 and is reduced at the end of each fiscal year by the amount, if
any, by which the aggregate Theater Group Capital Expenditures for such
fiscal year exceed aggregate Theater Group EBITDA for such fiscal year.
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SECTION 6.21. CUMULATIVE FILM INVESTMENT.
At the end of each fiscal quarter, the Cumulative Film Investment
shall not exceed Cumulative Free Cash Flow by more than the aggregate
amount of unused availability under the Revolving Credit Commitments at the
Closing Date after giving effect to all transactions required to occur on
the Closing Date.
SECTION 6.22. OVERHEAD EXPENSES.
Permit aggregate cash overhead expenditures (including amounts
capitalized in accordance with GAAP) to be more than $31,000,000 for any
fiscal year (but excluding expenses reflected in the computation of Theater
Group EBITDA).
SECTION 6.23. THEATER GROUP EBITDA RATIO.
The ratio of (i) the sum of Theater Group EBITDA plus Theater
Group Occupancy Charges (to the extent deducted in computing Theater Group
EBITDA) to (ii) Theater Group Occupancy Charges for each rolling four
quarter period shall be at least 1.5:1.
SECTION 6.24. FISCAL YEAR.
Change its fiscal year end to other than December 31.
SECTION 6.25. SPECIAL PURPOSE DISTRIBUTORS.
Enter into any transaction with any Person where such Person(s)
effectively acts as a distributor or intermediary for the exploitation of
Product in one or more territories in an arrangement whereby it is intended
that payments under Distribution Agreements entered into by such Person
with third parties will be included in the Borrowing Base (provided such
payments constitute Eligible Receivables) unless such transaction as well
as the proposed Person who will effectively act as a distributor or
intermediary, have been approved in writing by the Agent. Each Credit Party
agrees that it will enter into, and require each Special Purpose
Distributor to enter into, such Distributor Security Documents as the Agent
may request, which shall among other things assign to the Agent (for the
benefit of the Lenders) the security interest and other rights that it
receives from each Special Purpose Distributor pursuant to a film lease
agreement, a security agreement or otherwise.
SECTION 6.26. INTEREST RATE PROTECTION AGREEMENTS, ETC.
Enter into any Interest Rate Protection Agreement or Currency
Agreement for other than bona fide hedging purposes.
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7. EVENTS OF DEFAULT
SECTION 7.l. TERM LOAN EVENTS OF DEFAULT
In the case of the happening and during the continuance of any of
the following events (herein called "TERM LOAN EVENTS OF DEFAULT"):
(a) any representation or warranty made by a Credit Party in
this Agreement or any other Fundamental Document to which it is a party or
any statement or representation made in any report, financial statement,
certificate or other document furnished directly to the Agent or any Lender
pursuant to this Agreement or any other Fundamental Document, shall prove
to have been false or misleading (considered in the context of all other
information provided to the Lenders) in any material respect when made or
delivered;
(b) default shall be made in the payment of principal of the
Notes as and when due and payable, whether by reason of maturity, mandatory
prepayment, acceleration or otherwise;
(c) default shall be made in the payment of interest on the
Notes, Commitment Fees or other amounts payable to the Agent or a Lender
under this Agreement, under any Currency Agreement, under any Interest Rate
Protection Agreement or under the Fee Letter, when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or by acceleration thereof or otherwise and such
default shall continue unremedied for five (5) days;
(d) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.1(i) (with
respect to notice of Defaults or Events of Default), Section 5.8 or Article
6 of this Agreement;
(e) default shall be made in the due observance or performance
of any other covenant, condition or agreement to be observed or performed
pursuant to the terms of this Agreement or any other Fundamental Document
or 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 any Fundamental Document to which such Credit Party is a party
and such default shall continue unremedied for twenty (20) days after the
Borrower receives written notice or actual knowledge thereof;
(f) default in payment shall be made with respect to any
Indebtedness (other than the Obligations) of the Borrower or any of its
Subsidiaries in an amount or amounts over $5,000,000
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in the aggregate; or
other default in connection with any such Indebtedness, if the effect of
such other default is to accelerate following any applicable grace periods
or to permit the holder thereof 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 following any applicable grace
periods, and such default shall not be remedied, cured, waived or consented
to within the period of grace with respect thereto; or any such
Indebtedness shall not be paid when due;
(g) the Borrower or any of its Subsidiaries (other than the
Inactive Subsidiaries) 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 the Borrower or any of
its Subsidiaries 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 the Borrower or any of its Subsidiaries shall
take any action to authorize any of the foregoing;
(h) any involuntary case, proceeding or other action against the
Borrower or any of its Subsidiaries (other than the Inactive Subsidiaries)
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 ninety (90) days;
(i) final judgment(s) for the payment of money in excess of
$2,500,000 shall be rendered against the Borrower or any of its
Subsidiaries and within thirty (30) days from the entry of such judgment
shall not have been discharged or stayed pending appeal or shall not have
been discharged within thirty (30) days from the entry of a final order of
affirmance on appeal;
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(j) a Reportable Event relating to a failure to meet minimum
funding standards or an inability to pay benefits when due shall have
occurred with respect to any Plan under the control of the Borrower or any
of its Subsidiaries shall not have been remedied within thirty (30) days
after the occurrence of such Reportable Event; or a trustee shall be
appointed by a United States District Court to administer such Plan, or the
Pension Benefits Guaranty Corporation shall institute proceedings to
terminate such Plan and the Agent shall have notified the Borrower that the
Required Lenders have made a determination that on the basis of such
Reportable Event, appointment of trustee or commencement of proceedings,
there are reasonable grounds to believe that such occurrence would have a
Material Adverse Effect;
(k) the Pledge Agreements, this Agreement, the Copyright
Security Agreement, 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 or shall be declared null and void or any of the
Security Documents shall not give or shall cease to give the Agent the
Liens, rights, powers and privileges purported to be created thereby in
favor of the Agent for the benefit of 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 Agent having an aggregate value in excess of $1,000,000;
(l) failure to submit any Borrowing Base Certificate to the
Agent within ten (10) Business Days of the date such certificate was due
pursuant to the terms of this Agreement if at such time any Term Loans are
currently outstanding;
(m) a Revolving Loan Event of Default shall have occurred;
(n) a Change in Management shall occur; for purposes hereof, a
"Change in Management" shall mean that any one of the posts of chief
executive officer, head of production or head of the Theater Group shall
not be performed for the Borrower by an acceptable person (a person shall
be deemed acceptable if not objected to by the Required Lenders within 5
days of notice of the proposed appointment); provided that a Change in
Management shall not be deemed to have occurred by reason of an acceptable
person ceasing to perform any such functional role unless such
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person has not been replaced within one hundred twenty (120) days of such
discontinuance;
(o) any of the Metromedia Holders shall have disaffirmed in
writing their respective obligations under the Subordination Agreement or a
court of competent jurisdiction shall determine that the Subordination
Agreement is void or voidable;
then, in every such event and at any time thereafter during the
continuance of such event, the 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 Term Loan Commitments and the
Revolving Credit Commitments (except for that portion of the aggregate
Revolving Credit Commitment that is the Guaranteed Commitment) and/or (y)
declare the principal of and the interest on the Loans (other than
Revolving Credit Loans in excess of the difference between the Guaranteed
Commitment and the then current L/C Exposure) and the Term 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 Agreement or in the Notes to the contrary notwithstanding. If a Term
Loan Event of Default specified in paragraph (g) or (h) above shall have
occurred, the principal of, and interest on, the Loans and the Term Notes
and all other amounts payable hereunder and thereunder shall automatically
become due and payable without presentment, demand, protest, or other
notice of any kind, all of which are hereby expressly waived, anything in
this Agreement or the Notes to the contrary notwithstanding. Such remedies
shall be in addition to any other remedy available to the Lenders pursuant
to Applicable Law or otherwise.
SECTION 7.2. REVOLVING LOAN EVENTS OF DEFAULT.
In the case of the happening and during the continuance of any of
the following events (herein called "REVOLVING LOAN EVENTS OF DEFAULT"):
(a) default shall be made in the payment of principal of the
Notes as and when due and payable, whether by reason of maturity, mandatory
prepayment, acceleration or otherwise;
(b) default shall be made in the payment of interest on the
Notes, Commitment Fees or other amounts payable to the Agent or a Lender
under this Agreement, under any Currency Agreement, under any Interest Rate
Protection Agreement or under the Fee Letter, when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed
for
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prepayment thereof or by acceleration thereof or otherwise and such
default shall continue unremedied for five (5) days;
(c) the Guaranty Agreement shall for any reason, not be or shall
cease to be in full force and effect, or shall be declared null and void,
or becomes unenforceable, or it shall be terminated, or disaffirmed by any
Guarantor thereunder;
(d) a Change in Control shall occur; for purposes hereof, a
"Change in Control" shall mean (x) a change of ownership of the Borrower
which results in its not being wholly-owned by the Parent, (y) a change of
ownership of the Parent which results in (1) the Metromedia Holders not
having beneficial ownership or common voting power of at least 20% of the
common voting power of the Parent, (2) the Metromedia Primary Holders not
having beneficial ownership or common voting power of at least 15% of the
common voting power of the Parent, (3) any "person" (as such term is
defined in 13(d) and 14(d) of the Securities and Exchange Act of 1934)
having more common voting power than the Metromedia Holders or (4) any
person other than the Metromedia Holders for any reason obtaining the right
to appoint a majority of the Board of Directors;
(e) an Estate Default shall occur; for purposes hereof an
"Estate Default" shall mean (a) a failure by the estate of Kluge, within
ninety (90) days of the death of Kluge, or a failure by a conservator,
committee or guardian (a "conservator") for the assets of Kluge within
ninety (90) days of the appointment of any such conservator, (1) to duly
allow and assume, or otherwise confirm, a creditor's claim filed against
the estate or the conservator in accordance with Applicable Law relating to
the obligations of Kluge under the Guaranty (which, in the case of the
death of Kluge, shall, if required by Applicable Law, be evidenced by a
creditor's claim filed against the estate in accordance with Applicable
Law) and (2) to agree for the benefit of the Lenders and the Agent to
maintain (unless the Agent is furnished with cash collateral, a letter of
credit or other collateral acceptable to the Agent in an amount equal to
the estate's maximum exposure under the Guaranty) the net worth of the
estate (disregarding the separate status of the Borrower) of at least
$1,000,000,000 and not to make any beneficial distribution from the estate
that would cause its net worth to be less than such amount and (3) to
provide a legal opinion (in form and substance, and from counsel,
reasonably satisfactory to the Agent) regarding such allowance and
assumption or confirmation and such agreement or (b) any rejection, or
attempt at rejection, by the estate or a conservator for his assets of his
obligations under the Guaranty or the taking of any action or the filing of
any motion by such estate or conservator that could reasonably be expected
to materially adversely affect or impede the enforceability of such
obligation;
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then, in every such event and at any time thereafter during the continuance
of such event, the 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 Term Loan Commitments and the Revolving Credit
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 Agreement or in the Notes to the contrary
notwithstanding.
8. SECURITY
SECTION 8.1. SECURITY INTEREST.
As security for the due and punctual payment of the Obligations
(including post-petition interest, to the extent permitted by Applicable
Law), each of the Credit Parties hereby mortgages, pledges, assigns,
transfers, sets over, conveys and delivers to the Agent for the benefit of
the Lenders and grants to the Agent for the benefit of the Lenders a
security interest in all of its right, title and interest in and to the
Collateral.
SECTION 8.2. USE OF COLLATERAL.
So long as no Event of Default shall have occurred and be
continuing, and subject always to the various provisions of this Agreement
and the other Fundamental Documents, each of the Credit Parties may use the
Collateral in any lawful manner permitted hereunder.
SECTION 8.3. COLLECTION ACCOUNTS.
(a) On or before the Closing Date, the Borrower will establish
the Collection Accounts and execute and deliver a Collection Letter (to the
extent not already delivered) with respect to each such Collection Account
established with a Collection Bank.
(b) The Credit Parties shall direct (to the extent not already
done) all Persons (other than exhibitors) who become licensees, buyers or
account debtors under receivables with respect to any item of Product
included in the Collateral to be notified of the assignment to the Agent
(on behalf of the Lenders) of the proceeds of each Distribution Agreement,
and cause each Acceptable L/C to provide that payment thereunder shall be
made directly to a Collection Account.
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(c) The Credit Parties will execute documentation (including,
without limitation, Notices of Assignment and Irrevocable Instructions,
assignment agreements, and other documentation) as may now or hereafter be
required by the Agent in order to reflect the security interest of the
Agent (on behalf of the Lenders) in the proceeds in the Collection
Accounts, to provide for the deposit into a Collection Account of the
monies referred to in Section 8.3(b) and to otherwise effectuate the
provisions of this Section 8.3.
(d) In the event the Borrower receives payment from any Person
or proceeds under an Acceptable L/C, which payment should have been
remitted directly to a Collection Account, the Borrower shall promptly
remit such payment or proceeds to a Collection Account to be applied in
accordance with the terms of this Agreement.
(e) All amounts on deposit in the Collection Accounts shall be
remitted to the Concentration Account and provided that no Event of Default
has occurred and is continuing, the amount on deposit in the Concentration
Account will be available to the Borrower each Business Day and the
Borrower may instruct that the Agent transfer such amounts to the
Borrower's operating account or to another account designated by the
Borrower.
SECTION 8.. CREDIT PARTIES TO HOLD IN TRUST.
Upon the occurrence and during the continuance of an Event of
Default, each Credit Party will, upon receipt by it of any revenue, income,
profits or other sums in which a security interest is granted by this
Article 8, payable pursuant to any agreement or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an obligation
to pay any such sum, hold the sum or instrument in trust for the Lenders,
and forthwith, without any notice, demand or other action on the part of
the Lenders whatsoever (all notices, demands, or other actions on the part
of the Lenders being expressly waived), endorse, transfer and deliver any
such sums or instruments or both to the Agent to be applied to the
repayment of the Obligations in accordance with the provisions of Section
8.7 hereof.
SECTION 8.5. COLLECTIONS.
During the continuance of an Event of Default the Agent may, in
its sole discretion, in its name or in the name of the applicable Credit
Parties or otherwise, demand, sue 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 items comprising the Collateral, but shall be under no obligation so to
do, or the Agent may extend the time of payment, arrange
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for payment in
installments, or otherwise modify the payment terms, or release any item of
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the Credit Parties. The 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 under this Agreement or the Borrower fails to
make any payment under the Notes, the Agent may make such payments and take
all such actions as the Agent deems necessary to protect the Lenders'
security interests in the Collateral and/or the value thereof, and the
Agent is hereby authorized (without limiting the general nature of the
authority hereinabove conferred) to pay, purchase, contest or compromise
any encumbrances, charges or Liens which in the judgment of the Agent
appear to be equal to, prior to or superior to the security interests of
the Lenders in the Collateral and any encumbrances, charges or Liens not
expressly permitted by this Agreement.
SECTION 8.6. POSSESSION, SALE OF COLLATERAL.
During the continuance of an Event of Default, the Agent may
enter upon the premises, 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 Agent may take such
measures as it may 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 Agent shall decide, in one or more sales or parcels,
at such prices as the Agent may deem best, 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 10 days' written notice to the Credit Parties of the
time and place of such sale or sales and such other notices as may be
required by Applicable Law and cannot be waived), and the Agent or any
other Person may be the purchaser of all or any portion of the Collateral
so sold and thereafter hold the same free (to the fullest extent permitted
by Applicable Law) from any claim or right of whatever kind, including any
equity of redemption, of the Credit Parties, any such demand, notice,
claim, right or equity being hereby expressly waived and released to the
fullest extent permitted by Applicable Law. At any sale or sales made
pursuant to this Article 8, the Agent 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 of the Credit
Parties, 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
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any claim
for moneys then due and payable to the Agent and the Lenders (subject to
the provisions of Article 11 hereof) by the Credit Parties hereunder as a
credit against the purchase price. The Agent shall in any such sale make
no representations or warranties with respect to the Collateral or any part
thereof, and neither the Agent nor any Lender shall be chargeable with any
of the obligations or liabilities of any Credit Party. The Credit Parties
hereby agree (i) that they will, jointly and severally, indemnify and hold
the Agent 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 Agent pursuant to this Article
8, or arising out of any act of, or omission to act on the part of, any
Person (other than the Agent or Lenders) prior to such taking of actual
possession or control by the Agent, or arising out of any act on the part
of any of the Credit Parties, or their agents before or after the
commencement of such actual possession or control by the Agent; and (ii)
neither the Agent nor any Lender shall have liability or obligation to any
of the Credit Parties arising out of any such claim except for acts of
willful misconduct or gross negligence or not taken in good faith. 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 Agent and, upon the occurrence
of an Event of Default, each such pledgeholder is hereby authorized to sell
all or any portion of the Collateral upon the order and direction of the
Agent, and each of the Credit Parties hereby waives any and all claims for
damages or otherwise, for any action taken by such pledgeholder in
accordance with the terms of the UCC as adopted and in effect in New York
not otherwise waived hereunder. In any action hereunder the Agent shall be
entitled 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 Agent shall be entitled to
apply, without notice to the Credit Parties, any cash or cash items
constituting Collateral in the possession of the Agent to payment of the
Obligations.
SECTION 8.7. APPLICATION OF PROCEEDS.
Upon the occurrence of and during the continuance of an Event of
Default, the balance in the Concentration Account and any other account of
any Credit Party with any 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 costs and expenses incurred
by the Agent in enforcing this Agreement, in realizing on or protecting any
Collateral and in enforcing or collecting any Obligations or any Guaranty
thereof, including, without limitation, the reasonable
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attorney's fees and
expenses incurred by the Agent, and then to the payment in full of the
Obligations as set forth in Section 11.2(b), PROVIDED, HOWEVER, that the
Agent may, with the consent of the Required Lenders in their discretion,
apply funds comprising the Collateral to pay the cost (i) of completing any
item of Product owned in whole or in part by a Credit Party in any stage of
production and (ii) of making delivery under the Distribution Agreements
with respect to 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 continuance of such Event of
Default, (a) each of the Credit Parties does hereby irrevocably make,
constitute and appoint the Agent or any of its officers or designees its
true and lawful attorney-in-fact with full power in the name of the Agent
or such Credit Party to receive, open and dispose of all mail addressed to
the Credit Parties, 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 Agent, with full power and right to cause each Credit
Party's mail to be transferred to the Agent's own offices or otherwise, and
to do any and all other acts necessary or proper to carry out the intent of
this Agreement and grant the security interests hereunder and under the
other Fundamental Documents, and each of the Credit Parties hereby ratify
and confirm all that the Agent or its substitutes shall properly do by
virtue of this Section; (b) each of the Credit Parties does hereby further
irrevocably make, constitute and appoint the Agent or any of its officers
or designees its true and lawful attorney-in-fact in the name of the Agent
or such Credit Party (i) to enforce each of such Credit Party's rights
under and pursuant to all agreements with respect to the Collateral, all
for the sole benefit of the Agent for the benefit of the Lenders and to
enter into such other agreements as may be necessary or appropriate in the
judgment of the 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 which are required to be observed or performed by such Credit
Party, (iii) to execute such other and further mortgages, pledges and
assignments of the Collateral, and related instruments or agreements, as
the Agent may reasonably require for the purpose of perfecting, protecting,
maintaining or enforcing the security interest granted to the Agent on
behalf of the Lenders hereunder and under the other Fundamental Documents,
and (iv) to do any and all other things necessary or proper to carry out
the intention of this Agreement and the grant of the security interest
hereunder and under the other Fundamental
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Documents. The Credit Parties
hereby ratify and confirm in advance all that the Agent as such
attorney-in-fact or its substitutes shall properly do by virtue of this
power of attorney. In the event the Agent exercises the power of attorney
granted herein, the Agent shall, concurrently with such exercise, provide
written notice to the Borrower and the Lenders in accordance with Section
12.1.
SECTION 8.9. FINANCING STATEMENTS AND PAYMENT DIRECTIONS.
So long as the security interests of the Lenders in the
Collateral shall not have terminated pursuant to Section 8.12, each of the
Credit Parties hereby authorizes the Agent to file UCC financing statements
and any amendments thereto or continuations thereof and any other
appropriate security documents or instruments (including, without
limitation, Copyright Security Agreements and Copyright Security Agreement
Supplements) and to give any notices necessary or desirable to perfect the
Lien in the Collateral in all cases with regard to the Collateral without
the signature of the Credit Parties or to execute such items as attorney-
in-fact for such Credit Party. In the event the Agent exercises the power
of attorney granted herein, the Agent shall, concurrently with such
exercise, provide written notice to the Credit Parties in accordance with
Section 12.1. The Credit Parties further authorize the Agent, so long as
an Event of Default shall have occurred and be continuing, to notify any
account debtor that all sums payable to the Credit Parties relating to the
Collateral shall be paid as provided herein or as otherwise directed by the
Agent and to confirm directly with account debtors the amounts payable by
them to a Credit Party with regard to the Collateral and the terms of all
accounts receivable.
SECTION 8.10. FURTHER ASSURANCES.
Upon the request of the Agent, each of the Credit Parties 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
Agent, to carry out the provisions and purposes of this Article 8, and to
do all things necessary, in the judgment of the Agent, to perfect and
preserve the Liens of the Agent for the benefit of the Lenders hereunder
and under the Fundamental Documents, and in the Collateral or any portion
thereof.
SECTION 8.11. REMEDIES NOT EXCLUSIVE.
The remedies conferred upon or reserved to the 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
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Agent. Without limiting the
generality of the foregoing, the Agent and the Lenders shall have all
rights and remedies of a secured creditor under Article 9 of the UCC or
other Applicable Law.
SECTION 8.12. TERMINATION.
The security interest granted under this Article 8 shall
terminate when all the Obligations (including all amounts owing to any
Guarantor under the Guaranty Agreement pursuant to such Guarantor's rights
of subrogation) shall have been fully paid and performed, the Commitments
(including any commitment to issue any Letter of Credit) shall have
terminated and all Letters of Credit shall have expired or been terminated
or cancelled. At such time all rights to the Collateral pledged or
assigned by the Credit Parties shall revert to the Credit Parties. Upon
such termination the Agent will, at the Borrower's expense, execute and
deliver to a Credit Party such documents (in form and substance
satisfactory to the Agent) as such Credit Party shall reasonably request to
evidence such termination.
SECTION 8.13. QUIET ENJOYMENT.
The Lenders acknowledge that their security interest hereunder is
subject to the rights of Quiet Enjoyment of various licensees (which are
not Affiliates of any Credit Party) under license agreements and
distributors under 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 licensees under license
agreements and distributors under Distribution Agreements, the Lenders'
agreement that their rights under this Agreement and the Fundamental
Documents and in the Collateral are subject to the rights of such licensees
or distributors to distribute, exhibit and/or to exploit the Product
licensed to them, and to receive prints or have access to preprint material
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 licensees and distributors;
PROVIDED, HOWEVER, that such licensee or such distributor shall not be in
default under the relevant license or Distribution Agreement and, PROVIDED,
FURTHER except as set forth above, the Lenders shall not be responsible for
any liability or obligation of any Credit Party under any license
agreement.
SECTION 8.14. RELEASE OF COLLATERAL.
Unless an Event of Default shall have occurred and be continuing,
upon request by a Credit Party to the Agent in writing, the Agent shall
release its security interest in any Collateral sold by such Credit Party
in compliance with the terms of this Credit Agreement and the other
Fundamental Documents.
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9. GUARANTY
SECTION 9.1. GUARANTY.
(a) Each of the Corporate Guarantors, jointly, severally and
absolutely, unconditionally and irrevocably guarantees to the Agent and the
Lenders the due and punctual payment by, and performance of, the Guaranteed
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 of the Corporate
Guarantors 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 of the Corporate Guarantors waives presentation to,
demand for payment from and protest to, as the case may be, the Borrower or
any Corporate Guarantor or any other guarantor, and also waives notice of
protest for nonpayment, notice of acceleration and notice of intent to
accelerate. The obligations of the Corporate Guarantors hereunder shall
not be affected by (i) the failure of the Agent or any Lender to assert any
claim or demand or to enforce any right or remedy against the Borrower or
any Corporate Guarantor, or any other guarantor under the provisions of
this Agreement or any other agreement or otherwise; (ii) any extension or
renewal of any provision hereof or thereof; (iii) any rescission, waiver,
compromise, acceleration, amendment or modification of any of the terms or
provisions of this Agreement, the Notes or of any other agreement; (iv) the
release, exchange, waiver or foreclosure of any security held by the Agent
(for the benefit of the Lenders) for the Obligations or any of them; (v)
the failure of the Agent or any Lender to exercise any right or remedy
against any other guarantor of the Obligations; or (vi) the release or
substitution of any Corporate Guarantor or any other guarantor.
(c) Each of the Corporate Guarantors further agrees that this
Guaranty is a continuing guaranty and constitutes a guaranty of performance
and of payment when due and not just of collection, and waives any right to
require that any resort be had by the Agent to any security held for
payment of the Obligations or to any balance of any deposit, account or
credit on the books of the Agent in favor of the Borrower, any other
Corporate Guarantor or to any other Person.
(d) Each of the Corporate Guarantors hereby expressly assumes
all responsibilities to remain informed of the financial condition of the
Borrower, the Corporate Guarantors and any other
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guarantors and any
circumstances affecting the Collateral, or the Pledged Securities or the
ability of the Borrower to perform under this Agreement.
(e) Each Corporate Guarantors' Guaranty hereunder 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.
Neither the Agent nor any Lender makes any representation or warranty in
respect to any such circumstances and nor has any duty or responsibility
whatsoever to any Corporate Guarantor in respect to the management and
maintenance of the Obligations or the Collateral or the Pledged Securities.
SECTION 9.2. NO IMPAIRMENT OF GUARANTY.
The obligations of the Corporate Guarantors hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason, including, without limitation, any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any
defense (other than payment in full of the Obligations) 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 the
Corporate Guarantors hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Agent to assert any claim or
demand or to enforce any remedy under this Agreement or any other
agreement, by any waiver or modification of any provision 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 the Corporate Guarantors or would otherwise operate as a
discharge of the Corporate Guarantors as a matter of law, unless and until
the Guaranteed 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 of the Corporate Guarantors 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 principal of
or interest on or any fees on any Guaranteed Obligation is rescinded or
must otherwise be restored by the Agent upon the bankruptcy or
reorganization of the Borrower or any other Corporate Guarantor, or
otherwise. In furtherance of the provisions of this Article 9, and not in
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limitation of any other right which the Agent may have at law or in equity
against the Borrower or a Corporate Guarantor or any other person by virtue
hereof, upon failure of the Borrower to pay any Guaranteed Obligation when
and as the same shall become due, whether at maturity, by acceleration,
after notice or otherwise, each of the Corporate Guarantors hereby promises
to and will, upon receipt of written demand by the Agent on behalf of the
Lenders, forthwith pay or cause to be paid to the Agent for the benefit of
the Lenders in cash an amount equal to the unpaid amount of all the
Guaranteed Obligations with interest on the portion thereof that represents
outstanding loans and/or reimbursement obligations with respect to Letters
of Credit (but without duplication of interest included in such Guaranteed
Obligations) at a rate of interest equal to the rate specified in Section
2.9(a) hereof, and thereupon the Agent shall assign such Guaranteed
Obligation, together with all security interests, if any, then held by the
Agent in respect of such Guaranteed Obligation, to the Corporate Guarantors
making such payment; such assignment to be subordinate and junior first to
the rights of the Agent on behalf of the Lenders and second to either of
the Guarantors if applicable under the Priority and Contribution Agreement
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 Corporate Guarantor or
Corporate Guarantors making such payments.
(b) Upon payment by any Corporate Guarantor of any sums to the
Agent on behalf of the Lenders hereunder or to the Lenders, all rights of
such Corporate Guarantor against the Borrower, arising as a result thereof
by way of right of subrogation or otherwise, shall in all respects be
subordinate and junior in right of payment to the prior final and
indefeasible payment in full of first all the Obligations to the Agent on
behalf of the Lenders or to the Lenders and second to either of the
Guarantors if applicable under the Guaranty Agreement.
(c) Each Corporate Guarantor which guarantees obligations
hereunder, to the fullest extent permitted by Applicable Law, waives all
rights of such Corporate Guarantor against the Borrower or either of the
Guarantors arising as a result of payments made pursuant to such guarantees
by way of right of subrogation or otherwise. If any amount shall be paid
to such Corporate Guarantor for the account of the Borrower involved, such
amount shall be held in trust for the benefit of the Agent and shall
forthwith be paid to the Agent for the benefit of the Lenders to be
credited and applied to the Obligations when due and payable.
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SECTION 9.c. LIMITATION ON GUARANTEED AMOUNT.
Notwithstanding any other provision of this Article 9, the amount
guaranteed by any Corporate 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 such
Corporate Guarantor's obligations hereunder pursuant to the preceding
sentence, any rights of subrogation or contribution which such Corporate
Guarantor may have under this Article 9 or Applicable Law shall be taken
into account.
SECTION 9.5. TERMINATION.
The guarantees under this Article 9 shall terminate when all the
Obligations shall have been fully paid and performed, the Commitments
(including any commitment to issue any Letter of Credit) shall have been
terminated and all Letters of Credit shall have expired or been terminated
or cancelled.
SECTION 9.6. RELEASE OF CORPORATE GUARANTOR.
Unless an Event of Default shall have occurred and be continuing,
upon request by the Borrower to the Agent in writing, the Agent will
release from its obligations hereunder any Corporate Guarantor, all of
whose capital stock is sold by the Borrower in compliance with the terms of
this Credit Agreement and the other Fundamental Documents.
10. CASH COLLATERAL
SECTION 10.1. CASH COLLATERAL ACCOUNT.
On or prior to the Closing Date, there shall be established with
the Agent a collateral account in the name of the Agent (the "CASH
COLLATERAL ACCOUNT"), into which the Borrower shall from time to time
deposit Dollars pursuant to the express provisions of this Agreement
requiring or permitting such deposits. Except to the extent otherwise
provided in this Article 10, the Cash Collateral Account shall be under the
sole dominion and control of the Agent.
SECTION 10.2. INVESTMENT OF FUNDS.
(a) The Agent is hereby authorized and directed to invest and
reinvest the funds from time to time deposited in the Cash Collateral
Account or the Concentration Account 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
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such funds, in the sole discretion of the Agent, PROVIDED
that in no event may the Borrower give instructions to the Agent to, or may
the Agent in its discretion, invest or reinvest funds in the Cash
Collateral Account or the Concentration Account, as the case may be, in
other than Cash Equivalents described in clause (i) of the definition of
Cash Equivalents, or described in clauses (ii) and (iii) of the definition
of Cash Equivalents to the extent issued by Chemical Bank.
(b) Any net income or gain on the investment of funds from time
to time held in the Cash Collateral Account or the Concentration Account,
as the case may be, shall be promptly reinvested by the Agent as a part of
the Cash Collateral Account or the Concentration Account, as the case may
be, and any net loss on any such investment shall be charged against the
Cash Collateral Account or the Concentration Account, as the case may be.
(c) Neither the Agent nor the Lenders shall be a trustee for the
Borrower or shall have any obligations or responsibilities, or shall be
liable for anything done or not done, in connection with the Cash
Collateral Account or the Concentration Account, as the case may be, except
as expressly provided herein and except that the Agent shall have the
obligations of a secured party under the UCC. The Agent and the Lenders
shall not have any obligation or responsibilities and shall not be liable
in any way for any investment decision made pursuant to this Section 10.2
or for any decrease in the value of the investments held in the Cash
Collateral Account or the Concentration Account, as the case may be.
SECTION 10.3. GRANT OF SECURITY INTEREST.
For value received and to induce the Lenders to make Loans from
time to time to the Borrower as provided for in this Agreement, as security
for the payment of all of the Obligations, the Borrower hereby assigns to
the Agent (for the benefit of the Lenders), and grants to the Agent (for
the benefit of the Lenders), a first and prior Lien upon all the rights in
and to the Cash Collateral Account and the Concentration 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 the Concentration Account and all products and proceeds of any
of the foregoing. All cash, documents, instruments and securities from
time to time on deposit in the Cash Collateral Account and the
Concentration Account and all rights pertaining to investments of funds in
the Cash Collateral Account and the Concentration Account shall immediately
and without any need for any further action on the part of the Borrower,
any Lender or the Agent, become subject to the Lien set forth in this
Section 10.3, be deemed Collateral for
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all purposes hereof and be subject to the provisions of this Agreement.
SECTION 10.4. REMEDIES.
At any time during the continuation of an Event of Default, the
Agent may sell any documents, instruments and securities held in the Cash
Collateral Account and the Concentration Account and may immediately apply
the proceeds thereof and any other cash held in the Cash Collateral Account
and the Concentration Account to the satisfaction of the Obligations in
such order as the Agent may determine, but subject to the rights of the
Lenders. Any amounts remaining after such application shall be paid or
delivered to the Borrower or as a court of competent jurisdiction may
direct.
11. THE AGENT AND THE ISSUING BANK
SECTION 11.1. ADMINISTRATION BY AGENT.
(a) The general administration of the Fundamental Documents and
any other documents contemplated by this Agreement shall be by the Agent or
its designees. Except as otherwise expressly provided herein, each of the
Lenders hereby irrevocably authorizes the Agent, at its discretion, to take
or refrain from taking such actions as agent on its behalf and to exercise
or refrain from exercising such powers under the Fundamental Documents, the
Notes and any other documents contemplated by this Agreement as are
delegated by the terms hereof or thereof, as appropriate, together with all
powers reasonably incidental thereto. The Agent shall have no duties or
responsibilities except as set forth in the Fundamental Documents.
