Credit Agreement - DreamWorks Animation SKG Inc. and JPMorgan Chase Bank
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$200,000,000
CREDIT AGREEMENT
DATED AS OF OCTOBER __, 2004
AMONG
DREAMWORKS ANIMATION SKG, INC.,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
--------------------,
AS SYNDICATION AGENT,
--------------------,
As Documentation Agent,
and
JPMORGAN CHASE BANK,
As Administrative Agent
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J.P. MORGAN SECURITIES INC. AND BANC OF AMERICA SECURITIES, LLC,
As Co-Lead Arrangers and Joint Bookrunners
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS...................................................... 1
1.1 Defined Terms................................................... 1
1.2 Other Definitional Provisions................................... 15
Section 2. LOANS............................................................ 15
2.1 Revolving Credit Commitments.................................... 15
2.2 Procedure for Revolving Credit Borrowing........................ 16
2.3 Swingline Commitment............................................ 16
2.4 Procedure for Swingline Borrowing............................... 16
2.5 Refunding of Swingline Loans.................................... 17
2.6 Commitment Fee.................................................. 18
2.7 Termination or Reduction of Commitments; Mandatory Prepayments.. 18
2.8 Repayment of Loans; Evidence of Debt............................ 19
2.9 Optional Prepayments............................................ 19
2.10 Conversion and Continuation Options............................. 19
2.11 Minimum Amounts and Maximum Number of Tranches.................. 20
2.12 Interest Rates and Payment Dates................................ 20
2.13 Computation of Interest and Fees................................ 20
2.14 Inability to Determine Interest Rate............................ 21
2.15 Pro Rata Treatment and Payments................................. 21
2.16 Requirements of Law............................................. 22
2.17 Taxes........................................................... 24
2.18 Indemnity....................................................... 25
2.19 Change of Lending Office........................................ 26
2.20 Replacement of Lenders under Certain Circumstances.............. 26
Section 3. L/CS............................................................. 26
3.1 L/C Commitment.................................................. 26
3.2 Procedure for Issuance of L/Cs.................................. 27
3.3 L/C Participations.............................................. 27
3.4 Fees, Commissions and Other Charges............................. 28
3.5 Reimbursement Obligation of DW Animation........................ 28
3.6 Obligations Absolute............................................ 28
3.7 L/C Payments.................................................... 28
3.8 Applications; Uniform Customs................................... 29
Section 4. REPRESENTATIONS AND WARRANTIES................................... 29
4.1 Financial Statements............................................ 29
4.2 No Material Adverse Change...................................... 29
4.3 Existence; Compliance with Law.................................. 29
4.4 Power; Authorization; Enforceable Obligations................... 29
4.5 No Legal Bar.................................................... 30
4.6 No Material Litigation.......................................... 30
4.7 No Default...................................................... 30
4.8 Ownership of Property; Liens.................................... 30
4.9 Intellectual Property........................................... 30
4.10 Taxes........................................................... 30
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4.11 Accuracy of Information......................................... 31
4.12 Federal Regulations............................................. 31
4.13 ERISA........................................................... 31
4.14 Investment Company Act; Other Regulations....................... 32
4.15 Subsidiaries.................................................... 32
4.16 Purpose of Loans................................................ 32
4.17 Security Documents.............................................. 32
Section 5. CONDITIONS PRECEDENT............................................. 32
5.1 Conditions to Initial Extension of Credit....................... 32
5.2 Conditions to Each Extension of Credit.......................... 34
Section 6. AFFIRMATIVE COVENANTS............................................ 34
6.1 Financial Statements............................................ 34
6.2 Certificates; Other Information................................. 35
6.3 Payment of Obligations.......................................... 36
6.4 Conduct of Business and Maintenance of Existence................ 36
6.5 Compliance with Contractual Obligations and Laws................ 36
6.6 Maintenance of Property; Insurance.............................. 36
6.7 Inspection of Property; Books and Records; Discussions.......... 36
6.8 Notices......................................................... 36
6.9 Additional Collateral, etc...................................... 37
6.10 Further Assurances.............................................. 38
Section 7. NEGATIVE COVENANTS............................................... 38
7.1 Financial Condition Covenants................................... 39
