<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-25308
OVERSEAS FILMGROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3751702
(State or other (I.R.S. Employer
jurisdiction of incorporation or organization) Identification No.)
8800 SUNSET BLVD., THIRD FLOOR, LOS ANGELES, CA 90069
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (310) 855-1199
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
(title of class)
Warrants to Purchase Common Stock
(title of class)
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
--- ---
Indicate by check mark if disclosures of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated herein by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. /x/
The aggregate market value of the voting stock held by non-affiliates of
the Registrant (assuming for these purposes, but without conceding, that all
executive officers and directors are "affiliates" of the Registrant) as of March
24, 1997, (based on the closing sale price on such date as reported on the OTC
Bulletin Board) was $8,065,625.
The number of shares of Common Stock outstanding as of March 31, 1997 was
5,777,778.
DOCUMENTS INCORPORATED BY REFERENCE
NO DOCUMENTS ARE INCORPORATED BY REFERENCE INTO PARTS I, II OR III
<PAGE>
OVERSEAS FILMGROUP, INC. (THE "COMPANY") HEREBY AMENDS ITS ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 IN ORDER TO REFILE TWO EXHIBITS
(EXHIBITS 10.25 AND 10.26 AS DESCRIBED UNDER ITEM 14 SET FORTH BELOW) FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN GRANTED IN ACCORDANCE WITH THE APPLICABLE
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)1. INDEX TO FINANCIAL STATEMENTS
Page(s) in
Form 10-K
---------
Report of Independent Accountants..........................F-1
Consolidated Financial Statements:
Consolidated Balance Sheets - December 31, 1995 and
1996..................................................F-2
Consolidated Statements of Income - Years Ended
December 31, 1994, 1995 and 1996......................F-3
Consolidated Statements of Shareholders' Equity - Years
Ended December 31, 1994, 1995 and 1996................F-4
Consolidated Statements of Cash Flows - Years Ended
December 31, 1994, 1995 and 1996......................F-5
Notes to Consolidated Financial Statements ................F-6
(a)2. INDEX TO FINANCIAL STATEMENTS SCHEDULES
The schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission (the "Commission") are not
required under the related instructions or are
inapplicable, and therefore have been omitted.
(a)3. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Agreement of Merger among the Company, Pre-Merger
Overseas, and Ellen Dinerman Little and Robert B.
Little, dated as of July 2, 1996. Incorporated by
reference to Exhibit 10.7 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
May 31, 1996.
1
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.2 Amendment to Agreement of Merger among the Company,
Pre-Merger Overseas and Ellen Dinerman Little and
Robert B. Little, dated as of September 20, 1996.
Incorporated by reference to Exhibit 10.8 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1996.
3.1 Restated Certificate of Incorporation. Incorporated
by reference to Exhibit 3.1 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
3.2 Bylaws. Incorporated by reference to Exhibit 3.2 to
the Company's Current Report on Form 8-K, dated
October 25, 1996, filed with the Commission on
November 12, 1996.
4.1 Form of Common Stock Certificate. Incorporated by
reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
4.2 Form of Warrant Certificate. Incorporated by
reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-1, Registration No.
33-83624.
4.3 Form of Unit Purchase Option. Incorporated by
reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-1, Registration No.
33-83624.
4.4 Warrant Agreement between Continental Stock Transfer
& Trust Company and the Company. Incorporated by
reference to Exhibit 4.4 to the Company's
Registration Statement on Form S-1, Registration No.
33-83624.
4.5 Letter agreement, dated October 28, 1996, amending
the Unit Purchase Options. Incorporated by
reference to Exhibit 4.5 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
4.6 Form of Warrant issued in the Company's bridge
financing. Incorporated by reference to Exhibit
10.4 to the Company's Registration Statement on Form
S-1, Registration No. 33-83624.
2
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.7 Warrant, dated October 31, 1996, for Jefferson
Capital Group, Ltd. to purchase shares of Common
Stock of the Company. Incorporated by reference to
Exhibit 4.6 to the Company's Current Report on Form
8-K, dated October 25, 1996, filed with the
Commission on November 12, 1996.
10.1 Secured Promissory Note of the Company, dated October
31, 1996, payable to Robert B. Little and Ellen
Dinerman Little. Incorporated by reference to
Exhibit 10.1 to the Company's Current Report on Form
8-K, dated October 25, 1996, filed with the
Commission on November 12, 1996.
10.2 Indemnity Agreement, dated October 31, 1996, between
the Company and Ellen Dinerman Little. Incorporated
by reference to Exhibit 10.2 to the Company's
Current Report on Form 8-K, dated October 25, 1996,
filed with the Commission on November 12, 1996.
10.3 Indemnity Agreement, dated October 31, 1996, between
the Company and Robert B. Little. Incorporated by
reference to Exhibit 10.3 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
10.4 Indemnity Agreement, dated October 31, 1996, between
the Company and William F. Lischak. Incorporated by
reference to Exhibit 10.4 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
10.5 Indemnity Agreement, dated October 31, 1996, between
the Company and Stephen K. Bannon. Incorporated by
reference to Exhibit 10.5 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
10.6 Indemnity Agreement, dated October 31, 1996, between
the Company and Scot K. Vorse. Incorporated by
reference to Exhibit 10.6 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
3
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.7 Indemnity Agreement, dated October 31, 1996, between
the Company and Jeffrey A. Rochlis. Incorporated by
reference to Exhibit 10.7 to the Company's Current
Report on Form 8-K, dated October 25, 1996, filed
with the Commission on November 12, 1996.
10.8 Indemnity Agreement, dated October 31, 1996, between
the Company and Alessandro Fracassi. Incorporated
by reference to Exhibit 10.8 to the Company's
Current Report on Form 8-K, dated October 25, 1996,
filed with the Commission on November 12, 1996.
10.9 Employment Agreement, dated as of October 31, 1996,
between the Company and Ellen Dinerman Little.
Incorporated by reference to Exhibit 10.9 to the
Company's Current Report on Form 8-K, dated October
25, 1996, filed with the Commission on November 12,
1996.
10.10 Employment Agreement, dated as of October 31, 1996,
between the Company and Robert B. Little.
Incorporated by reference to Exhibit 10.10 to the
Company's Current Report on Form 8-K, dated October
25, 1996, filed with the Commission on November 12,
1996.
10.11 Employment Agreement, dated as of October 31, 1996,
between the Company and William F. Lischak.
Incorporated by reference to Exhibit 10.11 to the
Company's Current Report on Form 8-K, dated October
25, 1996, filed with the Commission on November 12,
1996.
10.12 Security Agreement, dated as of October 31, 1996,
between the Company and Ellen Dinerman Little and
Robert B. Little. Incorporated by reference to
Exhibit 10.12 to the Company's Current Report on
Form 8-K, dated October 25, 1996, filed with the
Commission on November 12, 1996.
10.13 Tax Reimbursement Agreement, dated as of October 31,
1996, between the Company, Ellen Dinerman Little,
Robert B. Little and William F. Lischak.
Incorporated by reference to Exhibit 10.13 to the
Company's Current Report on Form 8-K, dated October
25, 1996, filed with the Commission on November 12,
1996.
4
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.14 Promissory Note (the "Insurance Note"), dated
October 31, 1996, payable to Ellen Dinerman Little
and Robert B. Little. Incorporated by reference
to Exhibit 10.14 to the Company's Current Report on
Form 8-K, dated October 25, 1996, filed with the
Commission on November 12, 1996.
10.15 Stockholders' Voting Agreement, dated as of October
31, 1996, by and among the Company, Ellen Dinerman
Little, Robert B. Little, William F. Lischak,
Jeffrey A. Rochlis, Barbara Boyle, the Hoberman
Family Trust, John Hyde, Sparta Partners III,
Stephen K. Bannon, Scot K. Vorse and Gary M. Stein.
Incorporated by reference to Exhibit 10.15 to the
Company's Current Report on Form 8-K, dated October
25, 1996, filed with the Commission on November 12,
1996.
10.16 Lock-Up and Registration Rights Agreement, dated as
of October 31, 1996, between the Company and Ellen
Dinerman Little, Robert B. Little and William F.
Lischak. Incorporated by reference to Exhibit 10.16
to the Company's Current Report on Form 8-K, dated
October 25, 1996, filed with the Commission on
November 12, 1996.
10.17 Non-Competition Agreement, dated as of October 31,
1996, between the Company and Ellen Dinerman Little.
Incorporated by reference to Exhibit 10.17 to the
Company's Current Report on Form 8-K, dated October
25, 1996, filed with the Commission on November 12,
1996.
10.18 Non-Competition Agreement, dated as of October 31,
1996, between the Company and Robert B. Little.
Incorporated by reference to Exhibit 10.18 to the
Company's Current Report on Form 8-K, dated October
25, 1996, filed with the Commission on November 12,
1996.
10.19 Overseas Filmgroup, Inc. 1996 Special Stock Option
Plan and Agreement. Incorporated by reference to
Exhibit 99.1 to the Company's Current Report on Form
8-K, dated October 25, 1996, filed with the
Commission on November 12, 1996.
10.20 Overseas Filmgroup, Inc. 1996 Basic Stock Option and
Stock Appreciation Rights Plan. Incorporated by
reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
5
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.21 Agency Agreement, dated as of December 10, 1993,
between the Company and GKN Securities Corp., and
amendments thereto (without schedules). Incorporated
by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1, Registration No.
33-83624.
10.22 Letter Agreement among certain stockholders of the
Company, the Company and GKN Securities Corp.
(without schedules). Incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement
on Form S-1, Registration No. 33-83624.
10.23 Form of Stock Escrow Agreement between the Company
and Continental Stock Transfer & Trust Company.
Incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-1,
Registration No. 33-83624.
10.24 Letter Agreement regarding administrative support.
Incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement on Form S-1,
Registration No. 33-83624.
10.25 Restated and Amended Syndication Agreement dated as
of October 31, 1996, among Coutts & Co., Berliner
Bank A.G. London Branch, Overseas Filmgroup, Inc.
and Entertainment/Media Acquisition Corporation.
Filed herewith.+
10.26 Video Distribution Agreement dated March 15, 1996,
between the Company and BMG Video. Filed herewith.+
10.27 Loan Out Agreement dated as of March 11, 1996 between
the Company and BLAH, Inc. Incorporated by reference
to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
10.28 Agreement dated as of September 12, 1996, between the
Company and Racing Pictures s.r.l. Incorporated by
reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
10.29 Option Agreement dated as of September 13, 1996,
between Robert B. Little and the Company.
Incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31,
1996.
6
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.30 Overseas Filmgroup Lease Agreement dated April 21,
1987,as amended. Incorporated by reference to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
21 Subsidiaries of the Registrant. Incorporated by
reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
23 Consent of Price Waterhouse LLP. Incorporated by
reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
27 Financial Data Schedule. Incorporated by reference to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
____________
+ Confidential treatment has been granted for portions of such exhibit which
have been filed separately with the Commission pursuant to an application for
confidential treatment.
(b) The following reports on Form 8-K were filed by the Company during the
last quarter of the period covered by this Report.
Current Report on Form 8-K, dated October 25, 1996, filed by the
Company with the Commission on November 12, 1996 relating to the
Merger and the approval and consummation thereof. Such report
included Item 1 (Changes in Control of the Registrant), Item 2
(Acquisition or Disposition of Assets), Item 5 (Other Events) and Item
7 (Financial Statements and Exhibits). Financial Statements of the
business acquired (unaudited financial statements for the six months
ended June 30, 1996 and audited financial statements for the years
ended December 31, 1995 and 1994 of Pre-Merger Overseas) and pro forma
financial information (an unaudited pro forma combined balance sheet
as of June 30, 1996 and unaudited pro forma combined statements of
income for the six months ended June 30, 1996 and the year ended
December 31, 1995) were filed with such Report (with the financial
statements of the business acquired being incorporated by reference
from the Company's definitive proxy statement dated September 25, 1996
filed with the Commission pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended).
(c) See Item 14(a)3 above.
(d) Not applicable.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
OVERSEAS FILMGROUP, INC.
By: /s/ Ellen Dinerman Little
Ellen Dinerman Little,
Co-Chairman of the Board of Directors,
Co-Chief Executive Officer, and President
Dated: August 4, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Ellen Dinerman Little
Ellen Dinerman Little Co-Chairman of the Board of August 4, 1997
Directors, Co-Chief Executive
Officer, and President (Co-Principal
Executive Officer)
/s/ Robert B. Little
Robert B. Little Co-Chairman of the Board of August 4, 1997
Directors and Co-Chief Executive
Officer (Co-Principal Executive
Officer)
/s/ William F. Lischak
William F. Lischak Chief Operating Officer, Chief August 4, 1997
Financial Officer, Secretary, and
Director (Principal Financial and
Accounting Officer)
8
<PAGE>
/s/ Stephen K. Bannon
Stephen K. Bannon Director August 4, 1997
/s/ Alessandro Fracassi
Alessandro Fracassi Director August 4, 1997
/s/ Jeffrey A. Rochlis
Jeffrey A. Rochlis Director August 4, 1997
/s/ Scot K. Vorse
Scot K. Vorse Director August 4, 1997
9
<PAGE>
EXHIBIT 10.25*
*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
SYMBOL "^" HAS BEEN USED IN THE EXHIBIT TO INDICATE WHERE CONFIDENTIAL PORTIONS
OF THE TEXT HAVE BEEN OMITTED FROM THE EXHIBIT AND FILED SEPARATELY, ON A
CONFIDENTIAL BASIS, WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
DATED As October 31,1996
- ------------------------------------------------------------------------------
COUTTS & CO.
and
BERLINER BANK A.G. LONDON BRANCH
and
OVERSEAS FILMGROUP, INC.
and
ENTERTAINMENT/MEDIA ACQUISITION CORPORATION
- ------------------------------------------------------------------------------
RESTATED AND AMENDED
SYNDICATION AGREEMENT
- ------------------------------------------------------------------------------
RICHARDS BUTLER
Beaufort House,
15, St. Botolph Street,
London EC3A 7EE
Telephone: 071-247-6555
Telex: 949494 RBLAW G
Fax: 071-247-5091
Ref: CB/RPSP
<PAGE>
TABLE OF CONTENTS
- -----------------
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 25
4. PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8. CHANGES IN APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . 46
9. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS . . . . . . . . . . . . 48
10. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 76
11. FINANCIAL OBLIGATIONS OF THE BORROWER . . . . . . . . . . . . . . . . 79
12. EXECUTION OF FACILITY LETTERS . . . . . . . . . . . . . . . . . . . . 86
13. THE PRIOR OBLIGATIONS AND EXISTING BORROWINGS . . . . . . . . . . . . 88
14. NATURE OF THE BANKS' RIGHTS AND OBLIGATIONS . . . . . . . . . . . . . 89
15. SECURITY AND APPLICATION OF MONIES . . . . . . . . . . . . . . . . . . 90
16. PROCEDURE FOR FUNDING ADVANCES . . . . . . . . . . . . . . . . . . . . 92
17. AVAILABILITY AND REVIEW . . . . . . . . . . . . . . . . . . . . . . . 94
18. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
19. THE AGENT AND THE BANKS . . . . . . . . . . . . . . . . . . . . . . . 97
20. CONSENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . 104
21. SHARING OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 105
22. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 108
23. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
24. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
25. FURTHER ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 123
<PAGE>
26. CUMULATIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 124
27. GOVERNING LAW AND JURISDICTION . . . . . . . . . . . . . . . . . . . . 125
28. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
29. RELATIONSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
30. CONFLICTS WITH FACILITY LETTERS . . . . . . . . . . . . . . . . . . . 126
<PAGE>
THIS RESTATED AND AMENDED SYNDICATION AGREEMENT is made the 31st day of
October 1996
BETWEEN:-
(1)COUTTS & CO of 440 Strand, London WC2R OQS ("Coutts");
(2)BERLINER BANK A.G. LONDON BRANCH (the United Kingdom branch of a company
incorporated in Germany) of No. 1 Crown Court, Cheapside, London
EC2V 6JP ("Berliner");
(3)OVERSEAS FILMGROUP, INC. of 8800 Sunset Boulevard, Los Angeles CA 90069 ("Old
OFG"); and
(4)ENTERTAINMENT/MEDIA ACQUISITION CORPORATION of 8800 Sunset Boulevard, Los
Angeles, CA 90069 ("New OFG").
WHEREAS
(A)Pursuant to a syndication agreement dated 9th May 1994 between the Banks,
National Westminster Bank plc and Old OFG, as amended with effect from 9th
May 1995 and as extended pursuant to a commitment letter dated 12th August
1996 (effective as of 9th May 1996) from the Banks to Old OFG (such
agreement, as amended and extended being "the Existing Syndication
Agreement") the Banks made available certain facilities to Old OFG.
<PAGE>
(B)Pursuant to a facility letter ("the Distribution Facility Letter") dated 5th
July 1996 between the Agent and Old OFG, the Agent made available to Old OFG
a facility ("the Distribution Facility") of US$3,500,000 to enable Old OFG
to make a distribution to its principal shareholders.
(C)Pursuant to an Agreement of Merger dated as of July 2, 1996 executed by Old
OFG, New OFG, Ellen Dinerman Little and Robert B. Little, an Amendment to
Agreement of Merger dated as of September 20, 1996 executed by the same
parties (as amended, the Agreement of Merger is referred to herein as the
"Merger Agreement") and the certificate of merger ("the Certificate of
Merger") to be executed by new OFG and to be filed with the Secretary of
State of the State of Delaware Old OFG will merge with and into New OFG with
New OFG as the surviving corporation ("the Merger").
(D)Upon consummation of the Merger, New OFG will change its name from
Entertainment/Media Acquisition Corporation to Overseas Filmgroup, Inc.
(E)As a consequence of the Merger, New OFG will assume by law all of the
obligations of Old OFG under the Existing Syndication Agreement, the
Distribution Facility Letter and any and all agreements and documents
executed in connection therewith (including without limitation facility
letters, security agreements and any agreements or documents executed as a
pre-condition to the utilisation of any
<PAGE>
facility made available pursuant to the Existing Syndication Agreement)
(collectively "the Prior Obligations").
(F)Subject to the Merger being consummated, the Banks wish to continue to make
available facilities to New OFG on the terms set out herein.
(G)It is intended that this agreement be executed by all parties except New OFG
forthwith and by New OFG on consummation of the Merger.