(b) The Lenders hereby authorize the Agent (in its sole
discretion):
(i) in connection with the sale or other disposition of any
asset included in the Collateral, in accordance with the terms of
this Agreement, to release a Lien granted to it (for the benefit
of the Lenders) on such asset;
(ii) to determine that the cost to the Borrower or another Credit
Party is disproportionate to the benefit to be realized by 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 such
other Credit Party should not be required to perfect such Lien in
favor of the Agent (for the benefit of the Lenders);
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(iii) to appoint Lenders or other Persons to be the holder of
record of a Lien to be granted to the Agent (for the benefit of
the Lenders) or to hold on behalf of the Agent such collateral or
instruments relating thereto;
(iv) to modify any of the Fundamental Documents (other than this
Agreement, the Notes and the Guaranty) in order to (x) cure any
ambiguity, omission, defect or inconsistency, (y) comply with the
terms of transactions which are permitted by the terms of
Articles 5 or 6 hereof or which are otherwise consented to by the
requisite Lenders in accordance with the terms hereof and (z) to
add covenants of a Credit Party for the benefit of the Lenders;
(v) to grant the right of Quiet Enjoyment to licensees pursuant
to the terms of Section 8.13; and
(vi) enter guild subordination agreements with the guilds with
respect to the security interests in favor of the guilds required
pursuant to the terms of the collective bargaining agreements.
SECTION 11.2. ADVANCES AND PAYMENTS.
(a) On the date of each Loan, the 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 accordance with its Percentage
hereunder. Each of the Lenders hereby authorizes and requests the 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 Agent in immediately available funds for the amount so
advanced on its behalf by the Agent. If any such reimbursement is not made
in immediately available funds on the same day on which the Agent shall
have made any such amount available on behalf of any Lender, such Lender
shall pay interest to the Agent at a rate per annum equal to the 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 Agent, the Borrower agrees to repay to the 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 Agent at the Alternate Base Rate plus the
Applicable Margin for Alternate Base Rate Loans.
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(b) As between the Agent and the Lenders, any amounts received
by the Agent in connection with the Fundamental Documents (other than
amounts to which the Agent or any Lender is entitled pursuant to 2.13 and
12.5), the application of which is not otherwise provided for, shall be
applied, first, to pay accrued but unpaid Commitment Fees in accordance
with each Lender's Percentage, second, to pay accrued but unpaid interest
on the Term Notes in accordance with the amount of outstanding Term Loans
owed to each Lender, third, the principal balance outstanding on the Term
Notes (with amounts payable on the principal balance outstanding on the
Term Notes in accordance with each Lender's Percentage) and, fourth, to pay
accrued but unpaid interest on the Revolving Credit Notes in accordance
with the amount of outstanding Revolving Credit Loans (other than the
Revolving Credit Loans made pursuant to the Guaranteed Commitment) owed to
each Lender, fifth, the principal balance outstanding on the Revolving
Credit Notes (other than principal relating to Revolving Credit Loans made
pursuant to the Guaranteed Commitment) (with amounts payable in the
principal balance outstanding in the Revolving Credit Notes in accordance
with each Lender's Percentage) and amounts outstanding under Currency
Agreements and Interest Rate Protection Agreements, sixth, to pay the
remaining accrued but unpaid interest on the Revolving Credit Notes in
accordance with the amount of outstanding Revolving Credit Loans made
pursuant to the Guaranteed Commitment owed to each Lender, seventh, the
principal balance outstanding on the Revolving Credit Notes (with amounts
payable in the principal balance outstanding in the Revolving Credit Notes
in accordance with each Lender's Percentage) and eighth, to pay any other
amounts then due under this Agreement. All amounts to be paid to any
Lender by the Agent shall be credited to that Lender, after collection by
the Agent, in immediately available funds either by wire transfer or
deposit in such Lender's correspondent account with the Agent, or as such
Lender and the Agent shall from time to time agree.
SECTION 11.3. SHARING OF SETOFFS.
Each of the Lenders agrees that if it shall, through the exercise
of a right of banker's lien, setoff or counterclaim against the Borrower
(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 the Loans and L/C Exposure of any of the other Lenders
(a) it shall promptly purchase at par (and shall be deemed to have
thereupon purchased) from such other Lenders an interest in the Loans or
Letters of Credit of such other Lenders, so that the aggregate unpaid
principal amount of
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each of the Lenders' Loans and its interest 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 the benefit of such payments 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 cancelled and the purchase price
restored to the extent of such recovery. The Borrower expressly consents
to the foregoing arrangements and agree that any Lender or Lenders holding
(or deemed to be holding) a participation or other interest in a Note or
Letter of Credit may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by 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 or other interest.
SECTION 11.4. 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 Agent for and on behalf of, or for the benefit
of, all Lenders upon the direction of the Required Lenders, and any such
action shall be binding on all Lenders. No amendment, modification,
consent or waiver shall be effective except in accordance with the
provisions of Section 12.9 hereof.
SECTION 11.5. NOTICE TO LENDERS.
Upon receipt by the Agent from the Borrower of any written
communication calling for an action on the part of the Lenders, or upon
written notice to the Agent of any Default or Event of Default, the Agent
will in turn promptly inform the other Lenders in writing (which shall
include facsimile communications) of the nature of such communication or of
the Default or Event of Default, as the case may be.
SECTION 11.6. LIABILITY OF AGENT AND ISSUING BANK.
(a) The Agent or the Issuing Bank, when acting on behalf of the
Lenders, may execute any of its duties under this Agreement or the other
Fundamental Documents by or through its officers, agents, and employees,
and neither the Agent, the Issuing Bank nor their respective directors,
officers, agents, or employees shall be liable to the Lenders or any of
them for any
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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 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 Lenders or in reliance upon the advice of counsel
selected by it with reasonable care. Without limiting the foregoing,
neither the 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
Agreement, the Copyright Security Agreement, any Copyright Security
Agreement Supplement or any of the other Fundamental Documents or any
related agreement, document or order, or for the designation or failure to
designate this transaction as a "Highly Leveraged Transaction" for
regulatory purposes or for freedom of any of the Collateral or any of the
Pledged Securities from prior liens or security interests, or shall be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Credit Party of any of the terms,
conditions, covenants, or agreements of this Agreement, any Completion
Guaranty for an item of Product, or any of the other Fundamental Documents
or any related agreement or document.
(b) Neither the Agent as Agent for the Lenders hereunder, the
Issuing Bank nor any of their respective directors, officers, employees, or
agents shall have any responsibility to any Credit Party on account of the
failure or delay in performance or breach by any of the Lenders (other than
the Agent) of any of their respective obligations under this Agreement, the
other Fundamental Documents or any related agreement or document or in
connection herewith or therewith.
(c) The Agent as agent for the Lenders hereunder and the Issuing
Bank in such capacities, 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.
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SECTION 11.7. REIMBURSEMENT AND INDEMNIFICATION.
Each Lender agrees (i) to reimburse the Agent for such Lender's
Percentage of any expenses and fees incurred for the benefit of the Lenders
under the Fundamental Documents for which the Agent is entitled to seek
reimbursement from any Credit Party but which has not actually been
reimbursed by or on behalf of any Credit Party, including, without
limitation, counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, and any other expense incurred
in connection with the operations or enforcement thereof not reimbursed by
or upon behalf of the Borrower, (ii) to indemnify and hold harmless the
Agent and any of its directors, officers, employees, or agents, on demand,
in the amount of its proportionate share, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against it or any of them
in any way relating to or arising out of any Completion Guaranty for an
item of Product, the Fundamental Documents or any action taken or omitted
by it or any of them under any Completion Guaranty for an item of Product,
the Fundamental Documents or any related agreement or document, to the
extent not reimbursed by a Credit Party and (iii) in the case of only those
Lenders holding Revolving Credit Commitments, 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 Required Lenders holding at least 66-
2/3% of the Revolving Credit Commitments (except in the case of clause (i),
(ii) or (iii) above, as shall result from the gross negligence or willful
misconduct of the Person to be reimbursed, indemnified or held harmless, as
applicable). The Agent shall promptly remit to each such paying Lender its
Pro Rata Share of any such amounts subsequently recovered from any Credit
Party.
SECTION 11.8. RIGHTS OF AGENT.
It is understood and agreed that the Agent shall have the same
duties, rights and powers as a Lender hereunder (including the right to
give such instructions) as 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 a party, and engage in other
transactions with any Credit Party, as though it were not the Agent for
Lenders or
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the Issuing Bank under this Agreement and the other Fundamental
Documents.
SECTION 11.9. INDEPENDENT INVESTIGATION BY LENDERS.
Each of the Lenders acknowledges that it has decided to enter
into this Agreement, and to make the Loans and participate in the Letters
of Credit hereunder based upon its own analysis of the transactions
contemplated hereby and of the creditworthiness of the Credit Parties and
agrees that neither the Agent nor the Issuing Bank shall bear any
responsibility for such creditworthiness.
SECTION 11.10. NOTICE OF TRANSFER.
The Agent may deem and treat any Lender which is a party to this
Agreement on the date hereof 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 Agent
and become effective pursuant to Section 12.3 hereof.
SECTION 11.11. SUCCESSOR AGENT.
The 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 Agent of its appointment pursuant
hereto. Upon any such resignation, the retiring Agent shall promptly
appoint a successor Agent from among the Lenders, which is sophisticated in
entertainment industry lending, provided that such replacement is
reasonably acceptable (as evidenced in writing) to the Borrower and the
Required Lenders. If no successor agent shall have been so appointed by
the retiring Agent and shall have accepted such appointment, within 30 days
after the retiring Agent's giving of notice of resignation, the Borrower
may appoint a successor agent (which successor may be replaced by the
Required Lenders provided that such successor is sophisticated in the
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
sophisticated in entertainment industry lending. Upon the acceptance of
any appointment as Agent hereunder by a successor agent, such successor
agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged, except for any liabilities incurred prior thereto,
from its duties and obligations under this Agreement the other Fundamental
Documents and any other credit documentation. After any retiring Agent's
resignation
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hereunder as Agent, the provisions of this Article 11 shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
SECTION 11.12. DISSEMINATION OF INFORMATION.
The Agent shall deliver to the Lenders copies of (i) all items
received from the Borrower pursuant to Section 5.1(e) and Section 5.1(n)
and (ii) any other information received by the Agent pursuant to any
provision of this Agreement, copies of which are requested of any Lender.
12. MISCELLANEOUS
SECTION 12.1. NOTICES.
Notices and other communications provided for herein shall be in
writing and shall be delivered or mailed (or if by facsimile, delivered by
such equipment) addressed, if to the Agent, the Issuing Bank or Chemical
Bank, to it at 270 Park Avenue, New York, New York 10017, Attn: John J.
Huber, III, facsimile No. (212) 270-4711 with a copy to Agent Bank Services
Department, 140 Ease 45th Street, 29th Floor, New York, New York 10017-
2070, Attn: Donna Montgomery, facsimile No. (212) 622-0002 and with a copy
to Chase Securities Inc., 1800 Century Park East, Suite 400, Los Angeles,
CA 90067, Attn: Kenneth R. Wilson or if to a Credit Party to it at 1888
Century Park East, Seventh Floor, Los Angeles, CA 90067, Attn: John W.
Hester, facsimile No. (310) 282-9902, with a copy to James M. Dubin, Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York,
New York 10019, facsimile No. (212) 757-3990 or to a Lender, to it at its
address set forth on the signature page of this Agreement, or such other
address as such party may from time to time designate by giving written
notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions
of this 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 when receipt is
acknowledged, if by any other method, in each case addressed to such party
as provided in this Section 12.1 or in accordance with the latest unrevoked
written direction from such party.
SECTION 12.2. SURVIVAL OF AGREEMENT, REPRESENTATIONS AND
WARRANTIES, ETC.
All warranties, representations, covenants and agreements 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
pursuant to this Agreement or any other Fundamental Document shall be
considered to have been
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relied upon by th Lenders, and shall survive the
making of the Loans and the issuance of the Letters of Credit herein
contemplated and the execution and delivery to the Agent of the Notes
regardless of any investigation made by the Agent or the Lenders or on
their behalf and shall continue in full force and effect so long as any
amount due or to become due hereunder is outstanding and unpaid, so long as
the Letter of Credit remains outstanding and so long as any Commitment has
not been terminated. All statements in any such certificate or other
instrument delivered pursuant to this Agreement or a Fundamental Document
shall constitute representations and warranties made by the Credit Parties
hereunder.
SECTION 12.3. SUCCESSORS AND ASSIGNS; SYNDICATIONS; LOAN SALES;
PARTICIPATIONS.
(a) 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 (PROVIDED, HOWEVER, that neither the Borrower nor any
other Credit Party may assign its respective rights or obligations
hereunder without the prior written consent of all the Lenders), and all
covenants, promises and agreements by or on behalf of the Credit Parties
which are contained in this Agreement shall bind and inure to the benefit
of the successors and assigns of all such parties.
(b) Each of the Lenders may, with the prior written consent of
the Agent which consent shall not be unreasonably withheld, assign to one
or more banks or other entities (other than a competitor of the Borrower)
all or a portion of its interests, rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Commitment, and the same portion of the Loans at the time owing to it, the
Notes held by it and its obligations and rights with regard to any Letters
of Credit); PROVIDED, HOWEVER, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all of the assigning Lender's
interests, rights and obligations under this Agreement, (ii) the amount of
the Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the effective date of the Assignment and
Acceptance with respect to such assignment delivered to the Agent) shall be
(x) in the case of a Lender which has a Term Loan Commitment only, in a
minimum amount of $5,000,000 and (y) in the case of any other Lender, in a
minimum amount of $10,000,000 and (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in
the Register (as defined below), an Assignment and Acceptance, together
with the assigning Lender's original Notes and a processing and recordation
fee of $2,500 to be paid to the Agent by the assigning Lender, such fee not
to be paid or reimbursed by the Borrower. Upon such execution, delivery,
acceptance and recording, from and after the effective
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date specified in
each Assignment and Acceptance, which effective date shall not (unless
otherwise agreed to by the Agent) be earlier than five Business Days after
the date of acceptance and recording by the 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, be
relieved of its obligations under this Agreement (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 Agreement, such
assigning Lender shall cease to be a party hereto).
(c) Notwithstanding the other provisions of this Section
12.3(b), each Lender may at any time make an assignment of its interests,
rights and obligations under this Agreement to (i) any Affiliate of such
Lender (other than a competitor of the Borrower) or (ii) any other Lender
hereunder, provided that after giving effect to such assignment, the
assignee's Percentage shall not exceed the Agent's Percentage without the
consent of the Agent which consent shall not be unreasonably withheld.
(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 Agreement or the other Fundamental Documents 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 Lender assignor 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 hereto or thereto; (iii) such assignee confirms that it has
received a copy of this 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 3.4 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
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upon the Agent, such assigning Lender 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 Agreement or any other Fundamental Document; (v) such
assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement or any other
Fundamental Document as are delegated to the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will be bound by the provisions of
this Agreement and it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(e) The Agent shall maintain at its address at which notices are
to be given to it pursuant to Section 12.1 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 Agent and the Lenders may treat each Person whose name
is recorded in the Register as a Lender hereunder for all purposes of the
Fundamental Documents. The Register shall be available for inspection by
any Credit Party or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee together with the assigning Lender's
original Notes and the processing and recordation fee, the Agent shall, if
such Assignment and Acceptance has been completed and is in the form of
Exhibit G 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 Agent, in exchange for the surrendered Notes, new Notes to
the order of such assignee in amounts equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder, new Notes to the order of the assigning
Lender in amounts equal to the Commitments retained by it hereunder. Such
new Notes shall be in an aggregate principal amount equal to the principal
amount of the surrendered Notes, shall be dated the date of the surrendered
Notes and shall otherwise be in substantially the forms of Exhibits A-1 and
A-2. In addition each Credit Party will promptly, at its own expense,
execute such amendments to the Fundamental Documents to which it is a party
and such additional documents, and take such other actions as the Agent or
the
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assignee Lender may reasonably request in order to give such assignee
Lender the full benefit of the Liens contemplated by the Fundamental
Documents and the guaranty contemplated hereby.
(g) Each of the Lenders may, without the consent of the
Borrower, the Agent or the other Lenders, sell participations to one or
more banks or other entities in all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Loans owing to it and the Notes held by it);
PROVIDED, HOWEVER, that (i) any such Lender's obligations under this
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 Agreement, except with respect to proposed changes to interest
rates, amounts of Commitments, releases of all or substantially all of the
Collateral and Pledged Securities, maturity of any Loan 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 2.12,
2.13, and 2.14 and 11.3 hereof but a participant shall not be entitled to
receive pursuant to such provisions an amount larger than its share of the
amount to which the Lender granting such participation is actually entitled
to receive and (v) the Credit Parties, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement.
(h) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 12.3, disclose to the assignee or participant or proposed assignee
or participant, any information relating to 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 in
accordance with Section 12.16 hereof the confidentiality of any
confidential information relating to any Credit Party received from such
Lender.
(i) The Borrower consents that any Lender may at any time and
from time to time pledge or otherwise grant a security interest in any Loan
or in any Note evidencing the Loans (or any part thereof) to any Federal
Reserve Bank.
SECTION 12.4. EXPENSES; DOCUMENTARY TAXES.
Whether or not the transactions hereby contemplated shall be
consummated, the Borrower agrees to pay all reasonable fees and
out-of-pocket expenses incurred by the Agent or Chemical Securities Inc. in
connection with, or growing out of, the performance of due diligence, the
syndication of the credit
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facility contemplated hereby, the negotiation,
preparation, execution, delivery, waiver or modification, administration
and enforcement of this Agreement, the Pledged Securities, the Notes and
the other Fundamental Documents or any Completion Guaranty for an item of
Product, the making of the Loans, the issuance of the Letters of Credit or
the Collateral including but not limited to the reasonable out-of-pocket
costs and internally allocated charges of audit or field examination of the
Agent in connection with the administration of this Agreement, the
verification of financial data and the transactions contemplated hereby,
and the reasonable fees and disbursements of Morgan, Lewis & Bockius LLP,
counsel for the Agent, and any other legal counsel that the Agent shall
retain as well as all reasonable out-of-pocket expenses and reasonable
allocated costs incurred by the Agent, the Issuing Bank or the Lenders in
the enforcement or protection (as distinguished from administration) of the
rights and remedies of the Lenders in connection with this Agreement, the
other Fundamental Documents, the Letters of Credit or the Notes, or as a
result of any transaction, action or non-action arising from any of the
foregoing, including but not limited to the reasonable fees and
disbursements of any outside counsel for the Agent, the Issuing Bank or the
Lenders. Such payments shall be made on the date of execution of this
Agreement by the Borrower and thereafter on demand. The Borrower agrees
that it shall indemnify the 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 Agreement, the Notes (excluding Notes executed and
delivered solely as a result of an assignment pursuant to Section 12.3) or
the issuance of Letters of Credit. The obligations of the Borrower under
this Section shall survive the termination of this Agreement and/or the
payment of the Loans and/or the expiration of any Letter of Credit.
SECTION 12.5. INDEMNITY.
The Borrower agrees (a) to indemnify and hold harmless the Agent
and the Lenders and their respective directors, officers, employees,
trustees and agents and, in addition, in connection with matters relating
to the Letters of Credit, the Issuing Bank and its directors, officers,
employees and agents (each an "INDEMNIFIED PARTY") (to the full extent
permitted by Applicable Law) from and against any and all claims, demands,
losses, judgments and liabilities (including liabilities for penalties)
incurred by any of them as a result of, or arising out of, or in any way
related to, or by reason of, any investigation, litigation or other
proceeding (whether or not any Lender or the Agent is a party thereto)
related to the entering into and/or performance of any Fundamental Document
or the use of the proceeds of any Loans hereunder or the issuance of any
Letter of Credit or the consummation of any other transactions contemplated
in any Fundamental Document, including, without limitation, the
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reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding (but excluding any such
losses, liabilities, claims, damages or expenses of an Indemnified Party to
the extent incurred by reason of the gross negligence or willful misconduct
of the Indemnified Party). If any proceeding, including any governmental
investigation, shall be instituted involving any Indemnified Party, in
respect of which indemnity may be sought against the Borrower, such
Indemnified Party shall promptly notify the Borrower in writing, and the
Borrower shall assume the defense thereof on behalf of such Indemnified
Party including the employment of counsel (reasonably satisfactory to such
Indemnified Party) and payment of all reasonable expenses. Any Indemnified
Party shall have the right to employ separate counsel in any such
proceeding and participate in the defense thereof, but the fees and
expenses of such separate counsel shall be at the expense such Indemnified
party unless (i) the employment of such separate counsel has been
specifically authorized by the Borrower or (ii) the named parties to any
such action (including any impleaded parties) include such Indemnified
Party and the Borrower and such Indemnified Party shall have been advised
in writing by counsel to the Agent that an actual conflict of interest
exists between such Indemnified Party and the Borrower (in which case the
Borrower shall not have the right to assume the defense of such action on
behalf of such Indemnified Party). At any time after the Borrower has
assumed the defense of any proceeding involving any Indemnified Party in
respect of which indemnity has been sought against the Borrower, such
Indemnified Party may elect, by written notice to the Borrower, to withdraw
its request for indemnity and thereafter the defense of such proceeding
shall be maintained by counsel of the Indemnified Party's choosing at the
Indemnified Party's expense. The foregoing indemnity agreement includes
any reasonable costs incurred by an Indemnified Party in connection with
any action or proceeding which may be instituted in respect of the
foregoing by the Agent or the Issuing Bank or by any other Person either
against the Agent, the Issuing Bank or the Lenders or in connection with
which any officer or employee of the 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 Morgan, Lewis & Bockius LLP, counsel
to the Agent and any out-of-pocket costs incurred by the Agent, the Issuing
Bank or the Lenders in appearing as a witness or in otherwise complying
with legal process served upon them. The obligations of the Borrower under
this Section 12.5 shall survive the termination of this Agreement, the
payment of the Loans and/or the expiration or termination of any Letter of
Credit and shall inure to the benefit of any Person who was a Lender
notwithstanding such Person's Assignment of all its Loans and Commitment
hereunder.
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If a Credit Party shall fail to do any act or thing which it has
covenanted to do hereunder, under a Fundamental Document or a Completion
Guaranty, or any representation or warranty of a Credit Party shall be
breached, the Agent may (but shall not be obligated to) do the same or
cause it to be done or remedy any such breach and there shall be added to
the Obligations hereunder the cost or expense incurred by the Agent in so
doing, and any and all amounts expended by the Agent in taking any such
action shall be repayable to it upon its demand therefor and shall bear
interest at 3% in excess of the Alternate Base Rate from time to time in
effect for Revolving Credit Loans from the date advanced to the date of
repayment.
SECTION 12.6. CHOICE OF LAW.
THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK 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 12.7. NO WAIVER.
No failure on the part of the Agent, any Lender or the Issuing
Bank to exercise, and no delay in exercising, any right, power, privilege
or remedy hereunder or under the Notes, any other Fundamental Document or
with regard to any Letter of Credit shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power, privilege or
remedy preclude any other or further exercise thereof or the exercise of
any other right, power, privilege or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 12.8. EXTENSION OF MATURITY.
Should any payment 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 maturity thereof shall be extended to the next succeeding
Business Day (other than the maturity of a Eurodollar Loan if the next
Business Day shall fall in the next calendar month, in which case, such
maturity shall end on the next preceding Business Day) and, in the case of
principal, interest shall be payable thereon at the rate per annum herein
specified during such extension.
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SECTION 12.9. AMENDMENTS; WAIVERS.
No modification, amendment or waiver of any provision of this
Agreement, and no consent to any departure by a Credit Party from the
provisions of this Agreement, 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 specific purpose for which given; PROVIDED, HOWEVER, that no such
modification, amendment or waiver shall without the written consent of all
the Lenders, (i) increase the Commitment of a Lender; (ii) alter the stated
maturity or principal amount of any Loan, or the rate of interest payable
thereon, or the maturity or amount of any other payment required to be made
under this Agreement; (iii) decrease the Commitment of any Lender;
(iv) amend or modify any provision of this Agreement which provides for the
unanimous consent or approval of the Lenders; (v) amend this Section 12.9
or the definition of Required Lenders; (vi) subordinate the Obligations
hereunder to other Indebtedness or subordinate the security interests of
the Lenders in the Collateral except as permitted by Section 11.1;
(vii) authorize the release of any Collateral or any Pledged Securities,
except as permitted by Section 11.1; (viii) release any Guarantor; (ix)
amend Section 2.12(d), Section 2.12(e), Section 2.12(f), Section 2.12(g),
Section 2.12(h) or Section 12.3(a); or (x) the definitions of Borrowing
Base or any component thereof, except as provided for in such definition.
No such amendment, modification or waiver may adversely affect the rights
and obligations of the 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 Credit Party which is a party
hereto 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 12.10. SEVERABILITY.
Any provision of this Agreement or of the Notes which is invalid,
illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without invalidating the remaining provisions hereof,
and any such invalidity, illegality or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
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SECTION 12.11. WAIVER OF JURY TRIAL.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, EACH CREDIT 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 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 CREDIT PARTY ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE LENDERS
THAT THE PROVISIONS OF THIS SECTION 12.11 CONSTITUTE A MATERIAL INDUCEMENT
UPON WHICH THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING
INTO THIS AGREEMENT AND ANY OTHER FUNDAMENTAL DOCUMENT. THE AGENT OR ANY
LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 12.11
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY CREDIT PARTY TO
THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
SECTION 12.12. SERVICE OF PROCESS.
EACH CREDIT PARTY (EACH THE "SUBMITTING PARTY") HEREBY
IRREVOCABLY SUBMITS TO THE 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 AGREEMENT OR THE SUBJECT
MATTER HEREOF BROUGHT BY THE AGENT. 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 AGREEMENT OR THE SUBJECT
MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (B) HEREBY
WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY. EACH
SUBMITTING PARTY HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT THE
ADDRESS TO WHICH NOTICES ARE GIVEN PURSUANT TO SECTION 12.1. EACH
SUBMITTING PARTY AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO
SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE AGENT,
THE ISSUING BANK AND THE LENDERS. FINAL JUDGMENT AGAINST ANY SUBMITTING
PARTY IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY
BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON
THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE
EVIDENCE OF THE FACT AND THE AMOUNT OF INDEBTEDNESS OR LIABILITY THEREIN
DESCRIBED OR (Y) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF
SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE AGENT, THE
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<PAGE>
ISSUING BANK OR A LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER
JUDICIAL PROCEEDINGS AGAINST ANY SUBMITTING PARTY OR ANY OF THEIR RESPECTIVE
ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OR OF ANY COUNTRY OR
PLACE WHERE ANY SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.
SECTION 12.13. 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 Agreement.
SECTION 12.14. EXECUTION IN COUNTERPARTS.
This 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 12.15. TERMINATION OF AGREEMENT.
Except for the provisions of this Agreement and the Fundamental
Documents which by their terms survive the termination of this Agreement
and the Fundamental Documents, this Agreement, each Fundamental Document,
the security interest granted pursuant to Article 8 and the guaranty
pursuant to Article 9 shall terminate when all the Obligations shall have
been fully paid and performed and any amounts owing to any Guarantor
pursuant to such Guarantor's rights of subrogation are paid in full, the
Commitments (including any commitment to issue any Letter of Credit) shall
have terminated and all Letters of Credit shall have expired or been
terminated or cancelled.
SECTION 12.16. CONFIDENTIALITY.
Each of the Lenders understands that the information furnished to
it pursuant to this Agreement will be received by it prior to the time that
such information shall have been made public, and each of the Lenders
hereby agrees that it will keep, and will direct its officers and employees
to keep, all the information provided to it pursuant to this Agreement
confidential prior to its becoming public (through publication other than
as a result of action by one of the Lenders in violation of this
Section 12.16) except that Lenders shall be permitted to disclose such
information (i) to officers, directors, employees, representatives, agents,
auditors, consultants, advisors, lawyers and affiliates of such Lender, in
the ordinary course of business who have been made aware of the
confidential nature of the information; (ii) to such officers, directors,
employees, agents and representatives of a prospective assignee or
participant as need to know such information in
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<PAGE>
connection with the
evaluation of a possible participation in the Loans hereunder (who agrees
in writing to be bound by this provision will be informed of the
confidential nature of the material); (iii) as required by Applicable Law,
or pursuant to subpoenas or other legal process, or as requested by
governmental agencies and examiners or to others and the right of the
Lenders to use such information in proceedings to enforce their rights and
remedies hereunder or under any other Fundamental Document or in any
proceeding against the Lenders in connection with this Agreement or under
any other Fundamental Document or the transactions contemplated hereunder;
(iv) to the extent such information (A) becomes publicly available other
than as a result of a breach of this Agreement or (B) becomes available to
a Lender or a participant on a non-confidential basis, not in breach of any
agreement or other obligation to the Borrower, from a source other than the
Borrower; (v) to the extent the Borrower shall have consented to such
disclosure in writing; (vi) to any corporation controlled by a Lender or a
Lender's participant or under common control with a Lender or a Lender's
participant in connection with the sale of a participation by such Lender
or participant to such other corporation provided such transferee agrees in
writing to be bound by this provision; or (vii) in accordance with Section
12.3(h) herein.
SECTION 12.17. SUBORDINATION OF INTERCOMPANY ADVANCES.
(a) Each Credit Party hereby agrees that any Indebtedness or
other intercompany receivables or 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 shall be made (i) except intercompany receivables and
advances permitted pursuant to the terms hereof may be repaid 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 Obligations and termination of the Commitment.
(b) In the event that any payment or any such Indebtedness shall
be received by such Credit Party other than as permitted by
Section 12.17(a) before payment in full of all Obligations and termination
of the Commitment, such Credit Party shall receive such payments and hold
the same in trust for, and shall immediately pay over to, the Agent on
behalf of the Lenders all such sums to the extent necessary so that the
Lenders shall have been paid all Obligations owed or which may become
owing.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and the year first written.
BORROWER:
ORION PICTURES CORPORATION
By
Name:
Title:
CORPORATE GUARANTORS:
BRIGHTON PRODUCTIONS, INC.
BUCKMINSTER MUSIC LIMITED
DONNA MUSIC PUBLICATIONS
F.P. PRODUCTIONS
MUSICWAYS, INC.
OPC MUSIC PUBLISHING, INC.
ORION HOME ENTERTAINMENT CORPORATION
ORION MUSIC PUBLISHING, INC.
ORION PICTURES DISTRIBUTION (CANADA) INC.
ORION PICTURES DISTRIBUTION CORPORATION
ORION PRODUCTIONS, INC.
ORION TV PRODUCTIONS, INC.
MCEG STERLING ENTERTAINMENT
MCEG STERLING PRODUCTIONS
MCEG STERLING DEVELOPMENT
MCEG STERLING COMPUTER SERVICES
By_____________________________
Name:
Title:
Address: 1888 Century Park East
Los Angeles, CA 90067
<PAGE>
EXHIBIT A-1
FORM OF REVOLVING CREDIT NOTE
$________ New York, New York
as of June 27, 1996
FOR VALUE RECEIVED, ORION PICTURES CORPORATION, A Delaware
corporation (the "Obligor"), DOES HEREBY PROMISE TO PAY to the order of
[INSERT NAME OF LENDER] (the "Lender") at the office of Chemical Bank at
270 Park Avenue, New York, New York 10017-2070, in lawful money of the
United States of America in immediately available funds, the principal
amount of ________ DOLLARS ($______), or the aggregate unpaid principal
amount of all Revolving Credit Loans (as defined in the Credit Agreement
referred to below) made by the Lender to the Obligor pursuant to said
Credit Agreement, whichever is less, on such date or dates as is required
by said Credit Agreement, and to pay interest on the unpaid principal
amount from time to time outstanding hereunder, in like money, at such
office and at such times as set forth in said Credit Agreement.
The Obligor and any and all sureties, guarantors and endorsers
of this Note and all other parties now or hereafter liable hereon
severally waive grace, demand, presentment for payment, protest, notice
of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate or notice of acceleration) and
diligence in collecting and bringing suit against any party hereto and
agree to the extent permitted by applicable law (i) to all extensions and
partial payments, with or without notice, before or after maturity, (ii)
to any substitution, exchange or release of any security now or hereafter
given for this Note, (iii) to the release of any party primarily or
secondarily liable hereon, and (iv) that it will not be necessary for any
holder of this Note, in order to enforce payment of this Note, to first
institute or exhaust such holder's remedies against the Obligor or any
other party liable hereon or against any security for this Note. The
nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
This Note is one of the Revolving Credit Notes referred to in
that certain Amended and Restated Credit, Security and Guaranty Agreement
dated as of November 1, 1995, as amended and restated as of June 27, 1996
(as the same may be amended, supplemented or otherwise modified, renewed
or replaced from time to time, the "Credit Agreement") among the Obligor,
the Corporate Guarantors referred to therein, the Lenders referred to
therein and Chemical Bank as Agent and as Issuing Bank, and is entitled
<PAGE>
2
to the benefits of, and is secured by the security interests granted in
the Credit Agreement and the other security documents and guarantees
referred to and described therein, which among other things, contains
provisions for optional and mandatory prepayment and for acceleration of
the maturity hereof upon the occurrence of certain events, all as
provided in the Credit Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
ORION PICTURES CORPORATION
By:--------------------------
Name:
Title:
3
<PAGE>
[LAST PAGE OF NOTE]
Name of
Unpaid Person
Payments Balance Principal Making
DATE AMOUNT OF LOAN PRINCIPAL INTEREST OF NOTE NOTATION
<PAGE>
EXHIBIT A-2
FORM OF TERM NOTE
$__________ New York, New York
as of June 27, 1996
FOR VALUE RECEIVED, ORION PICTURES CORPORATION, a Delaware
corporation (the "Obligor"), DOES HEREBY PROMISE TO PAY to the order of
[INSERT NAME OF LENDER] (the "Lender") at the office of Chemical Bank at
270 Park Avenue, New York, New York 10017-2070, in lawful money of the
United States of America in immediately available funds, the principal
amount of DOLLARS ($__________), or such lesser amount as
shall then constitute the Lender's percentage of the Term Loan (as
defined in the Credit Agreement referred to below) made by the Lender to
the Obligor pursuant to said Credit Agreement, on such date or dates as
is required by said Credit Agreement, and to pay interest on the unpaid
principal amount from time to time outstanding hereunder, in like money,
at such office, as set forth in said Credit Agreement.