7.2 Limitation on Liens............................................. 39
7.3 Limitation on Fundamental Changes............................... 40
7.4 Limitation on Distributions..................................... 40
7.5 Limitation on Transactions with Affiliates...................... 41
7.6 Limitation on Negative Pledge Clauses........................... 41
7.7 Limitation on Restrictions on Subsidiary Distributions.......... 41
7.8 Limitation on Modification of Organizational Agreements......... 41
7.9 Optional Payments and Modifications of Certain Debt Instruments. 41
Section 8. REMEDIAL PROVISIONS.............................................. 42
8.1 Events of Default............................................... 42
Section 9. THE AGENTS....................................................... 45
9.1 Appointment..................................................... 45
9.2 Delegation of Duties............................................ 45
9.3 Exculpatory Provisions.......................................... 45
9.4 Reliance by Administrative Agent................................ 45
9.5 Notice of Default............................................... 45
9.6 Non-Reliance on Agents and Other Lenders........................ 46
9.7 Indemnification................................................. 46
9.8 Agent in Its Individual Capacity................................ 46
9.9 Successor Administrative Agent.................................. 47
9.10 The Documentation Agent and Syndication Agent................... 47
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Section 10. MISCELLANEOUS................................................... 47
10.1 Amendments and Waivers.......................................... 47
10.2 Notices......................................................... 48
10.3 No Waiver; Cumulative Remedies.................................. 48
10.4 Survival of Representations and Warranties...................... 48
10.5 Payment of Expenses and Taxes................................... 48
10.6 Successors and Assigns; Participations and Assignments.......... 49
10.7 Adjustments; Set-off............................................ 51
10.8 Counterparts.................................................... 52
10.9 Severability.................................................... 52
10.10 Integration..................................................... 52
10.11 GOVERNING LAW................................................... 52
10.12 Submission To Jurisdiction; Waivers............................. 52
10.13 Acknowledgements................................................ 53
10.14 Releases of Guarantees and Liens................................ 53
10.15 Confidentiality................................................. 54
10.16 WAIVERS OF JURY TRIAL........................................... 54
10.17 HBO Subordinated Loan Agreement................................. 54
10.18 Distribution Intercreditor Agreement............................ 54
10.19 Effective Date.................................................. 54
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SCHEDULES
Schedule 1.1 Commitments of Lenders
Schedule 4.1 Certain Asset Dispositions; Guarantee Obligations
Schedule 4.6 Litigation
Schedule 4.15 Subsidiaries
Schedule 4.17 UCC Filing Jurisdictions
Schedule 7.2(f) Existing Liens
EXHIBITS
Exhibit A Form of Guarantee and Collateral Agreement
Exhibit B Form of Closing Certificate
Exhibit C-1 Form of Legal Opinion of Cravath, Swaine & Moore LLP
Exhibit C-2 Form of Legal Opinion of Katherine Kendrick, Esq.
Exhibit C-3 Form of Legal Opinion of Seyfarth Shaw
Exhibit C-4 Form of Legal Opinion of Richards, Layton & Finger
Exhibit D Form of Assignment and Assumption
Exhibit E Form of Revolving Credit Loan Promissory Note
Exhibit F Form of Exemption Certificate
Exhibit G Terms of Specified Subordinated Indebtedness
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CREDIT AGREEMENT, dated as of October __, 2004, among DREAMWORKS
ANIMATION SKG, INC., a Delaware corporation ("DW Animation"), the several banks
and other financial institutions from time to time parties to this Agreement
(the "Lenders"), ____________________, as syndication agent (in such capacity,
the "Syndication Agent"), ___________________, as documentation agent (in such
capacity, the "Documentation Agent"), and JPMORGAN CHASE BANK, as administrative
agent for the Lenders hereunder.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank as its prime rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the lowest rate
of interest charged by JPMorgan Chase Bank in connection with extensions of
credit to debtors); "Base CD Rate" shall mean the sum of (a) the product of (i)
the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is
one and the denominator of which is one minus the CD Reserve Percentage and (b)
the CD Assessment Rate; and "Three-Month Secondary CD Rate" shall mean, for any
day, the secondary market rate for three-month certificates of deposit reported
as being in effect on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will, under
the current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate shall
not be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00 A.M.,
New York City time, on such day (or, if such day shall not be a Business Day, on
the next preceding Business Day) by JPMorgan Chase Bank from three New York City
negotiable certificate of deposit dealers of recognized standing selected by it.