IT IS AGREED as follows:-
1 INTERPRETATION
1.1 In this agreement:-
"the Acquisition shall mean each and every agreement
Agreements" described as "the Acquisition Agreement" in
each Facility Letter
"Agent" means Coutts, acting in its capacity as agent
for the Banks (including itself) hereunder;
"the Back End Fee" means in respect of each Film the fee referred
to in clause 6.1.3 hereof;
<PAGE>
"Banks" means Coutts and Berliner, and each is a
"Bank";
"the Borrower" means Old OFG up to the date of the
consummation of the merger and New OFG after
the date of the consummation of the merger;
"Business Day" means a day other than a Saturday or Sunday on
which commercial banks are open for business
generally in London, and (in the case of
payments to be made in United States Dollars)
New York City or (in the case of payments to
be made in other currencies) the principal
commercial centre of the country whose
currency is concerned;
"City National" means City National Bank;
"the City National Letter means the letters of credit issued
of Credit" prior to the date hereof by each Bank in
favour of City National Bank, each such letter
of credit being for up to a maximum amount of
^;
<PAGE>
"the City means the facility to be National Facility"
made available hereunder for the purpose set
out in clause 2.7 hereof;
"the Collections Account" means the Collections Account (as defined in
the applicable Facility Letter or Facility
Letters) ;
"Commitment" means in relation to each Bank the amount
which, on the assumption that the Film
Facilities, the Operating Facility and the
City National Facility were fully utilised
each Bank would be committed to make available
by way of Loan and/or assume by way of
Obligation pursuant to the terms hereof and of
the Facility Letters, the amount of each
Bank's Commitment being the amount set
opposite its name in Schedule 1;
"Distribution Commission" in respect of each Film shall bear the meaning
ascribed to it in the applicable Facility
Letter ;
<PAGE>
"Distribution Expenses" in respect of each Film shall bear the meaning
ascribed to it in the applicable Facility
Letter ;
"Event(s) of Default" means collectively the events of default set
out in clause 22 hereof and all "Events of
Default" as defined in each Facility Letter
and each is an "Event of Default";
"the Employment Agreements" means the agreements to be dated the effective
date of the Merger between the Borrower,
Robert Little and Ellen Little relating to the
employment by the Borrower of Robert and Ellen
Little;
"the Excluded Amounts" means the aggregate of (i) to (v) below:
(i) receivables from ^ of the ^ up to a
maximum amount of ^ of the amount
outstanding from time to time under the
Film Facilities; and
(ii) any receivables which are doubtful in
the absolute opinion of the Agent; and
<PAGE>
(iii) amounts outstanding from the Borrower
to ^, which are secured by a security
interest ranking superior to, or equal
with, the Security Interests and which
relate to the films entitled ^ and/or ^
but only up to a maximum amount equal
to the Borrower's aggregate receivables
from time to time in respect of each
such film;
(iv) amounts due to any third party
(including without limitation any
producer) contractually payable
pursuant to the arrangements made or to
be made to enable the Borrower to
acquire rights to any films (including
without limitation the Films), other
than with respect to receivables that
are already part of "the Excluded
Amounts" by virtue of the other sub-
clauses of this definition; and
<PAGE>
(v) receivables in respect of films
financed by a third party financier or
financiers since 9th May 1994 which are
secured by a security interest ranking
superior to, or equal with, the
Security Interests, but only up to a
maximum amount equal to the Borrower's
outstanding indebtedness to the
applicable financier(s);
"Facilities" means collectively the Film Facilities, the
Operating Facility, and the City National
Facility and each is a "Facility";
"Facility Letter" means in relation to each Film Facility the
agreement executed between the Agent and the
Borrower setting out the terms (other than the
terms contained in this Agreement) on which
such Film Facility is made available to the
Borrower and includes, without limitation, any
facility letter
<PAGE>
issued pursuant to the
Existing Syndication Agreement;
"Facility Request" means a request by the Borrower to the Agent
for the making of a Film Facility for a Film
in accordance with the procedures set out in
clause 12 hereof;
"Film Facilities" means collectively the facilities made
available pursuant to this Agreement for the
purposes set out in clause 2.2.2 hereof, and
each is a "Film Facility";
"the Films" means each film or television programme in
respect of which a Film Facility is made
available hereunder, and each is a "Film";
"the Group Companies" means Jacaranda Music Inc., a corporation
incorporated under the laws of the state of
Delaware (Federal Identification Number 95-
3931503), Intrastate Film Distributors, Inc, a
corporation incorporated under the laws of the
<PAGE>
state of Delaware (Federal Identification
Number 95-3842874), Overseas Filmgroup (UK)
Limited, a company incorporated under the laws
of England and Wales (Company No. 2505219) and
Walrus Pictures Inc., a company incorporated
under the laws of the State of California
(Federal Identification Number 95-4345242);
"Gross Receipts" means Gross Receipts (as defined in the
applicable Facility Letter or Facility
Letters);
"Interest Period(s)" means in relation to each Loan, each period
ascertained in accordance with clause 5
hereof;
"Licence Agreements" means all agreements and arrangements to be
entered into by the Borrower and the Sub-
Distributors for the distribution, exhibition
or other exploitation of any Film or Films
"Loan" means in relation to each Film
<PAGE>
Facility the sum made available and remaining
outstanding by way of cash advance under the
relevant Facility Letter or hereunder and/or
paid by the Agent or the Banks under any
letter of credit or bank guarantee issued
pursuant to any such Facility Letter and in
relation to the Operating Facility the
aggregate of all sums advanced hereunder and
remaining outstanding and in relation to the
City National Facility all sums advanced under
the City National Letter of Credit and
remaining outstanding hereunder and
additionally in relation to each Facility any
interest fees or expenses to which the Agent
or the Banks are entitled and which are
outstanding whether hereunder or under the
relevant Facility Letter;
"Majority Banks" means the Banks whose Commitments in total
constitute a percentage in excess of ^ of the
amount of the aggregate Commitments of the
Banks provided always that in the event of
<PAGE>
any deadlock (following good faith
consultation) between the Agent (acting in
its capacity as a Bank) and (if applicable)
any other Bank ("the Agent's Allied Bank")
on the one hand and any other Banks on the
other hand, "Majority Banks" shall mean ^
and ^ the ^;
"the Merger Documents" any and all agreements or documents executed
or supplied in consummation of, or in relation
to, the Merger;
"Net Receivables" means the aggregate amount from time to time
outstanding to the Borrower from third parties
(other than ^), plus the aggregate amount of
any ^ held by Borrower and/or the Group
Companies (or any of them);
"Obligations" means in relation to each Film Facility, the
obligations undertaken by the Banks, or by the
Agent on behalf of the Banks, to third parties
(which shall for these purposes include any
one or more of the Banks acting in a capacity
other
<PAGE>
than that of a Bank hereunder) pursuant
to the terms of the relevant Facility Letter
and/or this Agreement including without
limitation, obligations undertaken by way of
the establishment of letters of credit or the
giving of guarantees;
"the Operating means the facility to be
Facility" made available hereunder for the purpose set
out in clause 2.5 hereof;
"Permitted Encumbrances" means (a) the security interest of the Agent
and/or the Banks under this Agreement and the
other Relevant Agreements; (b) any other liens
approved in writing by the Agent; and (c) each
of the following:
(i) liens for taxes, the payment of which
is not yet delinquent;
(ii) statutory and common law liens of
landlords, carriers,
<PAGE>
warehousemen, mechanics, material-men,
film laboratories, sound studios,
collecting banks and others or Liens
imposed by law incurred in the
ordinary course of business for sums
not yet delinquent or being contested
in good faith, if all reserves or
other appropriate provisions, if any,
required by GAAP have been made
therefor;
(iii) liens (other than liens imposed by
ERISA) incurred or deposits made in the
ordinary course of business in
connection with workers' compensation,
unemployment insurance and other types
of social security, or to secure the
performance of tenders, statutory
obligations, surety and appeal bonds,
bids, leases, government contracts,
performance and return-of-money bonds
and other similar
<PAGE>
obligations (exclusive of obligations
for the payment of borrowed money) or
liens in favour of governmental
authorities arising as a matter of
law in connection with the issuance of
licenses and permits necessary for the
operation of any of the Relevant
Parties' businesses in the ordinary
course;
(iv) attachment or judgment liens not
constituting an Event of Default under
clause 22 hereof;
(v) any interest or title of a lessor under
any lease permitted by clause 11.1.3.7
hereof;
(vi) leases or subleases granted by a
Relevant Party to others not
interfering in any material respect
with the business of such Relevant
Party;
(vii) Easements, rights-of-way, restrictions,
servitudes,
<PAGE>
minor defects or irregularities in
title and other similar charges or
encumbrances not interfering in any
material respect with the ordinary
conduct of the business of Borrower;
(viii) Purchase money liens securing
obligations incurred in connection with
purchases or capitalised leases of
assets (other than Films) in the
ordinary course of business; provided
that, in each case, the same attaches
only to the specific asset purchased or
leased and provided further that the
indebtedness for borrowed money
incurred in connection with all such
liens does not exceed ^ in the
aggregate at any time;
(ix) liens in a Film or any other films or
TV programs acquired by or licensed to
the Borrower after the date of this
Agreement in favour of
<PAGE>
any bank providing production finance
to the producer of any of the Films
or any such other films or TV
programs or in favour of third party
completion guarantors or the person
or entity from whom the Borrower
acquired such Film or any such other
films or TV programs granted as
security for the monetary and
distribution obligations owing to
such production bank, guarantor, person
or entity, provided that pursuant to an
intercreditor agreement acceptable to
the Agent, after delivery of the Film
or any such other films or TV programs
and payment of the applicable advance
or guarantee (or after repayment of the
"secured sums", as applicable) such
liens are junior and subordinate to the
Security Interests and further provided
that after
<PAGE>
delivery of the Film or any such
other films or TV programs to the
Borrower and the Borrower's payment of
the applicable minimum advance, the
lien shall be limited to the secured
party's share of the proceeds
thereafter payable by Borrower under
the applicable Acquisition Agreement or
inter-party agreement or other
applicable acquisition or distribution
agreement;
(x) liens in a Film or other films or TV
programs owned licensed to, and/or
acquired by the Borrower after the date
of this Agreement pursuant to written
security agreements in favour of guilds
required pursuant to the terms of
collective bargaining agreements
securing the obligations of the
producer of such Film to such guilds
only with respect
<PAGE>
to such Film; and
(xi) contractual liens incurred in the
ordinary course of business with regard
to services rendered by laboratories
with respect to a Film to secure the
Borrower's obligations to such
laboratories only in connection with
such Film, provided that the Borrower
has provided to the Agent a laboratory
access agreement acceptable to the
Agent and provided the aggregate amount
of all secured obligations for each
Film does not exceed ^;
(xii) the security interest referred to in
clause 3.1.10 in favour of Robert
Little and Ellen Little;
(xiii) liens in any films or TV programs
(other than the Films) owned, licensed
to, and/or acquired by the Borrower
prior to the date
<PAGE>
hereof which have been disclosed to, and
approved by the Agent and provided always
that such liens are limited to the film or
TV program in question. Details of such
liens are set out in Schedule 5 hereto
"Permitted Prior means the Permitted Encumbrances
Encumbrances" described in clauses ^ and ^ of the definition
of the term Permitted Encumbrances that by law
are accorded priority to the liens in favour
of the Agent, and those described in clauses ^
and ^of the definition of the term Permitted
Encumbrances, subject to the limitations in
such clauses;
"Relevant Agreements" means this Agreement, the agreements referred
to in clause 3.1 hereof, the Facility Letters
and any document described in any Facility
Letter as a "Relevant Agreement";
"Relevant Parties" means the parties to the Relevant
<PAGE>
Agreements;
"the Security Agreements" means the agreements pursuant to which the
Borrower and the Group Companies will grant or
have granted to the Agent (as agent and
trustee for the Banks) the Security Interests
and each is a "Security Agreement";
"the Security Interests" means the security interests referred to in
clause 3.1.1 hereof and in relation to each
Film Facility the security interest given to
the Agent pursuant to any document executed in
fulfilment of the terms of the relevant
Facility Letter;
"Sub-Distributors" means the parties to the Licence Agreements
other than the Borrower;
"Tax(es)" means all taxes, levies, imposts, duties,
charges, fees, deductions and withholdings and
any restrictions or conditions resulting in a
charge; and
<PAGE>
"US $" and "United means lawful currency of the
United States Dollars" States of America.
1.2 In this agreement unless the context requires otherwise:-
1.2.1 references to "this Agreement" are references to this
agreement and its schedules, as amended or supplemented
at the relevant time, and any reference to a "Facility
Letter" is a reference to such document as amended or
supplemented at the relevant time;
1.2.2 each reference to a "person" shall be construed as a
reference to any person, firm, company, corporation,
government state, agency of a state, association or
partnership;
1.2.3 each reference to the Borrower, any Bank, or the Agent
shall where relevant be deemed to be a reference to or
to include, as appropriate, its successors or assigns;
1.2.4 each reference in this Agreement to "writing" and any
cognate expression, includes a reference to any
communication effected by
<PAGE>
facsimile transmission or other method of
reproducing words in permanent visible form;
1.2.5 each reference in this Agreement to a statute or a
provision of a statute is a reference to that statute
or provision as amended or re-enacted at the relevant
time;
1.2.6 the index to and the headings in this Agreement are for
convenience only and shall not affect its
interpretation; and
1.2.7 references to clauses and schedules are to clauses of,
and schedules to this Agreement.
2 FACILITIES
2.1 Subject to the terms of this Agreement and to an aggregate
facility limit of US$27,000,000 (twenty seven million United
States Dollars) (inclusive of fees, costs and expenses payable
hereunder), the Banks severally (pro rata to their respective
Commitments) hereby agree to make available to the Borrower:-
2.1.1 Film Facilities under which the aggregate total amount
outstanding at any time shall not exceed US$21,000,000
(twenty one million
<PAGE>
United States Dollars) or such lesser amount as
shall be determined pursuant to clause 2.11 hereof
(inclusive of fees, costs and expenses payable
hereunder in respect thereof);
2.1.2 the Operating Facility for an aggregate amount not
exceeding US$5,000,000; and
2.1.3 the City National Facility for an aggregate amount not
exceeding US$1,000,000.
2.2
2.2.1 Subject to the limit set out in clause 2.1 hereof as
the same may be varied pursuant to clauses 2.11 and/or
2.12 hereof the Film Facilities shall be made
available as a revolving facility. The Film
Facilities will be made available by the provision by
the Agent of cash advances or by the issue by the
Agent (as agent for the Banks) of a letter of credit
or bank guarantee provided always that the Agent shall
have received prior to such issue a counter-indemnity
from Berliner pursuant to clause 16.1 hereof in a
form acceptable to the Agent. It is hereby agreed
that the Agent will make available cash advances as
agent for each Bank pro rata to the proportion which
each Bank's Commitment bears to the aggregate
Commitments of the Banks and that in its capacity as
a Bank, the Agent shall only be obliged to
<PAGE>
make its pro rata amount of such cash advance available.
Each Film Facility will be made available pursuant to a
separate Facility Letter to be entered into in accordance
with the procedures set out in clause 12 below. It is
anticipated that any Facility Letter entered into hereunder
will relate to the financing of the acquisition of a specific
film or films, and will provide for security to be granted
over the rights of the Borrower in or relating to such film
or films as the Agent shall require on behalf of the Banks.
2.2.2 The purpose of the Film Facilities is to assist the Borrower in:
2.2.2.1 the financing of its acquisition of the right to
distribute and exploit Films ; and
2.2.2.2 as approved by the Agent the financing of print,
advertising and other distribution and sales expenses
relating to programmes and Films; and
2.2.2.3 as approved by the Agent the refinancing of sums
drawndown under the Operating Facility and advanced by
the Borrower to any producer of a Film prior to
delivery thereof in
<PAGE>
accordance with the applicable Acquisition Agreement
to pay for enhancements to such Film.
2.3 Subject to the terms of individual Facility Letters (where
applicable), each Film Facility will be reviewed on the
anniversary of first drawdown (in the case of cash advance
Facilities) or of encashment (in the case of letters of credit or
guarantee Facilities) and varied as necessary so as to ensure
that all outstanding amounts will in any event have been paid or
repaid in full within six months of the date of such review.
2.4 The Operating Facility shall subject to the terms and conditions
hereof be made available as a revolving overdraft facility.
2.5 The purpose of the Operating Facility is to meet the Borrower's
working capital requirements.
2.6 The City National Facility shall subject to the terms and
conditions hereof be made available by the provision of the City
National Letter of Credit.
2.7 The purpose of the City National Facility is to provide security
to City National for a revolving overdraft
<PAGE>
facility to the Borrower
2.8 The Loan with respect to the Operating Facility shall be repaid
on the earlier of 9th May 1997 (unless the Agent in its absolute
discretion agrees, following the review referred to in clause 17
hereof, to extend such repayment date) and the happening of an
Event of Default.
2.9 The City National Facility shall be repaid by the Borrower on
demand by the Agent provided always payment has then been made by
the Banks under the City National Letter of Credit it being
agreed that the Agent shall inform the Borrower if the City
National Letter of Credit is encashed. Upon the happening of an
Event of Default the Borrower will deposit with the Agent such
amount as the Agent shall deem sufficient to cover the Banks'
contingent liability under the City National Letter of Credit if
payment has not then been made thereunder.
2.10 Each Facility will at all times be maintained and shall be repaid
in United States Dollars.
2.11 In the event that upon the effective date of the Merger, the
actual cash balances of New OFG immediately prior to the Merger
(as determined by the Agent) are
<PAGE>
less than US$11,000,000, the lesser amount referred to in
clause 2.1.1 hereof shall be the greater of:-
2.11.1 US$18,800,000 (eighteen million eight hundred thousand
United States Dollars); and
2.11.2 US$21,000,000 less the amount by which such actual cash
balances are less than US$11,000,000.
2.12 Notwithstanding clause 2.1 hereof the Banks may agree to increase
the amount available under the Film Facilities by the amount by
which the Operating Facility is repaid (in which event the amount
available to be drawn under the Operating Facility shall be
correspondingly reduced) and by the amount by which the City
National Facility is repaid.