The Obligor and any and all sureties, guarantors and endorsers of
this Note and all other parties now or hereafter liable hereon severally
waive grace, demand, presentment for payment, protest, notice of any kind
(including, but not limited to, notice of dishonor, notice of protest,
notice of intention to accelerate or notice of acceleration) and
diligence in collecting and bringing suit against any party hereto and
agree to the extent permitted by applicable law (i) to all extensions and
partial payments, with or without notice, before or after maturity, (ii)
to any substitution, exchange or release of any security now or hereafter
given for this Note, (iii) to the release of any party primarily or
secondarily liable hereon, and (iv) that it will not be necessary for any
holder of this Note, in order to enforce payment of this Note, to first
institute or exhaust such holder's remedies against the Obligor or any
other party liable therefor or against any security for this Note. The
nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
This Note is one of the Term Notes referred to in that certain
Amended and Restated Credit, Security and Guaranty Agreement dated as of
November 1, 1995, as amended and restated as of June 27, 1996 (as the
same may be amended, supplemented or otherwise modified, renewed or
replaced from time to time, the "Credit Agreement"), among the Obligor,
the Corporate Guarantors referred to therein,
<PAGE>
2
the Lenders referred to
therein, and Chemical Bank as Agent and as Issuing Bank, and is entitled
to the benefits of and is secured by the security interests granted in
the Credit Agreement and the other security documents referred to and
described therein, which among other things contains provisions for
optional and mandatory prepayment, and for acceleration of the maturity
hereof upon the occurrence of certain events, all as provided in the
Credit Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
ORION PICTURES CORPORATION
By____________________________
Name:
Title:
<PAGE>
3
[LAST PAGE OF NOTE]
Name of
Unpaid Person
Payments Balance Principal Making
DATE AMOUNT OF LOAN PRINCIPAL INTEREST OF NOTE NOTATION
<PAGE>
EXHIBIT B-1
FORM OF COPYRIGHT SECURITY AGREEMENT
WHEREAS, Orion Pictures Corporation, a Delaware corporation
("Parent") and each Subsidiary of Parent whose name appears at the foot
hereof (collectively the "Grantors") hold certain copyrights and rights
under copyright with respect to certain movies-of-the-week, television
series, motion pictures, films, videotapes or other programs produced for
television release or for release in any other medium, shown on network,
free and cable, pay and/or other television medium (including, without
limitation, first-run syndication) in each case whether recorded on film,
videotape, cassette, cartridge, disc or on or by any other means, method,
process or device whether now owned or hereafter developed, including,
without limitation, those United States copyright registrations listed on
Schedule 1 hereto (the "Product");
WHEREAS, the Grantors are parties to a Credit, Security and
Guaranty Agreement dated as of November 1, 1995 (as the same may be
amended, supplemented or otherwise modified, renewed or replaced from
time to time, the "Credit Agreement"), among the Grantors, the Lenders
named therein (the "Lenders"), and Chemical Bank as Agent and as Issuing
Bank (the "Agent");
WHEREAS, pursuant to the terms of the Credit Agreement, the
Grantors granted to the Agent (for the benefit of the Lenders) a security
interest in all of the personal property of the Grantors including all
right, title and interest of the Grantors in, to and under any copyright
or copyright license whether now existing or hereafter arising or
acquired, and all proceeds thereof to secure the payment of the
Obligations (as such term is defined in the Credit Agreement);
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, Grantors do, as security for
the Obligations, hereby grant to the Agent (for the benefit of the
Lenders) a continuing security interest in all the Grantors' right, title
and interest in and to each and every item of Product, the scenario,
screenplay or script upon which an item of Product is based, all of the
properties thereof, tangible and intangible, and all domestic and foreign
copyrights and all other rights therein and thereto, of every kind and
character, whether now in existence or hereafter to be made or produced,
and whether or not in possession of such Grantors, including with respect
to each and every item of Product and without limiting the foregoing
language, each and all of the following particular rights and properties
(to the extent they are owned or hereafter created or acquired by
Grantors):
<PAGE>
2
(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 the item of
Product and/or which are or will be incorporated into the item of
Product, all component parts of the item of Product consisting of
said literary and other properties, all motion picture rights in
and to the story, all treatments of said story and other literary
material, together with all preliminary and final screenplays used
and to be used in connection with the item of Product, and all
other literary material upon which the item of Product is based or
from which it is adapted;
(iii). all motion picture rights in and to all music and
musical compositions used and to be used in the item of Product,
including, 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 item of
Product, including, without limitation, all exposed film,
developed film, positives, negatives, prints, positive prints,
answer prints, special effects, preparing materials (including
interpositives, duplicate negatives, internegatives, color
reversals, intermediates, lavenders, fine grain master prints and
matrices, and all other forms of pre-print elements), sound
tracks, cutouts, trims and any and all other physical properties
of every kind and nature relating to such item of Product, whether
in completed form or in some state of completion, and all masters,
duplicates, drafts, versions, variations and copies of each
thereof, in all formats whether on film, videotape, disk or
otherwise and all music sheets and promotional materials relating
to such item of Product (collectively, the "PHYSICAL MATERIALS");
(v). all collateral, allied, subsidiary and merchandising
rights appurtenant or related to each item of Product including,
without limitation, the following rights: all rights to produce
remakes or sequels to each item of Product based upon each item of
Product, said literary properties or the theme of each item of
Product and/or the text or any part of said literary
<PAGE>
3
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 item of Product or any remake or sequel to such item of
Product; all rights to produce primarily for television or similar
use a motion picture or series of motion pictures, by use of film
or any other mechanical recording device now known or hereafter
devised, based upon each item of Product, said literary properties
or any part thereof, including, without limitation, all properties
based upon any script, scenario or the like used in each 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 tieups of any kind arising out of or
connected with said literary properties, each item of Product, the
title or titles of each item of Product, the characters of each
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 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 the initial item of Product, together with
any and all copyrights obtained or to be obtained in connection
with each item of Product or any underlying or component elements
of such item of Product, including, 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 sue for past, present and future infringements of
copyright;
(vii). all insurance policies connected with each 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 item
of Product, the negatives, sound tracks, prints and motion picture
rights in and to said story, other literary material upon which
each item of Product is based or from which it is adapted, and
said
<PAGE>
4
music and musical compositions used or to be used in each
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 New York Uniform Commercial Code (the "UCC") or
otherwise) or other property obtained or to be obtained from the
distribution, exhibition, sale or other uses or dispositions of
each item of Product or any part of each 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 item of Product and/or any of the elements of
each item of Product including from collateral, allied, subsidiary
and merchandising rights;
(x). the dramatic, nondramatic, stage, television, radio and
publishing rights, title and interest in and to each item of
Product, and the right to obtain copyrights and renewals of
copyrights therein;
(xi). the title of each item of Product and all rights of
such Grantor to the use thereof, including, without limitation,
rights protected pursuant to trademark, service mark, unfair
competition and/or the rules and principles of law and of any
other applicable statutory, 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 item of Product;
(xiii). all accounts and/or other rights to payment which such
Grantor presently owns or which may arise in favor of such Grantor
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 item
of Product, and from exploitation of any and all of the
collateral, allied, subsidiary, merchandising and other rights in
connection with each 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 Grantor
or the
<PAGE>
5
Lenders 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 item of Product, any and
all general intangible rights in favor of such Grantor or the
Lenders relating to licenses of sound or other equipment, licenses
for photographic or other process, and all general intangibles
related to the distribution or exploitation of each item of
Product including general intangibles related to or which grow out
of the exhibition of each item of Product and the exploitation of
any and all other rights in each item of Product set out in this
definition;
(xv). any and all goods including inventory (as that term is
defined in the UCC) which may arise in connection with the
creation, production or delivery of each item of Product and which
goods pursuant to any production or distribution agreement or
otherwise are owned by such Grantor;
(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 item of Product, including, without
limitation, any and all rights in favor of such Grantor, the
ownership or control of which are or may become necessary in the
opinion of the Agent, in order to complete production of each item
of Product in the event that the Agent exercises any rights it may
have to take over and complete production of each item of Product;
(xvii). any and all documents issued by any pledgeholder or
bailee with respect to each item of Product, the negatives, sound
tracks or prints (whether or not in completed form) with respect
thereto;
(xviii). any and all production accounts or other bank accounts
established by such Grantor with respect to such item of Product;
(xix). any and all rights of such Grantor under contracts
relating to the production of each item of Product; and
(xx). any and all rights of such Grantor under any agreement
entered into by such Grantor pursuant to which such Grantor has
licensed, leased, assigned or sold distribution or other
<PAGE>
6
exploitation rights to any item of Product in any media or
territory to an unaffiliated person.
Each of the Grantors agrees that if any person, firm or
corporation shall do or perform any acts which the Agent believes
constitute a copyright infringement of the photoplay or of any of the
literary, dramatic or musical material contained in the Product, or
constitute a plagiarism, or violate or infringe any right of any Grantor
or the Lenders therein or if any person, firm or corporation shall do or
perform any acts which the Agent believes constitute an unauthorized or
unlawful distribution, exhibition, or use thereof, then and in any such
event, upon 30 days' prior written notice to such Grantor, while an Event
of Default is continuing, the Agent may and shall have the right to take
such steps and institute such suits or proceedings as the Agent may deem
advisable or necessary to prevent such acts and conduct and to secure
damages and other relief by reason thereof, and to generally take such
steps as may be advisable or necessary or proper for the full protection
of the rights of the parties. The Agent may take such steps or institute
such suits or proceedings in its own name or in the name of such Grantor
or in the names of the parties jointly.
This Copyright Security Agreement is made for collateral purposes
only. This security interest is granted in conjunction with the security
interests granted to the Agent (for the benefit of the Lenders) pursuant
to the Credit Agreement. The parties do hereby further acknowledge and
affirm that the rights and remedies of the Agent (for the benefit of the
Lenders) with respect to the security interest made and granted hereby
are more fully set forth in the Credit Agreement, and are subject to the
limitations (including certain rights of quiet enjoyment in favor of
licensees) set forth in the Credit Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
THIS COPYRIGHT SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
<PAGE>
7
IN WITNESS WHEREOF, the Grantors have caused this Copyright
Security Agreement to be duly executed by its officer thereunto duly
authorized as of November 1, 1995.
ORION PICTURES CORPORATION
BRIGHTON PRODUCTIONS, INC.
BUCKMINSTER MUSIC LIMITED
DONNA MUSIC PUBLICATIONS
F.P. PRODUCTIONS
MUSICWAYS, INC.
OPC MUSIC PUBLISHING, INC.
ORION HOME ENTERTAINMENT
CORPORATION
ORION MUSIC PUBLISHING, INC.
ORION PICTURES DISTRIBUTION
(CANADA) INC.
ORION PICTURES DISTRIBUTION
CORPORATION
ORION PRODUCTIONS, INC.
ORION TV PRODUCTIONS, INC.
By_____________________________
Name:
Title:
Address: 1888 Century Park East
Los Angeles, CA 90067
MCEG STERLING ENTERTAINMENT
MCEG STERLING PRODUCTIONS
MCEG STERLING DEVELOPMENT
MCEG STERLING COMPUTER SERVICES
MCEG STERLING ADMINISTRATIONS
By_____________________________
Name:
Title:
Address: 1888 Century Park East
Los Angeles, CA 90067
Accepted:
CHEMICAL BANK, individually
and as Agent
By:
Name:_________________________
Title:
<PAGE>
8
STATE OF )
: ss.:
COUNTY OF )
On the ____ day of __________, in the year 1995, before me personally
came _____________________, to me known, who, being by me sworn, did say
that he resides at ________________________; that he is an Authorized
Signatory of Orion Pictures Corporation, Brighton Productions, Inc.,
Buckminster Music Limited, Donna Music Publications, F.P. Productions,
Musicways, Inc., OPC Music Publishing, Inc., Orion Home Entertainment
Corporation, Orion Music Publishing, Inc., Orion Pictures Distribution
(Canada) Inc., Orion Pictures Distribution Corporation, Orion
Productions, Inc. and Orion TV Productions, Inc., which corporations are
described in, and which corporations executed the above instrument, and
that he signed his name by order of the Board of Directors of each of
said corporations.
___________________________________Notary Public
<PAGE>
9
STATE OF )
: ss.:
COUNTY OF )
On the ____ day of __________, in the year 1995, before me personally
came _____________________, to me known, who, being by me sworn, did say
that he resides at ________________________; that he is an Authorized
Signatory of MCEG Sterling Entertainment, MCEG Sterling Productions, MCEG
Sterling Development, MCEG Sterling Computer Services and MCEG Sterling
Administrations, which corporations are described in, and which
corporations executed the above instrument, and that he signed his name
by order of the Board of Directors of each of said corporations.
___________________________________Notary Public
<PAGE>
10
SCHEDULE 1 to
Copyright
Security Agreement
TITLE REGISTRATION NO. DATE OF REGISTRATION
<PAGE>
EXHIBIT B-2
FORM OF
SUPPLEMENT NO. __ TO THE COPYRIGHT SECURITY
AGREEMENT DATED AS OF ____________
WHEREAS, [NAME OF APPLICABLE CREDIT PARTY] (the "Grantor") is
party to an Amended and Restated Credit, Security and Guaranty Agreement
dated as of November 1, 1995, as amended and restated as of June 27, 1996
(as such agreement may be amended, supplemented or otherwise modified,
renewed or replaced from time to time, the "Credit Agreement") among
Orion Pictures Corporation, the Corporate Guarantors referred to therein,
the Lenders referred to therein (the "Lenders") and Chemical Bank as
Agent and as Issuing Bank (the "Agent");
WHEREAS, pursuant to the terms of the Credit Agreement, the
Grantor has granted to the Agent (for the benefit of the Lenders) a
security interest in all right, title and interest of the Grantor in and
to all personal property, whether now owned, presently existing or
hereafter acquired or created, including, without limitation, all right,
title and interest of the Grantor in, to and under any item of Product
being used herein as defined in the Copyright Security Agreement referred
to below) and any copyright or copyright license, whether now existing or
hereafter arising, acquired or created, and all proceeds thereof or
income therefrom, to secure the payment and performance of the
Obligations (such term being used herein as defined in the Credit
Agreement) pursuant to the Credit Agreement;
WHEREAS, the Grantor is a party to a Copyright Security
Agreement, dated as of November 1, 1995 (as the same has been, or may
hereafter be, amended or supplemented from time to time, the "Copyright
Security Agreement"), pursuant to which the Grantor has granted to the
Agent (for the benefit of the Lenders), as security for the Obligations,
a continuing security interest in all of the Grantor's right, title and
interest in and to all personal property, tangible and intangible,
wherever located or situated and whether now owned, presently existing or
hereafter acquired or created, including but not limited to, all goods,
accounts, instruments, intercompany obligations, contract rights,
documents, chattel paper, general intangibles, equipment, machinery,
inventory, copyrights, trademarks, trade names, insurance proceeds, cash,
bank accounts and the securities pledged to the Agent (for the benefit of
the Lenders) pursuant to the Credit Agreement, and any proceeds thereof
or income therefrom, further including but not limited to, all of the
Grantor's right, title and interest in and to each and every item of
Product, the scenario, screenplay or script upon which an item of Product
is based, all of the properties thereof, tangible
<PAGE>
2
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 the Grantor, all as
more fully set forth in the Copyright Security Agreement;
WHEREAS, the Grantor has acquired or created additional items
of Product since the date of execution of the Copyright Security
Agreement and, if applicable, any more recent Supplement thereto and
holds certain additional copyrights and rights under copyright with
respect to items of Product;
WHEREAS, Schedule 1 to the Copyright Security Agreement does
not reflect (i) item(s) of Product acquired or created by the Grantor
since the date of execution of the Copyright Security Agreement and the
most recent Supplement thereto or (ii) all the copyrights and rights
under copyright held by the Grantor;
THEREFORE,
A. The Grantor does hereby grant to the Agent (for the
benefit of the Lenders), as security, a continuing security interest
in and to all of the Grantor's right, title and interest in and to
each and every item of Product being added to Schedule 1 to the
Copyright Security Agreement pursuant to paragraph (b) below, the
scenario, screenplay or script upon which such item of Product is
based, all of the properties thereof, tangible and intangible, and
all domestic and foreign copyrights and all other rights therein and
thereto, of every kind and character, whether now in existence or
hereafter to be made or produced, and whether or not in possession
of the Grantor, all as contemplated by, and as more fully set forth
in, the Copyright Security Agreement.
B. Schedule 1 to the Copyright Security Agreement is hereby
supplemented, effective as of the date hereof, so as to reflect all
of the copyrights and rights under copyright with respect to the
item(s) of Product in and to which the Grantor has granted a
continuing security interest to the Agent (for the benefit of the
Lenders) pursuant to the terms of the Copyright Security Agreement
and the Credit Agreement. The following item(s) of Product and
copyright information are hereby added to Schedule 1 to the
Copyright Security Agreement:
<PAGE>
3
Date of
TITLE REGISTRATION NO. REGISTRATION
Except as expressly supplemented hereby, the Copyright Security
Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof. As used in the Copyright Security
Agreement, the terms "Agreement", "this Agreement", "this Copyright
Security Agreement", "herein", "hereafter", "hereto", "hereof" and words
of similar import, shall, unless the context otherwise requires, mean the
Copyright Security Agreement as supplemented by this Supplement.
Except as expressly supplemented hereby, the Copyright Security
Agreement, all documents contemplated thereby and any previously executed
Supplements thereto, are each hereby confirmed and ratified by the
Grantor.
The execution and filing of this Supplement, and the addition
of the item(s) of Product set forth herein to Schedule 1 to the Copyright
Security Agreement are not intended by the parties to derogate from, or
extinguish, any of the Agent's rights or remedies under (i) the Copyright
Security Agreement and/or any agreement, amendment or supplement thereto
or any other instrument executed by the Grantor and heretofore recorded
or submitted for recording in the U.S. Copyright Office or (ii) any
financing statement, continuation statement, deed or charge or other
instrument executed by the Grantor and heretofore filed in any state or
country in the United States of America or elsewhere.
<PAGE>
4
IN WITNESS WHEREOF, the Grantor has caused this Supplement
No. ___ to the Copyright Security Agreement to be duly executed by its
duly authorized officer as of _____________, ____.
[NAME OF GRANTOR]
By:__________________________
Name:
Title:
<PAGE>
5
STATE OF ______________ )
: ss.:
COUNTY OF _____________ )
On this the ___ day of __________, ____, before me,
________________________________, the undersigned Notary Public,
personally appeared _________________________________________,
[ ] personally known to me,
[ ] proved to me on the basis of satisfactory evidence, to be
the _________________________ of the corporation known as
_____________________ who executed the foregoing instrument on behalf of
the corporation, and acknowledged that such corporation executed it
pursuant to a resolution of its Board of Directors.
WITNESS my hand and official seal.
______________________________
Notary Public
<PAGE>
EXHIBIT C-1
FORM OF PLEDGEHOLDER AGREEMENT (UNCOMPLETED PRODUCT)
AGREEMENT dated as of ________________,
____ (the "Agreement") among (i) [INSERT NAME OF
LABORATORY] ("Laboratory") (ii) [INSERT NAME OF
EACH CREDIT PARTY WHO HAS CONTROL OVER THE
PHYSICAL ELEMENTS OF THE COLLATERAL]
(collectively referred to herein as the
"Producer(s)"), (iii) [INSERT NAME OF COMPLETION
GUARANTOR] (the "Completion Guarantor") and (iv)
Chemical Bank, as agent for the Lenders referred
to in the Credit Agreement hereinafter defined
(the "Agent").
Pursuant to the Amended and Restated Credit, Security and
Guaranty Agreement dated as of November 1, 1995, as amended and restated
as of June 27, 1996 among Orion Pictures Corporation (the "Borrower"),
the Corporate Guarantors referred to therein, the lenders referred to
therein (the "Lenders") and the Agent (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to
time, the "Credit Agreement"), the Lenders have agreed, subject to the
terms and conditions set forth in the Credit Agreement, to make loans to
the Borrower in connection with, among other things, the acquisition,
production and distribution of the Product (as hereinafter defined); and
the Producer(s) have granted to the Agent for the benefit of the Lenders
a security interest in, among other things, all of their right, title and
interest in and to the [DESCRIBE NATURE OF PRODUCT, I.E. THEATRICAL
MOTION PICTURE, MOVIE-OF-THE-WEEK, ETC.] currently entitled "[INSERT THE
NAME OF THE PRODUCT]" (hereinafter called the "Product") as security for
various obligations of the Producer(s) to the Lenders. Such security
interest covers, among other things, all physical properties of every
kind or nature of, or relating to, the Product and all versions thereof,
including, without limitation, exposed film, developed film, positives,
negatives, prints, positive prints, answer prints, special effects,
preparing materials (including interpositives, duplicate negatives,
internegatives, color reversals, intermediates, lavenders, fine grain
master prints and matrices, and all other forms of pre-print elements),
sound tracks, cutouts, trims and any and all other physical properties of
every kind and nature of, or relating to, the Product, whether in
completed form or in some state of completion, and all masters,
duplicates,
<PAGE>
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 the Product all of the
foregoing items being hereinafter collectively called the "Collateral".
Pursuant to the Completion Guaranty dated as of [_________],
199[_] among the Completion Guarantor, the Producer(s) and the Agent (the
"Completion Guaranty"), the Completion Guarantor has agreed to guaranty
the completion and delivery of the Product. In connection therewith, the
Producer(s) have granted to the Completion Guarantor, a security interest
in certain assets that are included in the Collateral, all as specified
in, and subject to the terms and conditions of, the Producer's Completion
Agreement dated as of [____________], 199[_] between the Producer(s) and
the Completion Guarantor (the "Producer's Agreement").
From time to time, the Laboratory will have in its possession
certain items of the Collateral.
Accordingly, the parties hereto hereby agree as follows:
1. Each of the Producer(s), the Completion Guarantor, and the
Agent hereby appoint the Laboratory as the pledgeholder of all items of
Collateral that may from time to time come into the possession or control
of the Laboratory. The Laboratory agrees to hold all such items of
Collateral as pledgeholder for the Agent (for the benefit of the Lenders)
subject to the following terms and conditions:
(a) Except as permitted by Section 1(b) below, the
Laboratory will keep all items of Collateral at the
laboratories or storage facilities listed on Schedule 1 hereto,
and will not deliver such property to anyone.
(b) Subject to the provisions of Sections 1(c) and 1(d)
below, the Laboratory will permit the Producers:
(A) to have access to the negatives and other pre-
print material of the Product (but not remove them from
the possession of the Laboratory) for purposes of
inspecting, cutting, scoring or similar purposes;
(B) to obtain a reasonable number of positive prints
including without limitation, dailies, for the purposes of
editing and previewing the Product;
(C) to direct the making of pre-print material and
positive prints of the Product
<PAGE>
and trailers thereof and
the delivery thereof to the Producers or distributors,
licensees or other parties as the Producers may direct;
(D) to remove reasonable amounts of material for
processing by optical and/or sound houses which agree in
writing to be bound by the terms hereof or enter into a
separate laboratory pledgeholder agreement substantially
in the form hereof, and to return such materials when
processed to the Laboratory;
(E) with the prior written consent of the Agent, to
forward any item of Collateral to another laboratory. The
Agent hereby consents to the Laboratory's forwarding
original material or elements constituting Collateral, if
requested to do so by the Producer(s) [OR THE COMPLETION
GUARANTOR], to any of the laboratories listed in Schedule
3 hereto. The Agent's consent contained in this clause
(v) may be revoked at any time by written notice to the
Laboratory [,THE COMPLETION GUARANTOR] and the Producers
from the Agent. In addition, such consent shall be deemed
to be revoked at any time upon receipt by the Laboratory
of written notice from the Agent, that an Event of Default
has occurred under the Credit Agreement; and
(F) to forward any of the above-mentioned property
to another laboratory, approved by the Agent, if the Agent
has previously received a Pledgeholder Agreement executed
by such laboratory.
(c) If and when the Laboratory shall receive written notice
from the Agent that an Event of Default shall have occurred
under the Credit Agreement, the Laboratory shall take no
further orders from the Producers and will hold all items of
Collateral within its possession or under its control as
pledgeholder hereunder, subject only (i) to the order and
instruction of the Agent; and (ii) to the rights of the Agent,
and/or the Completion Guarantor to have access to and/or
delivery of items referred to in Section 6 below.
(d) If and when the Laboratory shall receive written
notice from the Completion Guarantor that the Completion
Guarantor has exercised its right to take over the production
of the Product under the Producer's Agreement and, unless and
until the Laboratory shall have received written notice from
-3-
<PAGE>
the Agent to the contrary, the Laboratory shall allow the
Completion Guarantor to exercise the rights set forth in
clauses (i), (ii), (iii) and (iv) of Section 1(b) hereof.
Following such notice from the Completion Guarantor, the
Laboratory will not permit the Producer(s) to have any further
access to, or direct any further actions to be taken with
respect to, the Collateral in the Laboratory's possession or
under its control or to obtain any prints thereof.
(e) If the Completion Guarantor takes over the production
of the Product and requests that the Collateral be moved to a
different laboratory, the Agent agrees to consent to such move
so long as a laboratory pledgeholder agreement is executed by
the various parties hereto (other than the Laboratory) and by
the replacement laboratory, substantially in the form hereof
and so as long as the replacement laboratory is reasonably
satisfactory to the Agent.
2. The Producer(s) agree with the Agent that during
production of the Product they will deliver the daily rushes for the
Product to the Laboratory as soon as practicable and will use their best
efforts to deliver the daily rushes on a weekly basis.
3. The Laboratory shall keep the original negatives of the
Product in film vaults separate from and at a reasonable distance from
protective duplicating materials (whether protective masters, fine
grains, duplicate negatives or otherwise) to afford protection against
any loss or damage, whether by fire or other disaster or otherwise. The
Laboratory shall keep the Agent and the Completion Guarantor advised in
writing of the actual location of the film vaults where all items of the
Collateral are kept, including information as to the separate film vaults
utilized for the original negatives and protective materials as
aforesaid.
4. Subject to the rights of the Completion Guarantor, the
Laboratory agrees that in its capacity as pledgeholder it is holding and
has possession of the Collateral and the physical properties thereof
constructively for the Agent (for the benefit of the Lenders) and upon
written request of the Agent (a copy of which will be sent to the
Completion Guarantor unless its rights hereunder have terminated as
contemplated by Section 8 hereof), will hold a sale or sales of the
Collateral or any part thereof in accordance with the direction and
instruction of the Agent, at the expense of the Agent, or in the
alternative will cause to be delivered or made available to the Agent or
its nominee (in all cases, pursuant to written instructions from the
Agent) the Collateral and all
-4-
<PAGE>
physical properties thereof in the
possession of the Laboratory or under its control for the purpose of
enabling the Agent to deal with the same pursuant to the Credit
Agreement. Nothing herein contained shall be construed to waive any
rights of the Laboratory as specified under Section 9 hereof.
5. Each of the Completion Guarantor and the Producer(s)
hereby waives any claim for damages or otherwise which it may have
against the Laboratory for any acts which the Laboratory may take as
pledgeholder, pursuant to the direction of the Agent.
6. Subject to Section 9 hereof, the Laboratory agrees that,
despite the existence of any other claim which the Laboratory may have
against the Producer(s) and/or the Completion Guarantor and/or any third-
party distributor of the Product, the Laboratory shall accept and fulfill
orders for laboratory work and any other material which may be required
by the Agent or any other third-party distributor of the Product, subject
to satisfactory credit arrangements being made with the Laboratory with
respect to any charges incurred on behalf of the Agent or any such third-
party distributor, and the Laboratory will not assert any claim or lien,
statutory or otherwise, against the Agent or against the Product (except
as set forth in Section 9 hereof) with respect to any charges for
laboratory services or materials ordered by the Producer(s), the
designees of the Producer(s), any third-party distributor of the Product
or the Completion Guarantor.
7. The parties hereto agree that the Agent and its respective
designees, successors and assigns shall each be entitled to unilaterally
remove from the Laboratory materials made pursuant to an order
contemplated by Section 6 hereof, which materials shall not be subject to
this Agreement.
8. The rights granted hereunder to the Completion Guarantor
shall (i) at all times be junior and subordinate to the rights hereunder
of the Agent and (ii) terminate upon the completion and delivery of the
Product, unless prior to such completion and delivery of the Product, the
Completion Guarantor has notified the Agent and the Laboratory in writing
that it has or anticipates that it will have to advance its own funds to
complete the Product. Notwithstanding anything to the contrary in this
Agreement, the Completion Guarantor shall have no rights under this
Agreement if the Agent gives written notice to the Laboratory and the
Completion Guarantor that the Product has been completed and delivered
without the requirement that the Completion Guarantor advance any of its
own funds pursuant to the Completion Guaranty. The Completion Guarantor
hereby agrees that in the event that the Completion Guarantor shall have
been released in writing
-5-
<PAGE>
from all of its obligations under the Completion
Guaranty for the Product, any amendment or termination of this Agreement
thereafter shall not require the Completion Guarantor's consent.
9. The Laboratory shall hold and/or process the Collateral
under its standard terms of business as set forth in Schedule 2 hereto,
except that any liens arising in favor of the Laboratory shall be limited
to an aggregate amount of $_______ at any one time outstanding for
processing and/or storing the Collateral and/or materials delivered
therefrom for the Producers, any of their designees and/or the Completion
Guarantor. Except as provided in the prior sentence, the rights of the
Laboratory in the Collateral shall be subordinate and junior to the
rights of the Agent and the Completion Guarantor in respect of the
Collateral.
10. The Agent shall promptly give written notice to the
Laboratory when the Agent's (on behalf of the Lenders) security interests
in the Collateral has terminated. Upon receipt of such written notice,
the Laboratory's obligations hereunder as pledgeholder for the Agent
shall terminate.
11. This Agreement shall be binding on and inure to the
benefit of the parties hereto and the successors and assigns of each of
the parties.
12. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
13. No amendment to this Agreement shall be effective unless
in writing and signed by the Producer(s), the Agent and the Laboratory
and if the Laboratory has not received the notice from the Agent
contemplated by Section 8 hereof, then also the Completion Guarantor.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which when taken together, shall
constitute but one instrument, and shall become effective on the date on
which each of the Completion Guarantor and the Agent shall have received
a fully-executed copy of this Agreement. Promptly thereafter, the
Producers shall deliver or mail counterparts of this Agreement bearing
the signature of each of the parties hereto to each party hereto.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written above.
[LABORATORY]
By_____________________________
Name:
Title:
Address:
Attn:
[LIST APPLICABLE CREDIT PARTY]
By_____________________________
Name:
Title:
Address:
Attn:
[COMPLETION GUARANTOR]
By_____________________________
Name:
Title:
Address:
Attn:
CHEMICAL BANK, as Agent
By_____________________________
Name:
Title:
Address:
Attn:
-7-
<PAGE>
Schedule 1
List of Laboratory and Storage Facilities
-8-
<PAGE>
Schedule 2
[Attach Laboratory's Standard Terms of Business]
-9-
<PAGE>
Schedule 3
List of Laboratories
-10-
<PAGE>
EXHIBIT C-2
FORM OF PLEDGEHOLDER AGREEMENT (COMPLETED PRODUCT)
AGREEMENT dated as of _______________, ____
(the "Agreement") among (i) [INSERT NAME OF
LABORATORY] ("Laboratory") (ii) [INSERT NAME OF
EACH CREDIT PARTY WHO HAS CONTROL OVER THE
PHYSICAL ELEMENTS OF THE COLLATERAL]
(collectively referred to herein as the
"Producer(s)"), and (iii) Chemical Bank, as
agent for the Lenders referred to in the Credit
Agreement hereinafter defined (the "Agent").
Pursuant to the Amended and Restated Credit, Security and
Guaranty Agreement dated as of November 1, 1995, as amended and restated
as of June 27, 1996 among Orion Pictures Corporation (the "Borrower"),
the Corporate Guarantors referred to therein, the lenders referred to
therein (the "Lenders"), and the Agent (as the same may be further
amended, supplemented or otherwise modified, renewed or replaced from
time to time, the "Credit Agreement"), the Lenders have agreed, subject
to the terms and conditions set forth in the Credit Agreement, to make
loans to the Borrower in connection with, among other things, the
acquisition, production and distribution of the Product (as hereinafter
defined); and the Producer(s) have granted to the Agent for the benefit
of the Lenders a security interest in, among other things, all of their
right, title and interest in and to any motion picture, film or video
tape produced for theatrical, non-theatrical, television or video release
in any other medium, with respect to which the Producer(s) (i) is the
copyright owner or (ii) has acquired or has contracted to acquire an
equity interest or distribution rights (hereinafter called the "Product")
as security for various obligations of the Producers to the Lenders.