Any change in the ABR due to a change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the Prime Rate,
the Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively.
"ABR Loans": Loans the rate of interest applicable to which is based upon
the ABR.
"Administrative Agent": JPMorgan Chase Bank, as the agent for the Lenders
under this Agreement and the other Loan Documents, and any successor agent
appointed pursuant to Section 9.9. References in this Agreement or any other
Loan Document to the Administrative Agent that are contained in exculpatory or
indemnification provisions (including, without limitation, Sections 9.3, 9.6,
9.7 and 10.5) shall be deemed to include J.P. Morgan Securities Inc. in its
capacity as arranger of the Commitments.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (i) vote 20% or more of the voting
interests of such Person or (ii) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
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2
"Agents": the collective reference to the Documentation Agent, the
Syndication Agent and the Administrative Agent.
"Aggregate Revolving Extensions of Credit": as to any Lender at any time,
an amount equal to the sum of (a) the aggregate principal amount of all
Revolving Credit Loans made by such Lender then outstanding, (b) such Lender's
Commitment Percentage of the aggregate L/C Obligations then outstanding and (c)
such Lender's Commitment Percentage of the aggregate principal amount of the
Swingline Loans then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or otherwise
modified from time to time.
"Applicable Margin": (a) 1.75% in the case of Eurodollar Loans and (b)
0.75% in the case of ABR Loans.
"Application": with respect to each L/C, an application, in such form as
the L/C Issuer may specify from time to time, requesting the L/C Issuer to open
such L/C.
"Assignee": as defined in Section 10.6(b).
"Assignment and Assumption": an Assignment and Assumption, substantially
in the form of Exhibit D.
"Board": the Board of Governors of the Federal Reserve System of the
United States of America or any successor.
"Borrowing Availability" means, as of any date of determination, an amount
equal to (a) 67% of the aggregate First Cycle Residual Value as of such date,
plus (b) 67% of the aggregate Second Cycle Residual Value as of such date, minus
(c) Total Debt of DW Animation and its Subsidiaries outstanding as of such date,
whether or not included on a consolidated balance sheet of DW Animation
(including the Universal Advance, but excluding Indebtedness outstanding under
this Agreement, the HBO Subordinated Debt and up to $50,000,000 of Specified
Subordinated Indebtedness) as of such date, plus (d) 100% of cash on hand of DW
Animation or any Subsidiary Guarantor on such date to the extent constituting
Collateral in which the Administrative Agent has a perfected first priority
security interest. For the purposes of determining Borrowing Availability at any
date, values and costs will in all cases be determined as of such date on a
present value basis using an interest rate equal to the ABR plus the Applicable
Margin.
"Borrowing Availability Certificate": any certificate delivered pursuant
to Section 6.2(g).
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.2 or 2.4 as a date on which DW Animation requests the relevant Lenders
to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City or Los Angeles, California, are authorized or
required by law to close; provided that, when used in connection with a
Eurodollar Loan with respect to which the Eurodollar Rate is determined based
upon the Telerate screen (or any successor service), the term "Business Day"
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.
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"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.
"CD Assessment Rate": for any day as applied to any ABR Loan, the annual
assessment rate in effect on such day that is payable by a member of the Bank
Insurance Fund maintained by the Federal Deposit Insurance Corporation (the
"FDIC") classified as well-capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.4 (or any successor provision) to the FDIC (or any successor)
for the FDIC's (or such successor's) insuring time deposits at offices of such
institution in the United States.
"CD Reserve Percentage": for any day as applied to any ABR Loan, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve requirement for a
Depositary Institution (as defined in Regulation D of the Board as in effect
from time to time) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent set forth in
Section 5.1 shall be satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.
"Commitment Fee": as defined in Section 2.6.
"Commitment Fee Rate": (a) on any date on which the Facility Exposure
exceeds 50% of the aggregate Commitments, 0.50% per annum and (b) on any other
date, 0.75% per annum.