3 CONDITIONS PRECEDENT
3.1 Prior to any advance or the assumption of any Obligations
hereunder New OFG shall execute this agreement, and:
3.1.1 the Borrower shall execute a Security Agreement in
a form satisfactory to the Banks granting to the
Agent (as agent and trustee for the Banks) a
security interest (subject in priority
<PAGE>
only to the Permitted Prior Encumbrances) over the
entire undertaking and assets present and future of
the Borrower in favour of the Agent as agent and
trustee for itself and Berliner as security for all
amounts owed hereunder or under any Facility Letter
and each of the Group Companies shall enter into an
agreement with the Agent in form and substance
satisfactory to the Agent which shall provide that
references in the cross-guarantees and security
agreements executed prior to the date hereof in
fulfilment of the terms of the Existing Syndication
Agreement to Old OFG and the Existing Syndication
Agreement shall henceforth be deemed to be
references in addition to the Borrower and this
Agreement;
3.1.2 the Borrower shall supply the Agent with an opinion
letter in a form and from attorneys qualified in the
State of California acceptable to the Agent confirming
that:
3.1.2.1 Old OFG has merged with and into New OFG
pursuant to the Merger Agreement in
compliance with the Delaware General
Corporation law;
3.1.2.2 the security interest referred to in clause
3.1.1 hereof is valid and enforceable in
accordance with its terms and that all
necessary
<PAGE>
registrations and filings with respect
thereto have been made and perfected; and
3.1.2.3 having made all usual and proper enquiries
such attorneys are satisfied that no third
party is entitled to any right which might
conflict with or derogate from the benefit
conferred upon the Agent and the Banks by the
Security Interests;
3.1.3 the Borrower shall supply to the Agent a board
resolution of Overseas Filmgroup (UK) Limited
authorising the entry into and performance of those of
the agreements specified in clause 3.1.1. hereof to
which such company is a party and a certificate of New
OFG, Old OFG and each of the Group Companies other than
Overseas Filmgroup (UK) Limited in a form satisfactory
to the Agent to which shall be attached appropriate
resolutions of the board of directors of Old OFG, New
OFG and each of such Group Companies and the Articles
of Incorporation of Old OFG, New OFG and each of such
Group Companies,
<PAGE>
signed by an authorised signatory of the Borrower and
each of such Group Companies and dated the date hereof
3.1.3.1 verifying the incumbency and containing the
specimen signature(s) of the individual(s)
authorised to execute and deliver this
Agreement and the agreements referred to in
clause 3.1.1 hereof and any other agreements
ancillary thereto as required by the Agent on
behalf of Old OFG, New OFG and such Group
Companies; and
3.1.3.2 certifying that:-
3.1.3.2.1 the resolutions attached
thereto were duly adopted by the board of
directors of Old OFG, New OFG and such
Group Companies, and, on the date hereof,
such resolutions are in full force and
effect without amendment or other
modification thereof; and
3.1.3.2.2 the Articles of
<PAGE>
Incorporation attached thereto are true
and correct and have not been amended as
at the date of the Certificate; and
3.1.3.2.3 all necessary actions have been
taken by Old OFG, New OFG and such Group
Companies to authorise Old OFG and New
OFG to enter into this Agreement and to
authorise New OFG and such Group
Companies to enter into the agreements
referred to in clause 3.1.1 hereof and
any other agreements ancillary thereto as
required by the Agent; and
3.1.4 the Borrower shall supply to the Agent a valuation
prepared by the Borrower of the Borrower's interest in
its library of films in a form acceptable to the Agent
(receipt of which the Agent acknowledges);
3.1.5 the Borrower shall supply to the Agent a certificate of
good standing showing that New OFG and the Group
Companies (other than Overseas Filmgroup (UK) Limited)
are in good
<PAGE>
standing under the laws of the jurisdiction of
their organisation and certificates indicating that
New OFG and such Group Companies have qualified to
contract business and are in good standing in any
other jurisdiction in which New OFG and such Group
Companies are required to be so qualified;
3.1.6 the Borrower shall supply the Agent with such other
evidence or information (including without limitation
UCC searches for the states of California, New York and
Delaware and the County of New York of New OFG and the
Group Companies other than Overseas Filmgroup (UK)
Limited and as the Agent shall require to establish the
consummation of the transactions contemplated hereby,
the taking of all proceedings in connection therewith
and the compliance with the conditions set forth in
this Agreement; and
3.1.7 the Borrower will take out for the benefit of the Agent
as loss payee for the account of the Banks keyman
insurance in a form acceptable to the Agent on the
lives of each of Robert Little and Ellen Little with
not less than US $1,700,000 being payable
<PAGE>
thereunder upon the happening of the death of the
first of them in time and the difference between US
$5,250,000 and the amount paid upon the death of
the first of them on the death of the second of
them in time and on the life of William Lischak
with not less than US$1,500,000 being payable on
the death of William Lischak;
3.1.8 the Borrower shall name the Agent as loss payee on
the Borrower's disability insurance by the Agent
prior to any advance or the assumption of any
Obligations hereunder. The keyman insurance policy
and disability insurance policy referred to in
clauses 3.1.7 and 3.1.8 shall provide that
cancellation or other termination or variation of
any material terms thereof may only occur on thirty
days' prior notice in writing to the Agent;
3.1.9 the Borrower shall supply the Agent with the filed
Certificate of Merger of the Borrower and such of the
Merger Documents as the Agent shall require (including
without limitation the Employment Agreements);
3.1.10 the Borrower shall supply to the Agent a
<PAGE>
subordination agreement from Robert Little and
Ellen Little to the Agent in a form acceptable to
the Agent relating to the subordination of the
security interests of Robert Little and Ellen
Little over the Borrower to the security interests
of the Agent and providing that, without the prior
written consent of the Banks, Robert Little and
Ellen Little may not sell any shares in the
Borrower then or thereafter held by either of them;
3.1.11 the Borrower shall supply the Agent with such evidence
as the Banks shall require that William Lischak has
assigned to Robert Little and Ellen Little the voting
rights in the shares of New OFG held by William
Lischak; and
3.1.12 the Borrower will supply the Agent with such other
documents agreements or information as the Agent shall
reasonably request.
3.2 Prior to any advance being made under any Film Facility or any
Obligation being committed thereunder, as well as fulfilling the
conditions specified in clause 3.1 the Borrower shall also supply
to the Agent such
<PAGE>
documents and information as shall be required as a condition
precedent to any such advance or commitment under the
Facility Letter applicable thereto.
4 PAYMENT
4.1 The Borrower hereby covenants with the Banks:
4.1.1 to repay to the Agent (for the account of the Banks)
the Loan with respect to each Film Facility on the
applicable Maturity Date (as defined in the applicable
Facility Letter); and
4.1.2 to repay to the Agent (for the account of the Banks)
the Loan with respect to the Operating Facility and the
City National Facility in accordance with respectively
clause 2.8 and 2.9 hereof.
4.2 In the event the Loan and all other amounts then due have not
been repaid in full in accordance with clause 4.1 hereof this
shall not prejudice or diminish the Agent's, or the Banks' rights
hereunder or under any of the Security Agreements or any Facility
Letter, including but not in limitation its or their rights to
full repayment of the Loan and all rights of indemnity and
reimbursement of Coutts, Berliner, or the Agent
<PAGE>
(for the account of the Banks) which rights shall remain in
full force and effect.
4.3 The Borrower shall procure the payment of the Gross Receipts for
each Film and all other income from the exploitation of that Film
by the Sub-Distributors to the Licence Agreements in the
Territory (as defined in the applicable Facility Letter) directly
into the Collections Account for that Film specified in the
Facility Letter or as otherwise directed by the Agent without any
deduction whatsoever save any withholding required by law (it
being agreed by the Borrower that if any such withholding is
required to be made the Borrower will use its best endeavours to
obtain appropriate tax deduction certificates from the applicable
Sub-Distributor) and shall ensure that all Licence Agreements
entered into after the date hereof and all invoices rendered in
connection with each Film shall irrevocably direct that all
monies due thereunder be paid directly into the applicable
Collections Account. If notwithstanding the foregoing any of
such sums are paid to any other account in the name of or
operated by the Borrower by telegraphic or other bank transfer or
are paid to the Borrower by cheque, draft, letter of credit or
other money order, then such sums shall forthwith upon
identification by the Borrower (and in any event within five
Business Days of receipt)
<PAGE>
be transferred or paid (as the case may be) into the
applicable Collections Account without any deduction or
set-off whatsoever. In the event the Borrower considers that
it will be put to disproportionate expense in complying with
the terms of this clause, it shall consult the Agent and
proceed as the Agent shall direct in the Agent's good faith
judgment.
4.4 In relation to each Film Facility the balance standing to the
credit of the Collections Account shall accrue interest at the
Bank's short term notice rate calculated on the basis of a 360
day year. On the last Business Day of each Interest Period, the
Agent shall apply such balance in the Collections Account (with
accrued interest thereon) in reduction of the Loan and all other
amounts outstanding relating to such Film Facility ^. After such
Loan (and accrued interest and the Agent's and the Banks'
outstanding fees costs and expenses) has been repaid in full,
such balance shall (unless and until an Event of Default occurs
or the Agent enforces any of the Security Interests) be applied:
4.4.1 first in payment to the Borrower of the ^ relating to
that Film Facility then accrued; and
<PAGE>
4.4.2 secondly rateably and pari passu in payment to the
Agent (for the account of the Banks) of the ^ relating
to that Film Facility then accrued and in payment to
the Borrower of the ^ relating to that Film Facility
then accrued; and
4.4.3 thirdly and thereafter in payment of any surplus
remaining thereafter to the Borrower.
4.5 The Agent may however in its absolute discretion agree to the
earlier application of any part of the balance on the Collections
Account for any Film in payment of the ^ accrued in relation to
such Film. In such event:
4.5.1 the Agent shall determine in its absolute discretion
the amount to be so applied;
4.5.2 the Agent shall determine the aggregate of such ^ then
accrued;
4.5.3 the Agent shall calculate what percentage ("the
Percentage") of such aggregate is represented by the
amount referred to in clause 4.5.1 hereof;
4.5.4 the Agent shall retain for the account of the
<PAGE>
Banks the Percentage of such ^ and pay to the
Borrower the Percentage of such ^ and ^.
4.6 It is hereby expressly agreed that the Loan is made available on
a full recourse basis and that nothing in this Agreement or any
Facility Letter shall be construed as implying that repayment in
full of the Loan with respect to any Film Facility, accrued
interest and the Agent's and the Banks' outstanding fees costs
and expenses and/or any other obligation of the Borrower to the
Agent or the Banks hereunder or under any Facility Letter is with
recourse only to the funds from time to time paid or payable
pursuant to the applicable License Agreements. The Banks shall ^
as ^ and ^ unless and until ^.
4.7 Provided not less than three Business Days' notice in writing is
given to the Agent, the Borrower may at any time prepay or repay
the Loan with respect to any Facility together with accrued
interest and the Agent's and the Banks' outstanding fees costs
and expenses provided always any costs incurred in breaking
interest periods (if such prepayment or repayment is made on a
day other than the last Business Day of an Interest Period
applicable to such Facility) and (in any event) any losses
including any loss of profit expenses or charges (including
foreign exchange losses) incurred or
<PAGE>
suffered by any of the Banks as a result of such prepayment
or repayment are simultaneously reimbursed.
4.8 The Borrower hereby authorises the Agent for the account of the
Banks at any time or from time to time following the happening of
an Event of Default without notice to the Borrower which notice
the Borrower hereby waives to set off and to appropriate and to
apply any and all deposits and any other indebtedness which the
Agent may hold or owe to or for the credit of the account of the
Borrower against the whole or any part of the Loan and against
and on account of any other obligations and liabilities of the
Borrower hereunder or under any Facility Letter (including
without limitation all claims whatsoever arising out of or
connected with any such agreements) regardless of whether or not
by so doing any account in respect thereof shall be thereby
overdrawn or that the Agent shall have made any demand hereunder
or the Agent shall have declared the Loan and/or all other sums
due hereunder or any Facility Letter to be due and payable in
accordance with the terms hereof or thereof and notwithstanding
that the said obligations and liabilities, or any of them may be
contingent or unmatured.
4.9 All payments to be made by the Borrower hereunder shall
<PAGE>
be made without set-off or counterclaim and free of any
deduction or withholding (save any withholding required to be
made by law) on any ground whatsoever. If at any time the
Borrower is required by law to make any deduction or
withholding from any amount payable hereunder, the Borrower
shall pay such additional amount as may be necessary to
ensure that the Agent receives for the account of the Banks a
net amount equal to the full amount which it would have
received had no such deduction or withholding been made.
4.10 The Borrower hereby undertakes and agrees to indemnify and keep
each of the Banks indemnified from and against all actions
proceedings claims and demands which may be brought against the
Banks or any of them and all losses costs charges damages and
expenses which the Banks or any of them may incur or sustain or
for which the Banks or any of them may become liable by reason
whether directly or indirectly of the Banks having made any Loan
or the Agent or the Banks having issued any guarantee or letter
of credit pursuant to any Facility Letter or having issued the
City National Letter of Credit or made payment under any such
guarantee, letter of credit or the City National Letter of Credit
except for losses costs charges damages and expenses resulting
from the gross negligence or misfeasance of the Banks.
<PAGE>
5 INTEREST
5.1 Each Interest Period in respect of each Facility shall commence
on the borrowing of the Loan concerned whether by drawdown of the
Cash Advance (as defined in the applicable Facility Letter) or by
payment under the Guarantee or Letter of Credit (as such terms
shall be defined in the applicable Facility Letter) or by
drawdown under the Operating Facility or by payment under the
City National Letter of Credit or the deemed borrowing of the
Loan pursuant to clause 6.4 and/or 7.2 hereof and shall, subject
to the following provisions of this clause, be of one, three or
six month's duration as requested by the Borrower.
5.2 Subject to the following provisions of this clause, the first
Interest Period relative to any Loan in respect of each Facility
(other than the first Loan in respect of such Facility) shall end
on the same day as the current Interest Period relative to the
first Loan in respect of such Facility. Thereafter, all Interest
Periods relative to such Loans shall be co-terminous and such
Loans shall be treated as one Loan. Subject to the following
provisions of this clause, each subsequent Interest Period shall
commence on the same day as the then current Interest Period
ends.
<PAGE>
5.3 If any Interest Period relative to the Loan in respect of any
Film Facility would otherwise over-run the Maturity Date (as
defined in the applicable Facility Letter) such Interest Period
shall be shortened so that such Interest Period ends on such
date.
5.4 If any Interest Period relative to the Loan in respect of the
Operating Facility or the City National Facility would otherwise
overrun the date on which repayment of the principal amount in
respect thereof is due hereunder, such Interest Period shall be
shortened so that such Interest Period ends on the date such
principal falls due.
5.5 Interest for each Loan and for each Interest Period applicable
thereto will be calculated and charged at that rate determined by
the Agent as being 3% (three percent) per annum above the rate at
which US dollars are offered to the Agent in the London Interbank
Market at or about 11.00 a.m. two Business Days prior to the
start of that Interest Period in similar amounts to such Loan for
that Interest Period. The Borrower will be notified of the rate
of interest to be charged for each Interest Period as soon as
practicable after the start thereof.
5.6 Interest shall be calculated and accrue on the basis of
<PAGE>
the actual number of days elapsed and a 360 day year and will be
charged and paid at the end of each Interest Period to the Agent
for the account of the Banks. In the event that any sums fall
due for payment on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day and the
amount of interest shall be adjusted accordingly. Interest will
be charged and paid gross without any deductions or withholding
whatsoever (save any withholding required to be made by law) in
U.S. dollars. If at any time the Borrower is required by law to
make any deduction or withholding from any amount payable
hereunder, the Borrower shall pay such additional amount as may
be necessary to ensure that the Agent receives for the account of
the Banks a net amount equal to the full amount which it would
have received had no such deduction or withholding been made.
5.7 If the Borrower fails to pay any amount when due in accordance
with this Agreement or any Facility Letter the Borrower shall pay
interest on that amount to the Agent for the account of the Banks
from the date of default up to the time of actual payment at a
rate per annum which is equal to the rate which would have been
charged under clause 5.5 hereof for the relevant amount for the
relevant period plus one per cent.
<PAGE>
5.8 If the provisions of this Agreement or any Facility Letter would
at any time require payment to the Agent or the Banks of an
amount of interest in excess of the maximum amount then permitted
by the law applicable to the Loan, such interest payments shall
be reduced to the extent necessary to ensure that the Agent
and/or the Banks shall not receive interest in excess of such
maximum amount.
6 FEES
6.1 In consideration of the Banks' agreement to make the Facilities
available, the Borrower hereby covenants with the Banks to pay
6.1.1 to the Agent for the account of the Banks a closing fee
equal to 1/2% (one half of one per cent) per quarter or
part thereof of the face value of any letter of credit
or guarantee issued or given pursuant to any Facility
Letter calculated from the date such letter of credit
or bank guarantee is issued or given until the date
payment is made under such letter of credit or
guarantee subject to a minimum fee in each case of 2%
of the face value of such letter of credit or bank
<PAGE>
guarantee; and
6.1.2 to the Agent for the account of the Banks a closing fee
of 2% (two per cent) flat of the amount of any Cash
Advance (as defined in the applicable Facility Letter)
and of the face value of the City National Letter of
Credit; and
6.1.3 to the Agent for the account of the Banks sums equal to
^ from time to time or in respect of ^ such other
amount in lieu of such fee as shall be specified in the
applicable ^; and
6.1.4 to the Agent for the account of the Banks sums equal to
1% per annum of the difference between the maximum
amount available to be drawn under the Operating
Facility and the amount of the Operating Facility
outstanding from time to time calculated on a daily
basis and payable quarterly in arrears;
6.1.5 to the Agent a management fee of US$150,000 per annum
or part thereof, such fee being payable in quarterly
instalments in advance until this Agreement is
terminated;
<PAGE>
6.2
6.2.1 The closing fee referred to in clause 6.1.1 hereof shall be
payable quarterly in advance, it being agreed that if 2% of the
face value of any letter of credit or guarantee referred to in
clause 6.1.1 has not been paid prior to encashment thereof, any
balance shall be paid on encashment. Payment of the first
quarterly payment shall be a condition precedent to the issue of
any such letter of credit or guarantee.
6.2.2 The closing fee referred to in clause 6.1.2 hereof shall be paid
in advance and shall be a condition precedent to drawdown
pursuant to any Facility Letter.
6.2.3 Part of the fees referred to in clauses 6.1.1, 6.1.2 and 6.1.4
hereof shall be paid by the Agent to Berliner pro rata to its
participation upon the Agent receiving the same from the
Borrower.
6.3 The fee referred to in clause 6.1.3 hereof shall be paid or
retained as provided in clauses 4.4 and 4.5 hereof and part of
such fee upon payment of or retention by the Agent shall be paid
by the Agent to Berliner pro rata to its participation.
6.4 In the event that any sums are due and unpaid under clauses 6.1.1
or 6.1.2 or 6.1.4 or 6.1.5 hereof the
<PAGE>
Banks pro rata to their respective Commitments shall be deemed
to have made a Loan to the Borrower hereunder of an amount
equal to any such sums and the amount of such Loan shall
thereafter bear interest calculated in accordance with clause
5 hereof at the rate specified in clause 5.5 hereof.
7 EXPENSES
7.1 The Borrower hereby agrees with the Banks that it will be liable
to the Agent (for the account of the Banks where appropriate) on
demand and on a full indemnity basis for all costs charges fees
and expenses (including without limitation reasonable travel and
accommodation expenses incurred by representatives of each Bank
whilst engaged in the annual review referred to in clause 17
hereof for the purpose of reviewing the Facilities and otherwise
whilst engaged in connection with the Facilities or a proportion
thereof allocated by the Agent in its good faith judgment in the
event either Bank conducts other business whilst so engaged and
legal fees and disbursements) incurred by the Banks in connection
with the negotiation, preparation and execution of this
Agreement, of each Facility Letter and of any other agreement or
document referred to herein or therein and in connection with the
operation confirmation repayment or enforcement of the Facilities
<PAGE>
(or any of them) or of any document between the Borrower and the
Banks and/or the Agent relating thereto (including but not in
limitation stamp duties or documentary or other taxes payable
thereon or in connection therewith) and in connection with the
protection and enforcement of the Banks' rights.
7.2 In the event that any sums are due and unpaid under clause 7.1
hereof for more than 30 days the Banks pro rata to their
respective Commitments shall be deemed to have made a Loan to the
Borrower hereunder of the equivalent in United States Dollars (as
determined by the Bank) of any such sums and the amount of such
Loan in United States Dollars shall thereafter bear interest
calculated in accordance with clause 5 hereof at the rate
specified in clause 5.5 hereof.