Such security interest covers, among other things, all physical
properties of every kind or nature of, or relating to, the Product and
all versions thereof, including, without limitation, exposed film,
developed film, positives, negatives, prints, positive prints, answer
prints, special effects, preparing materials (including interpositives,
<PAGE>
duplicate negatives, internegatives, color reversals, intermediates,
lavenders, fine grain master prints and matrices, and all other forms of
pre-print elements), sound tracks, cutouts, trims and any and all other
physical properties of every kind and nature of, or relating to, the
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 the Product, all
of the foregoing items being hereinafter collectively called the
"Collateral".
From time to time, the Laboratory will have in its possession
certain items of the Collateral.
Accordingly, the parties hereto hereby agree as follows:
1. Each of the Producer(s) and the Agent hereby appoint the
Laboratory as the pledgeholder of all items of Collateral that may from
time to time come into the possession or control of the Laboratory. The
Laboratory agrees to hold all such items of Collateral as pledgeholder
for the Agent (for the benefit of the Lenders) subject to the following
terms and conditions:
(a) Except as permitted by Section 1(b) below, the
Laboratory will keep all items of Collateral at the
laboratories or storage facilities listed on Schedule 1 hereto,
and will not deliver such property to anyone.
(b) Subject to the provisions of Section 1(c) the
Laboratory will permit the Producer(s):
(i) to have access to the negatives and other pre-
print material of the Product (but not remove them from
the possession of the Laboratory) for purposes of
inspecting, cutting, scoring or similar purposes;
(ii) to obtain a reasonable number of positive prints
including without limitation, dailies, for the purposes of
editing and previewing the Product;
(iii) to direct the making of pre-print material and
positive prints of the Product and trailers thereof and
the delivery thereof to the Producers or distributors,
licensees or other parties as the Producer(s) may direct;
-2-
<PAGE>
(iv) to remove reasonable amounts of material for
processing by optical and/or sound houses which agree in
writing to be bound by the terms hereof or enter into a
separate laboratory pledgeholder agreement substantially
in the form hereof, and to return such materials when
processed to the Laboratory;
(v) with the prior written consent of the Agent, to
forward any item of Collateral to another laboratory. The
Agent hereby consents to the Laboratory's forwarding
original material or elements constituting Collateral, if
requested to do so by the Producer(s) to any of the
laboratories listed in Schedule 3 hereto. The Agent's
consent contained in this clause (v) may be revoked at any
time by written notice to the Laboratory and the
Producer(s) from the Agent. In addition, such consent
shall be deemed to be revoked at any time upon receipt by
the Laboratory of written notice from the Agent, that an
Event of Default has occurred under the Credit Agreement;
and
(vi) to forward any of the above-mentioned property
to another laboratory, approved by the Agent, if the Agent
has previously received a Pledgeholder Agreement executed
by such laboratory.
(c) If and when the Laboratory shall receive written notice
from the Agent that an Event of Default shall have occurred
under the Credit Agreement, the Laboratory shall take no
further orders from the Producers and will hold all items of
Collateral within its possession or under its control as
pledgeholder hereunder, subject only (i) to the order and
instruction of the Agent; and (ii) to the rights of the Agent
to have access to and/or delivery of items referred to in
Section 5 below.
2. The Laboratory shall keep the original negatives of the
Product in film vaults separate from and at a reasonable distance from
protective duplicating materials (whether protective masters, fine
grains, duplicate negatives or otherwise) to afford protection against
any loss or damage, whether by fire or other disaster or otherwise. The
Laboratory shall keep the Agent advised in writing of the actual location
of the film vaults where all items of the Collateral are kept, including
information as to the separate film vaults utilized for the original
negatives and protective materials as aforesaid.
-3-
<PAGE>
3. The Laboratory agrees that in its capacity as pledgeholder
it is holding and has possession of the Collateral and the physical
properties thereof constructively for the Agent (for the benefit of the
Lenders) and upon written request of the Agent, will hold a sale or sales
of the Collateral or any part thereof in accordance with the direction
and instruction of the Agent, at the expense of the Agent, or in the
alternative will cause to be delivered or made available to the Agent or
its nominee (in all cases, pursuant to written instructions from the
Agent) the Collateral and all physical properties thereof in the
possession of the Laboratory or under its control for the purpose of
enabling the Agent to deal with the same pursuant to the Credit
Agreement. Nothing herein contained shall be construed to waive any
rights of the Laboratory as specified under Section 7 hereof.
4. Each of the Producers hereby waive any claim for damages
or otherwise which it may have against the Laboratory for any acts which
the Laboratory may take as pledgeholder, pursuant to the direction of the
Agent.
5. Subject to Section 7 hereof, the Laboratory agrees that,
despite the existence of any other claim which the Laboratory may have
against the Producer(s) and/or any third-party distributor of the
Product, the Laboratory shall accept and fulfill orders for laboratory
work and any other material which, following the occurrence and
continuation of an Event of Default, may be required by the Agent or any
other third-party distributor of the Product, subject to satisfactory
credit arrangements being made with the Laboratory with respect to any
charges incurred on behalf of the Agent or any such third-party
distributor, and the Laboratory will not assert any claim or lien,
statutory or otherwise, against the Agent or against the Product (except
as set forth in Section 7 hereof) with respect to any charges for
laboratory services or materials ordered by the Producer(s), the
designees of the Producer(s), any third-party distributor of the Product.
6. The parties hereto agree that the Agent and its respective
designees, successors and assigns shall each be entitled to unilaterally
remove from the Laboratory materials made pursuant to an order
contemplated by Section 5 hereof, which materials shall not be subject to
this Agreement.
7. The Laboratory shall hold and/or process the Collateral
under its standard terms of business as set forth in Schedule 2 hereto,
except that any liens arising in favor of the Laboratory shall be limited
to an aggregate amount of $______ per any item of Product at any one time
outstanding for processing and/or storing the Collateral and/or materials
delivered therefrom for the Producer(s) and/or any of their designees.
Except as provided in the prior
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<PAGE>
sentence, the rights of the Laboratory in
the Collateral shall be subordinate and junior to the rights of the Agent
in respect of the Collateral.
8. The Agent shall promptly give written notice to the
Laboratory when the Agent's (on behalf of the Lenders) security interests
in the Collateral has terminated. Upon receipt of such written notice,
the Laboratory's obligations hereunder as pledgeholder for the Agent
shall terminate.
9. This Agreement shall be binding on and inure to the
benefit of the parties hereto and the successors and assigns of each of
the parties.
10. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
11. No amendment to this Agreement shall be effective unless
in writing and signed by the Producer(s), the Agent and the Laboratory.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which when taken together, shall
constitute but one instrument, and shall become effective on the date on
which the Agent shall have received a fully-executed copy of this
Agreement. Promptly thereafter, the Producer(s) shall deliver or mail
counterparts of this Agreement bearing the signature of each of the
parties hereto to each party hereto.
12. This Agreement shall supersede and replace all previous
Laboratory Pledgeholder Agreements, among the Laboratory, the Producer(s)
and the Agent, executed in connection with this Product and the related
Collateral.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written above.
[LABORATORY]
By_____________________________
Name:
Title:
Address:
Attn:
<PAGE>
[LIST EACH APPLICABLE CREDIT PARTY]
By_____________________________
Name:
Title:
Address:
Attn:
CHEMICAL BANK, as Agent
By_____________________________
Name:
Title:
Address:
Attn:
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<PAGE>
Schedule 1
List of Laboratory and Storage Facilities
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<PAGE>
Schedule 2
[Attach Laboratory's Standard Terms of Business]
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<PAGE>
Schedule 3
List of Laboratories
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<PAGE>
EXHIBIT D-1
FORM OF BORROWER PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of November 1, 1995
between ORION PICTURES CORPORATION, a Delaware
corporation (the "Pledgor") and CHEMICAL BANK,
as Agent for the Lenders referred to herein
(in such capacity, the "Agent").
INTRODUCTORY STATEMENT
Pursuant to a Credit, Security and Guaranty Agreement dated as of
November 1, 1995, among the Pledgor, the Corporate Guarantors referred to
therein, the Lenders referred to therein and the Agent (said agreement as
it may hereafter be amended, supplemented or otherwise modified, renewed
or replaced from time to time in accordance with its terms being the
"Credit Agreement"), the Lenders have agreed to make loans (the "Loans")
to the Pledgor.
The Pledgor owns beneficially and of record all of the issued and
outstanding shares of the capital stock of each Subsidiary listed on
Schedule 1 hereto (being referred to herein as the "Pledged Affiliates").
In order to induce the Lenders to enter into the Credit Agreement
and make the Loans to the Pledgor and to secure the obligations of the
Pledgor under the Credit Agreement (such obligations of the Pledgor being
hereinafter referred to as the "Obligations"), the Pledgor is pledging to
the Agent, for the ratable benefit of the Lenders, all of the issued and
outstanding capital stock of the Pledged Affiliates, all as more fully
set forth herein.
Accordingly, the parties hereto agree as follows (capitalized
terms used herein and not otherwise defined shall have the meanings set
forth in the Credit Agreement):
1. PLEDGE. (a) As security for payment in full of the
Obligations, the Pledgor hereby pledges, hypothecates, assigns,
transfers, sets over and delivers unto the Agent, for the ratable benefit
of the Lenders, and grants a security interest in (i) all the capital
stock of each of the Pledged Affiliates which the Pledgor owns
beneficially and of record, and (ii) all proceeds of such
<PAGE>
capital stock
and all other securities or other property at any time and from time to
time receivable or otherwise distributed in respect of or in exchange for
any or all of such capital stock or additional securities. All items
referred to in clauses (i) and (ii) of this Section 1 are hereinafter
referred to collectively as the "Pledged Securities".{1}
(b )The Pledgor shall deliver to the Agent the certificates
representing the Pledged Securities accompanied by undated stock powers
executed in blank and by such other instruments or documents as the Agent or
its counsel shall reasonably request.
2. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The Agent shall have the
right (in its sole and absolute discretion) to hold the certificates
representing any Pledged Securities in its own name, the name of its
nominee or in the name of the Pledgor, endorsed or assigned in blank or
in favor of the Agent. Upon the occurrence and during the continuation
of an Event of Default, the 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 Agreement.
3. PLEDGOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor
hereby represents and warrants to and/or covenants and agrees with the
Agent as follows:
(i) the Pledged Securities constitute 100% of the issued and
outstanding equity securities of each of the Pledged Affiliates;
(ii)the Pledged Securities are duly authorized, validly issued,
fully paid and non-assessable;
(iii) there are no restrictions on the transfer of the Pledged
Securities other than as a result of the Credit Agreement or applicable
securities laws or the regulations promulgated thereunder;
(iv)the Pledgor has good title to the Pledged Securities;
(v)the Pledged Securities are not subject to any prior liens or
encumbrances;
(vi)the Pledgor has the right to pledge the Pledged Securities
hereunder free of any encumbrances, and
________________________
{1/} The Agent has the discretion to limit this Lien to 65% of the
Pledged Securities of the capital stock of a Pledged Affiliate that is a
foreign controlled subsidiary.
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<PAGE>
without the consent of the creditors of the Pledged Affiliates or any other
person or any government agency whatsoever;
(vii) the Pledgor has full power and authority to execute, deliver
and perform this Agreement and to pledge the Pledged Securities hereunder;
(viii) the Pledgor will not take any action to allow any
additional equity securities of the Pledged Affiliates to be issued or grant
any options or warrants, unless such securities are pledged to the Agent, for
the ratable benefit of the Lenders, on terms satisfactory to the Agent as
security for the Obligations;
(ix) the execution, delivery and performance of this Agreement
will not violate any provision of law, administrative regulation, any
order of any court or other agency of government, any provision of any
indenture, agreement or other instrument to which the Pledgor is a party,
or be in conflict with, result in a material breach of or constitute (with
due notice and/or lapse of time) a material default under any such indenture,
agreement or other instrument;
(x)there are no pending legal or governmental proceedings to which
the Pledgor is a party or to which any of its properties is subject which
will materially affect the Pledgor's ability to perform its obligations
hereunder; and
(xi) on the date hereof, the Pledged Securities consist of the
securities listed on Schedule 2.
4. VOTING RIGHTS; DIVIDENDS; ETC. (a) Unless and until an Event of
Default shall have occurred and be continuing:
(i)The Pledgor shall be entitled to exercise any and all voting
and/or consensual rights and powers accruing to the owner of the Pledged
Securities or any part thereof for any purpose not inconsistent with the
terms hereof and of the Credit Agreement.
(ii) Any dividends or distributions of any kind whatsoever
received by the Pledgor, whether resulting from a subdivision, combination,
or reclassification of the outstanding capital stock of the shares or
received in exchange for the Pledged Securities or any part thereof or as a
result of any merger, consolidation, acquisition, or other exchange of assets to
which the shares may be a party, or otherwise, shall be and become part of the
Pledged Securities pledged hereunder and shall immediately be delivered to the
Agent to be held subject to the terms of this Agreement.
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<PAGE>
(iii) The Agent shall execute and deliver to the Pledgor, or cause
to be executed and delivered to the Pledgor, all such proxies, powers of
attorney and other instruments as the Pledgor may reasonably request for
the purpose of enabling the Pledgor to exercise the voting and/or consensual
rights and powers which it is entitled to exercise pursuant to clause (i)
above.
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to (i) exercise the voting and/or consensual
rights and powers which it is entitled to exercise pursuant to Section
4(a)(i) hereof and (ii) receive and retain dividends and distributions which
the Pledgor would be entitled to receive and retain pursuant to Section
4(a)(ii), if any, shall cease and all such rights shall thereupon become vested
in the Agent for the ratable benefit of the Lenders, which shall have the
sole and exclusive right and authority to exercise such voting and/or consensual
rights; provided, however, that to the extent any governmental consents or
filings are required for the exercise by the Agent of any of the foregoing
rights and powers, the Agent shall refrain from exercising such rights or
powers until the making of such required filings, the receipt of such consents
and the expiration of all related waiting periods.
5. REMEDIES UPON DEFAULT. (a) If an Event of Default shall have
occurred and be continuing, the Agent 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 Agent shall deem appropriate subject to the terms hereof or as
otherwise provided in the New York Uniform Commercial Code. The Agent
shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Pledged Securities for
their own account and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the 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 Pledgor.
(b)The Agent shall give the Pledgor 10 days' written notice of the Agent's
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 contemplated by Section 5(a). 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
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<PAGE>
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 within the State of New York or
California as the 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 Agent may (in its sole and absolute discretion) determine. The 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 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 Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Pledged
Securities so sold and, in case of any such failure, such Pledged
Securities may be sold again upon like notice. At any sale or sales made
pursuant to this Section 5, the Agent may bid for or purchase, free from
any claim or right of whatever kind, including any equity of redemption,
of the Pledgor, 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 Agent
by the Debtors or the Pledgor as a credit against the purchase price; and
the Agent, upon compliance with the terms of sale, may hold, retain and
dispose of the Pledged Securities without further accountability therefor
to the Pledgor or any third party. The Agent shall in any such sale make
no representations or warranties with respect to the Pledged Securities
or any part thereof, and the Agent shall not be chargeable with any of
the obligations or liabilities of the Pledgor with respect thereto. The
Pledgor hereby agrees (i) it will indemnify and hold the Agent 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 Agent pursuant to this Agreement or arising
out of any act of, or omission to act on the part of, any party other
than the Agent prior to such taking of actual possession or control by
the Agent, or arising out of any act on the part of the Pledgor or its
agents before or after the commencement of such actual possession or
control by the Agent; and (ii) the Agent shall have no liability or
obligation arising out of any such claim. As an alternative to
exercising the power of sale herein conferred upon it, the Agent may
proceed by a suit or
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<PAGE>
suits at law or in equity to foreclose this
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.
6. APPLICATION OF PROCEEDS OF SALE AND CASH. The proceeds of sale of
the Pledged Securities sold pursuant to Section 5 hereof shall be applied
by the Agent (in such order as the Agent shall in its sole discretion
determine) to the payment in full of the Obligations and the payment of
costs incurred by the Agent while enforcing its rights pursuant to this
Agreement.
7. AGENT APPOINTED ATTORNEY-IN-FACT. Upon the occurrence of an Event of
Default and during the continuance of an Event of Default, the Pledgor
hereby appoints the Agent its attorney-in-fact for the purpose of
carrying out the provisions of this Agreement and the pledge of the
Pledged Securities hereunder and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Agent
shall have the right and power to receive, endorse, and collect all
checks and other orders for the payment of money made payable to the
Pledgor representing any dividend or other distribution payable in
respect of the Pledged Securities or any part thereof and to give full
discharge for the same.
8. SECURITIES ACT, ETC. In view of the position of the Pledgor in
relation to the Pledged Securities, 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. The Pledgor understands that
compliance with the Federal Securities Laws may very strictly limit the
course of conduct of the Agent if the 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 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 Agent may be held to have certain general duties and
obligations to the Pledgor to make some effort towards obtaining a fair
price even though the Obligations may be discharged or reduced by the
proceeds
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<PAGE>
of a sale at a lesser price. The Pledgor hereby agrees that the
Agent shall not have any such general duty or obligation to it, and the
Pledgor will not attempt to hold the Agent responsible for selling all or
any part of the Pledged Securities at an inadequate price, even if the
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 8 would apply if, for example,
the 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 Agent placed all or any part of the Pledged
Securities privately with a purchaser or purchasers.
9. TERMINATION. The pledge hereunder shall terminate when all of the
Obligations and all amounts payable to the Guarantors under the Guaranty
Agreement shall have been fully paid and the Commitments have terminated.
At such time the Agent shall, at the sole cost and expense of the
Pledgor, assign and deliver to the Pledgor, or to such person or persons
as the Pledgor shall designate, against receipt, such of the Pledged
Securities (if any) as shall not have been sold or otherwise applied by
the Agent pursuant to the terms hereof and shall still be held by it
hereunder, together with appropriate instruments of reassignment and
release. Any such reassignment shall be without recourse upon or
warranty by the Agent (except as to acts of the Agent or persons claiming
through the Agent).
10. NOTICES. All demands, notices and other communications which any
party hereto may desire or may be required to give to any other party
hereunder shall be in writing (including telegraphic communication) and
shall be mailed, telegraphed or delivered to such other party at its
address on the signature pages hereto or to any such party at such other
address as shall be designated by such party in a written notice to the
other party, complying as to delivery with the terms of this Section 10.
All such demands, notices and other communications shall be effective
when received or five business days after mailing, whichever is earlier.
11. SERVICE OF PROCESS. THE PLEDGOR (A) HEREBY IRREVOCABLY SUBMITS TO
THE 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 PURPOSE OF ANY SUIT, ACTION, OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF BROUGHT BY THE Agent OR ITS SUCCESSORS OR ASSIGNS AND (B)
HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE,
OR OTHERWISE, IN ANY SUCH SUIT, ACTION, OR PROCEEDING, ANY CLAIM THAT IT
IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE ABOVE-
-7-
<PAGE>
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
AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH
COURT, AND (C) HEREBY WAIVES IN ANY SUCH SUIT, ACTION, OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS WHICH ARE UNRELATED TO THE TRANSACTIONS
CONTEMPLATED HEREIN. THE PLEDGOR HEREBY CONSENTS TO SERVICE OF PROCESS
BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN. THE
PLEDGOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO
SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE
LENDERS. FINAL JUDGMENT AGAINST THE PLEDGOR IN ANY SUCH SUIT, ACTION, OR
PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (A) BY SUIT, ACTION, OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT
AND OF THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF THE PLEDGOR THEREIN
DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS
OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE AGENT MAY AT ITS
OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
PLEDGOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED
STATES OR OF ANY COUNTRY OR PLACE WHERE THE PLEDGOR OR SUCH ASSETS MAY BE
FOUND. THE PLEDGOR FURTHER COVENANTS AND AGREES THAT SO LONG AS THIS
AGREEMENT SHALL BE IN EFFECT, IT SHALL MAINTAIN A DULY APPOINTED AGENT
FOR THE RECEIPT AND ACCEPTANCE ON ITS BEHALF OF SERVICE OF SUMMONS AND
OTHER LEGAL PROCESSES, AND UPON FAILURE TO DO SO THE CLERK OF EACH COURT
TO WHOSE JURISDICTION IT HAS SUBMITTED SHALL BE DEEMED TO BE ITS
RESPECTIVE DESIGNATED AGENT UPON WHOM SUCH PROCESS MAY BE SERVED ON ITS
BEHALF, AND NOTIFICATION BY THE ATTORNEY FOR THE PLAINTIFF, COMPLAINANT
OR PETITIONER THEREIN BY MAIL.
12. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW WHICH CANNOT BE WAIVED, THE PLEDGOR 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
AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. THE
PLEDGOR ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE PROVISIONS OF
THIS SECTION 12 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE OTHER
PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT. THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION 12 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE PLEDGOR TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
13. CHOICE OF LAW. THIS AGREEMENT AND ANY INSTRUMENT OR AGREEMENT
REQUIRED HEREUNDER SHALL BE DEEMED
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<PAGE>
TO BE MADE UNDER, SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns.
15. FURTHER ASSURANCES. The Pledgor, at its own expense, will execute
and deliver, from time to time, any and all further, or other,
instruments, and perform such acts, as the Agent may reasonably request
to effect the purposes of this Agreement and to secure to the Agent for
the ratable benefit of the Lenders, the benefits of all rights,
authorities, and remedies conferred upon the Agent and the Lenders by the
terms of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
constitute an original for all purposes, but all such counterparts taken
together shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ORION PICTURES CORPORATION
By:____________________________
Name:
Title:
Address: 1888 Century Park East
Los Angeles, CA 90067
CHEMICAL BANK, as Agent
By:_____________________________
Name:
Title:
Address: 270 Park Avenue
New York, NY 10017
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<PAGE>
SCHEDULE 1
PLEDGED AFFILIATES
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<PAGE>
SCHEDULE 2
PLEDGED SECURITIES
PLEDGED AFFILIATE STOCK CERTIFICATE NO. NO. OF SHARES
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<PAGE>
EXHIBIT D-2
FORM OF PARENT PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of
November 1, 1995 between METROMEDIA
INTERNATIONAL GROUP, INC., a Delaware corporation
(the "Pledgor") and CHEMICAL BANK, as Agent for
the Lenders referred to herein (in such capacity,
the "Agent").
INTRODUCTORY STATEMENT
Pursuant to a Credit, Security and Guaranty Agreement dated as of
November 1, 1995, among Orion Pictures Corporation (the "Borrower"), the
Corporate Guarantors referred to therein, the Lenders referred to therein
and the Agent (said agreement as it may hereafter be amended,
supplemented or otherwise modified, renewed or replaced from time to time
in accordance with its terms being the "Credit Agreement"), the Lenders
have agreed to make loans (the "Loans") to the Borrower.
The Pledgor owns beneficially and of record all of the issued and
outstanding shares of the capital stock of the Borrower.
In order to induce the Lenders to enter into the Credit Agreement
and make the Loans to the Borrower and to secure the obligations of the
Borrower under the Credit Agreement (such obligations of the Borrower
being hereinafter referred to as the "Obligations"), the Pledgor is
pledging to the Agent, for the ratable benefit of the Lenders, all of the
issued and outstanding capital stock of the Borrower, all as more fully
set forth herein.
Accordingly, the parties hereto agree as follows (capitalized
terms used herein and not otherwise defined shall have the meanings set
forth in the Credit Agreement):
1. PLEDGE. (a). As security for payment in full of the
Obligations, the Pledgor hereby pledges, hypothecates, assigns,
transfers, sets over and delivers unto the Agent, for the ratable benefit
of the Lenders, and grants a security interest in (i) all the capital
stock of each of the Borrower which the Pledgor owns beneficially and of
record, and (ii) all proceeds of such capital stock and
<PAGE>
all other
securities or other property at any time and from time to time receivable
or otherwise distributed in respect of or in exchange for any or all of
such capital stock or additional securities. All items referred to in
clauses (i) and (ii) of this Section 1 are hereinafter referred to
collectively as the "Pledged Securities".
(b). The Pledgor shall deliver to the Agent the certificates
representing the Pledged Securities accompanied by undated stock powers
executed in blank and by such other instruments or documents as the Agent
or its counsel shall reasonably request.
2. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The Agent shall
have the right (in its sole and absolute discretion) to hold the
certificates representing any Pledged Securities in its own name, the
name of its nominee or in the name of the Pledgor, endorsed or assigned
in blank or in favor of the Agent. Upon the occurrence and during the
continuation of an Event of Default, the 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 Agreement.
3. PLEDGOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Pledgor hereby represents and warrants to and/or covenants and agrees
with the Agent as follows:
(i). the Pledged Securities constitute 100% of the issued and
outstanding equity securities of the Borrower;
(ii). the Pledged Securities are duly authorized, validly
issued, fully paid and non-assessable;
(iii). there are no restrictions on the transfer of the Pledged
Securities other than as a result of the Credit Agreement or applicable
securities laws or the regulations promulgated thereunder;
(iv). the Pledgor has good title to the Pledged Securities;
(v). the Pledged Securities are not subject to any prior
liens or encumbrances;
(vi). the Pledgor has the right to pledge the Pledged
Securities hereunder free of any encumbrances, and without the consent of
the creditors of the Borrower or any other person or any government
agency whatsoever;
(vii). the Pledgor has full power and authority to execute,
deliver and perform this Agreement and to pledge the Pledged Securities
hereunder;
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<PAGE>
(viii). the Pledgor will not take any action to allow any
additional equity securities of the Borrower to be issued or grant any
options or warrants, unless such securities are pledged to the Agent, for
the ratable benefit of the Lenders, on terms satisfactory to the Agent as
security for the Obligations;
(ix). the execution, delivery and performance of this Agreement
will not violate any provision of law, administrative regulation, any
order of any court or other agency of government, any provision of any
indenture, agreement or other instrument to which the Pledgor is a party,
or be in conflict with, result in a material breach of or constitute
(with due notice and/or lapse of time) a material default under any such
indenture, agreement or other instrument;
(x). there are no pending legal or governmental proceedings
to which the Pledgor is a party or to which any of its properties is
subject which will materially affect the Pledgor's ability to perform its
obligations hereunder; and
(xi). on the date hereof, the Pledged Securities consist of
the securities listed on Schedule 1.
4. VOTING RIGHTS; DIVIDENDS; ETC. (a). Unless and until an Event
of Default shall have occurred and be continuing:
(i). The Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to the owner of the
Pledged Securities or any part thereof for any purpose not inconsistent
with the terms hereof and of the Credit Agreement.
(ii). Any dividends or distributions of any kind whatsoever
received by the Pledgor, whether resulting from a subdivision,
combination, or reclassification of the outstanding capital stock of the
shares or received in exchange for the Pledged Securities or any part
thereof or as a result of any merger, consolidation, acquisition, or
other exchange of assets to which the shares may be a party, or
otherwise, shall be and become part of the Pledged Securities pledged
hereunder and shall immediately be delivered to the Agent to be held
subject to the terms of this Agreement.
(iii). The Agent shall execute and deliver to the Pledgor, or
cause to be executed and delivered to the Pledgor, all such proxies,
powers of attorney and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the voting
and/or consensual rights and powers which it is entitled to exercise
pursuant to clause (i) above.
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<PAGE>
(b). Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to (i) exercise the voting and/or
consensual rights and powers which it is entitled to exercise pursuant to
Section 4(a)(i) hereof and (ii) receive and retain dividends and
distributions which the Pledgor would be entitled to receive and retain
pursuant to Section 4(a)(ii), if any, shall cease and all such rights
shall thereupon become vested in the Agent for the ratable benefit of the
Lenders, which shall have the sole and exclusive right and authority to
exercise such voting and/or consensual rights; provided, however, that to
the extent any governmental consents or filings are required for the
exercise by the Agent of any of the foregoing rights and powers, the
Agent shall refrain from exercising such rights or powers until the
making of such required filings, the receipt of such consents and the
expiration of all related waiting periods.
5. REMEDIES UPON DEFAULT. (a). If an Event of Default shall have
occurred and be continuing, the Agent 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 Agent shall deem appropriate subject to the terms hereof or as
otherwise provided in the New York Uniform Commercial Code. The Agent
shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Pledged Securities for
their own account and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the 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 Pledgor.
(b). The Agent shall give the Pledgor 10 days' written notice of
the Agent's 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 contemplated by Section 5(a). 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 within the State of New York or
California as the 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 Agent may (in its sole and absolute discretion)
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<PAGE>
determine. The 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 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 Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Pledged
Securities so sold and, in case of any such failure, such Pledged
Securities may be sold again upon like notice. At any sale or sales made
pursuant to this Section 5, the Agent may bid for or purchase, free from
any claim or right of whatever kind, including any equity of redemption,
of the Pledgor, 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 Agent
by the Debtors or the Pledgor as a credit against the purchase price; and
the Agent, upon compliance with the terms of sale, may hold, retain and
dispose of the Pledged Securities without further accountability therefor
to the Pledgor or any third party. The Agent shall in any such sale make
no representations or warranties with respect to the Pledged Securities
or any part thereof, and the Agent shall not be chargeable with any of
the obligations or liabilities of the Pledgor with respect thereto. The
Pledgor hereby agrees (i) it will indemnify and hold the Agent 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 Agent pursuant to this Agreement or arising
out of any act of, or omission to act on the part of, any party other
than the Agent prior to such taking of actual possession or control by
the Agent, or arising out of any act on the part of the Pledgor or its
agents before or after the commencement of such actual possession or
control by the Agent; and (ii) the Agent shall have no liability or
obligation arising out of any such claim. As an alternative to
exercising the power of sale herein conferred upon it, the Agent may
proceed by a suit or suits at law or in equity to foreclose this
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.
6. APPLICATION OF PROCEEDS OF SALE AND CASH. The proceeds of
sale of the Pledged Securities sold pursuant to Section 5 hereof shall be
applied by the Agent (in such
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<PAGE>
order as the Agent shall in its sole
discretion determine) to the payment in full of the Obligations and the
payment of costs incurred by the Agent while enforcing its rights
pursuant to this Agreement.
7. AGENT APPOINTED ATTORNEY-IN-FACT. Upon the occurrence of an
Event of Default and during the continuance of an Event of Default, the
Pledgor hereby appoints the Agent its attorney-in-fact for the purpose of
carrying out the provisions of this Agreement and the pledge of the
Pledged Securities hereunder and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Agent
shall have the right and power to receive, endorse, and collect all
checks and other orders for the payment of money made payable to the
Pledgor representing any dividend or other distribution payable in
respect of the Pledged Securities or any part thereof and to give full
discharge for the same.
8. SECURITIES ACT, ETC. In view of the position of the
Pledgor in relation to the Pledged Securities, 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. The Pledgor
understands that compliance with the Federal Securities Laws may very
strictly limit the course of conduct of the Agent if the 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 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 Agent may be held to have
certain general duties and obligations to the 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. The
Pledgor hereby agrees that the Agent shall not have any such general duty
or obligation to it, and the Pledgor will not attempt to hold the Agent
responsible for selling all or any part of the Pledged Securities at an
inadequate price, even if the 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
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<PAGE>
8 would
apply if, for example, the 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 Agent placed all or any
part of the Pledged Securities privately with a purchaser or purchasers.
9. TERMINATION. The pledge hereunder shall terminate when all
of the Obligations and all amounts payable to the Guarantors under the
Guaranty Agreement shall have been fully paid and the Commitments have
terminated. At such time the Agent shall, at the sole cost and expense
of the Pledgor, assign and deliver to the Pledgor, or to such person or
persons as the Pledgor shall designate, against receipt, such of the
Pledged Securities (if any) as shall not have been sold or otherwise
applied by the Agent pursuant to the terms hereof and shall still be held
by it hereunder, together with appropriate instruments of reassignment
and release. Any such reassignment shall be without recourse upon or
warranty by the Agent (except as to acts of the Agent or persons claiming
through the Agent).
10. NOTICES. All demands, notices and other communications which
any party hereto may desire or may be required to give to any other party
hereunder shall be in writing (including telegraphic communication) and
shall be mailed, telegraphed or delivered to such other party at its
address on the signature pages hereto or to any such party at such other
address as shall be designated by such party in a written notice to the
other party, complying as to delivery with the terms of this Section 10.
All such demands, notices and other communications shall be effective
when received or five business days after mailing, whichever is earlier.
11. SERVICE OF PROCESS. THE PLEDGOR (A) HEREBY IRREVOCABLY
SUBMITS TO THE 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 PURPOSE OF ANY SUIT, ACTION, OR
OTHER PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE
SUBJECT MATTER HEREOF BROUGHT BY THE Agent OR ITS SUCCESSORS OR ASSIGNS
AND (B) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION, OR PROCEEDING, 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 AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE
ENFORCED IN OR BY SUCH COURT, AND (C) HEREBY WAIVES IN ANY SUCH SUIT,
ACTION, OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS WHICH ARE UNRELATED TO
THE TRANSACTIONS
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<PAGE>
CONTEMPLATED HEREIN. THE PLEDGOR HEREBY CONSENTS TO
SERVICE OF PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE
TO BE GIVEN. THE PLEDGOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND
ITS CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT
OF THE LENDERS. FINAL JUDGMENT AGAINST THE PLEDGOR IN ANY SUCH SUIT,
ACTION, OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (A) BY SUIT, ACTION, OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT
AND OF THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF THE PLEDGOR THEREIN
DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS
OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE AGENT MAY AT ITS
OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
PLEDGOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED
STATES OR OF ANY COUNTRY OR PLACE WHERE THE PLEDGOR OR SUCH ASSETS MAY BE
FOUND. THE PLEDGOR FURTHER COVENANTS AND AGREES THAT SO LONG AS THIS
AGREEMENT SHALL BE IN EFFECT, IT SHALL MAINTAIN A DULY APPOINTED AGENT
FOR THE RECEIPT AND ACCEPTANCE ON ITS BEHALF OF SERVICE OF SUMMONS AND
OTHER LEGAL PROCESSES, AND UPON FAILURE TO DO SO THE CLERK OF EACH COURT
TO WHOSE JURISDICTION IT HAS SUBMITTED SHALL BE DEEMED TO BE ITS
RESPECTIVE DESIGNATED AGENT UPON WHOM SUCH PROCESS MAY BE SERVED ON ITS
BEHALF, AND NOTIFICATION BY THE ATTORNEY FOR THE PLAINTIFF, COMPLAINANT
OR PETITIONER THEREIN BY MAIL.
12. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, THE PLEDGOR 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 AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR
OTHERWISE. THE PLEDGOR ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE
PROVISIONS OF THIS SECTION 12 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO
THIS AGREEMENT. THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION 12 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PLEDGOR TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
13. CHOICE OF LAW. THIS AGREEMENT AND ANY INSTRUMENT OR
AGREEMENT REQUIRED HEREUNDER SHALL BE DEEMED TO BE MADE UNDER, SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
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<PAGE>
15. FURTHER ASSURANCES. The Pledgor, at its own expense, will
execute and deliver, from time to time, any and all further, or other,
instruments, and perform such acts, as the Agent may reasonably request
to effect the purposes of this Agreement and to secure to the Agent for
the ratable benefit of the Lenders, the benefits of all rights,
authorities, and remedies conferred upon the Agent and the Lenders by the
terms of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall
constitute an original for all purposes, but all such counterparts taken
together shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
METROMEDIA INTERNATIONAL GROUP, INC.
By:_________________________________
Name:
Title:
Address: 945 East Paces Ferry Road
Suite 2210
Atlanta, GA 30326
CHEMICAL BANK, as Agent
By:_________________________________
Name:
Title:
Address: 270 Park Avenue
New York, NY 10017
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<PAGE>
SCHEDULE 1
PLEDGED SECURITIES
STOCK CERTIFICATE NO. NO. OF SHARES
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<PAGE>
EXHIBIT D-3
FORM OF SUBSIDIARY PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of
between [INSERT NAME OF SUBSIDIARY] (the "Pledgor") and CHEMICAL BANK, as
Agent for the Lenders referred to herein (in such capacity, the "Agent").
INTRODUCTORY STATEMENT
Pursuant to an Amended and Restated Credit, Security and Guaranty
Agreement dated as of November 1, 1995, as amended and restated as of
June 27, 1996 among Orion Pictures Corporation (the "Borrower"), the
Corporate Guarantors referred to therein, the Lenders referred to therein
and the Agent (said agreement as it may hereafter be amended,
supplemented or otherwise modified, renewed or replaced from time to time
in accordance with its terms being the "Credit Agreement"), the Lenders
have agreed to make loans (the "Loans") to the Borrower.
The Pledgor owns beneficially and of record all of the issued and
outstanding shares of the capital stock of each Subsidiary listed on
Schedule 1 hereto (being referred to herein as the "Pledged Affiliates").
In order to induce the Lenders to enter into the Credit Agreement
and make the Loans to the Borrower and to secure the obligations of the
Borrower under the Credit Agreement (such obligations of the Borrower
being hereinafter referred to as the "Obligations"), the Pledgor is
pledging to the Agent, for the ratable benefit of the Lenders, all of the
issued and outstanding capital stock of the Pledged Affiliates, all as
more fully set forth herein.
Accordingly, the parties hereto agree as follows (capitalized terms
used herein and not otherwise defined shall have the meanings set forth
in the Credit Agreement):
I. PLEDGE. A. As security for payment in full of the Obligations,
the Pledgor hereby pledges, hypothecates, assigns, transfers, sets over
and delivers unto the Agent, for the ratable benefit of the Lenders, and
grants a security interest in (i) all the capital stock of each of the
Pledged Affiliates which the Pledgor owns beneficially and of record, and
(ii) all proceeds of such capital stock and all other securities or other
property at any time and
<PAGE>
from time to time receivable or otherwise
distributed in respect of or in exchange for any or all of such capital
stock or additional securities. All items referred to in clauses (i) and
(ii) of this Section 1 are hereinafter referred to collectively as the
"Pledged Securities".{1}
B. The Pledgor shall deliver to the Agent the certificates
representing the Pledged Securities accompanied by undated stock powers
executed in blank and by such other instruments or documents as the Agent
or its counsel shall reasonably request.
II. REGISTRATION IN NOMINEE NAME; DENOMINATIONS. The Agent shall
have the right (in its sole and absolute discretion) to hold the
certificates representing any Pledged Securities in its own name, the
name of its nominee or in the name of the Pledgor, endorsed or assigned
in blank or in favor of the Agent. Upon the occurrence and during the
continuation of an Event of Default, the 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 Agreement.
III. PLEDGOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Pledgor hereby represents and warrants to and/or covenants and agrees
with the Agent as follows:
1. the Pledged Securities constitute 100% of the issued and
outstanding equity securities of each of the Pledged Affiliates;
2. the Pledged Securities are duly authorized, validly
issued, fully paid and non-assessable;
3. there are no restrictions on the transfer of the Pledged
Securities other than as a result of the Credit Agreement or applicable
securities laws or the regulations promulgated thereunder;
4. the Pledgor has good title to the Pledged Securities;
5. the Pledged Securities are not subject to any prior liens
or encumbrances;
____________________
{1/}The Agent has the discretion to limit the Lien to 65% of the
Pledged Securities of the capital stock of a Pledged Affiliate that
is a foreign controlled subsidiary.
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<PAGE>
6. the Pledgor has the right to pledge the Pledged Securities
hereunder free of any encumbrances, and without the consent of the
creditors of the Pledged Affiliates or any other person or any government
agency whatsoever;
7. the Pledgor has full power and authority to execute,
deliver and perform this Agreement and to pledge the Pledged Securities
hereunder;
8. the Pledgor will not take any action to allow any
additional equity securities of the Pledged Affiliates to be issued or
grant any options or warrants, unless such securities are pledged to the
Agent, for the ratable benefit of the Lenders, on terms satisfactory to
the Agent as security for the Obligations;
9. the execution, delivery and performance of this Agreement
will not violate any provision of law, administrative regulation, any
order of any court or other agency of government, any provision of any
indenture, agreement or other instrument to which the Pledgor is a party,
or be in conflict with, result in a material breach of or constitute
(with due notice and/or lapse of time) a material default under any such
indenture, agreement or other instrument;
10. there are no pending legal or governmental proceedings to
which the Pledgor is a party or to which any of its properties is subject
which will materially affect the Pledgor's ability to perform its
obligations hereunder; and
11. on the date hereof, the Pledged Securities consist of the
securities listed on Schedule 2.
IV. VOTING RIGHTS; DIVIDENDS; ETC. A. Unless and until an Event
of Default shall have occurred and be continuing:
1. The Pledgor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to the owner of the
Pledged Securities or any part thereof for any purpose not inconsistent
with the terms hereof and of the Credit Agreement.
2. Any dividends or distributions of any kind whatsoever
received by the Pledgor, whether resulting from a subdivision,
combination, or reclassification of the outstanding capital stock of the
shares or received in exchange for the Pledged Securities or any part
thereof or as a result of any merger, consolidation, acquisition, or
other exchange of assets to which the shares may be a party,
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<PAGE>
or otherwise, shall be and become part of the Pledged Securities pledged
hereunder and shall immediately be delivered to the Agent to be held
subject to the terms of this Agreement.
3. The Agent shall execute and deliver to the Pledgor, or
cause to be executed and delivered to the Pledgor, all such proxies,
powers of attorney and other instruments as the Pledgor may reasonably
request for the purpose of enabling the Pledgor to exercise the voting
and/or consensual rights and powers which it is entitled to exercise
pursuant to clause (i) above.
B. Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to (i) exercise the voting and/or
consensual rights and powers which it is entitled to exercise pursuant to
Section 4(a)(i) hereof and (ii) receive and retain dividends and
distributions which the Pledgor would be entitled to receive and retain
pursuant to Section 4(a)(ii), if any, shall cease and all such rights
shall thereupon become vested in the Agent for the ratable benefit of the
Lenders, which shall have the sole and exclusive right and authority to
exercise such voting and/or consensual rights; provided, however, that to
the extent any governmental consents or filings are required for the
exercise by the Agent of any of the foregoing rights and powers, the
Agent shall refrain from exercising such rights or powers until the
making of such required filings, the receipt of such consents and the
expiration of all related waiting periods.
V. REMEDIES UPON DEFAULT. A. If an Event of Default shall have
occurred and be continuing, the Agent 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 Agent shall deem appropriate subject to the terms hereof or as
otherwise provided in the New York Uniform Commercial Code. The Agent
shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Pledged Securities for
their own account and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the 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 Pledgor.
B. The Agent shall give the Pledgor 10 days' written notice of the
Agent's intention to make any such public or
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<PAGE>
private sale, or sale at any
broker's board or on any such securities exchange, or of any other
disposition of the Pledged Securities contemplated by Section 5(a). 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 within the State of New York or
California as the 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 Agent may (in its sole and absolute discretion) determine. The 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 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 Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Pledged
Securities so sold and, in case of any such failure, such Pledged
Securities may be sold again upon like notice. At any sale or sales made
pursuant to this Section 5, the Agent may bid for or purchase, free from
any claim or right of whatever kind, including any equity of redemption,
of the Pledgor, 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 Agent
by the Debtors or the Pledgor as a credit against the purchase price; and
the Agent, upon compliance with the terms of sale, may hold, retain and
dispose of the Pledged Securities without further accountability therefor
to the Pledgor or any third party. The Agent shall in any such sale make
no representations or warranties with respect to the Pledged Securities
or any part thereof, and the Agent shall not be chargeable with any of
the obligations or liabilities of the Pledgor with respect thereto. The
Pledgor hereby agrees (i) it will indemnify and hold the Agent harmless
from and against any and all claims with respect to the Pledged
Securities
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<PAGE>
asserted before the taking of actual possession or control of
the Pledged Securities by the Agent pursuant to this Agreement or arising
out of any act of, or omission to act on the part of, any party other
than the Agent prior to such taking of actual possession or control by
the Agent, or arising out of any act on the part of the Pledgor or its
agents before or after the commencement of such actual possession or
control by the Agent; and (ii) the Agent shall have no liability or
obligation arising out of any such claim. As an alternative to
exercising the power of sale herein conferred upon it, the Agent may
proceed by a suit or suits at law or in equity to foreclose this
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.
VI. APPLICATION OF PROCEEDS OF SALE AND CASH. The proceeds of sale
of the Pledged Securities sold pursuant to Section 5 hereof shall be
applied by the Agent (in such order as the Agent shall in its sole
discretion determine) to the payment in full of the Obligations and the
payment of costs incurred by the Agent while enforcing its rights
pursuant to this Agreement.
VII. AGENT APPOINTED ATTORNEY-IN-FACT. Upon the occurrence of an
Event of Default and during the continuance of an Event of Default, the
Pledgor hereby appoints the Agent its attorney-in-fact for the purpose of
carrying out the provisions of this Agreement and the pledge of the
Pledged Securities hereunder and taking any action and executing any
instrument which the Agent may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest. Without limiting the generality of the foregoing, the Agent
shall have the right and power to receive, endorse, and collect all
checks and other orders for the payment of money made payable to the
Pledgor representing any dividend or other distribution payable in
respect of the Pledged Securities or any part thereof and to give full
discharge for the same.
VIII. SECURITIES ACT, ETC. In view of the position of the Pledgor
in relation to the Pledged Securities, 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. The Pledgor understands that
compliance with the Federal Securities Laws may very
-5-
<PAGE>
strictly limit the
course of conduct of the Agent if the 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 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 Agent may be held to have certain general duties and
obligations to the 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. The Pledgor hereby agrees that the
Agent shall not have any such general duty or obligation to it, and the
Pledgor will not attempt to hold the Agent responsible for selling all or
any part of the Pledged Securities at an inadequate price, even if the
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 8 would apply if, for example,
the 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 Agent placed all or any part of the Pledged
Securities privately with a purchaser or purchasers.
IX. TERMINATION. The pledge hereunder shall terminate when all of
the Obligations and all amounts payable to the Guarantors under the
Guaranty Agreement shall have been fully paid and the Commitments have
terminated. At such time the Agent shall, at the sole cost and expense
of the Pledgor, assign and deliver to the Pledgor, or to such person or
persons as the Pledgor shall designate, against receipt, such of the
Pledged Securities (if any) as shall not have been sold or otherwise
applied by the Agent pursuant to the terms hereof and shall still be held
by it hereunder, together with appropriate instruments of reassignment
and release. Any such reassignment shall be without recourse upon or
warranty by the Agent (except as to acts of the Agent or persons claiming
through the Agent).
X. NOTICES. All demands, notices and other communications which
any party hereto may desire or may be required to give to any other party
hereunder shall be in writing (including telegraphic communication) and
shall be mailed, telegraphed or delivered to such other party at its
address on the signature pages hereto or to any such party at such other
address as shall be designated by such party
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<PAGE>
in a written notice to the
other party, complying as to delivery with the terms of this Section 10.
All such demands, notices and other communications shall be effective
when received or five business days after mailing, whichever is earlier.
XI. SERVICE OF PROCESS. THE PLEDGOR (A) HEREBY IRREVOCABLY SUBMITS
TO THE 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 PURPOSE OF ANY SUIT, ACTION, OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT
MATTER HEREOF BROUGHT BY THE Agent OR ITS SUCCESSORS OR ASSIGNS AND (B)
HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE,
OR OTHERWISE, IN ANY SUCH SUIT, ACTION, OR PROCEEDING, 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
AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH
COURT, AND (C) HEREBY WAIVES IN ANY SUCH SUIT, ACTION, OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS WHICH ARE UNRELATED TO THE TRANSACTIONS
CONTEMPLATED HEREIN. THE PLEDGOR HEREBY CONSENTS TO SERVICE OF PROCESS
BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN. THE
PLEDGOR AGREES THAT ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO
SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE
LENDERS. FINAL JUDGMENT AGAINST THE PLEDGOR IN ANY SUCH SUIT, ACTION, OR
PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (A) BY SUIT, ACTION, OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT
AND OF THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF THE PLEDGOR THEREIN
DESCRIBED OR (B) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS
OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT THE AGENT MAY AT ITS
OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST THE
PLEDGOR OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED
STATES OR OF ANY COUNTRY OR PLACE WHERE THE PLEDGOR OR SUCH ASSETS MAY BE
FOUND. THE PLEDGOR FURTHER COVENANTS AND AGREES THAT SO LONG AS THIS
AGREEMENT SHALL BE IN EFFECT, IT SHALL MAINTAIN A DULY APPOINTED AGENT
FOR THE RECEIPT AND ACCEPTANCE ON ITS BEHALF OF SERVICE OF SUMMONS AND
OTHER LEGAL PROCESSES, AND UPON FAILURE TO DO SO THE CLERK OF EACH COURT
TO WHOSE JURISDICTION IT HAS SUBMITTED SHALL BE DEEMED TO BE ITS
RESPECTIVE DESIGNATED AGENT UPON WHOM SUCH PROCESS MAY BE SERVED ON ITS
BEHALF, AND NOTIFICATION BY THE ATTORNEY FOR THE PLAINTIFF, COMPLAINANT
OR PETITIONER THEREIN BY MAIL.
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<PAGE>
XII. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, THE PLEDGOR 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 AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR
OTHERWISE. THE PLEDGOR ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE
PROVISIONS OF THIS SECTION 12 CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO
THIS AGREEMENT. THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION 12 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PLEDGOR TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
XIII. CHOICE OF LAW. THIS AGREEMENT AND ANY INSTRUMENT OR
AGREEMENT REQUIRED HEREUNDER SHALL BE DEEMED TO BE MADE UNDER, SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAWS.
XIV. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns.
XV. FURTHER ASSURANCES. The Pledgor, at its own expense, will
execute and deliver, from time to time, any and all further, or other,
instruments, and perform such acts, as the Agent may reasonably request
to effect the purposes of this Agreement and to secure to the Agent for
the ratable benefit of the Lenders, the benefits of all rights,
authorities, and remedies conferred upon the Agent and the Lenders by the
terms of this Agreement.
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<PAGE>
XVI. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
constitute an original for all purposes, but all such counterparts taken
together shall constitute the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
[NAME OF SUBSIDIARY]
By:____________________________________
Name:
Title:
Address:
CHEMICAL BANK, as Agent
By:____________________________________
Name:
Title:
Address: 270 Park Avenue
New York, NY 10017
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<PAGE>
SCHEDULE 1
PLEDGED AFFILIATES
-11-
<PAGE>
SCHEDULE 2
PLEDGED SECURITIES
PLEDGED AFFILIATE STOCK CERTIFICATE NO. NO. OF SHARES
-12-
<PAGE>
EXHIBIT D-4
FORM OF
SUPPLEMENT NO. __ TO THE PLEDGE
AGREEMENT DATED AS OF_____________________
WHEREAS, [NAME OF APPLICABLE CREDIT PARTY] (the "Pledgor") is
party to an Amended and Restated Credit, Security and Guaranty Agreement
dated as of November 1, 1995, as amended and restated as of June 27, 1996
(as such agreement may be amended, supplemented or otherwise modified,
renewed or replaced from time to time, the "Credit Agreement") among
Orion Pictures Corporation, the guarantors referred to therein, the
lenders referred to therein (the "Lenders") and Chemical Bank as agent
for the Lenders (in such capacity, the "Agent"). All terms not otherwise
defined in this Pledge Agreement Supplement are used herein as defined in
the Credit Agreement;
WHEREAS, the Pledgor is a party to a Pledge Agreement, dated as
of (as the same has been, or may hereafter be,
amended or supplemented from time to time, the "Pledge Agreement");
WHEREAS, the Pledgor [HAS ACQUIRED OR HAS FORMED] a Subsidiary
(the "New Subsidiary") since the date of execution of the Pledge
Agreement and the most recent Supplement thereto and the Pledgor desires
to enter into this Supplement in order to pledge all of the equity
securities of such New Subsidiary which the Pledgor now owns beneficially
and of record;
WHEREAS, Pledgor owns beneficially and of record [__%] of the
issued and outstanding shares of the capital stock of the New Subsidiary;
THEREFORE,
A. The Pledgor does hereby pledge, hypothecate, assign,
transfer, set over and deliver unto the Agent (for the benefit of
the Lenders), a continuing security interest in the Pledged
Securities (as such term is defined in the Pledge Agreement as
supplemented hereby).
B. Each of Schedule 1 and Schedule 2 to the Pledge Agreement
is hereby supplemented, effective as of the date hereof, so as to
reflect the pledge of the
<PAGE>
equity securities of the New Subsidiary.
Attached hereto is Schedule 1 and Schedule 2, each supplemented to
reflect the pledge of the Pledged Securities of the New Subsidiary
which Schedules shall supersede any prior Schedules so delivered.
Except as expressly supplemented hereby, the Pledge Agreement
shall continue in full force and effect in accordance with the provisions
thereof on the date hereof. As used in the Pledge Agreement, the terms
"Agreement", "this Agreement", "this Pledge Agreement", "herein",
"hereafter", "hereto", "hereof" and words of similar import, shall,
unless the context otherwise requires, mean the Pledge Agreement as
supplemented by this Supplement.
Except as expressly supplemented hereby, the Pledge Agreement,
all documents contemplated thereby and any previously executed
Supplements thereto, are each hereby confirmed and ratified by the
Pledgor.
The execution of this Supplement, and the addition of the New
Subsidiary to the Pledge Agreement are not intended by the parties to
derogate from, or extinguish, any of the Agent's rights or remedies under
(i) the Pledge Agreement and/or any agreement, amendment or supplement
thereto or any other instrument executed by the Pledgor or (ii) any
financing statement, continuation statement or other instrument executed
by the Pledgor.
IN WITNESS WHEREOF, the Pledgor has caused this Supplement
No. ___ to the Pledge Agreement to be duly executed officer as of
_____________, ____.
[NAME OF PLEDGOR]
By:_________________________
Name:
Title:
Executed in
New York, New York
on _____________
CHEMICAL BANK, as Agent
By:________________________________
Name:
Title:
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<PAGE>
SCHEDULE 1
Subsidiaries
[REVISE]
-3-
<PAGE>
SCHEDULE 2
Pledged Securities
[REVISE]
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<PAGE>
EXHIBIT E-1
TO CREDIT AGREEMENT
EXHIBIT 1
TO GUARANTY AGREEMENT
FORM OF AMENDED AND RESTATED SUBORDINATION AGREEMENT
AMENDED AND RESTATED SUBORDINATION AGREEMENT
dated as of November 1, 1995 as amended and restated
as of June 27, 1996 (as further amended,
supplemented, otherwise modified, renewed or replaced
from time to time, the "Agreement") among (i) ORION
PICTURES CORPORATION (the "Obligor"), (ii) METROMEDIA
COMPANY, a Delaware general partnership
("Metromedia"), (iii) JOHN W. KLUGE, an individual
residing at c/o Metromedia Company, 215 E. 67th
Street, New York, NY 10021 ("Kluge"; together with
Metromedia, the "Subordinated Creditors") and (iv)
CHEMICAL BANK, as agent for the Lenders referred to
in the Credit Agreement (the "Agent").
INTRODUCTORY STATEMENT
Pursuant to the terms of an Amended and Restated Credit,
Security and Guaranty Agreement dated as of November 1, 1995, as amended
and restated as of June 27, 1996 among the Obligor, the lenders referred
to therein (the "Lenders"), the corporate guarantors referred to therein
and the Agent (as the same may be further amended, supplemented,
otherwise modified, renewed or replaced from time to time, the "Credit
Agreement") the Lenders have agreed, subject to the terms and conditions
thereof, to make loans (the "Loans") to the Obligor. The Credit
Agreement, the Notes referred to therein, any Interest Rate Protection
Agreement or Currency Agreement entered into with any Lender and the
other documents, instruments and agreements contemplated thereby as they
may be amended or otherwise modified from time to time, shall hereinafter
be referred to as "Senior Obligation Documents". For purposes of this
Agreement, unless otherwise defined herein, capitalized terms used herein
shall have the meanings given to such terms in the Credit Agreement.
The Subordinated Creditors have entered into an Amended and
Restated Guaranty Agreement dated November 1, 1995 as amended and
restated as of the date
<PAGE>
hereof (as the same may be further amended,
supplemented, otherwise modified, renewed or replaced from time to time,
the "Guaranty Agreement") between the Subordinated Creditors and the
Agent pursuant to which the Subordinated Creditors have guaranteed
certain obligations of the Obligor to the Lenders. Any obligation of the
Obligor to repay or reimburse the Subordinated Creditors for amounts paid
by the Subordinated Creditors in connection with the Guaranty Agreement
whether arising by subrogation or otherwise are hereinafter referred to
as the "Subordinated Obligations". Any document or instrument evidencing
any Subordinated Obligation, any replacements or substitutes therefore
and any other related agreement are hereinafter referred to as "Junior
Obligation Documents".
In order to induce the Agent and the Lenders to enter into the
Credit Agreement, the Subordinated Creditors have agreed, subject to the
provisions of this Subordination Agreement, that the Subordinated
Obligations shall be subordinate to the Senior Obligations (as
hereinafter defined).
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. AGREEMENT TO SUBORDINATE. The Subordinated Creditors
agree that the Subordinated Obligations are and shall be subordinate and
subject in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full of the Senior Obligations and
that any guarantees, security interests, mortgages and other liens
securing payment of the Subordinated Obligations are and shall be
subordinate, to the fullest extent permitted by law and as hereinafter
set forth, to any guarantees, security interests and mortgages and other
liens securing payment of the Senior Obligations, notwithstanding the
perfection, order of perfection or failure to perfect, any such security
interest or other lien, or the filing or recording, order of filing or
recording, or failure to file or record this Subordination Agreement or
any instrument or other document in any filing or recording office in any
jurisdiction. The term "Senior Obligations" shall mean all obligations
of the Obligor under the Senior Obligation Documents including, without
limitation, whether outstanding at the date hereof or hereafter incurred
or created, all obligations to pay principal, premium, if any, interest
(including, without limitation, interest accruing after the commencement
of any bankruptcy, insolvency, reorganization or similar proceedings with
respect to the Obligor, whether or not determined to be an allowed claim
in any
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<PAGE>
such proceeding), charges, costs, expenses and fees including,
without limitation, the disbursements and reasonable fees of counsel to
the Agent or the Lenders, all obligations to reimburse or indemnify the
Agent and/or any Lender in any way, and all renewals, extensions,
restructurings, refinancings or refunding of any indebtedness under the
Senior Obligation Documents in the nature of a "workout" or otherwise.
The expressions "prior payment in full", "payment in full",
"paid in full" or any other similar term(s) or phrase(s) when used herein
with respect to Senior Obligation Documents shall mean the payment in
full, in cash, of all of the Senior Obligations and the termination of
the Commitments.
2. RESTRICTIONS ON PAYMENT OF THE SUBORDINATED OBLIGATIONS,
ETC. The Subordinated Creditors will not ask, demand, sue for, take or
receive, directly or indirectly, from the Obligor or any affiliate
thereof, in cash or other property, by set-off, by realizing upon
collateral, by foreclosing on any lien or otherwise, by exercise of any
remedies or rights under the Junior Obligation Documents or by
executions, garnishments, levies, attachments or by any other action
relating to the Subordinated Obligations, or in any other manner, payment
of, or additional security for, all or any part of the Subordinated
Obligations unless and until the Senior Obligations shall have been paid
in full. The Obligor will not make any payment on any of the
Subordinated Obligations, or take any other action, in contravention of
the provisions of this Subordination Agreement. The Subordinated
Creditors expressly agree that, unless and until such time as the Loans
shall be accelerated, any payment in respect of the Subordinated
Obligations which is not made in a timely manner by reason of the
provisions of this Subordination Agreement shall be deemed to be deferred
until such time as payment can be made in compliance with this
Subordination Agreement and the Obligor shall not be in default under any
of the Junior Obligation Documents by reason thereof.
Each Subordinated Creditor further acknowledges and agrees that
it will not take any collateral of the Obligor unless and until the
Senior Obligations have been paid in full.
3. ADDITIONAL PROVISIONS CONCERNING SUBORDINATION. The
Subordinated Creditors and the Obligor agree as follows:
a. In the event of (i) any dissolution, winding up,
liquidation or reorganization of the Obligor (whether voluntary or
involuntary and whether in bankruptcy, insolvency or receivership
proceedings, or upon an assignment for the
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<PAGE>
benefit of creditors or
proceedings for voluntary or involuntary liquidation, dissolution or
other winding up of the Obligor, whether or not involving insolvency or
bankruptcy, or any other marshalling of the assets and liabilities of the
Obligor or otherwise); or (ii) any Event of Default (as such term is
defined in the Credit Agreement) which has not been waived or cured or an
event which with notice and/or passage of time would constitute an Event
of Default (as such term is defined in the Credit Agreement) which has
not been waived or cured, or acceleration of maturity regarding the
Subordinated Obligations:
(1) all Senior Obligations shall first be paid to the
Agent for the benefit of the Lenders in full before any payment
or distribution is made upon the principal of or interest on or
any fees, costs, charges or expenses in connection with the
Subordinated Obligations, and before any other action described
in Sections 2 and 4 hereof is taken by the Subordinated
Creditors; and
(2) any payment or distribution of assets of the Obligor,
whether in cash, property or securities to which the
Subordinated Creditors would be entitled except for the
provisions hereof, shall be paid or delivered by the Obligor,
or any receiver, trustee in bankruptcy, liquidating trustee,
disbursing agent, agent or other person making such payment or
distribution, directly to the Agent for the benefit of the
Lenders, to the extent necessary to pay in full all Senior
Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to the Agent for the benefit
of the Lenders before any payment or distribution is made to
the Subordinated Creditors;
b. In any proceeding referred to or resulting from any event
referred to in subsection (a) of this Section 3 commenced by or against
the Obligor:
(1) the Agent may, and is hereby irrevocably authorized
and empowered (in its own name or in the name of the
Subordinated Creditors or otherwise), but shall have no
obligation to, (i) demand, sue for, collect and receive every
payment or distribution referred to in subsection (a) of this
Section 3 and give acquittance therefor, (ii) file claims and
proofs of claim in the name of the Subordinated Creditors in
respect of the Subordinated Obligations, but only if the
Subordinated Creditors have not filed any claims or proofs of
claim with respect to
-4-
<PAGE>
the Subordinated Obligations before the
expiration of the time to file such, and (iii) take such other
action as the Agent may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of
the Agent and the Lenders hereunder; and
(2) the Subordinated Creditors will duly and promptly take
such action as the Agent may reasonably request to collect the
Subordinated Obligations for the account of the Agent and to file
appropriate claims or proofs of claim with respect thereto, to
execute and deliver to the Agent such powers of attorney,
assignments or other instruments as the Agent may request in order
to enable it to enforce any and all claims with respect to the
Subordinated Obligations, and to collect and receive any and all
payments or distributions which may be payable or deliverable upon
or with respect to the Subordinated Obligations;
c. All payments or distributions upon or with respect to the
Subordinated Obligations which are received by the Subordinated Creditors
contrary to the provisions of this Subordination Agreement shall be
deemed to be the property of the Agent, shall be received in trust for
the benefit of the Agent, shall be segregated from other funds and
property held by the Subordinated Creditors and shall be forthwith paid
over to the Agent for the benefit of the Lenders in the same form as so
received (with any necessary endorsement) to be applied to the payment or
prepayment of the Senior Obligations until the Senior Obligations shall
have been paid in full;
d. The Subordinated Creditors hereby waive any requirement for
marshalling of assets by the Agent in connection with any foreclosure of
any lien of the Agent under the Senior Obligation Documents;
e. The Subordinated Creditors shall not take any action to impair
or otherwise adversely affect the foreclosure of, or other realization of
the Agent's rights under the Senior Obligation Documents; and
f. The Agent is hereby authorized to demand specific performance
of this Subordination Agreement at any time when the Subordinated
Creditors shall have failed to comply with any of the provisions of this
Subordination Agreement, and the Subordinated Creditors hereby
irrevocably waive any defense based on the adequacy of a remedy at law
which might be asserted as a bar to such remedy of specific performance.
-5-
<PAGE>
4. SUBROGATION. Subject to the payment in full of all Senior
Obligations, to the extent of payments received by the Agent for
application against the Senior Obligations which would be payable to the
Subordinated Creditors for application against the Subordinated
Obligations but for the provisions of this Subordination Agreement, the
Subordinated Creditors shall be subrogated to the rights of the Agent and
the Lenders to receive payments or distributions of cash, property or
securities of the Obligor applicable to the Senior Obligations until the
principal of (and premium, if any) and interest on the Subordinated
Obligations shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the Agent and the Lenders of
any cash, property or securities to which the Subordinated Creditors
would be entitled except for the provisions of this Section, and no
payments over to the Agent and the Lenders pursuant to the provisions of
this Subordination Agreement by the Subordinated Creditor, shall, as
between, the Obligor, its creditors other than the Agent and the Lenders,
and the Subordinated Creditors, be deemed to be a payment by the Obligor
to or on account of the Senior Obligations. The Subordinated Creditors
agree that no payment or distribution to the Agent for the benefit of the
Lenders pursuant to the provisions of this Subordination Agreement shall
entitle the Subordinated Creditors to exercise any rights of subrogation
in respect thereof until the Senior Obligations shall have been paid in
full.
5. ASSIGNMENT AND PLEDGE OF SUBORDINATED OBLIGATIONS. As
security for the payment of all Senior Obligations and for performance by
the Subordinated Creditors of this Subordination Agreement, the
Subordinated Creditors do hereby transfer, assign and pledge to the Agent
for the benefit of the Lenders, and grant to the Agent for the benefit of
the Lenders a security interest in, all right, title and interest of the
Subordinated Creditors in and to the Subordinated Obligations together
with any collateral security at any time held or received therefor, with
all of the rights therein and thereto of the Subordinated Creditors
including the right on the part of the Agent to collect and enforce the
Subordinated Obligations by suit, proof of debt or claim in any
proceeding under the Bankruptcy Code or any amendments thereto, or in any
dissolution, insolvency, liquidation or other proceeding involving an
adjustment of the indebtedness of the Obligor on the Subordinated
Obligations or application of the assets of the Obligor to the payment in
liquidation thereof, or otherwise. The Agent, in its own name or on
behalf of the Subordinated Creditors as holder of the Subordinated
Obligations, may accept or reject any plan of reorganization,
readjustment, or compromise or otherwise.
The Subordinated Creditors and the Obligor further agree that at
no time hereafter will any part of the Subordinated Obligations be
represented by any
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<PAGE>
negotiable instruments or other writings, unless such
negotiable instruments or other writings are delivered to the Agent, duly
endorsed, or assigned by the Subordinated Creditors, if payable to the
Subordinated Creditors. In the event of the failure of the Subordinated
Creditors to endorse said negotiable instruments or other writings, the
Agent is hereby irrevocably constituted and appointed attorney-in-fact
for the Subordinated Creditors with full power to make any such
endorsements.