8 CHANGES IN APPLICABLE LAW
8.1 If any change in any applicable law or regulation or in the
interpretation thereof by any governmental or other authority
charged with the administration thereof shall:-
8.1.1 subject any of the Banks to any Taxes with respect to
any Loan or any Guarantee or Letter of Credit (as such
latter two terms
<PAGE>
may be defined in any Facility Letter) or the City
National Letter of Credit (other than usual taxes on
overall net income); or
8.1.2 change the basis of taxation to any of the Banks of any
payments of principal, interest, or otherwise in
respect of any Facility or any Loan or any Guarantee or
Letter of Credit (as such latter two terms may be
defined in any Facility Letter) or the City National
Letter of Credit; or
8.1.3 impose, modify or deem applicable any reserve
(including any special deposits) or capital adequacy
requirements against or in respect of any assets of or
loans by any of the Banks; or
8.1.4 impose on any of the Banks any other conditions with
respect to any Loan or any Guarantee or Letter of
Credit (as such latter two terms may be defined in any
Facility Letter) or the City National Letter of Credit
and the result of any of the foregoing is to increase the overall
cost to any of the Banks of making or maintaining the Loan by an
amount which any such Bank
<PAGE>
deems material, then and in any such case:-
8.2 the Agent shall notify the Borrower in writing thereof; and
8.3 the Borrower shall pay to the Agent for the account of such Bank
on the last Business Day of the then current Interest Period as
additional interest on that Loan such amounts as will compensate
such Bank for such additional cost calculated from the date of
notification to the Borrower; and
8.4 the Borrower shall be at liberty at any time thereafter to repay
all (but not part) of that Loan (including if appropriate by
making adequate payment on account of the Agent's remaining
contingent liability under the City National Letter of Credit and
any such Letter of Credit or Guarantee (as such latter two terms
may be defined in any Facility Letter)) to the Agent for the
account of the Banks after paying as additional interest only
such amounts as may be due under clause 8.3 thereof up to the
date of actual repayment together with all other amounts
outstanding hereunder or under any Facility Letter, whereupon the
Agent's and the Banks' obligations to the Borrower hereunder or
under any Facility Letter (but not for the avoidance of doubt and
without limitation the entitlement of the Agent or
<PAGE>
Berliner to any fees due in accordance with clause 6 hereof)
shall be cancelled.
9 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
9.1 The Borrower acknowledges that the Banks have entered into this
Agreement and the Agent will enter into Facility Letters in full
reliance upon the representations and warranties by the Borrower
in the following terms and the Borrower hereby represents and
warrants to each of the Banks (and shall be deemed to repeat such
representations and warranties in accordance with the facts and
circumstances then subsisting on the effective date of the Merger
and on every day thereafter on which a Facility Letter is
executed or on which any drawing is made hereunder or under any
Facility Letter (whether by cash advance or payment under the
City National Letter of Credit or under any guarantee or letter
of credit issued pursuant to any Facility Letter) or on which the
City National Letter of Credit any such letter of credit or
guarantee is given or issued):-
9.1.1 that the Borrower is a corporation duly incorporated
and validly existing and in good standing under the
laws of the state of Delaware with the power to own
assets and
<PAGE>
carry on its business as currently conducted
and that the Borrower has the requisite power and
authority to enter into and perform this Agreement and
any Facility Letter entered into on the date this
warranty is given or repeated and to assume, execute,
perform and discharge the obligations herein and
therein contained;
9.1.2 that the Relevant Agreements executed at the time this
warranty is given or repeated constitute the legal,
valid and binding obligations of the Borrower
enforceable in accordance with their respective terms
including but not in limitation in the case of the
Security Agreements those terms relating to the ranking
or priority of such agreements or documents and/or the
liens created thereby;
9.1.3 that neither the acceptance nor the performance by the
Borrower of any Relevant Agreement executed at the time
this warranty is given or repeated will or does:
9.1.3.1 contravene any law regulation or similar
enactment applicable to the
<PAGE>
Borrower, or any judgment injunction or award
of any court or authority applicable to the
Borrower, or any provision of any existing
contract applicable to the Borrower or its
Certificate of incorporation or by-laws or
any limitation on the powers of either
directors or other officers of the Borrower;
or
9.1.3.2 cause any Event of Default to occur; or
9.1.3.3 except for the Permitted Encumbrances give
rise to the creation or imposition of any
security interest lien charge or encumbrance
on any of the undertaking property or assets
of the Borrower, present or future (including
uncalled capital) other than the Security
Interests;
9.1.4 that no litigation, arbitration or administrative
proceedings before or of any court, arbitrator or
authority are presently
<PAGE>
pending or, to the best of the Borrower's knowledge and
belief, threatened against it or any other Relevant
Parties at the time this warranty is given or repeated
or any of their assets which might materially and
adversely affect its or their ability to perform its
or their obligations hereunder or under any of the
Relevant Agreements executed at the time this
warranty is given or repeated provided the failure to
perform such obligations materially adversely affects
or will materially adversely affect the Banks hereunder
as determined by the Banks in good faith;
9.1.5 the signature acceptance execution and performance by
the Borrower and the Relevant Parties have been duly
authorised by all appropriate action on its or their
part;
9.1.6 the information set out in the Relevant Agreements
executed at the time this warranty is given or repeated
is true and accurate in all material respects which
materially affect or will materially affect the Banks
hereunder as determined by the Banks in good faith and
the Borrower has fully disclosed all facts
<PAGE>
and information relating to the Borrower and the
production and financing of each of the Films which
the Borrower knows or ought having exercised due
diligence to know are material to the Banks in the
context of the transaction contemplated by this
Agreement and the Facility Letters executed at the
time this warranty is given or repeated and that if
any such facts or information are received or
discovered or which would on enquiry (whether of
professional advisers or others) be received or
discovered after the date hereof the Borrower will
forthwith notify the Agent and the Borrower
specifically warrants that the Borrower has
not received any information nor knows of any
information which would or be likely to affect the
Banks' decision to extend any Facility extended
hereunder at the time this warranty is given or
repeated and that if any such facts or information are
received or discovered or which would on enquiry
(whether of professional advisers or others) be
received or discovered after the date hereof the
Borrower will forthwith notify the Agent;
9.1.7 that the ^ and ^ specified in respect of ^
<PAGE>
for ^ in the ^ in which the Borrower has ^ in such ^
and in respect of ^ set out in the Borrower's ^ and
reproduced in each ^ executed at the time this warranty
is given or repeated and upon which the Banks have
relied in deciding to make ^ are or will be in the
Borrower's good faith business judgement ^ and are or
will in the Borrower's good faith business judgement
be ^ to the ^ which may be ^ likely to be ^ from the ^
which may be ^ likely to be ^ from the ^ of each such ^
and that to the best of the Borrower's knowledge and
belief all the ^ required under the ^ executed at the
time of this warranty is given or repeated in respect
of each such ^ will be promptly ^ when ^;
9.1.8 that to the best of the Borrower's knowledge and belief
none of the Relevant Parties is in breach ("breach" for
this purpose being limited to a breach which materially
adversely affects, or will materially adversely affect,
the Banks hereunder as determined by the Banks in good
faith) of any of the Relevant Agreements executed at
the time this warranty is given or repeated or in
material default ("default" for this purpose
<PAGE>
being limited to a default which materially adversely
affects, or will materially affect the Banks hereunder
as determined by the Banks in good faith) thereunder or
under any other instrument or agreement to which any of
such parties is a party or by which it is bound
relating to any of the Films or their financing,
production or exploitation, all of which Relevant
Agreements the Borrower warrants and represents to the
best of the Borrower's knowledge and belief are
unencumbered insofar as the material interests of the
Banks are not or will not be materially adversely
affected thereby as determined by the Banks in good
faith (except for the Permitted Encumbrances or as
otherwise as provided for herein or in any Facility
Letter executed at the time this warranty is given or
repeated) in full force and effect and with the terms
of which all such parties have complied and will
continue to comply and to the best of the Borrower's
knowledge and belief that, except as to the Permitted
Encumbrances, no party (save the Agent) has or is in
the process of perfecting any charge or lien or any
other security over any of the undertaking and assets
of such
<PAGE>
parties relating to any such Film without the
prior written consent of the Agent;
9.1.9 that the Borrower is or will become and remain (without
further action or fulfilment of any condition) entitled
to the exclusive right for the full term of each
Acquisition Agreement executed at the time this
warranty is given or repeated to arrange for the
exhibition distribution and other exploitation of the
Film or Films to which each such Acquisition Agreement
relates (including all necessary rights in the music on
the soundtrack of the Film) and the Ancillary Rights
(as such term is defined in the applicable Facility
Letter) throughout the applicable territory without
further licence or fee (other than as agreed with
applicable third parties and approved by the Agent);
9.1.10 that subject to any contractually required collection
arrangement approved in writing by the Agent all the
Gross Receipts in respect of each Film will (prior to
any enforcement of any of the Security Interests by the
Agent) be paid into the applicable
<PAGE>
Collections Account in accordance with the provisions
of the applicable Facility Letter;
9.1.11 that the Borrower will maintain or procure the
maintenance of any insurance in respect of each Film
required by the Bank as a condition precedent to
drawdown or issue of any letter of credit or guarantee
pursuant to clause 3.3.8 hereof or pursuant to any
Facility Letter until delivery of such Film in
accordance with the provisions of the applicable
Acquisition Agreement and thereafter maintain or
procure the maintenance of Errors and Omissions cover
for a total period of three years from commencement of
production (it being agreed that in the event the Loan
with respect to the applicable Film Facility has not
then been repaid in full the Borrower will, at the
written request of the Agent extent such cover or
obtain new cover as directed by the Agent) in amounts
to be approved by the Agent but not to exceed US$1
million per claim and US$3 million in the aggregate;
9.1.12 that each Film will conform to the screenplay specified
in the Facility Request relating
<PAGE>
thereto will star, will be produced by and directed
by those persons specified in the Facility Request
relating thereto subject to any replacements thereof
substituted with the approval of the completion
guarantor for the applicable Film and that each Film
will have a running time of not less than 90 and not
more than 120 minutes (all unless otherwise approved
by the Agent in writing) and that production of each
Film will be or has been undertaken in accordance with
the applicable Acquisition Agreement and in a timely
manner in strictest conformity with the best industry
practice to the intent that each such completed Film
will be or is of first-class technical quality suitable
for first run theatrical release (if a theatrical film)
throughout the territory in respect of which the
Borrower is granted distribution rights pursuant to the
applicable Acquisition Agreement and that the Borrower
will use reasonable efforts to ensure that full and
adequate delivery of each Film may be made in a timely
manner on or before the delivery date specified in the
applicable Acquisition Agreement and that the Borrower
will ensure that full and adequate delivery of each
Film
<PAGE>
is made in a timely manner on or before the delivery
dates specified in the applicable Licence Agreements
(as the same may be varied in writing by the Borrower
and the applicable Sub-Distributor) and otherwise in
all respects and with all delivery items required
thereby and that to the best of the Borrower's
knowledge and belief (but subject always to the
Permitted Encumbrances) there is not now and the
Borrower does not know of anything which in the
future might give rise to any claim, lien, charge,
imperfection in title or copyright, inadequacy in
production or direction, censorship or other reason
whatsoever now preventing or hampering full delivery
of each Film exactly in accordance with the applicable
Acquisition Agreement and the applicable Licence
Agreements or receipt and application of the applicable
Gross Receipts as provided for in the applicable
Facility Letter or the Borrower from lawfully and
freely exercising all rights under such agreements and
that the Borrower knows of no reason why delivery of
each such Film as aforesaid should not be accepted
under all such agreements provided always that no
breach of any of the foregoing provisions
<PAGE>
shall constitute a breach of the Borrower's
representations and warranties hereunder unless such
breach materially adversely affects or will materially
adversely affect the Banks hereunder as determined by
the Banks in good faith;
9.1.13 in terms identical (mutatis mutandis) to the warranties
and representations made by the Borrower in the
Acquisition Agreements executed at the time this
warranty is given or repeated as if the same were
hereinafter set out in full;
9.1.14 that it has provided Bannon & Company with all
documents and information required by Bannon & Company
to prepare its valuation of the Borrower's library of
films and that all such information is true and
accurate in all material respects; and
9.1.15 that prior to any drawdown hereunder all conditions
precedent to, and all consents necessary to permit, the
Merger pursuant to the Merger Agreement shall have been
satisfied and no material breach of any term or
provision of any Merger Document shall
<PAGE>
have occurred and no action shall have been taken by
any competent authority which restrains, prevents or
imposes material adverse conditions upon, or seeks to
restrain, prevent or impose material adverse conditions
upon, the Merger;
9.1.16 that prior to any drawdown hereunder Old OFG shall have
merged with and into the Borrower pursuant to the
Merger Agreement in compliance with the Delaware
General Corporation Law;
9.1.17 that prior to any drawdown hereunder the Certificate of
Merger executed by the Borrower shall have been filed
with the Secretary of State of the State of Delaware
and filed or recorded in each other place wherein it is
required to be so filed or recorded, in each case
evidencing the consummation of the Merger and such
Certificate of Merger complies as to form and substance
with the requirements of the Delaware General
Corporation Law;
9.1.18 that prior to any drawdown hereunder the approval of
the Merger and the other
<PAGE>
transactions and matters related thereto by the Board
of Directors and shareholders of Old OFG and the
Borrower respectively shall not have been rescinded,
modified or withdrawn;
9.1.19 that the Borrower is in compliance with all applicable
state and federal securities laws and regulations;
9.1.20 that:
9.1.20.1 when the Merger is consummated Robert Little
and Ellen Little will own, free and clear
from any liens, 2,928,218 shares of the
5,777,778 then outstanding shares of the
voting stock of the Borrower and William
Lischak will own 249,560 of such then
outstanding voting stock;
9.1.20.2 further approximately US$42,000,000 of equity
(less any applicable fees and expenses) is
capable of being paid to the Borrower upon
exercise of options, warrants and units of
the Borrower that will be
<PAGE>
outstanding upon consummation of the Merger
(disregarding for such purpose any means of
cashless exercise);
9.1.20.3 upon consummation of the Merger pursuant to
the Merger Documents, the board of directors
of the Borrower will comprise Robert Little,
Ellen Little, William Lischak and Allesandro
Fracassi ("the OFG Directors") and three
nominees of New OFG ("the EMAC Directors");
9.1.20.4 Section 1(e) of the Stockholders' Voting
Agreement to be entered into upon
consummation of the Merger provides that:
"During the term of this Agreement, the
Overseas Stockholders shall not vote to
remove any director designated by the
Founders and who is still entitled to be a
director hereunder, and the Founders shall
not vote to remove any director
<PAGE>
designated by the Overseas Stockholders
and who is still entitled to be a director
hereunder; provided, however, that as soon as
practicable after the receipt of a written
request from holders of a majority of the
Shares held by all Overseas Stockholders to
remove an Overseas Stockholders Designee, or
from holders of a majority of the Shares held
by all Founders to remove a Founders
Designee, the other Stockholders agree to use
their best efforts to take, or cause to be
taken, all appropriate action to effect the
removal and replacement of such Overseas
Stockholders Designee or Founders Designee,
as the case may be."
9.1.20.5 Section 3.01 of the Bylaws of New OFG to be
effective upon consummation of the Merger
provide that:
"Subject to the provisions of the
<PAGE>
laws of the State of Delaware and the
Certificate of Incorporation, the business
and affairs of the corporation shall be
managed and all corporate powers shall be
exercised by or under the direction of the
Board. The board may delegate the management
of the day-to-day operations of the business
of the corporation to a management company or
other person provided that the business and
affairs of the corporation shall be managed
and all corporate powers shall be exercised
under the ultimate direction of the Board."
9.1.20.6 The Operating Guidelines of New OFG after the
Merger will further provide with respect to
the Board:
"The Board will have regular meetings on a
quarterly basis. The Executive Committee of
the Board, chaired by the Vice Chairman of
the Board, will have the Co-Chief Executive
Officers on as permanent
<PAGE>
members, and the members of the Executive
Committee will use their reasonable best
efforts to meet bi-weekly to review business
operations. During intervals between
meetings of the Board of Directors of the
Corporation, the Executive Committee shall
exercise all powers of the Board of Directors
(except those specifically reserved by
Delaware law to the full Board of Directors)
in the management and direction of the
business and conduct of the affairs of the
Corporation in all cases in which specific
directions have not been given by the Board
of Directors."
9.1.20.7 Section 1.1 of the Employment Agreement of
each of Robert B Little and Ellen Dinerman
Little (the "Employment Agreement") to be
entered into upon consummation of the Merger
provides in part:
"The Services and authority of
<PAGE>
Employee shall include management and
supervision of (A) the general business,
affairs, management and operations of the
Company, (B) the distribution of motion
pictures, and (C) other principal business
activities of the Company and its
Affiliates."
Section 1.5.2 of the Employment Agreement
provides:
"During the Term, all officers and employees
of the Company shall report to, and only to,
Employee and the Co-Executive (directly or
through such channels as Employee and the Co-
Executive shall designate). During the Term,
there shall be no officer or employee of the
Company whose title, position or authority
with the Company is equal to Employee (other
than the Co-Executive) or superior to that of
Employee."
Section 1.5.4 of the Employment
<PAGE>
Agreement provides:
"In addition to the other duties and
authority of Employee set forth herein,
Employee and the Co-Executive (and no other
person without Employee's consent) shall
have, subject to Section "V" of the Company's
Operating Guidelines attached hereto as
Exhibit "A", the sole and ultimate authority
and responsibility to make all creative
decisions for the Company with respect to all
motion pictures financed, produced or
distributed by the Company or its Affiliates.
This authority shall include, without
limitation, the creative decisions for
acquiring and developing properties,
attaching all creative elements,
greenlighting films for acquisition, and
approving the motion pictures or other
properties to be financed or acquired by the
Company, as well as by its Affiliates. In
addition, Employee
<PAGE>
and the Co-Executive shall have sole
authority and responsibility to make all
employment decisions regarding Company
personnel, including personnel of the
Company's Affiliates."
9.1.20.8 The Operating Guidelines of New OFG after the
Merger will provide with respect to the
authority/responsibility of the
Co-Chairpersons and Co-Chief Executive
Officers:
"Such officers shall have general
supervision, direction and control of the
business and affairs of the Corporation and
the general powers and duties of management
usually vested in such officers of a
corporation. They shall preside at all
meetings of the Board and at all meetings of
the shareholders. They shall serve on the
three member Executive Committee of the
Board. Such officers (and no other persons)
shall have the sole and
<PAGE>
ultimate authority and responsibility to make
all creative decisions for the Corporation.
In addition, such officers shall have the
sole authority and responsibility to make all
employment decisions regarding Corporation
personnel with decisions regarding key senior
management to be made in consultation with
the Executive Committee. All other officers
and employees of the Corporation shall report
to, and only to, such officers (directly or
through such channels as they may
designate)."
9.1.20.9 The following actions must be approved by
more than a simple majority of a quorum of
the New OFG Board pursuant to the New OFG
Bylaws and/or Operating Guidelines:
(i) Any amendments to the Restated
Certificate or the Bylaws of New OFG which
would alter (A) the voting rights of the
holders of
<PAGE>
stock in New OFG, (B) the number or classes
of directors on the New OFG Board, or (C) the
notice and quorum requirements for meetings
of the New OFG Board or its committees or of
the shareholders of New OFG;
(ii) Any merger or sale of all or
substantially all of the assets of New OFG
(other than in connection with the
liquidation, dissolution or winding up of New
OFG);
(iii) The designation or issuance of any
preferred stock of New OFG;
(iv) Any amendments to the New OFG operating
guidelines; and
(v) amendment or repeal of the New OFG
Bylaws or any New OFG Bylaw.
9.1.20.10 the provisions cited in clauses 9.1.20.4,
9.1.20.5, 9.1.20.6, 9.1.20.7, 9.1.20.8 and
9.1.20.9 hereof are not contradicted, amended
or modified in a material
<PAGE>
manner by any other provisions in any of the
Merger Documents or any other agreement or
document by which the Borrower is bound.
9.2 The Borrower hereby undertakes for the benefit of the Banks (and
shall be deemed to repeat such undertakings on every day
hereafter on which a Facility Letter is executed or on which any
drawing is made hereunder or under any Facility Letter (whether
by cash advance or payment under the City National Letter of
Credit or under any guarantee or letter of credit issued pursuant
to any Facility Letter) or on which the City National Letter of
Credit or any such letter of credit or guarantee is issued or
given):-
9.2.1 that while any sum is outstanding hereunder, the
Borrower will not at any time without the prior written
consent of the Agent sell, transfer or in any way
dispose of all or a substantial part of its undertaking
or assets or create or permit to subsist any mortgage,
charge (whether fixed or floating) or other security or
possessory interest (other than the Permitted
Encumbrances) upon any of its undertaking or assets nor
allow nor permit any of its subsidiaries or associates
to do
<PAGE>
any of the same nor alter its charter document;
9.2.2 that the Borrower shall not at any time prior to the
repayment and payment of all amounts due hereunder or
under any Facility Letter to Coutts or the Agent for
the account of the Banks without the prior written
consent of the Agent assign, novate, discount, pledge,
charge, terminate or otherwise dispose of or deal with,
or authorise third party rights to arise over, or
authorise or agree to any material alteration of (which
alteration materially adversely affects or will
materially adversely affect the Banks hereunder as
determined by the Banks in good faith), any or all of
the Relevant Agreements executed at the time this
undertaking is given or repeated and shall procure that
no person firm or corporation over whom the Borrower
exercises any control, and use best endeavours to
procure that no other person firm or corporation, shall
at any time revoke alter or countermand or attempt or
purport to revoke alter or countermand any or all of
the directions as to payment into the Collections
Account contained in the Licence Agreements
<PAGE>
or in any notice of acknowledgement of assignment
executed in fulfilment of the terms hereof or of any
Facility Letter provided always that if the Borrower
considers it will be put to disproportionate cost in
procuring the same or considers that legal
proceedings will be necessary to procure the same,
it will first consult the Agent and thereafter
proceed as the Agent shall in good faith direct;
9.2.3 that the Borrower shall not accept and has not accepted
partial, late or incomplete Delivery (as that term is
defined in any applicable Acquisition Agreement
executed at the time this undertaking is given or
repeated) of any Film without the prior written consent
of the Agent unless such partial, late or incomplete
delivery does not prevent the Borrower from fully
complying with its obligations under the Licence
Agreements for that Film, in which event the Borrower
shall notify the Agent of such partial, late or
incomplete Delivery but shall not be obliged to obtain
the Agent's consent before accepting the same;
<PAGE>
9.2.4 that the Borrower will, and will use all reasonable
endeavours to procure that the Relevant Parties will
promptly and fully comply with their respective
obligations under the Relevant Agreements and will
observe keep and perform all the terms and conditions
thereof;
9.2.5 the Borrower will ensure that the Agent is fully
consulted in connection with the exploitation of each
Film and the Ancillary Rights (as defined in the
applicable Facility Letter) thereto and that ^ will be
^ after the date hereof without first obtaining the
consent of the Agent, unless either the Agent does not
respond to a written request for such consent within 3
Business Days or the amount of the ^ or ^ thereunder ^
for the ^ and ^ in question the ^ set out in the second
column of the applicable Schedule to the applicable ^
in which event and without further formality but
subject to clause 11.3 hereof the Agent shall be deemed
to have given its consent and that forthwith upon the
execution thereof the Agent shall be sent a copy of all
such agreements;
<PAGE>
9.2.6 that it shall be a term of all of the Licence
Agreements that by irrevocable direction to that effect
all monies due and payable to the Borrower thereunder
(whether minimum guarantees, advances, overages or
otherwise) shall be paid directly into the Collections
Account specified in the applicable Facility Letter
without any deductions whatsoever (save those as may be
required by local law);
9.2.7 that simultaneously with the execution and delivery of
each completed Licence Agreement entered into after the
date of this Agreement the Borrower shall deliver a
notice of assignment of such Licence Agreement to the
licensee party thereto in the form of the notice set
out in Exhibit II to the Schedule 3 hereto and shall
use good faith efforts to procure that the form of
acknowledgement and receipt attached thereto is duly
executed by the applicable Sub-Distributor and
delivered to the Agent to the extent only that the
provisions of such notice and acknowledgement are not
contained in the Licence Agreement itself. In the
event that any Sub-Distributor refuses to sign such
acknowledgement and receipt or requests
<PAGE>
changes thereto, the Borrower shall notify the Agent
and shall only conclude the applicable Licence
Agreement with the consent of the Agent.
Notwithstanding the foregoing, in the event that the
Agent does not respond within 3 Business Days of
such notice from the Borrower, the Borrower may
conclude such Licence Agreement;
9.2.8 that the copyright in the screenplay of each Film has
been registered with the U.S. Copyright Office (or such
registration has been applied for) and upon completion
of each Film the copyright therein and the grant of
distribution rights to the Borrower under the
applicable Acquisition Agreement will be recorded by
appropriate documentation with the U.S. Copyright
Office;
9.2.9 that the Borrower will maintain the keyman insurance
referred to in clause 3.1.7 hereof;
9.2.10 that the Borrower will notify the Agent forthwith upon
becoming actually aware of the occurrence or threatened
occurrence of an Event of Default;
<PAGE>
9.2.11 that the Borrower will not deliver any Film to any Sub-
Distributor pursuant to any Licence Agreement which
provides for any payment in whole or in part of the
minimum guarantee or advance to be made prior to
delivery until all such payments have been made in
full.
9.2.12 that the cash balance of New OFG as at the effective
date of the Merger will be applied as follows:
9.2.12.1 US$1,500,000 will be paid to Robert Little
and Ellen Little;
9.2.12.2 US$3,500,000 will be used to repay amounts
outstanding under the Distribution Facility
Letter on or before the maturity thereof; and
9.2.12.3 the balance shall be used to repay amounts
outstanding under the Existing Syndication
Agreement or for investment in film or
television projects or for working capital
purposes of the Borrower.
<PAGE>
9.2.13 that without the Banks' prior written consent, the
provisions cited in clauses 9.1.20.4, 9.1.20.5,
9.1.20.6, 9.1.20.7 and 9.1.20.8 hereof will not be
amended, modified, or repealed by the Borrower in a
manner which would or might have a material and adverse
effect upon the Banks hereunder.
9.3 The Borrower agrees to indemnify and keep indemnified the Banks
from and against all costs expenses (including legal fees and
disbursements on an indemnity basis) claims losses damages
liabilities or proceedings suffered by the Banks whatsoever
arising directly or indirectly from any Event of Default or
actual or alleged breach of or non-compliance with the
representations warranties undertakings and obligations herein
contained and the Banks reserve the right (without prejudice to
their other rights and remedies) on the happening of any Event of
Default or any such breach or non-compliance to withhold any
amount of the Loan not then drawn down until the breach or non-
compliance complained of is remedied and if the breach or non-
compliance is not remedied within five Business Days or is an
Event of Default, to demand immediate repayment by the Borrower
to the Agent for the account of the Banks or Coutts (as
applicable) of that part of the Loan which has by then been
advanced hereunder
<PAGE>
together with interest thereon at the rate provided for herein
and the Banks' unpaid fees and expenses or if the Loan (or any
part thereof) has not by then been advanced to require the
Borrower to make such provision as the Banks in their
discretion deem adequate against the Banks' contingent
liability under any Guarantee or Letter of Credit issued
pursuant to any Facility Letter or under the City National
Letter of Credit.
10 FINANCIAL INFORMATION
10.1 The Borrower hereby undertakes to send copies of the following to
the Agent in a form satisfactory to the Agent:
10.1.1 monthly facility schedules setting out all amounts
outstanding or committed (in the case of letters of
credit or guarantee facilities) under each Facility,
all amounts due under the Licence Agreements for any of
the Films (or in the case of unsigned agreements, all
amounts expected to be due) when such amounts were or
will be due, from which Sub-Distributor such amounts
were or will be due and which such amounts are secured
by letters of credit or bank guarantees;
<PAGE>
10.1.2 monthly itemised cash flow forecasts setting out the
anticipated cash flow of the Borrower for the
succeeding 12 months;
10.1.3 monthly schedules showing in respect of each Sub-
Distributor all amounts due or to become due in
relation to each Film, when such amounts were or will
be due and which such amounts are secured by letters of
credit or bank guarantees;
10.1.4 monthly unaudited management accounts setting out the
profit and loss account, balance sheet and cash flow
(itemised in the same way as set out in clause 10.1.2
above) of the Borrower for the previous month;
10.1.5 the budgeted profit and loss account and balance sheet
of the Borrower for the succeeding financial year;
10.1.6 the annual accounts of the Borrower audited in
accordance with generally accepted accounting
principles in the United States of America by a firm of
certified public accountants approved by the Agent
(Price Waterhouse are hereby approved);
<PAGE>
10.1.7 monthly bank statements relating to the Borrower's
overdraft with City National; and
10.1.8 copies of all Form 10-K, 10-Q, 8-K and all other
periodic reports filed or required to be filed by the
Borrower pursuant to the security laws or regulations
of the United States and any applicable state security
laws or regulations.
10.2 The material specified in clauses 10.1.1 and 10.1.2, 10.1.3
and 10.1.7 hereof shall be sent no later than 10 Business Days
after the end of the month to which it relates, the material
specified in clause 10.1.4 shall be sent no later than 20
Business Days after the end of the month to which it relates,
the material specified in clause 10.1.5 hereof shall be sent
no later than 31st January of each year until this Agreement
is terminated, the material specified in clause 10.1.6 shall
be sent no later than six months from the end of the year to
which it relates and each item specified in clause 10.1.8
shall be sent no later than 7 Business Days after the same is
filed with the United States Securities and Exchange
Commission or applicable state regulatory authority.
<PAGE>
10.3 In addition to the material specified in clause 10.1 hereof and
any other information or documentation which the Borrower may be
obliged to supply pursuant to any Facility Letter, the Borrower
shall promptly meet any request for additional financial,
management or other information or documentation as the Agent may
from time to time request in the management of the Facilities.
The Borrower also agrees that its officers will make themselves
available to speak to the Agent's duly authorised representatives
upon reasonable notice and if so required no less frequently than
weekly.
11 FINANCIAL OBLIGATIONS OF THE BORROWER
11.1 The Borrower undertakes that:-
11.1.1 The Borrower will maintain a consolidated net worth (as
the expression is understood in accordance with
generally accepted accounting principles in the United
States of America) of not less than US$12,000,000 in
1996 (or, if the provisions of clause 2.11 hereof
apply, not less than US$11,000,000) and in succeeding
years the consolidated net worth for the previous year
plus 50% of the annual net income (as such term or any
term analogous thereto shall be defined in the
<PAGE>
Borrower's audited accounts) for such previous year.
11.1.2 The Borrower, the Group Companies and any affiliate or
subsidiary of the Borrower or any of the Group
Companies shall not pay any dividend or make any
distribution of its profits unless and until the Agent
is satisfied that the Borrower is not in breach of
clause 11.1.1 hereof and that such payment or
distribution will not lead to the Borrower being in
breach of such clause.
11.1.3 The Borrower shall not, without the prior written
consent of the Banks, create or incur, nor permit any
of the Group Companies to create or incur, any
indebtedness for borrowed money or for the deferred
purchase price of property under capital leases, or
become liable as a surety, guarantor, accommodation
endorser, or otherwise for or upon the obligation for
any other person, firm or corporation; provided,
however, that this sub-clause shall not be deemed to
prohibit:
11.1.3.1 unsecured liabilities incurred in
<PAGE>
the ordinary course of business as
presently conducted in connection with the
acquisition or lease of goods, supplies or
merchandise and the distribution of Films
(but in no event for borrowed money) and
current accounts payable which are payable
within one year and are not owing and
unpaid in excess of forty-five days after
the due date;
11.1.3.2 the execution of bonds or undertakings in the
ordinary course of business as presently
conducted;
11.1.3.3 the endorsement of negotiable instruments
received in the ordinary course of business
as presently conducted;
11.1.3.4 the borrowing of up to US$1,000,000 under the
Borrower's existing overdraft with City
National ;
11.1.3.5 indebtedness in connection with taxes nor yet
required to be paid;
<PAGE>
11.1.3.6 unsecured liabilities (or liabilities secured
by Permitted Encumbrances) for advances,
royalties, participations, deferments or
residuals in connection with films;
11.1.3.7 capital leases in an aggregate amount not to
exceed ^;
11.1.3.8 indebtedness for borrowed money incurred in
connection with the Permitted Encumbrances
described in the definition of the term
Permitted Encumbrances, subject to the
limitations contained in such definition;
11.1.3.9 indebtedness in respect of judgments which do
not constitute an Event of Default under
clause 22.9;
11.1.3.10 indebtedness for borrowed money owing to the
Agent or the Banks under this Agreement;
<PAGE>
11.1.3.11 indebtedness of US$2,000,000 plus interest
thereon to Robert Little and Ellen Little pursuant to a
secured promissory note to be dated the effective date
of the Merger.
11.1.4 Solely with respect to either (a) Licence Agreements
where a minimum guarantee or advance of greater than ^
is payable and the Sub-Distributor has not been
approved by the Agent or (b) Licence Agreements where
the minimum guarantee or advance is not payable in full
prior to delivery of the applicable Film to the
applicable Sub-Distributor no less than ^ of the
minimum guarantee or advance which is contractually due
to the Borrower from each Sub-Distributor pursuant to
each Licence Agreement and in any event the ^ of the ^
of such ^ or ^ shall, unless the Agent shall notify the
Borrower to the contrary, be secured by an irrevocable
letter of credit or bank guarantee issued by such
person as the Agent shall approve substantially in the
form of the letter of credit or bank guarantee attached
as Schedule 4 or such other form as the Agent shall
approve.
<PAGE>
11.1.5 The Borrower shall keep full, complete, accurate and
faithful books of account and records relating to the
delivery distribution and exploitation of each Film and
the Agent shall be entitled at the Borrower's expense
on reasonable prior notice on any Business Day and
either directly or through an appointed representative
to inspect all such books of account and records as
aforesaid and to take copies of the same or extracts
thereof and/or once annually to cause such books to be
audited. The Borrower will promptly deliver to the
Bank copies of all statements to be rendered under any
Acquisition Agreement and any Licence Agreement and in
any event within five Business Days of receipt or
despatch thereof.
11.1.6 The Borrower shall provide or has provided in all
Licence Agreements for the right of the Borrower to
audit and inspect the book of accounts of the Sub-
Distributors. Such provision shall be in a form
acceptable to the Agent. The Borrower will also upon
demand by the Agent exercise such of its right to audit
and inspect the books of account of the licensees under
any of the
<PAGE>
Licence Agreements as the Agent may specify in such
demand and provide the Banks with such full record
of such audit and inspection as the Agent shall
require.
11.1.7 The Borrower will maintain Net Receivables of ^ of the
amount of the contingent liability from time to time of
the Banks under the City National Letter of Credit.
11.2 The Borrower shall set an itemised annual budget acceptable to
the Agent for operational overheads of the Borrower and notify
the Agent accordingly. The Borrower will not exceed the total of
^ of such budget (although it may apply savings on any one item
against excess on another item) without the prior written consent
of the Agent, which shall not be unreasonably withheld.
11.3 The Agent shall have the absolute right to approve the identity
of all Sub-Distributors and to determine the maximum aggregate
unpaid amount of minimum guarantees owed by each Sub-Distributor
to the Borrower at any time. It is intended that the Borrower
shall submit a list of Sub-Distributors to the Agent for its
approval and that during the term hereof the Borrower may submit
further Sub-Distributors for the Agent's approval.
<PAGE>
Once the Agent has approved a Sub-Distributor in writing to
the Borrower, such Sub-Distributor will continue to be
approved until the Agent notifies the Borrower to the contrary
in writing.
11.4 The Borrower shall procure that at all times the aggregate of:
11.4.1 cash on deposit in respect of Films in respect of which
the Film Facility has not been fully repaid, which the
Borrower owns, which is not held for a third party, and
which has not then been applied in reduction of any
amounts outstanding hereunder or under any Facility
Letter; and
11.4.2 receivables acceptable to the Banks in respect of Films
in respect of which the Film Facility has not been
fully repaid
shall equal not less than 30% (thirty per cent) of the amount
outstanding or committed (by way of letters of credit or
guarantees issued but unencashed) in connection with the Film
Facilities.
For the purpose of clause 11.4.2 only, a Film Facility shall be
deemed fully repaid when all amounts
<PAGE>
outstanding to the Agent or the Banks hereunder or under any
Facility Letter (excluding only the ^ to ^ have been fully
repaid.
11.5 For the avoidance of doubt, the Borrower hereby acknowledges that
the Banks may refuse to grant a Film Facility if this would
result in the Borrower being in breach of this clause 11.4.
12 EXECUTION OF FACILITY LETTERS
12.1 Subject to the Facility Limit set out in clauses 2.1, 2.3 and
12.2 hereof the Borrower may at any time during the term hereof
request the Agent to make available a Film Facility for a Film.
Each such Facility Request shall be in the form set out in
Schedule 2 or in such other form as the Agent may from time to
time require and shall be sent to the Agent. When making such
request (and thereafter), the Borrower shall provide the Agent
with such information documentation and details as the Agent
shall at its reasonable discretion require.
12.2 In no event shall any Facility Request seek a Film Facility the
amount of which when aggregated with the amount of all other Film
Facilities then outstanding might exceed US$21,000,000 (twenty
one million United
<PAGE>
States Dollars) or such greater amount as such limit shall
have been permitted pursuant to clause 2.12 hereof or such
lesser amount as such limit shall be as determined by clause
2.11 hereof. For these purposes, liability under all Film
Facilities then outstanding shall consist of the value of
Loans and accrued interest thereon and/or which the Banks
might be required to advance thereunder and the face value of
any Obligations which the Banks might be required to accept.