6. LEGEND. Each of the Subordinated Creditors and the Obligor
will cause each promissory note evidencing any of the Subordinated
Obligations, any replacement thereof and any mortgage or security
document relating thereto to include or have endorsed thereon the
following provision:
"The indebtedness evidenced or secured by this instrument is
subordinated to other indebtedness pursuant to, and to the extent
provided in, and is otherwise subject to the terms of, the Amended
and Restated Subordination Agreement dated as of November 1, 1995
as amended and restated as of July 1, 1996 by and among (1) Orion
Pictures Corporation, as Obligor, (ii) Metromedia Company, a
Delaware general partnership, as Subordinated Creditor, and
(iii) John W. Kluge, as Subordinated Creditor and (iv) Chemical
Bank, as Agent for the Lenders."
7. NEGATIVE COVENANTS OF THE SUBORDINATED CREDITORS. So long as
any of the Senior Obligations shall remain outstanding, the Subordinated
Creditors will not, without the prior written consent of the Agent:
a. Sell, assign, pledge, encumber or otherwise dispose of any
instrument evidencing the indebtedness owed to the Subordinated Creditors
or any collateral securing the Subordinated Obligations unless such sale,
assignment, pledge, encumbrance or other disposition is made expressly
subject to this Subordination Agreement and the other party to such sale,
assignment, pledge, encumbrance or other disposition consents in writing
to be bound by the terms hereof;
b. Permit the terms of the Junior Obligation Documents or
collateral securing any Subordinated Obligations to be changed in any way
which would limit or impair these subordination provisions, increase the
interest payable thereon, change any payment date thereunder or accept
any collateral;
-7-
<PAGE>
c. Declare all or any portion of the Subordinated Obligations due
and payable prior to the date fixed therefor or realize upon, or
otherwise exercise any remedies with respect to, any collateral securing
the Subordinated Obligations or take any other action described in
Section 2 hereof; or
d. Commence, or join with any creditor other than the Lenders in
commencing any proceeding referred to in Section 3(a) hereof.
8. OBLIGATIONS UNCONDITIONAL. All rights and interests of the
Agent and the Lenders hereunder, and all agreements and obligations of
the Subordinated Creditors and the Obligor hereunder, shall remain in
full force and effect irrespective of:
a. Any lack of validity or enforceability of any Senior
Obligation Document or any other agreement or instrument relating
thereto;
b. Any change in the time, manner or place of payment of, or in
any other term of, all or any of the Senior Obligations, or any other
amendment or waiver of or any consent to departure from any Senior
Obligation Document;
c. Subject to the terms of the Guaranty Agreement, any exchange,
release or nonperfection of any collateral, or any release or amendment
or waiver of or consent to departure from any guaranty, for all or any of
the Senior Obligations;
d. Any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Obligor in respect of the
Senior Obligations or of the Subordinated Creditors or the Obligor in
respect of this Subordination Agreement; or
e. Any further subordination of the Subordinated Obligations.
9. ADDITIONAL AGREEMENTS AND WAIVERS BY THE SUBORDINATED
CREDITORS. The Subordinated Creditors waive, to the fullest extent
permitted by law, any right to request marshalling of assets or equitable
subordination (whether under or pursuant to 11 U.S.C. <section> 510 or
otherwise) and any right to assert that the Agent or any Lender has in
any way failed to comply with the provisions of the Uniform Commercial
Code, including the provisions of Article 9 thereof.
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<PAGE>
10. REPRESENTATIONS AND WARRANTIES. Each Subordinated Creditor
hereby represents and warrants that:
a. such Subordinated Creditor has the power and authority and the
legal right to execute and deliver, and to perform its obligations
under, this Subordination Agreement, and has taken all necessary action
to authorize the execution, delivery and performance of this
Subordination Agreement;
b. this Subordination Agreement constitutes a legal, valid and
binding obligation of such Subordinated Creditor enforceable in
accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting the enforcement of creditors'
rights generally, general equitable principles and an implied covenant
of good faith and fair dealing;
c. the execution, delivery and performance of this Subordination
Agreement will not violate in any material respect any provision of any
Applicable Law or any agreement to which such Subordinated Creditor is
a party;
d. no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
partner, stockholder or creditor of such Subordinated Creditor) is
required in connection with the execution, delivery, performance,
validity or enforceability of this Subordination Agreement;
e. no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
such Subordinated Creditor, threatened by or against such Subordinated
Creditor with respect to this Subordination Agreement;
f. the agreements governing the Subordinated Obligations of such
Subordinated Creditor do not and will not contain (i) any default which
is triggered by (A) a default under any other agreements to which the
Obligor is a party or (B) any other Indebtedness of the Obligor being
declared due and payable prior to its stated maturity or (ii) without
limiting clause (i) above, any covenants or events of default which are
more strict than those contained in the Credit Agreement; and
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<PAGE>
g. such Subordinated Creditor is an Affiliate of the Obligor and
the Subordinated Obligations are permitted by Section 6.1 of the Credit
Agreement.
11. PRESENT SUBORDINATED OBLIGATIONS. Each of the Subordinated
Creditors hereby represents and warrants that the outstanding
Subordinated Obligations as of the this date are $______.
12. FURTHER ASSURANCES. The Subordinated Creditors and the
Obligor will, at their own expense and at any time and from time to time,
promptly execute and deliver all further instruments and documents, and
take all further action that the Agent may reasonably request, in order
to perfect or otherwise protect any right or interest granted or
purported to be granted hereby or to enable the Agent to exercise and
enforce its rights and remedies hereunder. The Subordinated Creditors
further authorize the Agent to file UCC financing statements and any
amendments thereto or continuations thereof with regard to the
Subordinated Obligations without the Subordinated Creditors' signatures.
13. EXPENSES. The Obligor agrees to pay to the Agent, upon
demand, the amount of any and all reasonable expenses, including the
reasonable fees and expenses of counsel for the Agent, which the Agent
may incur in connection with the exercise or enforcement against the
Subordinated Creditors of any of the rights or interests of the Agent or
the Lenders hereunder.
14. NOTICE. All demands, notices and other communications which
any party hereto may desire or may be required to give to any other party
hereunder shall be in writing (including telegraphic communication) and
shall be mailed, telecopied, telegraphed or delivered to such other party
at its address as set forth on the signature pages hereof or to any such
party at such other address as shall be designated by such party in a
written notice to each other party, complying as to delivery with the
terms of this Section 14. All such demands, notices, and other
communications shall be effective when received.
15. SERVICE OF PROCESS. EACH OF THE SUBORDINATED CREDITORS AND
THE OBLIGOR (A) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
STATE COURTS OF THE STATE OF NEW YORK AND THE JURISDICTION OF THE UNITED
STATE DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE
PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
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<PAGE>
OUT OF OR BASED
UPON THIS SUBORDINATION AGREEMENT OR THE SUBJECT MATTER HEREOF BROUGHT BY
THE AGENT OR ITS SUCCESSORS OR ASSIGNS AND (B) HEREBY WAIVES AND AGREES
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH
SUIT, ACTION OR PROCEEDING, 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 SUBORDINATION
AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH
COURT, AND (C) HEREBY WAIVES IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS (EXCEPT FOR COMPULSORY COUNTERCLAIMS). EACH OF
THE SUBORDINATED CREDITORS AND THE OBLIGOR HEREBY CONSENTS TO SERVICE OF
PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE
GIVEN. EACH OF THE SUBORDINATED CREDITORS AND THE OBLIGOR AGREES THAT
ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO SERVICE OF PROCESS BY
MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE AGENT. FINAL JUDGMENT
AGAINST THE SUBORDINATED CREDITORS OR THE OBLIGOR IN ANY SUCH ACTION,
SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT
AND OF THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF THE SUBORDINATED
CREDITORS OR THE OBLIGOR THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER
PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED,
HOWEVER, THAT THE AGENT MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER
JUDICIAL PROCEEDINGS AGAINST THE SUBORDINATED CREDITORS OR THE OBLIGOR OR
ANY OF THEIR RESPECTIVE ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE SUBORDINATED
CREDITORS, THE OBLIGOR OR THEIR RESPECTIVE ASSETS MAY BE FOUND. EACH OF
THE SUBORDINATED CREDITORS AND THE OBLIGOR FURTHER COVENANTS AND AGREES
THAT SO LONG AS THIS SUBORDINATION AGREEMENT SHALL BE IN EFFECT, EACH
SHALL MAINTAIN A DULY
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<PAGE>
APPOINTED AGENT FOR THE RECEIPT AND ACCEPTANCE ON
ITS BEHALF OF SERVICE OF SUMMONS AND OTHER LEGAL PROCESSES, AND UPON
FAILURE TO DO SO THE CLERK OF EACH COURT TO WHOSE JURISDICTION IT HAS
SUBMITTED SHALL BE DEEMED TO BE ITS RESPECTIVE DESIGNATED AGENT UPON WHOM
SUCH PROCESS MAY BE SERVED ON ITS BEHALF, AND NOTIFICATION BY THE
ATTORNEY FOR PLAINTIFF, COMPLAINANT OR PETITIONER THEREIN BY MAIL OR
TELEGRAPH TO ANY SUBORDINATED CREDITOR OR THE OBLIGOR OF THE FILING OF
EACH SUIT, ACTION OR PROCEEDING SHALL BE DEEMED SUFFICIENT NOTICE
THEREOF.
16. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES,
AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS SUBORDINATION AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN
INFORMED THAT THE PROVISIONS OF THIS SECTION 16 CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL
RELY IN ENTERING INTO THIS SUBORDINATION AGREEMENT. THE PARTIES HERETO
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 16 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH OTHER PARTY TO THE
WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
17. MISCELLANEOUS.
a. No amendment of any provision of this Subordination Agreement
shall be effective unless it is in writing and signed by the Subordinated
Creditors, the Obligor and the Agent, and no waiver of any Subordination
Agreement, and no consent to any departure therefrom, shall be effective
unless it is in writing and signed by the Agent, and any such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
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<PAGE>
b. No failure on the part of the Agent to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right.
c. Any provision of this Subordination Agreement which is
prohibited or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
invalidity without invalidating the remaining portions hereof or thereof
or affecting the validity or enforceability of such provision in any
other jurisdiction.
d. This Subordination Agreement shall be binding on the
Subordinated Creditors and the Obligor and their respective successors
and assigns including, without limitation, any holders of the instruments
evidencing the Subordinated Obligations.
e. This Subordination Agreement, and any modifications or
amendments hereto, may be executed by one or more of the parties to this
Subordination Agreement on any number of separate counterparts, and all
said counterparts taken together shall be deemed to constitute one and
the same instrument.
f. This Subordination Agreement and any supplement or agreement
required hereunder shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of
conflicts of laws.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Subordination Agreement on the date first above written.
OBLIGOR:
ORION PICTURES CORPORATION
By_________________________
Name:
Title:
Address: 1888 Century Park East
Los Angeles, CA 90067
Attn: John W. Hester
with a copy to:
Paul, Weiss, Rifkind,Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attn.: James M. Dubin
SUBORDINATED CREDITORS:
METROMEDIA COMPANY, a general
partnership
By_________________________
Name:
Title:
Address: One Meadowlands Plaza
East Rutherford, NJ 07073
Attn: Arnold L. Wadler
<PAGE>
JOHN W. KLUGE
By_________________________
John W. Kluge
Address: c/o Metromedia Company
215 E. 67th Street
New York, NY 10021
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<PAGE>
CHEMICAL BANK,
as Agent
Executed in New York, New
York on ________, 1996 By_________________________
Name:
Title:
Address: 270 Park Avenue
New York, NY 10172
Attn: John J. Huber, III
with a copy to:
Chase Securities, Inc.
1800 Century Park East
Suite 400
Los Angeles, CA 90067
Attn: Kenneth R. Wilson
<PAGE>
EXHIBIT E-2
FORM OF AMENDED AND RESTATED SUBORDINATION AGREEMENT
AMENDED AND RESTATED SUBORDINATION
AGREEMENT dated as of November 1, 1995 as amended and
restated as of June 27, 1996 (as further amended,
supplemented, otherwise modified, renewed or replaced
from time to time, the "Subordination Agreement")
among (i) Orion Pictures Corporation (the "Obligor"),
(ii) Metromedia International Group, Inc., (the
"Parent"), (iii) Metromedia International
Telecommunications, Inc., (together with the Parent,
the "Subordinated Creditors") and (iv) Chemical Bank,
as agent for the Lenders referred to in the Credit
Agreement (the "Agent").
INTRODUCTORY STATEMENT
Pursuant to the terms of an Amended and Restated Credit,
Security and Guaranty Agreement dated as of November 1, 1995 as amended
and restated as of June 27, 1996 among the Obligor, the lenders referred
to therein (the "Lenders"), the corporate guarantors referred to therein
and the Agent (as the same may be further amended, supplemented,
otherwise modified, renewed or replaced from time to time, the "Credit
Agreement"), the Lenders have agreed, subject to the terms and conditions
thereof, to make loans (the "Loans") to the Obligor. The Credit
Agreement, the Notes referred to therein, any Interest Rate Protection
Agreement or Currency Agreement entered into with any Lender and the
other documents, instruments and agreements contemplated thereby as they
may be amended or otherwise modified from time to time, shall hereinafter
be referred to as "Senior Obligation Documents". For purposes of this
Subordination Agreement, unless otherwise defined herein, capitalized
terms used herein shall have the meanings given to such terms in the
Credit Agreement.
The Subordinated Creditors have previously made loans to the
Obligor, and may from time to time hereafter make additional loans to the
Obligor. The obligations of
<PAGE>
the Obligor to repay the principal amount of
any loans and all interest thereon and all other amounts payable to the
Subordinated Creditors in connection therewith are hereinafter referred
to as the "Subordinated Obligations". Any promissory note evidencing any
such loan, any replacements or substitutes therefore and any other
related agreement are hereinafter referred to as "Junior Obligation
Documents".
In order to induce the Agent and the Lenders to enter into the
Credit Agreement, the Subordinated Creditors have agreed, subject to the
provisions of this Subordination Agreement, that the Subordinated
Obligations shall be subordinate to the Senior Obligations (as
hereinafter defined), subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. AGREEMENT TO SUBORDINATE. The Subordinated Creditors
agree that the Subordinated Obligations are and shall be subordinate and
subject in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full of the Senior Obligations and
that any guarantees, security interests, mortgages and other liens
securing payment of the Subordinated Obligations are and shall be
subordinate, to the fullest extent permitted by law and as hereinafter
set forth, to any guarantees, security interests and mortgages and other
liens securing payment of the Senior Obligations, notwithstanding the
perfection, order of perfection or failure to perfect, any such security
interest or other lien, or the filing or recording, order of filing or
recording, or failure to file or record this Subordination Agreement or
any instrument or other document in any filing or recording office in any
jurisdiction. The term "Senior Obligations" shall mean all obligations
of the Obligor under the Senior Obligation Documents including, without
limitation, whether outstanding at the date hereof or hereafter incurred
or created, all obligations to pay principal, premium, if any, interest
(including, without limitation, interest accruing after the commencement
of any
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<PAGE>
bankruptcy, insolvency, reorganization or similar proceedings with
respect to the Obligor, whether or not determined to be an allowed claim
in any such proceeding), charges, costs, expenses and fees including,
without limitation, the disbursements and reasonable fees of counsel to
the Agent or the Lenders, all obligations to reimburse or indemnify the
Agent and/or any Lender in any way, and all renewals, extensions,
restructurings, refinancings or refunding of any indebtedness under the
Senior Obligation Documents in the nature of a "workout" or otherwise.
The expressions "prior payment in full", "payment in full",
"paid in full" or any other similar term(s) or phrase(s) when used herein
with respect to Senior Obligation Documents shall mean the payment in
full, in cash, of all of the Senior Obligations and the termination of
the Commitments.
2. RESTRICTIONS ON PAYMENT OF THE SUBORDINATED OBLIGATIONS,
ETC. The Subordinated Creditors will not ask, demand, sue for, take or
receive, directly or indirectly, from the Obligor or any affiliate
thereof, in cash or other property, by set-off, by realizing upon
collateral, by foreclosing on any lien or otherwise, by exercise of any
remedies or rights under the Junior Obligation Documents or by
executions, garnishments, levies, attachments or by any other action
relating to the Subordinated Obligations, or in any other manner, payment
of, or additional security for, all or any part of the Subordinated
Obligations unless and until the Senior Obligations shall have been paid
in full; PROVIDED, HOWEVER, that the Parent may receive, and the Obligor
may repay any loans identified as Parent Line of Credit Loans upon the
terms set forth in the Junior Obligation Documents so long as at the time
of making such payment and immediately after giving effect thereto, no
"Event of Default" (as such term is defined in the Senior Obligation
Documents) or event which with notice and/or the passage of time would
constitute an Event of Default shall have occurred and be continuing.
The Obligor will not make any payment on any of the Subordinated
Obligations, or take any other action, in contravention of the provisions
of this Subordination Agreement. The Subordinated Creditors expressly
agree that, unless and until such time as the Loans shall be accelerated,
any payment in respect of the Subordinated Obligations which is not made
in a timely manner by reason of the provisions of this Subordination
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<PAGE>
Agreement shall be deemed to be deferred until such time as payment can
be made in compliance with this Subordination Agreement and the Obligor
shall not be in default under any of the Junior Obligation Documents by
reason thereof.
Each Subordinated Creditor further acknowledges and agrees that
it will not take any collateral of the Obligor unless and until the
Senior Obligations have been paid in full.
3. ADDITIONAL PROVISIONS CONCERNING SUBORDINATION. The
Subordinated Creditors and the Obligor agree as follows:
a. In the event of (i) any dissolution, winding up,
liquidation or reorganization of the Obligor (whether voluntary or
involuntary and whether in bankruptcy, insolvency or receivership
proceedings, or upon an assignment for the benefit of creditors or
proceedings for voluntary or involuntary liquidation, dissolution or
other winding up of the Obligor, whether or not involving insolvency or
bankruptcy, or any other marshalling of the assets and liabilities of the
Obligor or otherwise); or (ii) any Event of Default which has not been
waived or cured or an event which with notice and/or passage of time
would constitute an Event of Default which has not been waived or cured,
or acceleration of maturity regarding the Subordinated Obligations:
(1) all Senior Obligations shall first be paid to the
Agent for the benefit of the Lenders in full before any payment
or distribution is made upon the principal of or interest on or
any fees, costs, charges or expenses in connection with the
Subordinated Obligations, and before any other action described
in Sections 2 and 4 hereof is taken by the Subordinated
Creditors; and
(2) any payment or distribution of assets of the Obligor,
whether in cash, property or securities to which the
Subordinated Creditors would be entitled except for the
provisions hereof, shall be paid or delivered by the Obligor,
or any receiver, trustee in bankruptcy, liquidating trustee,
disbursing agent, agent or other person making such payment or
distribution,
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<PAGE>
directly to the Agent for the benefit of the
Lenders, to the extent necessary to pay in full all Senior
Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution to the Agent for the benefit
of the Lenders before any payment or distribution is made to
the Subordinated Creditors;
b. In any proceeding referred to or resulting from any event
referred to in subsection (a) of this Section 3 commenced by or against
the Obligor:
(1) the Agent may, and is hereby irrevocably authorized
and empowered (in its own name or in the name of the
Subordinated Creditors or otherwise), but shall have no
obligation to, (i) demand, sue for, collect and receive every
payment or distribution referred to in subsection (a) of this
Section 3 and give acquittance therefor, (ii) file claims and
proofs of claim in the name of the Subordinated Creditors in
respect of the Subordinated Obligations, but only if the
Subordinated Creditors have not filed any claims or proofs of
claim with respect to the Subordinated Obligations before the
expiration of the time to file such, and (iii) take such other
action as the Agent may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of
the Agent and the Lenders hereunder; and
(2) the Subordinated Creditors will duly and promptly take
such action as the Agent may reasonably request to collect the
Subordinated Obligations for the account of the Agent and to file
appropriate claims or proofs of claim with respect thereto, to
execute and deliver to the Agent such powers of attorney,
assignments or other instruments as the Agent may request in order
to enable it to enforce any and all claims with respect to the
Subordinated Obligations, and to collect and receive any and all
payments or distributions which may be payable or deliverable upon
or with respect to the Subordinated Obligations;
-5-
<PAGE>
c. All payments or distributions upon or with respect to the
Subordinated Obligations which are received by the Subordinated Creditors
contrary to the provisions of this Subordination Agreement shall be
deemed to be the property of the Agent, shall be received in trust for
the benefit of the Agent, shall be segregated from other funds and
property held by the Subordinated Creditors and shall be forthwith paid
over to the Agent for the benefit of the Lenders in the same form as so
received (with any necessary endorsement) to be applied to the payment or
prepayment of the Senior Obligations until the Senior Obligations shall
have been paid in full;
d. The Subordinated Creditors hereby waive any requirement for
marshalling of assets by the Agent in connection with any foreclosure of
any lien of the Agent under the Senior Obligation Documents;
e. The Subordinated Creditors shall not take any action to impair
or otherwise adversely affect the foreclosure of, or other realization of
the Agent's rights under the Senior Obligation Documents; and
f. The Agent is hereby authorized to demand specific performance
of this Subordination Agreement at any time when the Subordinated
Creditors shall have failed to comply with any of the provisions of this
Subordination Agreement, and the Subordinated Creditors hereby
irrevocably waive any defense based on the adequacy of a remedy at law
which might be asserted as a bar to such remedy of specific performance.
4. SUBROGATION. Subject to the payment in full of (x) all
Senior Obligations and (y) the (i) subrogation rights of Metromedia
Company and John W. Kluge under the Guaranty Agreement and (ii) the
provisions of the Priority and Contribution Agreement, to the extent of
payments received by the Agent for application against the Senior
Obligations which would be payable to the Subordinated Creditors for
application against the Subordinated Obligations but for the provisions
of this Subordination Agreement, the Subordinated Creditors shall be
subrogated to the rights of the Agent and the Lenders to receive payments
or distributions of cash, property or securities of the Obligor
applicable to the Senior Obligations until the principal of (and premium,
if any) and interest on the
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<PAGE>
Subordinated Obligations shall be paid in
full; and, for the purposes of such subrogation, no payments or
distributions to the Agent and the Lenders of any cash, property or
securities to which the Subordinated Creditors would be entitled except
for the provisions of this Section, and no payments over to the Agent and
the Lenders pursuant to the provisions of this Subordination Agreement by
the Subordinated Creditor, shall, as between, the Obligor, its creditors
other than the Agent and the Lenders, and the Subordinated Creditors, be
deemed to be a payment by the Obligor to or on account of the Senior
Obligations. The Subordinated Creditors agree that no payment or
distribution to the Agent for the benefit of the Lenders pursuant to the
provisions of this Subordination Agreement shall entitle the Subordinated
Creditors to exercise any rights of subrogation in respect thereof until
the Senior Obligations shall have been paid in full.
5. ASSIGNMENT AND PLEDGE OF SUBORDINATED OBLIGATIONS. As
security for the payment of all Senior Obligations and for performance by
the Subordinated Creditors of this Subordination Agreement, the
Subordinated Creditors do hereby transfer, assign and pledge to the Agent
for the benefit of the Lenders, and grant to the Agent for the benefit of
the Lenders a security interest in, all right, title and interest of the
Subordinated Creditors in and to the Subordinated Obligations together
with any collateral security at any time held or received therefor, with
all of the rights therein and thereto of the Subordinated Creditors
including the right on the part of the Agent to collect and enforce the
Subordinated Obligations by suit, proof of debt or claim in any
proceeding under the Bankruptcy Code or any amendments thereto, or in any
dissolution, insolvency, liquidation or other proceeding involving an
adjustment of the indebtedness of the Obligor on the Subordinated
Obligations or application of the assets of the Obligor to the payment in
liquidation thereof, or otherwise. The Agent, in its own name or on
behalf of the Subordinated Creditors as holder of the Subordinated
Obligations, may accept or reject any plan of reorganization,
readjustment, or compromise or otherwise.
The Subordinated Creditors and the Obligor further agree that at
no time hereafter will any part of the Subordinated Obligations be
represented by any negotiable instruments or other writings, unless such
negotiable instruments
-7-
<PAGE>
or other writings are delivered to the Agent, duly
endorsed, or assigned by the Subordinated Creditors, if payable to the
Subordinated Creditors. In the event of the failure of the Subordinated
Creditors to endorse said negotiable instruments or other writings, the
Agent is hereby irrevocably constituted and appointed attorney-in-fact
for the Subordinated Creditors with full power to make any such
endorsements.
6. LEGEND. Each of the Subordinated Creditors and the Obligor
will cause each promissory note evidencing any of the Subordinated
Obligations, any replacement thereof and any mortgage or security
document relating thereto to include or have endorsed thereon the
following provision:
"The indebtedness evidenced or secured by this instrument is
subordinated to other indebtedness pursuant to, and to the extent
provided in, and is otherwise subject to the terms of, the Amended
and Restated Subordination Agreement dated as of November 1, 1995
as amended and restated as of July 1, 1996 by and among (i) Orion
Pictures Corporation, as Obligor, (ii) Metromedia International
Group, Inc.,
and Metromedia International Telecommunications, Inc., as
Subordinated Creditors and (iii) Chemical Bank, as Agent for the
Lenders."
7. NEGATIVE COVENANTS OF THE SUBORDINATED CREDITORS. So long as
any of the Senior Obligations shall remain outstanding, the Subordinated
Creditors will not, without the prior written consent of the Agent:
a. Sell, assign, pledge, encumber or otherwise dispose of any
instrument evidencing the indebtedness owed to the Subordinated Creditors
or any collateral securing the Subordinated Obligations unless such sale,
assignment, pledge, encumbrance or other disposition is made expressly
subject to this Subordination Agreement and the other party to such sale,
assignment, pledge, encumbrance or other disposition consents in writing
to be bound by the terms hereof;
b. Permit the terms of the Junior Obligation Documents or
collateral securing any Subordinated Obligations to be changed in any way
which would limit or
-8-
<PAGE>
impair these subordination provisions, increase the
interest payable thereon, change any payment date thereunder or accept
any collateral;
c. Declare all or any portion of the Subordinated Obligations due
and payable prior to the date fixed therefor or realize upon, or
otherwise exercise any remedies with respect to, any collateral securing
the Subordinated Obligations or take any other action described in
Section 2 hereof; or
d. Commence, or join with any creditor other than the Lenders in
commencing any proceeding referred to in Section 3(a) hereof.
8. OBLIGATIONS UNCONDITIONAL. All rights and interests of the
Agent and the Lenders hereunder, and all agreements and obligations of
the Subordinated Creditors and the Obligor hereunder, shall remain in
full force and effect irrespective of:
a. Any lack of validity or enforceability of any Senior
Obligation Document or any other agreement or instrument relating
thereto;
b. Any change in the time, manner or place of payment of, or in
any other term of, all or any of the Senior Obligations, or any other
amendment or waiver of or any consent to departure from any Senior
Obligation Document;
c. Any exchange, release or nonperfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Senior Obligations;
d. Any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Obligor in respect of the
Senior Obligations or of the Subordinated Creditors or the Obligor in
respect of this Subordination Agreement; or
e. Any further subordination of the Subordinated Obligations.
-9-
<PAGE>
9. ADDITIONAL AGREEMENTS AND WAIVERS BY THE SUBORDINATED
CREDITORS. The Subordinated Creditors waive, to the fullest extent
permitted by law, any right to request marshalling of assets or equitable
subordination (whether under or pursuant to 11 U.S.C. <section> 510 or
otherwise) and any right to assert that the Agent or any Lender has in
any way failed to comply with the provisions of the Uniform Commercial
Code, including the provisions of Article 9 thereof.
10. REPRESENTATIONS AND WARRANTIES. Each Subordinated Creditor
hereby represents and warrants that:
a. such Subordinated Creditor has the power and authority and the
legal right to execute and deliver, and to perform its obligations
under, this Subordination Agreement, and has taken all necessary action
to authorize the execution, delivery and performance of this
Subordination Agreement;
b. this Subordination Agreement constitutes a legal, valid and
binding obligation of such Subordinated Creditor enforceable in
accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting the enforcement of creditors'
rights generally, general equitable principles and an implied covenant
of good faith and fair dealing;
c. the execution, delivery and performance of this Subordination
Agreement will not violate in any material respect any provision of any
Applicable Law or any agreement to which such Subordinated Creditor is
a party;
d. no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no
consent of any other Person (including, without limitation, any
partner, stockholder or creditor of such Subordinated Creditor) is
required in connection with the execution, delivery, performance,
validity or enforceability of this Subordination Agreement;
-10-
<PAGE>
e. no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
such Subordinated Creditor, threatened by or against such Subordinated
Creditor with respect to this Subordination Agreement;
f. the agreements governing the Subordinated Obligations of such
Subordinated Creditor do not and will not contain (i) any default which
is triggered by (A) a default under any other agreements to which the
Obligor is a party or (B) any other Indebtedness of the Obligor being
declared due and payable prior to its stated maturity or (ii) without
limiting clause (i) above, any covenants or events of default which are
more strict than those contained in the Credit Agreement; and
g. such Subordinated Creditor is an Affiliate of the Obligor and
the Subordinated Obligations are permitted by Section 6.1 of the Credit
Agreement.
11. PRESENT SUBORDINATED OBLIGATIONS. Each of the Subordinated
Creditors hereby represents and warrants that the outstanding
Subordinated Obligations as of the this date are $______.
12. FURTHER ASSURANCES. The Subordinated Creditors and the
Obligor will, at their own expense and at any time and from time to time,
promptly execute and deliver all further instruments and documents, and
take all further action that the Agent may reasonably request, in order
to perfect or otherwise protect any right or interest granted or
purported to be granted hereby or to enable the Agent to exercise and
enforce its rights and remedies hereunder. The Subordinated Creditors
further authorize the Agent to file UCC financing statements and any
amendments thereto or continuations thereof with regard to the
Subordinated Obligations without the Subordinated Creditors' signatures.
13. EXPENSES. The Obligor agrees to pay to the Agent, upon
demand, the amount of any and all reasonable expenses, including the
reasonable fees and expenses of counsel for the Agent, which the Agent
may incur in connection with the exercise or enforcement against the
Subordinated Creditors of any of the rights or interests of the Agent or
the Lenders hereunder.
-11-
<PAGE>
14. NOTICE. All demands, notices and other communications which
any party hereto may desire or may be required to give to any other party
hereunder shall be in writing (including telegraphic communication) and
shall be mailed, telecopied, telegraphed or delivered to such other party
at its address as set forth on the signature pages hereof or to any such
party at such other address as shall be designated by such party in a
written notice to each other party, complying as to delivery with the
terms of this Section 14. All such demands, notices, and other
communications shall be effective when received.
15. SERVICE OF PROCESS. EACH OF THE SUBORDINATED CREDITORS AND
THE OBLIGOR (A) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
STATE COURTS OF THE STATE OF NEW YORK AND THE JURISDICTION OF THE UNITED
STATE DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE
PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED
UPON THIS SUBORDINATION AGREEMENT OR THE SUBJECT MATTER HEREOF BROUGHT BY
THE AGENT OR ITS SUCCESSORS OR ASSIGNS AND (B) HEREBY WAIVES AND AGREES
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH
SUIT, ACTION OR PROCEEDING, 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 SUBORDINATION
AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH
COURT, AND (C) HEREBY WAIVES IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY
OFFSETS OR COUNTERCLAIMS (EXCEPT FOR COMPULSORY COUNTERCLAIMS). EACH OF
THE SUBORDINATED CREDITORS AND THE OBLIGOR HEREBY CONSENTS TO SERVICE OF
PROCESS BY REGISTERED MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE
GIVEN. EACH OF THE SUBORDINATED CREDITORS AND THE OBLIGOR AGREES THAT
ITS SUBMISSION TO JURISDICTION AND ITS CONSENT TO SERVICE OF PROCESS BY
MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE AGENT. FINAL JUDGMENT
AGAINST THE SUBORDINATED CREDITORS OR THE OBLIGOR IN ANY SUCH ACTION,
SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER
JURISDICTIONS (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT
AND OF THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF THE SUBORDINATED
CREDITORS OR THE OBLIGOR THEREIN DESCRIBED OR (B) IN ANY OTHER MANNER
PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER
-12-
<PAGE>
JURISDICTION; PROVIDED,
HOWEVER, THAT THE AGENT MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER
JUDICIAL PROCEEDINGS AGAINST THE SUBORDINATED CREDITORS OR THE OBLIGOR OR
ANY OF THEIR RESPECTIVE ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE SUBORDINATED
CREDITORS, THE OBLIGOR OR THEIR RESPECTIVE ASSETS MAY BE FOUND. EACH OF
THE SUBORDINATED CREDITORS AND THE OBLIGOR FURTHER COVENANTS AND AGREES
THAT SO LONG AS THIS SUBORDINATION AGREEMENT SHALL BE IN EFFECT, EACH
SHALL MAINTAIN A DULY APPOINTED AGENT FOR THE RECEIPT AND ACCEPTANCE ON
ITS BEHALF OF SERVICE OF SUMMONS AND OTHER LEGAL PROCESSES, AND UPON
FAILURE TO DO SO THE CLERK OF EACH COURT TO WHOSE JURISDICTION IT HAS
SUBMITTED SHALL BE DEEMED TO BE ITS RESPECTIVE DESIGNATED AGENT UPON WHOM
SUCH PROCESS MAY BE SERVED ON ITS BEHALF, AND NOTIFICATION BY THE
ATTORNEY FOR PLAINTIFF, COMPLAINANT OR PETITIONER THEREIN BY MAIL OR
TELEGRAPH TO ANY SUBORDINATED CREDITOR OR THE OBLIGOR OF THE FILING OF
EACH SUIT, ACTION OR PROCEEDING SHALL BE DEEMED SUFFICIENT NOTICE
THEREOF.
16. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES,
AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY
ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS SUBORDINATION AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN
INFORMED THAT THE PROVISIONS OF THIS SECTION 16 CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL
RELY IN ENTERING INTO THIS SUBORDINATION AGREEMENT. THE PARTIES HERETO
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 16 WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH OTHER PARTY TO THE
WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
17. MISCELLANEOUS.
a. No amendment of any provision of this Subordination Agreement
shall be effective unless it is in writing and signed by the Subordinated
Creditors, the Obligor and the Agent, and no waiver of any Subordination
Agreement, and no consent to any departure therefrom, shall be effective
unless it is in writing and signed by the
-13-
<PAGE>
Agent, and any such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
b. No failure on the part of the Agent to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other
or further exercise thereof or the exercise of any other right.
c. Any provision of this Subordination Agreement which is
prohibited or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
invalidity without invalidating the remaining portions hereof or thereof
or affecting the validity or enforceability of such provision in any
other jurisdiction.
d. This Subordination Agreement shall be binding on the
Subordinated Creditors and the Obligor and their respective successors
and assigns including, without limitation, any holders of the instruments
evidencing the Subordinated Obligations.
e. This Subordination Agreement, and any modifications or
amendments hereto, may be executed by one or more of the parties to this
Subordination Agreement on any number of separate counterparts, and all
said counterparts taken together shall be deemed to constitute one and
the same instrument.
f. This Subordination Agreement and any supplement or agreement
required hereunder shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of
conflicts of laws.
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Subordination Agreement on the date first above written.
OBLIGOR:
ORION PICTURES CORPORATION
By_________________________
Name:
Title:
Address: 1888 Century Park East
Los Angeles, CA 90067
Attn: John W. Hester
SUBORDINATED CREDITORS:
METROMEDIA
INTERNATIONAL GROUP, INC.
By_________________________
Name:
Title:
Address:
METROMEDIA INTERNATIONAL
TELECOMMUNICATIONS, INC.
By_________________________
Name:
Title:
Address:
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<PAGE>
CHEMICAL BANK,
as Agent
Executed in New York,
New York on ______, 1996
By_________________________
Name:
Title:
Address: 270 Park Avenue
New York, NY 10172
Attn: John J. Huber, III
with a copy to:
Chase Securities, Inc.
1800 Century Park East
Suite 400
Los Angeles, CA 90067
Attn: Kenneth R. Wilson
-16-
<PAGE>
EXHIBIT F
FORM OF LABORATORY ACCESS LETTER
[DATE]
[ADDRESS TO LABORATORY]
This letter will confirm the terms of an agreement among you (the
"Laboratory"), [INSERT THE NAME OF THE CREDIT PARTY THAT HAS ACCESS
RIGHTS TO THE PHYSICAL ELEMENTS OF THE PRODUCT LISTED ON SCHEDULE 1
HERETO] (the "Producer") and Chemical Bank as agent for the Lenders
referred to in the Credit Agreement hereinafter defined (the "Agent")
relating to the items of Product (the "Product") described on Schedule 1
hereto.
Reference is hereby made to that certain Amended and Restated
Credit, Security, and Guaranty Agreement dated as of November 1, 1995, as
amended and restated as of June 27, 1996 among [ORION PICTURES
CORPORATION OR THE PRODUCER], [THE PRODUCER, AS A GUARANTOR,] the other
guarantors named therein, the Lenders named therein and the Agent (as the
same may be amended, supplemented or otherwise modified, renewed or
replaced from time to time, the "Credit Agreement").
The Laboratory now has or may have in its possession or under its
control certain of the negatives, dupe negatives, fine grain prints,
soundtracks, positive prints, video tape masters or other physical
properties in connection with the Product, whether or not in completed
form (all of the foregoing physical properties now or hereafter in the
Laboratory's possession or control are herein collectively referred to as
the "Physical Materials"). The Producer now possesses certain rights in
connection with the Product and the Physical Materials, including,
without limitation, rights of access with respect to the Physical
Materials (the "Access Rights").
For good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. The Laboratory hereby agrees and confirms to the Agent that the
Producer is entitled to exercise the Access Rights with respect to the
Physical Materials. The Producer and the Agent hereby confirm to the
Laboratory, and the
<PAGE>
Laboratory hereby acknowledges, that in order to
secure the Producer's obligations under the Credit Agreement, the
Producer has, pursuant to the Credit Agreement, INTER ALIA, granted to
the Agent (for the benefit of the Lenders) a security interest in and to
the Producer's right, title and interest in and to personal property,
including without limitation, the Access Rights.
2. The parties hereto hereby agree that, upon written notice from
the Agent to the Laboratory that the Agent (on behalf of the Lenders) has
exercised its security interest with respect to Access Rights, the
Laboratory shall accord to the Agent (or the Agent's successors or
assigns) the non-exclusive right to exercise the Access Rights including,
without limitation, the right to have access to the Physical Materials
and to order and receive from the Laboratory (on the Laboratory's normal
and customary terms) all materials and services customarily rendered or
furnished by the Laboratory in connection with the Physical Materials.
3. Laboratory and the other parties hereto hereby agree (a) that
the Laboratory will not look to any party hereunder for payment of any
charges incurred by any other person or entity with respect to the
Product(s) or the Physical Materials (it being understood and agreed that
all services or materials ordered by any party shall be at the sole cost
and expense of the party ordering the same) and (b) that, except for
liens within the limits provided in Paragraph 4: (i) the rights of any
party hereunder (including, without limitation, Agent's non-exclusive
right to exercise the Access Rights) shall not be affected, diminished,
impeded or interfered with by reason of any failure of any other person
or entity to pay for any charges which have heretofore been incurred or
which may hereinafter be incurred in connection with the Product(s) or
the Physical Materials, and (ii) any claim or lien which Laboratory may
assert against any party hereto with respect to services or materials
furnished or rendered by Laboratory at the request of such party with
respect to the Product(s) or the Physical Materials will not interfere
with any other party's rights of access with respect to the Physical
Materials or other rights referred to hereunder.
4. If the Laboratory shall have been notified by the Agent that an
Event of Default (as defined in the Credit Agreement) has occurred and is
continuing under the Credit Agreement, the parties hereto agree that they
will not agree to alter, amend, supplement, terminate or replace the
Access Rights without the prior written consent of Agent, and that the
Physical Materials may not be released to any other entity (including
another laboratory) without Agent's prior written consent.
-2-
<PAGE>
-3-
<PAGE>
Kindly confirm your agreement to and acceptance of the
foregoing by signing in the space provided below.
Very truly yours,
[PRODUCER]
By:___________________________
Name:
Title:
AGREED AND ACCEPTED BY:
[LABORATORY]
By:_______________________
Name:
Title:
CHEMICAL BANK, as Agent
By:_______________________
Name:
Title:
-4-
<PAGE>
EXHIBIT I
FORM OF COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected [INSERT TITLE OF AUTHORIZED
OFFICER] of Orion Pictures Corporation (the "Borrower");
2. I have reviewed the terms of the Amended and Restated
Credit, Security and Guaranty Agreement dated as of November 1, 1995, as
amended and restated as of June 27, 1996 (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to
time, the "Credit Agreement"), among the Borrower, the Corporate
Guarantors referred to therein, the Lenders referred to therein, and
Chemical Bank as Agent and as Issuing Bank. The financial statements
attached hereto fairly present the financial condition of the Parent and
its Consolidated Subsidiaries, including the Borrower on a consolidated
basis as at the dates indicated. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit
Agreement.
3. The examinations described in paragraph (2) did not
disclose the existence of any condition or event which constitutes an
Event of Default or Default during, or at the end of, the accounting
period covered by the attached financial statements or as of the date of
this Certificate, except as set forth in paragraph (4) below;
4. In the course of the performance of my duties, I have made
such examinations and investigations as are deemed necessary to express
an informed opinion whether any condition or event which would constitute
an Event of Default or Default. As of the date of this Certificate, I
have no knowledge of any such condition or event, except as set forth
below:
Describe below (or in a separate attachment to this
Certificate) the exceptions, if any, to paragraphs (3) and (4) above by
listing, in detail, the nature of each condition or event, the period
during which it has existed and the action which the Borrower has taken,
is taking, or proposes to take, with respect to each such condition or
event:
<PAGE>
________________________________________________________________________
________________________________________________________________________
_________
5. Attached hereto, in reasonable detail, are the
computations and comparisons required to demonstrate in detail compliance
with the provisions of Sections 6.1(g), 6.1(h), 6.16, 6.17, 6.19, 6.21
and 6.23 of the Credit Agreement.
The foregoing certifications, together with the computations
and comparisons set forth in the attachments hereto and the financial
statements attached to this Certificate in support hereof, are made and
delivered this _____ day of __________, pursuant to Section 5.1 of the
Credit Agreement.
ORION PICTURES CORPORATION
By
Name:
Title:
- 2 -
<PAGE>
ATTACHMENTS
1. financial statements; and
2. the computations and comparisons (in reasonable detail)
required to demonstrate compliance with the provisions of Sections
6.1(g), 6.1(h), 6.16, 6.17, 6.19, 6.21 and 6.23 of the Credit Agreement.
- 3 -
<PAGE>
EXHIBIT J
Form of Borrowing Base Certificate
as of ________________
The undersigned (the "Borrower") HEREBY CERTIFIES the following
information as of __________, _____ pursuant to the Amended and Restated
Credit, Security and Guaranty Agreement dated as of November 1, 1995, as
amended and restated as of June 27, 1996 among the Borrower, the
guarantors named therein, the lenders named therein and Chemical Bank as
Agent and as Issuing Bank, as the same may be amended, supplemented or
otherwise modified from time to time (herein called the "Credit
Agreement"), the defined terms therein being herein used with the same
meanings:
ITEM (from detailed Amount Advance
Borrowing
schedules attached) $000'S RATE BASE
(a) Other Receivables
which are guaranteed
by Metromedia{1} ______x 100% =_________
b. Other Receivables
which are supported
by an Acceptable L/C ______x 100% =_________
c. Domestic
Receivables ______x 90% =_________
d. Foreign
Receivables ______x 85% =_________
e. Other Receivables
not included in
item (a) or (b)
_____________________
{1} Not to exceed $20,000,000 in the aggregate
<PAGE>
above{2} ______x 50% =_________
f. Theater Credit ______x 100% =_________
f. Library Credit ______x 50% =_________
g. Domestic Home
Video Credit ______x 50% =_________
h. Domestic Free
TV Credit ______x 50% =_________
i. Domestic Pay
TV Credit ______x 90% =_________
g. Less Amounts
Payable to Third
Parties not Already
Deducted (________)
TOTAL BORROWING BASE{3}
==========
MINUS
Outstanding Term Loans _________
Total outstanding _________
_____________________
{2} Not to exceed $5,000,000 in the aggregate or $250,000 for any obligor
{3} Note: The portion of the Borrowing Base attributable to the Library
Credit, the Domestic Home Video Credit, the Domestic Free TV Credit and
the Domestic Pay TV Credit may not in the aggregate account for more
than 50% of the Borrowing Base at any time prior to December 31, 1999,
40% of the Borrowing Base at any time on or after December 31, 1999 but
prior to December 31, 2000, or 35% at any time on or after December 31,
2000.
-2-
<PAGE>
Availability _________
The Borrower has no reason to believe that the aggregate principal amount
of all Term Loans outstanding as of the date of this certificate would
exceed the Borrowing Base if such Borrowing Base was computed as of the
date of this certificate.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed this day of , ____
ORION PICTURES CORPORATION
By____________________________
Name:
Title:
-3-
<PAGE>
1 / To the extent not already deducted in computing the Total
Borrowing Base, the sum of (i) all amounts payable to third
parties from or with regard to the amounts payable to third
parties from or with regard to the amounts otherwise included in
the Borrowing Base pursuant to (a), (b), or (c) above, including
without limitation remaining acquisition payments, set offs,
profit participations, deferments, residuals, commissions and
royalties and (ii) the outstanding amount of unrecouped
distribution expenses must be subtracted from the Total Borrowing
Base.
<PAGE>
EXHIBIT K
FORM OF BORROWING CERTIFICATE
The undersigned HEREBY CERTIFIES with respect to the Borrowing
to be made on the date indicated below pursuant to the Amended and
Restated Credit, Security and Guaranty Agreement dated as of November 1,
1995, as amended and restated as of June 27, 1996 among Orion Pictures
Corporation (the "Borrower") the Corporate Guarantors named therein, the
Lenders named therein and Chemical Bank as Agent and as Issuing Bank (as
the same may be amended, supplemented or otherwise modified, renewed or
replaced from time to time, the "Credit Agreement"; capitalized terms
used herein and not otherwise defined shall have the meanings set forth
in the Credit Agreement) that:
A. the representations and warranties contained in the Credit
Agreement are true and correct in all material respects on and as of
the date hereof (except to the extent that such representations and
warranties expressly relate to an earlier date) as if such
representations and warranties had been made on and as of the date
hereof;
B. no Revolving Loan Default or Revolving Loan Event of
Default has occurred or is continuing, nor shall any such event
occur by reason of the making of the Loan(s) requested herein; and
C. the Borrower requests [A] Loan(s) on the terms and
conditions as stated in the Credit Agreement and the related Notes:
1. the requested Business Day of the Loan is __________,
____; and
2. the type of Loan(s) requested, the amounts thereof and
the Interest Period(s), if a Eurodollar Loan is requested, are
as follows:
TYPE INTEREST PERIOD AMOUNT
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed this __ day of ____________, ____.
ORION PICTURES CORPORATION
By:
Name:
Title:
-2-
<PAGE>
EXHIBIT L
FORM OF AMENDED AND RESTATED PRIORITY
AND CONTRIBUTION AGREEMENT
This PRIORITY AND CONTRIBUTION AGREEMENT (as the same may be
amended, supplemented or otherwise modified, renewed or replaced from
time to time, the "Agreement") is entered into as of June 27, 1996 by and
among Orion Pictures Corporation (the "Borrower"), Metromedia Company, a
Delaware general partnership ("Metromedia"), John W. Kluge, a general
partner of Metromedia ("Kluge"; together with Metromedia, the "Parent
Guarantors") and the Corporate Guarantors which are party to the Credit
Agreement (as hereinafter defined) (such Corporate Guarantors together
with the Borrower being referred to herein collectively as the
"Contributors" and individually as a "Contributor") for the purpose of
establishing the respective rights and obligations of contribution among
the Parent Guarantors and the Contributors in connection with the Credit
Agreement and the Guaranty (as hereinafter defined). Capitalized terms
used herein and not otherwise defined shall have the meanings set forth
in the Credit Agreement.
RECITALS
WHEREAS, the Contributors have entered into an Amended and
Restated Credit, Security and Guaranty Agreement dated as of November 1,
1995, as amended and restated as of June 27, 1996 with the lenders
referred to therein (the "Lenders") and Chemical Bank, as Agent and as
Issuing Bank (said agreement, as it may be amended, supplemented or
otherwise modified, renewed or replaced from time to time in accordance
with its terms being the "Credit Agreement"), pursuant to which (i) the
Lenders have made available to the Borrower a $300,000,000 five-year
secured credit facility consisting of a term loan of $200,000,000 and a
revolving credit facility of $100,000,000 and (ii) the Corporate
Guarantors have guaranteed the Obligations (such term being used herein
as defined in the Credit Agreement) of the Borrower;
WHEREAS, pursuant to the Credit Agreement, the Contributors have
granted to the Agent for the benefit of the Lenders a security interest
in the Collateral as security for their respective obligations under the
Credit Agreement;
<PAGE>
WHEREAS, pursuant to the Amended and Restated Guaranty Agreement
dated as of the date hereof, issued by each of the Parent Guarantors (the
"Guaranty"), the Parent Guarantors have provided to the Agent for the
benefit of the Lenders, an unconditional guaranty of payment of the
Revolving Credit Loans;
WHEREAS, as a result of the transactions contemplated by the
Credit Agreement, the Contributors and the Parent Guarantors will
benefit, directly and indirectly, from the Obligations and in
consideration thereof desire to enter into this Agreement to allocate
such benefits among themselves and to provide a fair and equitable
arrangement to make contributions in the event (i) any payment is made by
a Contributor or Parent Guarantor under the Credit Agreement or the
Guaranty or to otherwise satisfy any Obligations, or (ii) the Agent (on
behalf of the Lenders) exercises any right of set-off against any
Contributor or Parent Guarantor or recourse against any of the Collateral
owned by a Contributor (such payment or recourse being referred to herein
as a "Contribution");
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Contributors and the Parent Guarantors hereby agree as
follows:
SECTION 1. CONTRIBUTION. In the event any Parent Guarantor or
Contributor makes any Contribution, such Parent Guarantor or Contributor
shall be entitled to a contribution from certain other Contributors for
all payments, damages and expenses incurred by such Parent Guarantor or
Contributor in discharging any of the Obligations, in the manner and to
the extent set forth in this Agreement. The amount of any Contribution
under this Agreement shall be equal to the payment made by such Parent
Guarantor or Contributor pursuant to the Credit Agreement or Guaranty or
the fair saleable value of the Contributor's portion of the Collateral
against which recourse is exercised, and shall be determined as of the
date on which such payment is made or recourse is exercised, as the case
may be.
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<PAGE>
SECTION 2. PARENT PAYMENT. In the event that either Parent
Guarantor makes a Contribution (a "Parent Payment"):
(a) each of the Contributors hereby acknowledges that each
Parent Guarantor shall be fully subrogated to the extent of such
Parent Payment to all of the rights and remedies (including
without limitation all of the security interests) of the Agent and
the Lenders under all of the Fundamental Documents against each of
the Contributors; and
(b) each of the Contributors agrees that it is jointly and
severally liable to reimburse each Parent Guarantor in full,
(together with interest calculated in accordance with the Credit
Agreement) for any Parent Payment without regard to any rights
(including, without limitation, those rights provided in this
Agreement) that such Contributor may have against any other
Contributor of the Obligations which might otherwise limit such
Contributor's joint and several liability to reimburse each Parent
Guarantor in full.
SECTION 3. PRIORITY OF PARENT GUARANTOR. Each of the
Contributors hereby agrees that all of the rights of each Parent
Guarantor referred to in this Agreement shall have priority over any
right of any Contributor, whether direct or indirect, by contribution,
subrogation, reimbursement, indemnification or otherwise, to demand any
payment, contribution or reimbursement whatsoever from any other
Contributor until such time as any and all Parent Payments have been
repaid to each Parent Guarantor in full and neither Parent Guarantor has
any further obligations under the Parent Guaranty, and until such time as
the Contributors shall not be entitled to exercise any such rights
against any other Contributor. The forgoing shall not prevent the making
of any payment otherwise permitted under the Fundamental Documents,
including, without limitation, any Restricted Payment otherwise permitted
thereunder.
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<PAGE>
SECTION 4. NO DUTY TO CONTRIBUTOR. Except for duties
expressly stated to be applicable to the Agent and the Lenders under the
Fundamental Documents and non-waivable, mandatory duties imposed by law,
each of the Contributors hereby acknowledges and agrees that (i) neither
of the Parent Guarantors has any duties to any Contributor with respect
to the method, manner and timing of the exercise or nonexercise of any of
such Parent Guarantor's rights to recover payment of any Parent Payment
and (ii) to the extent that any such duties may exist, they are hereby
waived.
SECTION 5. PARENT GUARANTOR'S RIGHT OF SET-OFF. In the
event that either Parent Guarantor makes any Parent Payment, each Parent
Guarantor is hereby irrevocably authorized by each Contributor at any
time and from time to time without notice to such Contributor, any such
notice being hereby waived by such Contributor, to set off and
appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held
or owing by either Parent Guarantor to or for the credit or the account
of such Contributor, or any part thereof in such amounts as either Parent
Guarantor may elect, on account of the liabilities of such Contributor
hereunder or under the Fundamental Documents and claims of every nature
and description of either Parent Guarantor against such Contributor, in
any currency, whether arising hereunder or otherwise, as either Parent
Guarantor may elect, whether or not either Parent Guarantor has made any
demand for payment and although such liabilities and claims may be
contingent or unmatured. Each Parent Guarantor shall notify such
Contributor promptly of any such set-off made by it and the application
made by it of the proceeds thereof; PROVIDED that the failure to give
such notice shall not affect the validity of such set-off and
application. The rights of each Parent Guarantor under this Section 5
are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which either Parent Guarantor may
have against any Contributor.
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<PAGE>
SECTION 6. BENEFIT AMOUNT DEFINED. For purposes of this
Agreement, the "Benefit Amount" of any Contributor as of any date of
determination shall be the net value of the benefits to such Contributor
from extensions of credit made by the Lenders to the Borrower under the
Credit Agreement. Such benefits (collectively, the "Benefits") shall
include, without limitation, benefits of funds constituting proceeds of
Loans which are advanced to a Borrower by the Lenders and which are in
turn advanced or contributed by the Borrower to such Contributor. In the
case of any proceeds of Loans or Benefits advanced or contributed to, or
received by, a Person (an "Owned Entity") any of the equity interests of
which are owned directly or indirectly by a Contributor, the Benefit
Amount of such Contributor with respect thereto shall be that portion of
the net value of the benefits attributable to such proceeds of Loans or
Benefits equal to the direct or indirect percentage ownership of such
Contributor in its Owned Entity.
SECTION 7. CONTRIBUTION OBLIGATION. In the event that any of the
Contributors (a "Corporate Contributor") is required to make a
Contribution:
(a) each such Corporate Contributor hereby waives any and
all rights, whether direct or indirect, or by contribution,
subrogation, reimbursement, indemnification or otherwise, to
demand any payment, contribution or reimbursement whatsoever from
either Parent Guarantor or its successors or assigns under the
Guaranty as a result of such Contribution; and
(b) each other Contributor shall be liable to such Corporate
Contributor in an amount equal to the greater of (A) the product
of (i) a fraction the numerator of which is the Benefit Amount of
such Contributor, and the denominator of which is the total amount
of Obligations and (ii) the amount of Obligations paid by such
Corporate Contributor and (B) 95% of the excess of the fair
saleable value of the property of such Contributor over the total
liabilities of such Contributor
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<PAGE>
(including the maximum amount
reasonably expected to become due in respect of contingent
liabilities), as the case may be, determined as of the date on
which the payment by a Corporate Contributor is deemed made for
purposes of this Agreement or any recourse is exercised against a
Corporate Contributor's portion of the Collateral, as the case may
be (giving effect to all payments made by other Corporate
Contributors and to the exercise of recourse against any other
Corporate Contributor's portion of the Collateral as of such date
in a manner to maximize the amount of such contributions).
SECTION 8. ALLOCATION AMONG MULTIPLE CORPORATE CONTRIBUTORS. In
the event that at any time there exists more than one Corporate
Contributor with respect to any Contribution (in any such case, the
"Applicable Contribution"), then payment from other Corporate
Contributors pursuant to this Agreement shall be allocated among such
Corporate Contributors in proportion to the total amount of the
Contribution made for or on account of the Borrower by each such
Corporate Contributor pursuant to the Applicable Contribution. In the
event that at any time any Contributor pays an amount under this
Agreement in excess of the amount calculated pursuant to clause (b)(A) of
Section 7 hereof, that Contributor shall be deemed to be a Corporate
Contributor to the extent of such excess and shall be entitled to
contribution from the other Contributors in accordance with the
provisions of this Agreement.
SECTION 9. SUBROGATION. Any payments made hereunder by the
Borrower shall be credited against amounts payable by the Borrower
pursuant to any subrogation rights of the Contributors which received the
payments under this Agreement.
SECTION 10. PRESERVATION OF RIGHTS. This Agreement shall not
limit any right which any Contributor may have against any other Person
which is not a party hereto.
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<PAGE>
SECTION 11. SUBSIDIARY PAYMENT. The amount of contribution
payable under this Agreement by any Contributor shall be reduced by the
amount of any contribution paid hereunder by a guarantor of such
Contributor.
SECTION 12. EQUITABLE ALLOCATION. If as a result of any
reorganization, recapitalization, or other corporate change in the
Borrower or any Affiliate or guarantor of the Borrower, or as a result of
any amendment, waiver or modification of the terms and conditions
governing the Credit Agreement or the Obligations, or for any other
reason, the contributions under this Agreement become inequitable as
between the Corporate Guarantors, the parties hereto shall promptly
modify and amend this Agreement to provide for an equitable allocation of
the contributions as between the Corporate Guarantors. Any of the
foregoing modifications and amendments shall be in writing and signed by
all parties hereto.
SECTION 13. ASSET OF PARTY TO WHICH CONTRIBUTION IS OWING. The
parties hereto acknowledge that the right to contribution hereunder shall
constitute an asset in favor of the party to which such contribution is
owing.
SECTION 14. SUBORDINATION. No payments payable by a Contributor
pursuant to the terms hereof shall be paid until all Obligations then due
and payable by the Borrower to any Lender, are paid in full in cash and
the Commitments are terminated. Nothing contained in this Agreement
shall affect the Obligations or the obligations of any party hereto to
any Lender under the Credit Agreement or any other Fundamental Document.
SECTION 15. NON-EXCLUSIVITY. Notwithstanding anything in this
Agreement to the contrary, the rights accorded to each Parent Guarantor
hereunder shall be in addition to, and not in lieu of, any rights that
either Parent Guarantor may have to be reimbursed for all Parent Payments
at common law, in equity, by separate agreement or otherwise; provided,
that none of such rights may be exercised until the Obligations have been
fully satisfied, and all such rights are subject to the terms and
provisions of the Fundamental Documents.
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<PAGE>
SECTION 16. CONTINUED EFFECTIVENESS. The rights of each of the
Parent Guarantor under this Agreement shall continue to be effective, or
be reinstated, as the case may be, if any payment made hereunder, or any
part thereof, on account of any of the Obligations is at any time
rescinded or at any time must otherwise be restored or returned by either
of the Parent Guarantors upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any Contributor, or upon or as a result
of the appointment or a receiver, intervenor or conservator of, or
trustee or similar officer for, any Contributor or any substantial part
of their property, or otherwise, all as though such payments had not been
made.
SECTION 17. SEVERABILITY. Any provision of this 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 18. SUCCESSORS AND ASSIGNS; AMENDMENTS. This Agreement
shall be binding upon each party hereto and its respective successors and
assigns and shall inure to the benefit of the parties hereto and their
respective successors and assigns, and in the event of any transfer or
assignment of rights by a Contributor, the rights and privileges herein
conferred upon that Contributor shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and
condition hereof. Each reference herein to any party hereto shall be
deemed to include its successors and assigns, all of whom shall be bound
and benefited by the provisions of this Agreement. Each Contributor
agrees to cause any other guarantor or other obligor on all or any
portion of the obligations guaranteed by the Parent Guarantor which is
controlled by any Contributor or which becomes such a guarantor or
obligor with the cooperation of any Contributor to enter into an
agreement identical to this one with such other guarantor or obligor
being defined as a "Contributor". Except as specifically required under
Section 12 and as contemplated
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<PAGE>
by the Instrument of Assumption and
Joinder, this Agreement shall not be amended without the prior written
consent of the Required Lenders.
SECTION 19. TERMINATION. This Agreement shall remain in effect
and shall not be terminated until the Credit Agreement, all amounts owed
to the Parent Guarantors and this Agreement have been discharged or
otherwise satisfied in accordance with its respective terms.
SECTION 20. CHOICE OF LAW. THIS AGREEMENT AND ANY INSTRUMENT OR
AGREEMENT REQUIRED HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
SECTION 21. COUNTERPARTS. This Agreement, and any modifications
or amendments hereto, may be executed in any number of counterparts, each
of which when so executed and delivered shall constitute an original for
all purposes, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 22. EFFECTIVENESS. This Agreement shall become effective
as to any party upon the execution hereof by such party and delivery of
its executed counterpart to the Agent.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first written above.
ORION PICTURES CORPORATION
By_________________________________
Name:
Title:
CORPORATE GUARANTORS:
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<PAGE>
BRIGHTON PRODUCTIONS, INC.
BUCKMINSTER MUSIC LIMITED
DONNA MUSIC PUBLICATIONS
F.P. PRODUCTIONS
MUSICWAYS, INC.
OPC MUSIC PUBLISHING, INC.
ORION HOME ENTERTAINMENT
CORPORATION
ORION MUSIC PUBLISHING, INC.
ORION PICTURES DISTRIBUTION
(CANADA) INC.
ORION PICTURES DISTRIBUTION
CORPORATION
ORION PRODUCTIONS, INC.
ORION TV PRODUCTIONS, INC.
MCEG STERLING ENTERTAINMENT
MCEG STERLING PRODUCTIONS
MCEG STERLING DEVELOPMENT
MCEG STERLING COMPUTER SERVICES
By_____________________________
Name:
Title:
Address: 1888 Century Park East
Los Angeles, CA 90067
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<PAGE>
PARENT GUARANTORS:
METROMEDIA COMPANY, a general
partnership
By:____________________________
Name:
Title:
_______________________________
JOHN W. KLUGE
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<PAGE>
EXHIBIT M
FORM OF AMENDED AND RESTATED GUARANTY AGREEMENT
AMENDED AND RESTATED GUARANTY AGREEMENT,
dated as of November 1, 1995 as amended and
restated as of June 27, 1996 (as the same
may be further amended from time to time,
the "Guaranty Agreement") among (i) JOHN W.
KLUGE, an individual residing at c/o
Metromedia Company, 215 E. 67th Street, New
York, NY 10021 ("Kluge"); (ii) METROMEDIA
COMPANY, a Delaware general partnership
("Metromedia"; together with Kluge, the
"Guarantors" or individually, a
"Guarantor") and (iii) CHEMICAL BANK, a New
York banking corporation, as agent for the
Lenders referred to below (in such
capacity, the "Agent").
Pursuant to the Amended and Restated Credit, Security and
Guaranty Agreement dated as of November 1, 1995 as amended and restated
as of June 27, 1996 (as the same may be further amended, supplemented, or
otherwise modified, renewed or replaced from time to time, the "Credit
Agreement") among Orion Pictures Corporation, a Delaware corporation (the
"Borrower"), the Corporate Guarantors referred to therein, the Lenders
referred to therein and Chemical Bank, as Issuing Bank and Agent, the
Lenders have agreed to make Term Loans to the Borrower in an aggregate
principal amount equal to $200,000,000 and to make Revolving Credit Loans
to the Borrower in an aggregate principal amount outstanding at any one
time not in excess of $100,000,000. Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the Credit
Agreement.
As an inducement to the Lenders to make the Revolving Credit
Loans and issue Letters of Credit to the Borrower, the Guarantors have
agreed to guaranty such
<PAGE>
obligations of the Borrower to the extent and in
accordance with the terms hereof.
Therefore, for good and valuable consideration, the receipt of
which is hereby acknowledged by the Guarantors, the parties hereto agree
as follows:
1. GUARANTY
SECTION 1.` GUARANTY. (a) The Guarantors, jointly and
severally, unconditionally and irrevocably guarantee the due and punctual
payment by the Borrower, subject to Section 4.1, of all principal of and
interest on the Revolving Credit Loans made and to be made by the Lenders
to the Borrower, as and when such
amounts shall become due and payable whether by scheduled maturity,
acceleration or otherwise and any extensions or renewals thereof,
reimbursement obligations in respect of Letters of Credit, related costs
and attorney's fees, and all other monetary obligations of the Borrower
to the Lenders, the Agent or the Issuing Bank under the Credit Agreement
which directly relate or are properly allocable to the Revolving Credit
Loans or the Letters of Credit (the "Guaranteed Obligations"). To the
extent any amount is not clearly allocable to the Revolving Credit Loans
or the Letters of Credit, the Agent shall allocate such amounts pro-rata
based upon the then outstanding Term Loans and Revolving Credit Loans and
L/C Exposure. The Guaranteed Obligations shall not include the Term
Loans or interest, fees and expenses payable or allocable to on the Term
Loan.
(b) In furtherance of the provisions of this Guaranty
Agreement, and not in limitation of any other right which the Lenders may
have at law or in equity against the Borrower or any other guarantor of
the Guaranteed Obligations, upon failure of the Borrower to pay any of
the Guaranteed Obligations 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 Agent
on behalf of Lenders, forthwith pay or cause to be paid to the Agent on
behalf of Lenders in cash an amount equal to the unpaid balance of the
Guaranteed Obligations then due and payable, subject always to the
limitation set forth in Section 4.1 hereof.
(c) Each Guarantor, to the extent permitted by applicable law,
waives presentation to, demand for payment from and protest to the
Borrower and also waives notice of protest for nonpayment, notice of
acceleration and notice of intent to accelerate. The obligations of each
Guarantor hereunder shall not be affected by (i) the failure of the Agent
or any Lender to assert any claim or demand or to
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<PAGE>
enforce any right or
remedy against the Borrower or any other guarantor of the Guaranteed
Obligations under the provisions of the Credit Agreement or any other
agreement or otherwise; (ii) any extension or renewal of any provision
hereof or thereof; (iii) any rescission, waiver, compromise,
acceleration, amendment or modification of any of the terms or provisions
of the Credit Agreement, the Revolving Credit Notes or any other
agreement; (iv) the release, exchange, waiver or foreclosure of any
security held by the Agent for the Guaranteed Obligations or any of them
or (v) the failure of the Agent or any Lender to exercise any right or
remedy against any other guarantor of the Guaranteed Obligations.
Notwithstanding
the foregoing, the consent of Metromedia shall be required prior to any
written amendment, waiver or modification to the Credit Agreement.
(d) Each Guarantor further agrees that this guaranty is a
continuing guaranty and constitutes a guaranty of performance and of
payment when due and not just of collection, and waives, to the extent
permitted by applicable law, any right to require that any resort be had
by the Agent or the Lenders to any security held for payment of the
Guaranteed Obligations or to any balance of any deposit, account or
credit on the books of the Agent or any Lender in favor of the Borrower
or any other guarantor or to any other person.