12.3 The Agent shall notify Berliner of each Facility Request. The
Agent shall further supply to Berliner such details and
information relating thereto as it possesses in order to permit
Berliner to understand the purpose and nature of the proposed
Facility. Berliner shall be entitled to discuss with the Agent
any aspect of the proposed borrowing, and to make such
recommendations to the Agent as it feels appropriate.
12.4 The Agent (on behalf of the Banks hereunder) may in its sole and
absolute discretion and without giving any reasons decline to
grant any Film Facility requested by a Facility Request, it being
the intention that each such proposed financing be considered on
its own merits. The Agent will notify the Borrower of its
decision within 10 Business Days of receipt by it of a
<PAGE>
Facility Request. Once the Facility Request has been approved
and a Facility Letter entered into, the Agent and/or the Banks
shall make available the requested loan in accordance with the
provisions of the applicable Facility Letter.
12.5 It is anticipated that each Film Facility for a Film will be made
available in accordance with the terms and conditions of a
Facility Letter which will be substantially in the form of the
draft set out in Schedule 3. The Agent specifically reserves the
right, however to stipulate an alternative form of agreement at
its discretion, and shall stipulate whatever requirements in
relation to security for the Banks it feels are appropriate in
the circumstances of each Film Facility.
12.6 A Film Facility for a Film shall be made available hereunder by
signature by the Borrower, and (upon its being authorised to do
so as provided in clause 19.1 hereof) by the Agent on behalf of
the Banks, of a Facility Letter. If, in relation to a Facility
Request, the Borrower shall decline to sign the Facility Letter
as stipulated by the Agent, it shall be under no obligation to do
so. It shall, however, be liable to pay the out of pocket
expenses of the Agent in connection with such request, as set out
below.
<PAGE>
13 THE PRIOR OBLIGATIONS AND EXISTING BORROWINGS
13.1 With effect from the effective date of the Merger, New OFG hereby
expressly and unconditionally assumes the Prior Obligations.
Such Prior Obligations shall be deemed obligations hereunder as
well as obligations under the Agreements pursuant to which they
were assumed by Old OFG.
13.2 It is hereby acknowledged that all amounts outstanding, due,
paid, repaid or borrowed under the Existing Syndication Agreement
or any Facility Letter or other document ancillary thereto shall
be deemed outstanding, due, paid, repaid or borrowed hereunder.
13.3 Amounts outstanding, due, paid, repaid or borrowed under the
Distribution Facility shall be deemed outstanding, due, paid or
repaid under the Operating Facility.
13.4 It is hereby acknowledged that the provisions of clauses 13.1,
13.2 and 13.3 hereof shall not operate so as to terminate the
Existing Syndication Agreement or the Distribution Facility
Letter or any other agreement pursuant to which the Prior
Obligations were originally assumed, all of which shall remain in
full force and
<PAGE>
effect provided always that the Borrower shall not be liable
twice for the same obligation. It is expressly acknowledged
that this Agreement is an amendment to and restatement of the
Existing Syndication Agreement.
14 NATURE OF THE BANKS' RIGHTS AND OBLIGATIONS
14.1 The obligations of the Banks hereunder are several, and failure
by a Bank to carry out those obligations shall not relieve any
other party of its obligations hereunder, or under any Facility
Letter or other document entered into pursuant hereto or thereto.
In executing a Facility Letter, the Agent acts as agent for each
Bank severally, and does not by its signature assume
responsibility in respect of the obligations of any Bank, other
than itself in its capacity as a Bank. In entering into an
Obligation, the Agent likewise acts as agent for each Bank
severally and Berliner agrees to indemnify the Agent for that
part of the Obligation which equates to its Commitment. No Bank
shall be responsible for the obligations of any other Bank
hereunder or under any Facility Letter.
14.2 The obligations of the Borrower towards each of the Agent and the
Banks hereunder and under each Facility Letter are undertaken to
each of them as separate and
<PAGE>
independent rights.
15 SECURITY AND APPLICATION OF MONIES
15.1 The Agent shall hold and enforce the Security Interests as agent
and trustee for itself and Berliner in accordance with their
respective rights hereunder and subject to clause 15.3 hereof.
15.2 Notwithstanding anything to the contrary contained in any
Facility Letter to be entered into hereafter or any other
agreement, all Security Interests held by the Agent for the
liabilities of the Borrower in respect of any of the Facilities
shall be held as security for the liabilities of the Borrower in
respect of all of the Facilities.
15.3 Amounts received by the Agent from the Borrower or recovered by
the Agent upon enforcement of the Security Interests or any of
them shall be applied in the following order:
15.3.1 in repayment of fees or expenses (including without
limitation any expenses incurred by the Agent in
enforcing the Security Interests or any of them)
outstanding from the Borrower hereunder or under any
Facility Letter or any
<PAGE>
Security Agreements;
15.3.2 in repayment of any interest outstanding from the
Borrower relating to the Facilities;
15.3.3 in repayment of all other amounts of principal
outstanding from the Borrower hereunder or under any
Facility Letter;
15.3.4 in repayment of any other amount outstanding from the
Borrower hereunder, under any Facility Letter or under
any document ancillary thereto;
15.3.5 the surplus will be paid to the Borrower or as
otherwise required by law.
15.4 At the written request of the Borrower, the Agent will agree in
writing with any Sub-Distributor that provided such Sub-
Distributor is not in breach of the Licence Agreement to which
such Sub-Distributor is a party the Agent will not exercise its
Security Interest in any way which will interfere with the quiet
enjoyment by such Sub-Distributor of the rights granted or
licensed to such Sub-Distributor pursuant to such Licence
Agreement.
<PAGE>
15.5 Where necessary in relation to any Film or any other film or TV
program acquired by or licensed to the Borrower after the date of
this Agreement, the Agent and/or the Banks will enter into an
intercreditor agreement with other parties secured on such Film,
other film or TV program to be negotiated in good faith, to
establish the priority set out in Clause (c)(ix) of the
definition of "Permitted Encumbrances".
16 PROCEDURE FOR FUNDING ADVANCES
16.1 ^ Business Days before the assumption by the Agent of an
Obligation on behalf of the Banks, Berliner undertakes for the
express benefit of the Borrower and the Agent to provide the
Agent with a ^ substantially in the form agreed providing for the
^ in respect of the applicable Facility.
16.2 In the case of each Loan to be made available under a Facility,
the Agent shall notify Berliner of the date on which such Loan is
to be made to the Borrower at least ^ Business Days before the
date on which such Loan is to be made or such shorter period as
shall be practicable in the circumstances. In the case of any
payment by the Agent in respect of an Obligation it shall give to
Berliner notice of its intention to make a payment in respect
thereof ^ Business Days before the
<PAGE>
date on which payment is made, or shall give such shorter
period of notice as may be practicable in the circumstances.
Failure by the Agent, however, to give notice to Berliner as
set out in this sub-clause shall not relieve Berliner of its
other obligations under this clause or otherwise under this
Agreement.
16.3 Berliner undertakes for the express benefit of the Borrower and
the Agent to pay to the Agent so that the Agent receives value
therefor on the day on which the Agent proposes to disburse the
same, such proportion of the total amount proposed to be
disbursed as Berliner's Commitment bears to the aggregate
Commitments of the Banks.
16.4 All payments to be made hereunder shall be made, if in United
States Dollars, to the account of Coutts with ^ or to such other
account as the Agent may specify and if in any other currency, to
such account of the Agent as the Agent shall from time to time
specify.
16.5 If, for whatever reason, Berliner shall have failed to make any
payment to the Agent as required by this clause 16, then,
provided Berliner has received the notice referred to in clause
16.2 hereof, the Agent may at its discretion (but shall in no
event be obliged to) make the relevant payment on behalf of
Berliner. In
<PAGE>
this event and in consideration of the Agent's agreement to
pay to Berliner Berliner's share of fees payable by the
Borrower hereunder, Berliner shall forthwith reimburse the
Agent for the amount so expended, and pending reimbursement,
the amount concerned shall bear interest at the rate specified
in clause 5.5 hereof. In addition, Berliner shall indemnify
the Agent against all losses, expenses and costs incurred by
the Agent in funding such payment. The amount of such costs
shall be certified to Berliner by the Agent, and the
certificate shall be binding and conclusive for all purposes,
save in the case of manifest error. Any interest payable
hereunder by Berliner shall accrue from day to day and shall
be calculated on the basis of a 360 day year, in the case of
amounts payable in United States Dollars, and on whatever
basis may be customary in the London Interbank market from
time to time in the case of amounts payable in currencies
other than United States Dollars.
17 AVAILABILITY AND REVIEW
The Facilities will be available subject to the terms of this Agreement
until 9th May 1997 or the earlier happening of an Event of Default. The
Banks will review the Facilities made available by this Agreement before
9th May 1997 with a view to determining whether the Facilities should
remain available after such date.
<PAGE>
Prior to such review, the Borrower will supply to the Agent its internal
valuation of the Borrower's interest in its library of films in a form
acceptable to the Agent or, if the Agent shall so request, such a
valuation audited by a firm of certified public accountants acceptable
to the Agent. Such valuation shall value the library at no less than
US$20,000,000. The Agent will consult the Borrower prior to such review
and notify the Borrower of the decision of the Banks as soon as
practicable thereafter.
Such review shall be without prejudice to the terms of any Facility
Letter executed prior thereto.
18 ASSIGNMENT
18.1 This Agreement shall be binding upon, and inure to the benefit
of, the Banks, the Agent, the Borrower and their respective
successors.
18.2 The Borrower shall not assign or transfer any of its rights
and/or obligations under this Agreement.
18.3 Each Bank may at any time with the consent of the Agent (which it
may give or withhold at its discretion but not until it has first
consulted the Borrower) and the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed) assign or
transfer all or any part of its rights or benefits under this
<PAGE>
Agreement by assigning to any one or more banks or other lending
institutions (each of which is in this clause called an
"Assignee") all or any part of such Bank's rights and benefits
under this Agreement
PROVIDED that:-
18.3.1 such assignment or transfer may only be effected if the
Assignee, by delivery of such undertaking as the Agent
may approve, becomes bound by the terms of this
Agreement;
18.3.2 the assignor Bank shall pay to the Agent on demand all
expenses (including but not limited to legal fees) and
any Value Added Tax thereon, certified by the Agent as
having been properly incurred by it in connection with
such transfer by the assignor Bank under this clause;
AND PROVIDED that no Bank may make such assignment or transfer if such
assignment or such transfer will (as appears at the time of such transfer)
result in the Borrower becoming obliged to pay under this Agreement any
greater amounts than it would have been obliged to pay had such assignment
not been made.
18.4 If any Bank assigns or transfers all or any part of its
<PAGE>
rights, benefits and obligations under this Agreement as
provided in clause 18.3 above, all references in this
Agreement to such Bank shall subsequently be construed as
references to such Bank and such Assignee to the extent of
their respective participation and the Borrower shall
subsequently look only to the Assignee (to the exclusion of
such Bank) in respect of that proportion of the Bank's
obligations under this Agreement as correspond to such
Assignee's participation in this Agreement and accordingly
such Bank's Commitment under this Agreement shall be
proportionately reduced and the Assignee shall assume a
Commitment equivalent to such reduction. The Agent shall
notify the Borrower of any such assignment or transfer.
18.5 A Bank may with the prior written consent of the Agent and the
Borrower disclose to a potential Assignee such information about
the Borrower and its financial condition as shall have been made
available to the Banks generally.
19 THE AGENT AND THE BANKS
19.1 Each Bank hereby appoints the Agent to act as the agent of such
Bank for the purposes of this Agreement and for such purposes
irrevocably authorises the Agent to hold
<PAGE>
the Security Interests on its behalf and to take such action
on its behalf and to exercise such powers hereunder as are
specifically delegated to it by this Agreement together with
such powers as are reasonably incidental to them.
Notwithstanding anything else contained herein (including the
provisions of clause 19.13 hereof) the Banks shall jointly and
unanimously decide whether each ^ should be accepted and the
terms of each ^. The approval of each Bank shall be evidenced
by its execution of a copy of each ^ immediately prior to the
execution thereof by the Agent and the Borrower. Subject to
the terms of this sub-clause the Agent will act or refrain
from acting in accordance with any direction received from
Majority Banks.
19.2 The Agent will account to each Bank for such Bank's due
proportion of all sums received by the Agent for such Bank's
account, whether by way of repayment of principal or payment of
interest, fees or otherwise. The Agent may retain for its own use
and benefit (and shall not be liable to account to the Banks for
all or any part of) any sums received by it by way of
reimbursement of expenses incurred by it (including legal fees)
and by way of agency fees payable for the Agent's own account.
19.3 The Agent shall not be obliged to take any steps to
<PAGE>
ascertain whether any Event of Default (other than default in
repayment of principal or in payment of interest, fees or any
other sums due hereunder or pursuant to any Facility Letter)
has happened or exists. Until the Agent shall have received
express notice from the Borrower or Berliner to the contrary
or has actual knowledge that an Event of Default has happened
or exists, the Agent shall be entitled to assume that no Event
of Default (other than as above) has happened or exists. Upon
receipt of such notice or the possession of such knowledge the
Agent will inform Berliner and will thereafter proceed in
relation to:-
19.3.1 the making or refraining from making of any demand for
repayment of some or all of the amounts then
outstanding or due and unpaid under any of the
Facilities; and
19.3.2 the advance of any further funds to the Borrower under
any of the Facilities
strictly in accordance with the decisions of the Majority Banks,
notwithstanding anything to the contrary herein or in any
Facility Letter.
19.4 The Agent will be entitled to rely on any communication or
document believed by it to be genuine and correct
<PAGE>
and to have been communicated or signed by the person by whom
it purports to be communicated or signed and shall not be
liable to any of the parties to this Agreement for any of the
consequences of such reliance.
19.5 The Agent shall not be obliged to take any proceedings against
the Borrower, any Bank or any other person for the recovery of
any sum due under this Agreement.
19.6 Neither the Agent nor any of its directors, officers,
employees or agents shall be liable for the consequences of
any action taken or omitted by it or them or the exercise of
any discretion or power under or in connection with this
Agreement unless caused by its or their gross negligence or
wilful misconduct. The Agent shall not be responsible for any
statements, representations or warranties made by the Borrower
in this Agreement any Facility Letter or otherwise or for or
in respect of any information supplied or provided or
subsequently to be supplied or provided by the Agent or any of
the Banks which is in any way connected with the Borrower or
this Agreement or any Facility Request, Facility Letter or any
of the matters contemplated by this Agreement. The Agent shall
send Berliner monthly reports on the operation and management
of the Facilities. The Agent shall also meet any reasonable
request for additional information within its knowledge
<PAGE>
relating to the Facilities as soon as practicable but
otherwise save as specifically provided in this Agreement, the
Agent shall not be under any duty or obligation, either
initially or on a continuing basis, to provide Berliner with
any credit information or other information with respect to
the financial condition of the Borrower or otherwise relevant
to the Facilities. Furthermore, the Agent shall not be
responsible for the execution, effectiveness, genuineness,
validity, enforceability or sufficiency of this Agreement or
any of the other documents referred to in this Agreement or
for the recoverability of any Loan or any other sums to become
due and payable pursuant to this Agreement.
19.7 The Agent shall be entitled to rely on the advice of any
professional advisers selected by it given in connection with
this Agreement and any of the matters contemplated by it and
shall not be liable to Berliner for any of the consequences of
such reliance.
19.8 In performing its functions and duties under this Agreement the
Agent shall act solely as the agent of the Banks. Nothing in this
Agreement shall constitute the Agent a trustee for any Bank (save
as expressly provided herein) or trustee or agent of the
Borrower. The Agent shall be under no liability or responsibility
<PAGE>
of any kind to the Borrower or to Berliner arising out of or in
relation to any failure or delay in performance or breach by
Berliner or, as the case may be, the Borrower of any of its
obligations pursuant to this Agreement.
19.9 With respect to its own participation as a Bank in the
Facilities, Coutts shall have the same rights, liabilities and
powers under this Agreement as though it were not also acting as
the Agent for the Banks. The Agent may, without liability to
account, accept deposits from, lend money to and generally engage
in any kind of banking or trust business with or for the Borrower
as if it were not the Agent for the Banks.
19.10 Berliner agrees to indemnify the Agent (to the extent not
reimbursed by the Borrower) rateably according to its
participation herein from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature
whatsoever (except where caused by the wilful misconduct or gross
negligence of the Agent and except in respect of any agency or
other fee due to the Agent in its capacity as Agent) which may be
imposed on, incurred by or asserted against the Agent in its
capacity as Agent in any way relating to or arising out of this
Agreement or any
<PAGE>
action taken or omitted by the Agent in enforcing or
preserving the rights of the Banks under this Agreement.
19.11 Berliner will notify the Agent of, and provide the Agent with a
copy of, any communication between either of them and the
Borrower on any matter concerning the Facilities. The Agent
shall promptly notify Berliner upon receipt of any notices and
documents concerning the Facilities from or to the Borrower and
will immediately send to Berliner copies (or details of the
contents) of such notices and documents of which notification is
given as stated above. The Agent shall also promptly notify
Berliner in writing of its exercise (whether orally or in
writing) of any power of approval, consent, discretion, variation
or waiver vested in it by virtue of the terms hereof or of any
Facility Letter or its being a party thereto as agent for the
Banks.
19.12 Berliner acknowledges that it has, independently and without
reliance upon the Agent based on such documents and information
as it has deemed appropriate, made its own analysis of the
financial condition and affairs of, and its own appraisal of the
creditworthiness of, the Borrower and made its own decision to
enter into this Agreement. Berliner also acknowledges that it
will,
<PAGE>
independently and without reliance upon the Agent and based
on such documents and information as it shall deem appropriate at
the time, continue to make its own decisions in taking or not
taking action under this Agreement (save where it has
specifically agreed to delegate the making of such decisions to
the Agent).
19.13 The Agent may grant waivers or consents, vary the terms of this
Agreement and do or omit to do all such acts and things in
connection with this Agreement as may be authorised in writing by
the Majority Banks. Any such waiver, consent, variation, act or
omission so authorised and effected by the Agent shall be binding
on all the Banks and the Agent shall be under no liability
whatsoever in respect of any such waiver, consent, variation, act
or omission. Except with the prior written Agreement of Berliner
(in the case of clause 19.13.1 - 19.13.4 inclusive), nothing in
this clause shall authorise (as between the Agent and the Banks):
19.13.1 any change in the rate at which any interest is payable
hereunder;
19.13.2 any extension of the date for payment, or alteration in
the amount or currency, of any principal, interest,
fees or any other amount
<PAGE>
payable under any Facility Letter or hereunder
(excluding the fee payable pursuant to clause 6.1.5
hereof);
19.13.3 any increase in any Bank's Commitment; or
19.13.4 any variation of the definition of "Majority Banks" in
clause 1;
19.14 With the consent of the Borrower (not to be unreasonably withheld
or delayed) Coutts may for any reason which Coutts itself
considers sufficient justification retire at any time as Agent
hereunder and as trustee for the Banks of the Security Interests
by giving to the Borrower and each of the Banks not less than 30
days' notice of its intention to do so. In such event the
identity of the bank to be appointed agent and trustee in Coutts'
stead shall be decided by the Majority Banks. Upon such other
bank as the Majority Banks may decide being so appointed, the
retiring Agent shall be discharged from any further obligations
as agent under this Agreement and the Security Agreements and its
successor and each of the other parties to this Agreement shall
have the same rights and obligations and interest as they would
have had if such successor had been a party to this Agreement.
The retiring Agent shall make over to its
<PAGE>
successor all such records as its successor requires to carry
out its duties.
20 CONSENTS AND WAIVERS
Subject to the warranties contained in clauses 9.1.15, 9.1.16, 9.1.17,
9.1.18 and 9.1.19 being true and accurate in all respects the Banks hereby
consent to the Merger.
21 SHARING OF PAYMENTS
21.1 If either Bank ("the Sharing Bank") at any time shall obtain
(whether by way of voluntary payment or pursuant to this
Agreement or otherwise including, but not in limitation, by way
of set-off, counterclaim or other withholding) a proportion in
respect of its participation in any sum due from the Borrower
under this Agreement which is greater than the proportion
obtained by the Bank or Banks obtaining the smallest proportion
of its participation in it, including a nil receipt, (the amount
so obtained by the Sharing Bank which is attributable to such
excess being called the "excess amount") then:
21.1.1 the Sharing Bank shall immediately pay to the Agent an
amount equal to the excess amount, whereupon the Agent
shall notify the Borrower
<PAGE>
of such amount and its receipt by the Agent;
21.1.2 the Agent shall treat such payment as if it were a
payment by the Borrower on account of the sum owed to
the Banks as above; and
21.1.3 as between the Borrower and the Sharing Bank the excess
amount shall be treated as not having been paid, while
as between the Borrower and each Bank (including the
Sharing Bank) it shall be treated as having been paid
to the extent receivable by such Bank
PROVIDED THAT:
21.1.4 notwithstanding the above provisions, no Bank shall be
entitled to commence any action or proceeding for the
recovery of any sum payable to it for its account by
any other Bank under this Agreement prior to the
expiration of 30 Business Days from receipt by such
other Bank of such sum;
21.1.5 every payment and adjustment made pursuant to clauses
21.1.1, 21.1.2 and 21.1.3 above shall be subject to the
condition that if the excess amount (or any part of it)
<PAGE>
subsequently falls to be repaid by the Sharing Bank to
the Borrower or to be paid to any third person, the
Agent (if it shall then hold the same) and each of the
Banks which has received any part of it from the Agent
shall repay the excess amount (or the relevant part, as
the case may be) to the Sharing Bank together with such
amount (if any) as is necessary to reimburse to the
Sharing Bank the appropriate proportion of any interest
it shall be obliged to pay when repaying such amount as
above, and the relevant adjustments pursuant to clauses
21.1.1, 21.1.2 and 21.1.3 above shall be cancelled; and
21.1.6 if any Bank shall commence an action or proceedings
against the Borrower in any court to enforce its rights
under this Agreement and, as a result of or in
connection with such action or proceedings, shall
receive any excess amount such Bank shall not be
required:
21.1.6.1 to share any portion of such excess amount
with a Bank that has the legal right to, but
does not, join
<PAGE>
such action or proceedings or commence and
diligently prosecute a separate action or
proceedings to enforce its rights in the
same or another court; or
21.1.6.2 to share any portion of such excess amount
with the Bank which has or have joined the
same action or proceeding or has or have
commenced and prosecuted a separate action or
proceedings to enforce its or their rights in
the same or in another court if, by reason of
the negligence or wilful default of such
Bank, or Banks obtain(s) a sum which is
proportionately smaller (including a nil
receipt) than that received by the Sharing
Bank; or
21.1.6.3 to share any portion of such excess amount in
circumstances where both the Banks join the
same action or proceedings.
21.2 Each Bank exercising any rights giving rise to a receipt or
receiving any payment of the type referred
<PAGE>
to in clause 21.1 or instituting legal proceedings to
recover sums owing to it pursuant to this Agreement shall
as soon as practicable afterwards give notice to the Agent,
which will as soon as practicable afterwards give notice
to the other Bank.
22 EVENTS OF DEFAULT
In any of the following events:-
22.1 if any of the Relevant Parties commits any material breach of or
omits or fails to observe any of the material obligations or
undertakings contained in the Relevant Agreements and such breach
or omission materially adversely affects or will materially
adversely affect the Banks hereunder as determined by the Banks
in good faith or if any material representation or warranty
contained in any of the Relevant Agreements (or in any of the
documents presented when any guarantee or letter of credit issued
pursuant to any Facility Letter is paid) is or becomes untrue or
ceases to be accurate and the same materially adversely affects
or will materially adversely affect the Banks hereunder as
determined by the Banks in good faith or if any of such
agreements is terminated (whether or not lawfully) or ceases to
be in force for whatever reason and, in the Agent's absolute
opinion,
<PAGE>
such termination materially adversely affects the Banks'
rights hereunder or if the Borrower otherwise ceases to be the
exclusive distributor of any Film as provided for in the
applicable Acquisition Agreement and such cessation materially
adversely affects or will materially adversely affect the
Banks hereunder as determined by the Banks in good faith; or
22.2 if while any sum is outstanding hereunder the Borrower at any
time sells transfers or in any way disposes of all or a
substantial part of its undertaking or assets or creates or
permits to subsist any mortgage, charge (whether fixed or
floating) lien or encumbrance or other security or possessory
interest (other than the Permitted Encumbrances) upon any of its
undertaking or assets or allows or permits any of its
subsidiaries or associates to do any of the same or alters its
charter; or
22.3 if the Borrower fails to make or procure the making of any
payment of principal when due or of interest or of fees or
expenses or other payment whatsoever hereunder or under any
Facility Letter on the due date; or
22.4 if any of the Relevant Parties (a) becomes insolvent or (b) is
unable, deemed unable or admits in writing its inability to meet
its respective debts as they fall due
<PAGE>
or (c) makes an assignment for the benefit of creditors or to
an agent authorised to liquidate any substantial amount of its
properties or assets or (d) applies for or consents to the
appointment of a receiver or trustee for it or for a
substantial part of its property or business or institutes or
has instituted against it any proceedings for relief under any
bankruptcy law or any law for the relief of debtors or has
entered against it any order or judgment decreeing its
dissolution or division (provided, however, that, in the event
such a receiver or trustee is appointed or such proceedings
are instituted or order or judgement is entered, without the
consent of the applicable Relevant Party, it is not discharged
within thirty (30) days after such appointment institution and
entrance or (e) if a meeting of creditors is convened or any
composition or arrangement for the benefit of creditors is
proposed or entered into provided always that if any of the
foregoing occurs with respect to a Relevant Party other than
the Borrower the same shall only be an Event of Default if it
materially adversely affects or will materially adversely
affect the Banks hereunder as determined by the Banks in good
faith by any of the aforesaid or (f) if a petition is
presented for the purpose of considering a resolution for the
liquidation (except, and subject to the Agent's prior written
consent as aforesaid, in the event of bona fide company
<PAGE>
reorganisation or amalgamation) of any of the Relevant Parties
or (g) if similar proceedings are taken for the winding up,
bankruptcy or dissolution of any of the aforesaid or (h) if so
called Chapter VII or Chapter XI proceedings are commenced
against any of the Relevant Parties or (i) if any event
analogous to the foregoing occurs in any jurisdiction provided
always that if any of the foregoing occurs with respect to a
Relevant Party other than the Borrower the same shall only be
an Event of Default if it materially adversely affects or will
materially adversely affect the Banks hereunder as determined
by the Banks in good faith; or
22.5 if any of the Relevant Parties shall cease or threaten to cease
to carry on business and such cessation materially adversely
affects or will materially adversely affect the Banks hereunder
as determined by the Banks in good faith or if the existence of
the Borrower is terminated without the Agent's prior written
consent; or
22.6 if an encumbrancer takes possession or a trustee, administrative
receiver or receiver or similar officer is appointed, of the
whole or a material (in the opinion of the Agent) part of the
assets or undertaking of any of the Relevant Parties or if any
event analogous to the foregoing occurs in any jurisdiction
<PAGE>
and such event materially adversely affects or will materially
adversely affect the Banks hereunder as determined by the
Banks in good faith; or
22.7 if the Agent becomes aware of any circumstances which lead the
Agent acting reasonably and in good faith to believe that a
petition for an administration order under Section 9 of the
Insolvency Act 1986 may be presented to the Court in respect of
any of the Relevant Parties and the Agent is satisfied that any
of the Relevant Parties is or may become unable to pay its debts
(within the meaning given to that expression in Section 123 of
that Act) or if such a petition is so presented or if any event
analogous to any of the foregoing occurs in any jurisdiction and
such event materially adversely affects or will materially
adversely affect the Banks hereunder as determined by the Banks
in good faith; or
22.8 if a distress or execution shall be levied or enforced upon or
sued out against the whole or any part of the property of any of
the Relevant Parties and shall not be paid within 5 Business Days
or if any event analogous to any of the foregoing occurs in any
jurisdiction and such event materially adversely affects or will
materially adversely affect the Banks hereunder as determined by
the Banks in good faith; or
<PAGE>
22.9 if there shall be entered or filed against any of the Relevant
Parties or any material portion of its assets, money judgements,
writs or warrants of attachment or similar process in an
aggregate amount greater than US$200,000 (two hundred thousand
United States Dollars) which shall remain unvacated, unbonded,
unstayed or unsatisfied for a period of 30 (thirty) days or in
any event later than five (5) days prior to the date of any
proposed sale thereunder and such event materially adversely
affects or will materially adversely affect the Banks hereunder
as determined by the Banks in good faith;
22.10 if control (as defined in Section 416 of the Income and
Corporation Taxes Act 1988 or in relevant analogous local
legislation) of any of the Relevant Parties (other than the
Borrower) shall be passed to any person or group of persons whose
control in the Agent's reasonable opinion results in a material
deterioration in any of the Relevant Parties' or the Borrower's
creditworthiness or if there is any disagreement or deadlock
amongst the owners or managers of any of the Relevant Parties
(excluding, in the case of any disagreement only, the Borrower)
which the Agent reasonably believes (acting in good faith) will
materially adversely affect the Borrower's ability to
<PAGE>
meet its obligations hereunder or if any event analogous to
any of the foregoing occurs in any jurisdiction; or
22.11 if any of the Security Interests shall not be or shall cease to
be in force or effect or (subject to the Permitted Prior
Encumbrances) shall cease to be a first priority security
interest; or
22.12 if for any reason whatsoever any of the Licence Agreements under
which payments which the Agent shall in its sole opinion deem
material to the security of any Facility and the repayment of any
Loan are due but unpaid shall be terminated or cancelled or if
any such payments are not made when due; or
22.13 if ^ or ^ of ^ from the ^ of ^ and supplied to the Banks and upon
which the Banks have relied or from time to time rely in deciding
whether to ^ or ^ any ^ are found to be materially inaccurate or
unreliable; or
22.14 if any Film is not delivered to any of the licensees in all
material respects in accordance with the provisions of the
relevant Licence Agreements and such failure in delivery results
in any material delay in payment or any non-payment by the
applicable Sub-Distributor or if any Film is not delivered to the
Borrower in all
<PAGE>
material respects in accordance with the provisions of any
Acquisition Agreement in respect of a Film for which the
Borrower has drawndown under any Facility prior to such
delivery and such failure materially adversely affects or will
materially adversely affect the Banks hereunder as determined
by the Banks in good faith; or
22.15 if the amount outstanding to under the Borrower's overdraft
facility with City National at any time exceeds US$1,000,000; or
22.16 if the Borrower defaults under any agreement involving the
borrowing of money or the extension of credit to which the
Borrower is a party and such default consists of the failure to
pay any amount when due or results in any party other than the
Borrower to such agreement having the right to accelerate any
obligation to pay under such agreement and such failure
materially adversely affects or will materially adversely affect
the Banks hereunder as determined by the Banks in good faith; or
22.17 if, without the Banks' prior written consent, Robert and Ellen
Little shall cease to beneficially own and control, directly or
indirectly, free and clear from any liens, at least twenty-five
percent (25%), in the
<PAGE>
aggregate, of the then outstanding voting stock of Borrower or
at least thirty-seven percent (37%), in the aggregate, of the
voting stock of the Borrower on a fully diluted basis
(assuming for the latter purpose that voting stock underlying
options, warrants and convertible securities forms part of the
voting stock of the Borrower on a fully diluted basis, whether
or not such options, warrants or securities are then presently
exercisable or convertible);
22.18 if Robert Little and Ellen Little shall cease to be members of
the board of directors of the Borrower, or cease to be employed
by the Borrower in the capacity set out in their respective
Employment Agreements or if Robert Little and Ellen Little shall
die or become disabled to an extent rendering them incapable of
performing their current jobs for the Borrower; or
22.19 if Robert Little and Ellen Little (or a replacement for one of
Robert Little or Ellen Little approved pursuant to clause 22.20
hereof) and their designees or nominees do not constitute a
majority of the board of directors of the Borrower and the same
affects the Borrower's ability to meet its obligations hereunder
(as determined by the Banks in their absolute discretion); or
<PAGE>
22.20 if either Robert Little or Ellen Little shall cease to be a
member of the board of directors of the Borrower or shall cease
to be employed by the Borrower in the capacity set out in their
respective Employment Agreements or if Robert Little or Ellen
Little shall die or become disabled to an extent rendering them
incapable of performing their jobs for the Borrower (each such
event being a "Termination") and a replacement therefor approved
by the Banks (such approval not to be unreasonably withheld) is
not engaged within 3 months of the Termination upon terms
approved by the Banks (such approval not to be unreasonably
withheld) (it being specifically agreed by the parties hereto
that, notwithstanding anything to the contrary contained herein,
from Termination until the engagement of a replacement approved
by the Banks, the Banks may, in their absolute discretion permit
no further borrowings hereunder); or
22.21 if any person, entity or "group" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act) other than Robert
Little, Ellen Little and/or William Lischak shall have acquired
beneficial ownership of any outstanding class of capital stock of
New OFG which beneficial ownership carries 20% or more of the
outstanding ordinary voting power of New OFG (including without
limitation the outstanding voting power in the
<PAGE>
election of directors of New OFG) whether or not such power is
exercised;
22.22 if any circumstances arise which in the Agent's opinion acting
reasonably and in good faith will materially and adversely affect
the Borrower's ability to meet its obligations hereunder or the
security conferred or intended to be conferred on the Agent or
the Banks hereunder or under any Facility Letter including
without limitation, any invalidity, breach, repudiation or
threatened repudiation of any of the Security Agreements or any
guarantee or letter of credit issued or given under any Facility
Letter
then:
(i) on the expiry of notice requiring remedy within five Business
Days (or at any time after such expiry) in the case of any such
event which is capable of remedy which then remains unremedied
and in all other cases at once (or at any time thereafter) the
Banks and the Agent shall be under no further obligation to issue
any guarantee or letter of credit pursuant to any Facility Letter
if not then issued or to issue the City National Letter of Credit
if not then issued and in the case of all Event of Defaults other
than an Event of Default under clause 22.4 hereof the Agent may
by notice to the
<PAGE>
Borrower terminate all Facilities and in the case of an Event
of Default under clause 22.4 hereof the Facilities shall
automatically terminate and upon any such termination the Loan
(and at the Agent's election all other amounts outstanding
hereunder or any Facility Letter) shall immediately become due
and repayable to the Agent (for the account of the Banks) (as
applicable) together with interest accrued to the date of
actual repayment thereof and an amount equal to the loss of
profit suffered by the Banks as a result of the termination of
each Film Facility prior to the Maturity Date (as defined in
each applicable Facility Letter) and any other charges,
expenses or amounts outstanding but unpaid hereunder or under
any Facility Letter, all without any further demand,
presentment or notice, all of which the Borrower hereby
expressly waives, notwithstanding anything to the contrary
contained herein; and
(ii) if any guarantee or letter of credit has pursuant to any Facility
Letter by then been issued or if the City National Letter of
Credit has by then been issued:-
(aa) to the extent payment in full under any such guarantee
or letter of credit or the City National Letter of
Credit has not been made by the Agent or the Banks it
shall remain
<PAGE>
valid and payable and the Borrower shall remain
liable for all its obligations hereunder and under
any Facility Letter irrespective of any action the
Agent may take (and it shall be under no obligation
to take any action) otherwise to secure repayment of
the Loan (if and whenever made) and all other
amounts then outstanding hereunder or under any
Facility for itself or for the account of the Banks
(as applicable); and
(bb) the Agent may require the Borrower to make such
provision by deposit with the Agent or otherwise as the
Agent in its absolute discretion deems adequate against
the Agent's or the Banks' contingent liability under
any such letter of credit or guarantee or the City
National Letter of Credit; and
(cc) the Agent may at its option by notice to the Borrower
terminate any or all of the Facilities and any part of
the Loan then made shall immediately become due and
repayable together with interest accrued to the date of
actual repayment thereof, an amount equal to the loss
of profit suffered by the Agent as a result of any such
parts of the Loan being
<PAGE>
repaid before the Maturity Date (as defined in the
applicable Facility Letters) and any other charges
expenses or amounts outstanding but unpaid hereunder
or under any Facility Letter; and
(iii) if any Event of Default shall have occurred and be continuing
then the Agent (as agent and trustee for the Banks) and the Banks
shall be entitled to exercise all of the rights and remedies
available to a secured party upon default under the California
Uniform Commercial Code in effect at the time which shall be
applicable for the purpose of establishing the relative rights of
the Agent (as agent and trustee of the Banks) and of the Banks
and of the Borrower, under procedures to be followed in the event
clause 22 hereof shall become operative, including, but not
limited to, the right to sell, license or distribute the
Collateral in respect of which the Security Interests shall have
been granted or any portion thereof, and, in addition thereto,
the rights and remedies provided for in this Agreement, in any
Facility Letter in the Security Agreements or in any other
Relevant Agreement and such other rights and remedies as may be
provided by law or in equity. All rights and remedies existing
under this Agreement, any Facility Letter, any of the Security
Agreements or any other Relevant Agreement are cumulative with,
and not
<PAGE>
exclusive of, any rights or remedies otherwise available.
23 NOTICES
23.1 Any notice or other communication required to be given to the
Agent under this Agreement or any Facility Letter shall be sent
to the Agent at 440 Strand, London WC2R OQS facsimile number
0171-753 1059, marked for the attention of R.E.J. Payne Esq., or
such other address, facsimile number and/or for such other
attention as may be notified to the parties in accordance with
this clause and a copy of such notice shall be sent to Richards
Butler, Beaufort House, 15 St. Botolph Street, London EC3A 7EE
facsimile number 0171-247 5091 marked for the attention of R.P.S.
Philipps Esq. and Michael Maxtone-Smith Esq. or such other
address, facsimile number and/or for such other attention as may
be notified to the parties in accordance with this clause.
23.2 Any notice or other communication required to be given to the
Borrower under this Agreement or any Facility Letter shall be
sent to the Borrower at 8800 Sunset Boulevard, Los Angeles, CA-
90069 facsimile number 310 855 0719, marked for the attention of
W. Lischak Esq. or such other address, facsimile number and/or
for such other attention as may be notified to the parties in
<PAGE>
accordance with this clause.