(e) Each Guarantor hereby expressly assumes all
responsibilities to remain informed of the financial condition of the
Borrower and each other guarantor of the Guaranteed Obligations and any
circumstances affecting the Collateral or the ability of the Borrower to
perform under the Credit Agreement.
(f) This guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Guaranteed Obligations, the
Revolving Credit Notes or any other instrument evidencing any of the
Guaranteed Obligations, or by the existence, validity, enforceability,
perfection or extent of any collateral therefor or by any other
circumstance relating to the Guaranteed Obligations which might otherwise
constitute a defense to the guaranty under this Guaranty Agreement. The
Agent makes no representation or warranty in respect to any such
circumstances nor has any duty or responsibility whatsoever to the
Guarantors in respect to the management and maintenance of the Guaranteed
Obligations or the Collateral.
SECTION 1.2 NO IMPAIRMENT OF GUARANTY. The obligations of
each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for
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<PAGE>
any reason, including, without
limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense (other than payment
of the Guaranteed Obligations) or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed 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 Agent or any Lender to assert any claim or
demand or to enforce any remedy hereunder or under the Credit Agreement
or any other agreement, by any waiver or modification of any provision
thereof, by any default, failure, or delay, willful or otherwise, in the
performance of the Guaranteed 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 the Guarantor or would
otherwise operate as a discharge of the Guarantor as a matter of law,
unless and until the Guaranteed Obligations are paid in full.
SECTION 1.3 CONTINUATION AND REINSTATEMENT, ETC. Each
Guarantor further agrees that its or his, as the case may be, 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 principal of or
interest on any Obligation is rescinded or must otherwise be restored by
the Agent upon the bankruptcy or other reorganization of the Borrower or
any other guarantor of the Guaranteed Obligations or otherwise.
SECTION 1.4 SUBROGATION. Subject to the prior final and
indefeasible payment in full of all Obligations and to the extent of
payments received by the Agent from a Guarantor on the Guaranteed
Obligations, such Guarantor shall be subrogated to the rights of the
Agent and the Lenders to receive payments or distributions of cash,
property or securities of the Borrower applicable to the Obligations;
PROVIDED, however, that all such rights of subrogation shall be
subordinated and junior in right of payment to the prior payment in full
of the Obligations to the Agent and the Lenders in the manner and to the
extent set forth in the Subordination Agreement, dated the date hereof,
attached hereto as Exhibit 1 and the Priority and Contribution Agreement.
2. REPRESENTATIONS AND WARRANTIES
Each Guarantor makes the following representations and
warranties to the Lenders, all of which shall survive the execution and
delivery of the Revolving Credit Notes and this Guaranty Agreement and
the making of the loans evidenced and to be evidenced by the Revolving
Credit Notes:
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<PAGE>
(i) Metromedia is a Delaware general partnership whose general
partners are Kluge and Stuart Subotnick.
(ii) Metromedia has been duly organized and is validly
existing in good standing under the laws of its jurisdiction of
organization.
(iii) The execution, delivery and performance of this
Guaranty Agreement by the Guarantors (a) in the case of Metromedia,
has been duly authorized by all necessary partnership action, (b)
will not violate, or involve any of the Lenders in a violation of,
any provision of applicable law or any order of any governmental
authority or any judgment of any court applicable to the Guarantor
his or its property, as the case may be, (c) will not violate any
indenture, any agreement for borrowed money, any bond, note or other
similar instrument or any other material agreement to which any
Guarantor is a party or by which any Guarantor or any of its or his,
as the case may be, property is bound, (d) 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, any such indenture, agreement,
bond, note, instrument or other material agreement and (e) will not
result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any property or assets of
any Guarantor other than pursuant to this Guaranty.
(iv) This Guaranty Agreement constitutes the legal, valid and
binding obligation of the Guarantors, enforceable in accordance with
its terms, subject (a) as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency and other laws
affecting creditors' rights generally and to moratorium laws from
time to time in effect, (b) to general equitable principles which
may limit the right to obtain the remedy of specific performance and
(c) the qualification that the enforceability of indemnification
provisions may be limited by applicable federal and state securities
laws, rules and regulations.
(v) The Guarantors will realize a direct economic benefit as
a result of the Loans being made to the Borrower pursuant to the
Credit Agreement.
(vi) The net worth certificate as at December 31, 1995, in
the form which one of the Guarantors has previously provided to the
Lenders,
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<PAGE>
fairly presents the minimum net worth of such Guarantor as
at such date.
3. COVENANT
SECTION 3.1 NET WORTH CERTIFICATE. The Guarantors hereby
agree to deliver to the Agent, within 90 days after the end of each
fiscal year of the Borrower, a net worth certificate in the form
previously delivered to the Lenders, certifying that Metromedia or Kluge
have a net worth of at least $1,000,000,000.
4. LIMITATION ON GUARANTORS' LIABILITY
SECTION 4.1 LIMITATION ON GUARANTORS' LIABILITY.
(a) The maximum liability of the Guarantors on any date pursuant to this
Guaranty shall never exceed the sum of (i) the amount, if any, by which
the Guaranteed Obligations incurred or accrued prior to the occurrence of
any Event of Default which is continuing on such date exceeds on such
date the amount by which the Borrowing Base exceeds the outstanding
principal amount of the Term Loans (together with all related interest,
fees and expenses) plus (ii) all principal of and interest on any
Revolving Credit Loans made after the occurrence of any Event of Default
which is continuing on such date and any extensions or renewals thereof,
reimbursement obligations in respect of Letters of Credit issued after
the occurrence of any Event of Default which is continuing on such date,
Commitment Fees with respect to the Guaranteed Commitment which accrue
after the occurrence of any Event of Default which is continuing on such
date, related costs and attorney's fees, and all other monetary
obligations of the Borrower to the Lenders, the Agent or the Issuing Bank
under the Credit Agreement which directly relate or are properly
allocable to Revolving Credit Loans made, or Letters of Credit issued,
after the occurrence of any Event of Default which is continuing on such
date plus (iii) interest on all of the foregoing at the rate of interest
specified in Section 2.9(a) of the Credit Agreement from the time a
written request is made for payment hereunder until receipt by the Agent
on behalf of the Lenders of payment in full in cash; PROVIDED HOWEVER,
that the sum of the Guaranteed Obligations included in the foregoing
clause (i) plus the combined principal amount of Revolving Credit Loans
and reimbursement obligations in respect of Letters of Credit which are
included in the foregoing clause (ii) shall never exceed $100,000,000.
(b) In addition, the maximum liability of the Guarantors
pursuant to Section 1.1 shall be permanently reduced by an amount equal
to 100% of any additional equity investment or loan (other than loans
identified as Parent
-6-
<PAGE>
Line of Credit Loans in accordance with the
definition thereof) made by the Parent in or to the Borrower on or after
the Closing Date; provided, however, that the maximum liability of the
Guarantors may not be reduced by more than $50,000,000 pursuant to this
Section 4.1(b)
5. MISCELLANEOUS
SECTION 5.1 NOTICES. Notices and other communications
provided for herein shall be in writing and shall be delivered or mailed
(or if by telecopier, delivered by such equipment) addressed, if to the
Agent, to it at 270 Park Avenue, New York, New York 10017, Attn: John J.
Huber, III, Telecopy No.: (212) 270-4711, with a copy to Chase
Securities, Inc., 1800 Century Park East, Suite 400, Los Angeles,
California 90067, Attn: Kenneth R. Wilson, Telecopy No.: (310) 788-5628
or if to Metromedia, to it at One Meadowlands Plaza, East Rutherford, New
Jersey 07073, Attn: Arnold L. Wadler, Telecopy No.: (201) 531-2803, or if
to Kluge, to him at c/o Metromedia Company, 215 E. 67th Street, New York,
NY 10021 or such other address as such party may from time to time
designate by giving written notice to the other party hereunder. All
notices and other communications given to any party hereto in accordance
with the provisions of this Guaranty 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 when receipt is acknowledged, if by telecopier, in each
case addressed to such party as provided in this Section 5.1 or in
accordance with the latest unrevoked written direction from such party.
SECTION 5.2 SUCCESSORS. Each reference herein to a party
hereto shall be deemed to include their respective successors, assigns,
heirs, executors, administrators and legal representatives including but
not by way of limitation, any party in whose favor the provisions of the
Revolving Credit Notes shall inure, all of whom shall be bound by the
provisions of this Guaranty Agreement.
SECTION 5.3 SERVICE OF PROCESS. EACH GUARANTOR (I) HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE COURTS OF THE STATE
OF NEW YORK IN NEW YORK COUNTY AND TO THE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE
PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED
UPON THIS GUARANTY AGREEMENT, OR THE SUBJECT MATTER HEREOF BROUGHT BY THE
AGENT OR ITS SUCCESSORS OR ASSIGNS AND (II) HEREBY WAIVES, AND AGREES NOT
TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT HE OR IT, AS THE CASE MAY BE,
IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE
-7-
<PAGE>
ABOVE-NAMED COURTS,
THAT HIS OR ITS, AS THE CASE MAY BE, 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 GUARANTY AGREEMENT OR THE SUBJECT
MATTER HEREOF OR THEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND
(III) HEREBY AGREES NOT TO ASSERT ANY OFFSETS OR COUNTERCLAIMS (OTHER
THAN COMPULSORY COUNTERCLAIMS) IN ANY SUCH ACTION, SUIT OR PROCEEDING.
EACH GUARANTOR HEREBY CONSENTS TO SERVICE OF PROCESS BY CERTIFIED MAIL AT
THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN, AND AGREES THAT THE
SUBMISSION TO JURISDICTION AND THE CONSENT TO SERVICE OF PROCESS BY MAIL
IS MADE FOR THE EXPRESS BENEFIT OF THE AGENT AND THE LENDERS. FINAL
JUDGMENT AGAINST ANY GUARANTOR IN ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN OTHER JURISDICTIONS (X) BY
SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF
WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF ANY
INDEBTEDNESS OR LIABILITY OF SUCH GUARANTOR THEREIN DESCRIBED OR (Y) IN
ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER
JURISDICTION; PROVIDED, HOWEVER, THAT THE AGENT MAY AT ITS OPTION BRING
SUIT OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST A GUARANTOR OR ANY
OF HIS OR ITS, AS THE CASE MAY BE, ASSETS IN ANY STATE OR FEDERAL COURT
OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE SUCH GUARANTOR OR
SUCH ASSETS MAY BE FOUND.
SECTION 5.4 GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
SECTION 5.5 NO WAIVER, ETC. Neither a failure nor a delay on
the part of the Agent in exercising any right, power or privilege under
this Guaranty Agreement shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
of any right, power or privilege. The rights, remedies and benefits of
the Agent herein expressly specified are cumulative and not exclusive of
any other rights, remedies or benefits which it may have under this
Guaranty Agreement, at law, in equity, by statute, or otherwise.
SECTION 5.6 MODIFICATION, ETC. No modification, amendment or
waiver of any provision of this Guaranty Agreement, nor the consent to
any departure by a Guarantor therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Agent and the
Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or
demand on a Guarantor in any case shall
-8-
<PAGE>
entitle such Guarantor to any
other or further notice or demand in the same, similar or other
circumstances.
SECTION 5.7 SEVERABILITY. If any one or more of the
provisions contained in this Guaranty Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall in no
way be affected or impaired thereby.
SECTION 5.8 HEADINGS. Section headings used herein are for
convenience of reference only and are not to affect the construction of,
or be taken into consideration in interpreting, this Guaranty Agreement.
SECTION 5.9 WAIVER OF JURY TRIAL. TO THE EXTENT NOT
PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH GUARANTOR
HEREBY WAIVES, AND COVENANTS THAT HE OR IT, AS THE CASE MAY BE, 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 GUARANTY AGREEMENT OR
THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH GUARANTOR
ACKNOWLEDGES THAT HE OR IT, AS THE CASE MAY BE, HAS BEEN INFORMED BY THE
AGENT THAT THE PROVISIONS OF THIS SECTION 5.9 CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH THE LENDERS HAVE RELIED, ARE RELYING AND WILL RELY
IN MAKING THE LOANS EVIDENCED BY THE REVOLVING CREDIT NOTES AND ENTERING
INTO THIS GUARANTY AGREEMENT. THE AGENT MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION 5.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF EACH GUARANTOR TO THE WAIVER OF HIS OR ITS, AS THE CASE MAY
BE, RIGHTS TO TRIAL BY JURY.
IN WITNESS WHEREOF, each of the Guarantor and the Agent has
caused this Guaranty Agreement to be executed by its duly authorized
officer, all as of the date first written above.
METROMEDIA COMPANY, a general
partnership
By:___________________________
Name:
Title:
-9-
<PAGE>
______________________________
JOHN W. KLUGE
Executed by the Agent CHEMICAL BANK
in New York, New York
By:____________________________
Name:
Title:
-10-
<PAGE>
EXHIBIT 1
FORM OF AMENDED AND RESTATED SUBORDINATION AGREEMENT
See Exhibit E-1 to Credit Agreement
<PAGE>
EXHIBIT N
FORM OF INSTRUMENT OF ASSUMPTION AND JOINDER
Instrument of ASSUMPTION AND JOINDER AGREEMENT dated as of
_________, ____ (the "Assumption Agreement") made by [INSERT NAME OF
CREDIT PARTY] a [INSERT STATE OF INCORPORATION] corporation ("[INSERT
ABBREVIATED NAME ["NAME"] OF CREDIT PARTY]") in favor of the lenders (the
"Lenders") referred to in that certain Amended and Restated Credit,
Security and Guaranty Agreement dated as of November 1, 1995, as amended
and restated as of June 27, 1996 (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to
time, the "Credit Agreement"; capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Credit
Agreement) among Orion Pictures Corporation, a Delaware corporation (the
"Borrower"), the Corporate Guarantors referred to therein, the Lenders
and Chemical Bank, as Agent and as Issuing Bank.
W I T N E S S E T H
[NAME] [EITHER (I) IS A RECENTLY FORMED [INSERT STATE OF
INCORPORATION] CORPORATION OR (II) A FORMERLY INACTIVE SUBSIDIARY] and is
a Subsidiary of the Borrower. Pursuant to Section 5.20 of the Credit
Agreement, [NAME] is required to execute this document (as a [EITHER (I)
NEWLY FORMED SUBSIDIARY OF THE BORROWER OR (II) A FORMERLY INACTIVE
SUBSIDIARY OF THE BORROWER]).
NOW, THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt of which is hereby acknowledged,
[NAME] hereby agrees as follows:
1. ASSUMPTION AND JOINDER.
(1) [NAME] hereby expressly confirms that it has assumed,
and hereby agrees to perform and observe, each and every one of the
covenants, rights, promises, agreements, terms, conditions, obligations,
appointments, duties and liabilities of (i) a Corporate Guarantor under
the Credit Agreement, the Notes and all the other Fundamental Documents,
(ii) a Contributor (as such term is defined in the Priority and
Contribution Agreement) under the Priority and Contribution Agreement and
(iii) a Grantor
<PAGE>
(as such term is defined in the Copyright Security
Agreement) under the Copyright Security Agreement. By virtue of the
foregoing, [NAME] hereby accepts and assumes any liability of (x) a
Corporate Guarantor and/or a Credit Party related to each representation
or warranty, covenant or obligation made by a Corporate Guarantor and/or
a Credit Party in the Credit Agreement or any other document and hereby
expressly affirms, on the date hereof, for the benefit of the Lenders,
each of such representations, warranties, covenants and obligations, (y)
a Contributor related to each covenant or obligation made by a
Contributor in the Priority and Contribution Agreement and hereby
expressly affirms, on the date hereof, each of such covenants and
obligations and (z) a Grantor related to each covenant or obligation made
by a Grantor in the Copyright Security Agreement and hereby expressly
affirms, on the date hereof, each of such covenants and obligations.
(2) All references to the term "Corporate Guarantor" or
"Credit Party" in the Credit Agreement or any other Fundamental Document,
or in any document or instrument executed and delivered or furnished, or
to be executed and delivered or furnished, in connection therewith shall
be deemed to be references to, and shall include, [NAME].
(3) All references to the term "Contributor" in the
Contribution Agreement, or in any document or instrument executed and
delivered or furnished, or to be executed and delivered or furnished, in
connection therewith shall be deemed to be references to, and shall
include, [NAME].
(4) All references to the term "Grantor" in the Copyright
Security Agreement or any Copyright Security Agreement Supplement, or in
any document or instrument executed and delivered or furnished, or to be
executed and delivered or furnished, in connection therewith shall be
deemed to be references to, and shall include, [NAME].
2. REPRESENTATIONS AND WARRANTIES. [NAME] hereby represents
and warrants to the Lenders as follows:
(1) [NAME] has the requisite corporate power and
authority to enter into this Assumption Agreement and to perform its
obligations hereunder and under the Credit Agreement, the Priority and
Contribution Agreement, the Copyright Security Agreement and the other
Fundamental Documents. The execution, delivery and performance of this
Assumption Agreement by [NAME] and the performance of its obligations
under the Credit Agreement and the other Fundamental Documents have been
duly authorized by the Board of Directors of [NAME] and no other
corporate proceedings on
-2-
<PAGE>
the part of [NAME] are necessary to authorize
the execution, delivery or performance of this Assumption Agreement, the
transactions contemplated hereby or the performance of its obligations
under the Credit Agreement or any other Fundamental Document. This
Assumption Agreement has been duly executed and delivered by [NAME].
This Assumption Agreement and the Credit Agreement each constitutes a
legal, valid and binding obligation of [NAME], enforceable against it in
accordance with its terms, subject as to the enforcement of remedies, to
applicable bankruptcy, insolvency and similar laws affecting creditors
rights generally and to general principles of equity.
(2) The representations and warranties set forth in
Article 3 of the Credit Agreement are true and correct on and as of the
date hereof (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 the date hereof.
(3) The authorized capitalization of [NAME], the number
of shares of its capital stock outstanding on the date hereof, and the
ownership of each outstanding capital stock is set forth on Schedule 1
hereto.
(4) On the date hereof [NAME] has not done business, is
not doing business and does not intend to do business other than under
its full corporate name, including, without limitation, under any trade
name or other doing business name and is in good standing in all
jurisdictions where the nature of its properties or business so requires.
(5) The chief executive office of [NAME] is located at
[INSERT ADDRESS] Such office is the place where [NAME] is "located" for
the purpose of the UCC and the Uniform Commercial Code in effect in the
state in which [NAME] is so located, and the place where [NAME] keeps the
records concerning the Collateral on the date hereof. The only places at
which [NAME] regularly keeps any goods included in the Collateral on the
date hereof are the places listed on Schedule 2 hereto.
3. FURTHER ASSURANCES. At any time and from time to time,
upon the Agent's request and at the sole expense of [NAME], [NAME] will
promptly and duly execute and deliver any and all further instruments and
documents and take such further action as the Agent reasonably deems
necessary to effect the purposes of this Assumption Agreement.
-3-
<PAGE>
4. BINDING EFFECT; ASSIGNMENT. This Assumption Agreement
shall be binding upon [NAME] and shall inure to the benefit of the
Lenders and their respective successors and assigns.
5. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE
OF NEW YORK.
-4-
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered by its duly authorized
officer as of the date first above written.
[NAME]
By: ______________________
Name:
Title:
-5-
<PAGE>
SCHEDULE 1
CAPITAL STOCK OF [NAME]
Authorized capitalization:
Number of shares of capital stock
outstanding:
Ownership of the outstanding
capital stock:
<PAGE>
SCHEDULE 2
LOCATION OF COLLATERAL
<PAGE>
EXHIBIT O
FORM OF NOTICE OF ASSIGNMENT
AND IRREVOCABLE INSTRUCTIONS
ORION PICTURES CORPORATION
1888 Century Park East
Los Angeles, CA 90067
As of _____________
[INSERT NAME AND ADDRESS OF ACCOUNT DEBTOR]
Re: [DESCRIBE AGREEMENT WITH ACCOUNT DEBTOR
(THE "AGREEMENT")]
Dear Sir or Madam:
The undersigned has created a security interest in its benefits
and rights to receive payments under the Agreement referred to above, for
the benefit of the Lenders party to that certain Amended and Restated
Credit, Security and Guaranty Agreement dated as of November 1, 1995, as
amended and restated as of June 27, 1996 (as the same may be amended,
supplemented or otherwise modified, renewed or replaced from time to
time, the "Credit Agreement") among Orion Pictures Corporation (the
"Company"), the Corporate Guarantors named therein, the Lenders named
therein and Chemical Bank, as Agent and Issuing Bank.
The Company hereby irrevocably instructs and authorizes you to
pay all monies from time to time owing or to become due from you to us
pursuant to the Agreement as follows:
If by wire transfer, to:
Chemical Bank
Collection Account
for credit to Orion Pictures Corporation
Concentration Account
Account No. 144021927
ABA # 021000128
<PAGE>
If by mail or hand delivery, to:
Orion Pictures
Post Office Box 305050
Newark, New Jersey 07193-5050
This authority and instruction is coupled with an interest and
may not be modified, terminated or revoked without the prior written
consent of the Agent.
Upon the occurrence of an Event of Default (as such term is
defined in the Credit Agreement), the Agent shall have the right to
modify this authority and instruction by written notice to the parties
hereto.
Please signify your acknowledgment hereof by signing and
returning to the Agent at the address below the acknowledgment and
confirmation as set out below.
Very truly yours,
ORION PICTURES CORPORATION
By:___________________________
Name:
Title:
To: Chemical Bank, as Agent
c/o Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178-0060
Attention: Richard S. Petretti, Esq.
WE ACKNOWLEDGE RECEIPT, of the foregoing notice of irrevocable authority
and instruction and undertake to comply with it. We hereby confirm and
agree that all monies owing under the Agreement shall be paid immediately
when they are due subject only to the Agreement between us and the
Company.
Dated this ______ day of ______
-2-
<PAGE>
[NAME OF ACCOUNT DEBTOR]
By:_________________________
Name:
Title:
-3-
<PAGE>
EXHIBIT 10.43
METROMEDIA INTERNATIONAL GROUP, INC./
MOTION PICTURE CORPORATION OF AMERICA
RESTRICTED STOCK PLAN
ARTICLE 1.
PURPOSE
The purpose of the Metromedia International Group,
Inc./Motion Picture Corporation of America Restricted Stock Plan (the
"Plan") is to provide a means through which Metromedia International
Group, Inc. ("Metromedia"), a Delaware corporation, may reward certain
key employees of its Motion Picture Corporation of America subsidiary, a
Delaware corporation and wholly owned subsidiary of Metromedia (the
"Company"), upon whom rest the responsibilities of the successful
administration and management of the Company, and whose contributions to
the welfare of the Company are of importance.
ARTICLE 2.
DEFINITIONS
The following terms shall have the meanings described below
when used in the Plan.
A. "Award" or "Restricted Stock Award" shall refer to
a restricted stock award granted under the Plan.
B. "Common Stock" shall mean the Common Stock of
Metromedia.
C. "Restricted Period" shall mean the period during
which a Restricted Stock Award is being earned, which, unless otherwise
provided herein, shall be over the vesting period set forth in Article
3, Section B.
ARTICLE 3.
RESTRICTED STOCK AWARDS
A. GRANT OF AWARDS. Under the Plan, Awards shall be
granted on the "Adjustment Date" as such term is defined in the
Agreement and Plan of Merger, dated as of May 17, 1996, by and among
Metromedia, MPCA Merger Corp., the Company, Bradley R. Krevoy and Steven
Stabler (the "Merger Agreement"). The number of shares of Common Stock
to be awarded on the Adjustment Date (the "Award Shares") shall be equal
to the quotient of $3,845,000 divided by the Average Closing Price (as
defined in the Merger Agreement). On the Adjustment Date, the following
key employees ("Participants") shall receive the following Awards,
expressed as a percentage of Award Shares. The number of Award Shares
granted shall be rounded to the nearest whole share:
<PAGE>
Page 2
<TABLE>
<CAPTION>
Restricted Stock AWARD
(expressed as percentage of total)
EMPLOYEE
<S> <C>
Dean Shapiro .52
Joanna Rees-Jones .52
Patrick Todd Coe .26
Robert J. Murillo .65
Jeremy Kramer .52
Daniel Ethridge .26
Jodie Adair .39
Jeanette Draper .65
Bradley Jenkel 32.51
Jeffrey Ivers 32.51
Bradley Thomas 19.51
Jed Weintrob 11.70
100.00%
</TABLE>
In the event any of the Participants are not employees of the
Company on the Adjustment Date for a reason other than those set forth
in Article B, the Restricted Stock Award shall be deemed granted and
forfeited. In the event of the forfeiture of any Restricted Stock
Award, the shares of Common Stock subject to such forfeited Award shall
be divided 59.1406% to Bradley R. Krevoy and 40.8594% to Steven Stabler
and delivered to them forthwith free of any restrictions under the Plan.
B. VESTING. Unless otherwise provided herein, each
Restricted Stock Award shall vest over a three-year period from the date
of grant as follows:
1 year from grant 33 1/3%
2 years from grant 66 2/3%
3 years from grant 100%
Notwithstanding the above vesting schedule, vesting shall be
accelerated to 100% and all restrictions on any Restricted Stock Award
of a Participant under the Plan shall terminate upon any of the
following events:
(i) A demotion without cause in the Participant's
Company job title from the job title held by the Participant at the time
of the grant of the Award; or
(ii) 30 days after receipt of a notice to the
Participant and Metromedia accelerating the vesting and terminating any
other restrictions, which notice is signed by Steven Stabler and Bradley
R. Krevoy in their sole and absolute discretion, and while Steven
Stabler and Bradley R. Krevoy are still employed by the Company; or
(iii)Upon the termination of employment of Bradley
R. Krevoy and Steven Stabler from the Company; or
(iv) Upon the satisfaction of such performance
criteria, the combination of time and performance or such other manner
as Metromedia shall determine; or
<PAGE>
Page 3
(v) Termination of employment by reason of death
or disability.
C. RESTRICTIONS. A Restricted Stock Award may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed
of, except by will or the laws of descent and distribution, until the
Award shall have vested in accordance with the vesting schedule or the
vesting schedule shall have been accelerated in accordance with Article
III, Section B.
D. DEATH, DISABILITY AND TERMINATION OF EMPLOYMENT.
Upon termination of a Participant's employment prior to
the end of the Restricted Period for any reason, except for disability
or death, the Participant's unvested portion of the Award shall be
forfeited, and the Participant shall have no right with respect to such
Award, and the shares of Common Stock subject thereto shall be delivered
to Krevoy and Stabler in accordance with Article 3, Section A.
Upon termination of a Participant's employment prior to
the end of the Restricted Period by reason of the Participant's
disability or death, vesting shall be accelerated to 100% and all
restrictions on such Participant's Award under the Plan shall terminate.
E. DELIVERY OF AWARDS.
(i) At the time of Award each Participant shall
receive three share certificates evidencing ownership of one-third of
the shares of Common Stock subject to the Award which share certificates
shall bear the following legend:
"These shares have been issued or transferred subject to a
Restricted Stock Award and are subject to substantial restrictions,
including a prohibition against transfer and a provision requiring
transfer of these shares without payment in the event of termination of
employment of the registered owner under certain circumstances all as
more particularly set forth in the Metromedia International Group,
Inc./Motion Picture Corporation of America Restricted Stock Plan dated
July 2, 1996, a copy of which is on file with the Company. Restrictions
lapse effective ______________."
(ii) Subject to the provisions of subsection (iii)
hereof, after expiration or acceleration of the vesting schedule and
completion of the Restricted Period, such legended share certificates
may be exchanged by the Participant or, in the case of the death of the
Participant, the Participant's beneficiary, or if none, the person or
persons to whom such Participant's rights under the Award are
transferred by will or the laws of descent and distribution or by Krevoy
or Stabler in accord with Article 3, Section A for share certificates
without the legend set forth in (i) above.
(iii)Delivery pursuant to this paragraph E shall
be made in shares of Common Stock except there may be paid in cash the
value of any partial shares of Common Stock and that part of the total
payment determined by the Company to be necessary to satisfy tax
withholding requirements.
<PAGE>
Page 4
F. UNREGISTERED SECURITIES.
To the extent that any shares of Common Stock which are
the subject of an Award are not registered under the Securities Act of
1933, such share certificates shall bear the following additional
legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and neither
these securities, nor any interest therein, may be sold, transferred,
pledged or hypothecated without (i) obtaining an opinion of counsel for
this company, at the expense of the holder hereof, that such sale,
transfer, pledge or hypothecation is exempt from the registration
requirements of the Securities Act of 1933, as amended, or (ii) there
being in effect a registration statement covering the offer and sale of
these securities in accordance with the Securities Act of 1933, as
amended."
ARTICLE 4.
GENERAL PROVISIONS
A. DESIGNATION OF BENEFICIARY. Subject to adoption
of reasonable rules and regulations, each Participant who shall be
granted an Award under the Plan may designate a beneficiary or
beneficiaries and may change such designation from time to time by
filing a written designation of beneficiaries with Metromedia on a form
to be prescribed by it, provided that no such designation shall be
effective unless so filed prior to the death of such Participant.
B. NO RIGHT OF CONTINUED EMPLOYMENT. Neither the
establishment of the Plan, the granting of Awards, nor the payment of
any benefits hereunder nor any action of the Company or of the Board of
Directors or Metromedia shall be held or construed to confer upon any
person any legal right to continue in the employ of the Company or its
subsidiaries, each of which expressly reserves the right to discharge
any employee whenever the interest of any such company in its sole
discretion may so require without liability to such company, except as
to any rights which may be expressly conferred upon such employee under
the Plan.
C. REGISTRATION REQUIREMENT. If Metromedia
determines at any time to register any of its equity securities under
the Securities Act of 1933 (or similar statute then in effect),
Metromedia, at its expense, will include among the securities which it
then registers all stock or securities issued in respect thereof, in
exchange therefor, or in replacement thereof.
D. NEW YORK LAW TO GOVERN. All questions pertaining
to the construction, regulation, validity and effect of the provisions
of the Plan shall be determined in accordance with the laws of the State
of New York.
E. PAYMENTS AND TAX WITHHOLDING. Each Participant
shall provide Metromedia with a written undertaking for the payment of
withholding taxes when due. The delivery of any shares of Common Stock
and the payment of any amount with respect to fractional shares in
respect of an Award shall not be made until the recipient shall have
made satisfactory arrangements for the payments of any applicable
withholding taxes.
<PAGE>
Page 5
ARTICLE 5.
AMENDMENT AND TERMINATION
A. AMENDMENTS, SUSPENSION OR DISCONTINUANCE. The
Board of Directors of Metromedia may amend, suspend or discontinue the
Plan provided, however, that the Board of Directors of Metromedia may
not, without the prior approval of the stockholders of Metromedia, make
any amendment for which stockholder approval is necessary to comply with
any applicable tax or regulatory requirement, including for these
purposes any approval requirement which is a prerequisite for exemptive
relief under Section 16(b) of the Exchange Act, and provided, further,
that no amendment may adversely affect the rights of any person in
connection with an Award previously granted.
EXHIBIT 11
METROMEDIA INTERNATIONAL GROUP, INC.
Computation of Earnings Per Share
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
June 30, June 30,
1996 1995
<S> <C> <C>
Loss Per Share - Primary
Net loss available for Common $(18,850) $(16,714)
Stock and Common Stock equivalents
Common Stock and Common Stock Equivalents (A)
Weighted average common shares outstanding 42,661 20,944
during the period, less stock in treasury
Loss Per Share - Primary $(0.44) $(0.80)
Loss Per Share - Assuming Full Dilution (B)
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1996 1995
<S> <C> <C>
Loss Per Share - Primary
Net loss available for Common $(37,991) $(37,080)
Stock and Common Stock equivalents
Common Stock and Common Stock Equivalents (A)
Weighted average common shares outstanding 42,638 20,939
during the period, less stock in treasury
Loss Per Share - Primary $(0.89) $(1.77)
</TABLE>
Loss Per Share - Assuming Full Dilution (B)
(A) -Common stock equivalents are not included in primary loss per share in
the Three and Six Months Ended June 30, 1996 and 1995 because they would be
anti-dilutive.
(B) -Fully diluted loss per share is not used in the Three and Six Months
Ended June 30, 1996 and 1995 because it is less than primary loss per share.
<PAGE>
EXHIBIT 27
METROMEDIA INTERNATIONAL GROUP, INC.
FINANCIAL DATA SCHEDULE
JUNE 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS FILED AS PART OF
THE QUARTERLY REPORT ON FORM 10-Q AND IS
QUALIFIED IN ITTS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 3,325
<SECURITIES> 0
<RECEIVABLES> 46,135
<ALLOWANCES> (11,951)
<INVENTORY> 53,157
<CURRENT-ASSETS> 96,298
<PP&E> 10,739
<DEPRECIATION> (3,365)
<TOTAL-ASSETS> 573,211
<CURRENT-LIABILITIES> 198,224
<PAGE>
<CAPTION>
<S> <C>
<BONDS> 258,975
0
0
<COMMON> 42,686
<OTHER-SE> 3,090
<TOTAL-LIABILITY-AND-EQUITY> 573,211
<SALES> 68,796
<TOTAL-REVENUES> 68,796
<CGS> 54,834
<TOTAL-COSTS> 88,928
<OTHER-EXPENSES> 137
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (33,823)
<INCOME-TAX> 400
<INCOME-CONTINUING> (37,991)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,991)
<EPS-PRIMARY> (.89)
<EPS-DILUTED> (.89)
</TABLE>