23.3 Any notice or other communication required to be given to
Berliner under this Agreement or any Facility Letter shall be
sent to Berliner at No. 1 Crown Court, Cheapside, London EC2V 6JP
facsimile number 0171 572 9397 or 0171 572 9399 marked for the
attention of S. Robbins Esq., or such other address, facsimile
number and/or for such other attention as may be notified to the
parties in accordance with this clause.
23.4 Any notice or other communication to be given or made pursuant to
this Agreement or any Facility Letter shall in writing and shall
be sent by personal delivery, be given or made by registered
first class mail (airmail if overseas) or facsimile transmission
(with a hard copy by mail) and shall, save as specified below, be
effective when such personal delivery, first class mail or
facsimile transmission is actually received. In the case of
airmail such notice shall be deemed to be effective 7 Business
Days after being posted. If the Agent is unable, after using
reasonable efforts, to assure itself of the safe arrival of any
notice given hereunder or under any Facility Letter and it elects
then to send or resend the same by registered first class prepaid
post, then such notice shall be deemed to be effective 2 Business
Days after being posted.
<PAGE>
24 CONFIDENTIALITY
The Agent shall have the right to insist that its association and the
association of Berliner with any Film is not disclosed to third parties
(other than professional advisers) or otherwise made public. In any
event, the Borrower shall keep the terms of this Agreement and any
Facility Letters confidential and shall not, other than as required by
law, disclose them to third parties (other than its professional advisers)
without the Agent's prior written consent. Where disclosure is required
by law, the Borrower shall where possible, consult with the Agent about
the disclosure required to be made and shall in any event make only such
disclosure as is necessitated by the applicable legal requirements. The
Banks shall keep confidential all information supplied to them by the
Borrower and shall not other than as required by law disclose it to third
parties other than to their professional advisers or (with the prior
written consent of the Borrower, which consent shall not be unreasonably
withheld or delayed) to any bank to whom any of them shall wish to sub-
participate or assign any of its rights hereunder and/or to any such
bank's professional advisers.
25 FURTHER ASSURANCE
The Borrower shall at the Borrower's expense furnish the Agent with and
shall execute acknowledge and deliver and cause to be
<PAGE>
executed acknowledged and delivered to the Agent any agreements
documents or instruments (including without limiting the generality of
the foregoing short form assignments of copyright and of any of the
Licence Agreements) in such form and substance as shall be approved or
designated by the Agent which the Agent may from time to time in its
discretion reasonably require or deem necessary or proper to evidence
establish protect enforce or secure any of the arrangements or
transactions made or envisaged by this Agreement or any Facility Letter
or more fully to put into effect or carry out the purposes provisions or
intent of this Agreement or any Facility Letter. Should the Borrower
within ten (10) Business Days of being requested so to do fail to
execute acknowledge and deliver any such supplemental documents required
by the Agent then the Agent shall have the right to execute acknowledge
and deliver such documents on behalf of and in the name of the Borrower.
The Agent is hereby irrevocably appointed the lawful attorney of the
Borrower for the purposes of this clause such appointment constituting a
power coupled with an interest.
26 CUMULATIVE RIGHTS
The rights of the Banks and the Agent under this Agreement and any
Facility Letter are cumulative and may be exercised as frequently as any
Bank or the Agent considers necessary and any waiver by any Bank of any
breach default or non-compliance hereunder or herewith (and whether or not
the same constitutes an
<PAGE>
Event of Default) will not be construed as a continuing waiver of the
same or any other breach default or non-compliance hereunder or
herewith. Notwithstanding anything to the contrary herein contained any
reference in this Agreement or any Facility Letter to the termination
thereof shall in each place in which it occurs be entirely without
prejudice to the rights of Coutts or Berliner to payment in full of all
amounts (of whatsoever kind) outstanding or arising hereunder which
right shall remain enforceable against the Borrower at all times.
27 GOVERNING LAW AND JURISDICTION
27.1 This Agreement and all Facility Letters shall be governed by and construed
in accordance with English law and the parties hereby submit to the non-
exclusive jurisdiction of the English Courts and the state and federal
courts located in Los Angeles, California.
27.2 THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY AND ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUIT, ACTION OR PROCEEDING,
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY FACILITY LETTER OR ANY
SECURITY AGREEMENT OR ANY OTHER RELEVANT AGREEMENT BROUGHT IN THE STATE OF
CALIFORNIA, COUNTY OF LOS ANGELES AND HEREBY FURTHER IRREVOCABLY WAIVES
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN THE STATE OF
CALIFORNIA, COUNTY OF LOS ANGELES HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
<PAGE>
28 SEVERABILITY
If any of the provisions of this Agreement or any Facility Letter become
invalid illegal or unenforceable in any respect under any law or for any
other reason whatsoever, the validity legality and enforceability of the
remaining provisions hereof or thereof shall not in any way be affected or
impaired.
29 RELATIONSHIP
Nothing in this Agreement or in any Facility Letter shall constitute or be
deemed to constitute a partnership or joint venture between any of the
Banks and the Borrower and nothing shall create or be deemed to create a
relationship of principal and agent between any of the Banks and the
Borrower. It is hereby acknowledged that any and all provisions of this
Agreement creating rights and obligations of the Banks to each other are
of no concern to the Borrower.
30 CONFLICTS WITH FACILITY LETTERS
In the event of any conflict or inconsistency between this Agreement and
any Facility Letter or other agreement, the terms of this Agreement shall
prevail.
AS WITNESS the hands of the duly authorised representatives of the parties the
day and year first before written.
<PAGE>
Signed by )
for and on behalf of ) /S/ Christopher P. Collins
Coutts & Co. )
in the presence of:- ) /S/ Judith Chan
Signed by )
for and on behalf of ) /S/ Amanda Burgess
Berliner Bank A.G. London )
Branch in the presence of:- ) /S/ Christopher P. Collins
Signed by )
for and on behalf of ) /S/ William F. Lischak
Overseas Filmgroup Inc. )
in the presence of:- ) /S/ Michael Maxtone-Smith
Signed by )
for and on behalf of ) /S/ William F. Lischak
Entertainment/Media Acquisition )
Corporation in the presence of:- ) /S/ Michael Maxtone-Smith
<PAGE>
EXHIBIT 10.26*
* CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
SYMBOL "^" HAS BEEN USED IN THE EXHIBIT TO INDICATE WHERE CONFIDENTIAL PORTIONS
OF THE TEXT HAVE BEEN OMITTED FROM THE EXHIBIT AND FILED SEPARATELY, ON A
CONFIDENTIAL BASIS, WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
March 15, 1996
Neal H. Edelson, Esq.
BMG Video
Vice President, Business and Legal Affairs
1540 Broadway
New York, New York 10036-4098
Re: VIDEO DISTRIBUTION AGREEMENT - DEAL MEMO
Dear Neal:
Pursuant to our conversations, the following sets forth the basic terms of our
agreement in connection with a video distribution agreement (the "Agreement")
between Overseas Filmgroup, Inc.("OFG") and BMG Video ("BMG"):
A. TERM: The term of the Agreement shall be one year, commencing on January
1, 1996 and terminating on December 31, 1996 (the "Term"). With respect to each
picture, the Term shall expire five (5) years from the applicable videogram
release date. OFG and BMG shall have the option to extend the Term of this
Agreement for one additional year by mutual consent (the "Extension").
B. TERRITORY/RIGHTS: BMG will be granted video distribution rights (the
"Rights") to the Pictures (as defined in Paragraph C. below) throughout the
United States and its respective territories, commonwealths and possessions,
including Puerto Rico and the United States Virgin Islands (the "Territory").
Video distribution rights shall be defined as the sole and exclusive right to
manufacture, advertise, promote, sell, lease and distribute on a sale or rental
basis, all video product of the Pictures in all linear (non-interactive) formats
intended for home use including, but not limited to, videocassettes, laser
discs, CD-I, CD-ROM, Digital Video Disc and any other video format hereafter
created.
C. PICTURES: The pictures which are part of the Agreement (the "Pictures")
include the titles attached hereto on Exhibits A through L, as well as any
picture delivered to OFG within the Term of the Agreement, excluding only those
pictures which OFG determines to sell all rights in the Territory to one buyer
(an "All Rights Sale Exception") and those pictures which are "Excluded
Pictures" as defined below. With respect to each All Rights Sales Exception
only, BMG shall have a right of first negotiation.
With respect to each Picture, OFG shall inform BMG of its release plans in the
Territory, such release plans will generally fall into two categories. The
first category shall be those Pictures
<PAGE>
Neal Edelson, Esq.
March 6, 1996
Page 2
which are expected to be released theatrically as the first window of
exploitation in the U.S., including any Picture released theatrically by OFG
doing business as First Look Pictures (a "Theatrical Release Picture"). The
second category shall be those Pictures which are not expected to be released
theatrically in the U.S. as the first window of exploitation (a "Non-Theatrical
Release Picture").
With respect to each Picture, OFG and BMG shall negotiate in good faith in order
to reach an agreed level of ^ and based upon the ^ as described below, the ^
which OFG shall earn ^. In the event, OFG and BMG cannot agree on the ^ after
good faith negotiation, OFG shall be entitled to remove such picture from the
terms of this Agreement (an "Excluded Picture"). Notwithstanding the foregoing,
OFG agrees that, with respect to any Excluded Picture, OFG will provide to BMG
the significant financial terms of any bona fide third party offer which OFG
intends to accept, if the terms of any such third party offer (the "Qualifying
Third Party Offer") includes a ^ of gross receipts to OFG which is not at least
^ more than the Guarantee (as defined below). BMG will then have the right (the
^ ) to offer distribution of the Excluded Picture on ^ and ^ as the
Qualifying Third Party Offer. The ^ shall be exercised, if at all, by BMG
giving OFG notice within three business days of its receipt of a summary of the
Qualifying Third Party Offer. In the event BMG exercises its ^, OFG shall be
obligated to accept the BMG offer made by way of the ^ . BMG and OFG warrant
and agree to keep the terms of any Qualifying Third Party Offer and the ^ of
this Agreement (as well as any other material business provision of this
Agreement) completely and highly confidential. Additionally, with respect to
any Excluded Picture, in the event BMG has last provided estimates of unit
sales, costs, expenses and ^ more than ^ prior to OFG's receipt of any third
party offer OFG intends to accept, OFG agrees that BMG will be afforded a
reasonable time period to provide updated ^ and ^ prior to OFG's accepting any
third party offer.
Further, with respect to each of the Theatrically Released Pictures and the
Non-Theatrically Released Pictures OFG and BMG agree as follows:
(1) THEATRICAL RELEASE PICTURE(S) With respect to each Theatrical
Release Picture:
a) Fee: BMG shall be entitled to a distribution fee of ^ of
all gross receipts generated from exploitation of the Rights
until such time as the share of such gross receipts payable
to OFG is equal to ^ of the ^ . Thereafter, BMG shall be
entitled to a distribution fee of ^ of all gross receipts
^ to the ^ of gross receipts payable only from gross
receipts in ^ of ^ of the ^ and only until such time as
gross receipts ^ to OFG is ^ to ^ of the ^. Thereafter, BMG
shall be entitled to a distribution fee of ^ of all gross
receipts
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 3
generated from exploitation of the Rights in ^ of those
needed to pay OFG ^ of the ^ .
b) Guarantee: BMG guarantees the ^ from the exploitation of the
Rights shall not be ^ than ^ of ^ of the ^ .
Notwithstanding the foregoing, the ^ for the Theatrical
Release Pictures named in Exhibits A through D (the "Initial
Theatrical Release Picture(s)") shall be as provided in each
of Exhibits A through D.
c) P & A Commitment: With respect to each Theatrical Release
Picture, OFG and BMG shall negotiate in good faith to arrive
at an agreed minimum theatrical print and advertising
commitment to be made by OFG (the "Minimum P & A
Commitment"). OFG shall determine the Minimum P & A
Commitment prior to BMG providing its final estimates of
units sales, costs, expenses and the Theatrical Release
Picture Guarantee with respect to a particular Theatrical
Release Picture. With respect to the Initial Theatrical
Release Picture(s), the Minimum P & A Commitment is provided
on Exhibits A through D.
(2) NON-THEATRICAL RELEASE PICTURE(S): With respect to each
Non-Theatrical Release Picture:
a) Fee: BMG shall be entitled to a distribution fee of ^ of
all gross receipts generated from exploitation of the Rights
until such time as the share of such gross receipts ^ to OFG
is ^ to ^ of the ^ . Thereafter, BMG shall be entitled to
a distribution fee of ^ of all gross receipts in ^ of ^
of the ^ . At such time as the share of gross receipts ^ to
OFG equals ^ of the ^ , BMG shall be entitled to a
distribution fee of all gross receipts ^ to the ^ of
gross receipts but payable only from gross receipts in ^
of ^ of the ^ .
b) Guarantee: BMG shall guarantee OFG's share of gross receipts
from the exploitation of the Rights shall ^ be ^ than ^ .
Notwithstanding the foregoing, the ^ for the ^ named in
Exhibits E through L shall be as provided in each of Exhibit
E through L.
Each of the ^ and the ^ shall sometimes be referred to as a Guarantee and
each Guarantee shall be paid ^ days following the video release of the
respective Picture. With respect to the ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 4
and the ^ , OFG and BMG acknowledge and confirm their agreement on estimated ^
, the ^ or ^ and, if applicable, the Minimum P & A Commitment.
D. BMG shall pay OFG an ^ of ^ which shall be payable (i) ^ upon signature
by OFG of this Agreement and delivery to BMG of a finished and edited D-2
Master of at least ^ Pictures; and (ii) ^ upon signature by OFG of a ^ and
delivery of certain ^ to be specified within the ^ . The ^ shall be ^ by
BMG both (i) by applying any ^ of actual receipts payable to OFG based on
the distribution of a particular Picture and the ^ paid, which ^ , if any,
shall be ^ upon the ^ accounting period with respect to each Picture,
and (ii) against any amounts payable to OFG with respect to any Picture in
^ of any ^ paid. Should, at the end of the Term, any portion of the ^ be
^ as provided above ^ such ^ shall be available to be ^ to Pictures
becoming a part of this Agreement during the Extension, if any.
BMG shall pay OFG an additional ^, less any ^, if any, ^ on December 31,
1996, (OFG hereby acknowledges that BMG will not be in breach so long as
actual payment of the ^ is received by ^ ) should both OFG and BMG ^ to the
^ of the ^ of this Agreement for an additional one year period, which ^
shall be ^ against Pictures becoming a part of the Agreement (which OFG
warrants shall be ^ than ^ additional Pictures) during the Extension and
which ^ shall be ^ in the same manner and on the same basis as the ^ but
against such future pictures only.
E. EXPLOITATION DECISIONS: OFG shall name a person (the "Point Person") who
will be the primary contact with respect to exploitation decisions with
respect to the Pictures. This Point Person may be changed by OFG at its
sole election and at such times as OFG shall determine. Initially, MJ
Peckos shall be such Point Person. Where OFG is provided certain
consultation rights under this paragraph, the Point Person will be the
primary party to which BMG shall provide such rights.
With respect to each Picture, OFG is hereby given the right to seriously
and meaningfully consult (the "Consultation Right") with respect to all
areas of the marketing and distribution of the Pictures as provided under
this Agreement. Such Consultation Right will apply to projected unit
sales, selling price per unit, budgeted levels of marketing, selling and
manufacturing costs, video release dates, marketing plans (including
selection of third party creative designers, the purchase of video
distributor and trade advertising, the creation of key art and "box" art to
be used, any sales incentive plans to be used, any marketing development
funds ("MDF's"), so called "spiffs", packaging of units, the
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 5
design and implementation of promotional campaigns) and all other
material marketing and sales decisions. BMG agrees to provide ongoing
information, both written and oral, to OFG throughout all planning,
marketing and distribution phases of each Picture and specifically to
provide OFG with multiple designs of artwork intended for use as both
key art and "box" art prior to BMG's final selection. In addition, OFG
shall be given notice of and allowed, as appropriate, to participate in
all meetings (both held internally and with outside vendors, if any)
with respect to areas of planning, marketing and distribution of each
Picture. Nothing contained in this paragraph is meant to provide an
undue burden on BMG in providing OFG with this Consultation Right.
F. REPORTING: With respect to each Picture, beginning with the fiscal quarter
(based upon BMG's fiscal year end) of the videogram release date of such
Picture, BMG shall issue to OFG a true and correct statement of accounting
within 60 days following each fiscal quarter for the first two years following
the video release of such Picture. Thereafter, BMG shall account to OFG on a
semiannual basis. Such accountings shall include units sold, price per unit,
gross receipts, sales, marketing and manufacturing costs, a reserve for returns,
and OFG's share of gross receipts. The report shall also reflect the ^ paid
and any application of the ^ or the ^ . Payment of any amounts owing to OFG
shall be made and included with each accounting. At OFG's request, BMG will
provide supporting information and documentation (including third party
invoices) with respect to any area outlined above.
The foregoing is meant only to summarize the principle business points between
OFG and BMG. OFG and BMG intend to enter into a long form agreement in a
reasonable time period following the execution of this Agreement which long form
agreement shall set forth the remaining terms of this agreement and which long
form agreement will be subject to good faith negotiations between OFG and BMG,
however, until such time as the long form agreement is executed this Agreement
shall be binding upon both parties.
Very truly yours,
/s/ William F. Lischak
William Lischak
COO/CFO
Overseas Filmgroup, Inc.
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 6
Agreed to this 20th day of March, 1996
BMG VIDEO
By: /s/ Joe Schultz
Its: General Manager
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 7
EXHIBIT "A"
TITLE: "ANTONIA'S LINE"
CATEGORY: Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
MINIMUM P & A COMMITMENT: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 8
EXHIBIT "B"
TITLE: "INFINITY"
CATEGORY: Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
MINIMUM P & A COMMITMENT: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 9
EXHIBIT "C"
TITLE: "THIS IS THE SEA"
CATEGORY: Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
MINIMUM P & A COMMITMENT: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 10
EXHIBIT "D"
TITLE: "BODY OF A WOMAN"
CATEGORY: Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
MINIMUM P & A COMMITMENT: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 11
EXHIBIT "E"
TITLE: "MANHATTAN MERINGUE"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 12
EXHIBIT "F"
TITLE: "FIST OF THE NORTH STAR"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 13
EXHIBIT "G"
TITLE: "ONE GOOD TURN"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 14
EXHIBIT "H"
TITLE: "MAD DOGS AND ENGLISHMEN"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 15
EXHIBIT "I"
TITLE: "DOWNHILL WILLIE"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 16
EXHIBIT "J"
TITLE: "BOSTON KICKOUT"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 17
EXHIBIT "K"
TITLE: "BACK TO BACK"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
<PAGE>
Neal Edelson, Esq.
August 4, 1997
Page 18
EXHIBIT "L"
TITLE: "SHORTCUT TO PARADISE"
CATEGORY: Non-Theatrical Release Picture
ESTIMATED UNITS: ^
ESTIMATED OFG GROSS RECEIPTS: ^
GUARANTEE: ^