"Commitment Percentage": as to any Lender at any time, the percentage
which such Lender's Commitment at such time constitutes of the aggregate
Commitments at such time (or, at any time after the Commitments shall have
expired or terminated, the percentage which the Aggregate Revolving Extensions
of Credit of such Lender at such time constitutes of the Facility Exposure at
such time).
"Commitment Period": the period from and including the Closing Date to but
not including the Scheduled Termination Date or such earlier date on which the
aggregate Commitments shall terminate as provided herein.
"Commitments": as to any Lender, the obligation of such Lender to make
Revolving Credit Loans to, to participate in Swingline Loans made to, and to
participate in L/Cs issued on behalf of, DW Animation in an aggregate principal
and/or face amount at any one time outstanding not to exceed (a) in the case of
any Lender that is a Lender on the date hereof, the amount set forth opposite
such Lender's name on Schedule 1.1 under the caption "Commitments", as such
amount may be changed from time to time in accordance with this Agreement and
(b) in the case of any Lender that becomes a Lender after the date hereof, the
amount specified as such Lender's "Commitment" in the Assignment and Acceptance
pursuant to which such Lender assumed a portion of the aggregate Commitments, as
such amount may be changed from time to time in accordance with this Agreement.
The aggregate amount of the Commitments as of the Closing Date is $200,000,000.
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"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with DW Animation within the meaning of Section
4001 of ERISA or is part of a group which includes DW Animation and which is
treated as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of determining liability under Section 412 of the Code, which is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.
"Conduit Lender": any special purpose corporation organized and
administered by any Lender for the purpose of making Loans otherwise required to
be made by such Lender and designated by such Lender in a written instrument;
provided, that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to fund a Loan under
this Agreement if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall (a) be entitled to receive any greater
amount pursuant to Section 2.16, 2.17, 2.18 or 10.5 than the designating Lender
would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender or (b) be deemed to have any Commitment.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated August 2004 and furnished to certain Lenders with respect to DW
Animation.
"Consolidated Cash Interest Expense": for any period, total cash interest
expense of DW Animation and its consolidated Subsidiaries with respect to all
outstanding Indebtedness of DW Animation and its consolidated Subsidiaries,
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to L/Cs and bankers' acceptance financing and amounts
paid in cash (net of amounts received in cash) under interest rate protection
agreements.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.
"Default": any of the events specified in Section 8.1, whether or not any
requirement for the giving of notice or the lapse of time, or both, has been
satisfied.
"Distribution Agreement": the Distribution Agreement, between DreamWorks
and DW Animation, dated on or prior to the Closing Date.
"Distribution Intercreditor Agreement": the Intercreditor Agreement, dated
on or prior to the Closing Date, among DreamWorks, DW Animation and the
Administrative Agent relating to the Liens permitted by Section 7.2(l), in form
and substance reasonably satisfactory to the Administrative Agent.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Domestic Free Television Exhibition": Free Television Exhibition within
the Domestic Territories.
"Domestic Territories": the entire territorial United States and its
possessions, territories and commonwealths, including the U.S. Virgin Islands,
Puerto Rico, Guam, and the former U.S. Trust Territories of the Pacific Islands,
including the Carolina Islands, the Marshall Islands and the Mariana Islands,
Saipan and American Samoa; the Dominican Republic, the British Virgin Islands,
the Bahamas, Bermuda, Saba Island, St. Eustatius Island, St. Kitts Island, St.
Martin Island, St. Maarten Island, and Canada and its possessions and
territories.
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"DreamWorks": DreamWorks L.L.C., a Delaware limited liability company.
"Effective Date": the date on which the conditions precedent set forth in
paragraphs (a), (g), (h), (i) and (k) of Section 5.1 shall be satisfied.
"Employee Equity Plan": the DW Animation 2004 Equity Compensation Plan
dated on or prior to the Closing Date as such plan may be amended from time to
time.
"Equity Interest": any equity, ownership or profit participation interest
in a Person.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each Eurodollar Loan during a specified
Interest Period, the rate of interest determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period, commencing on
the first day of such Interest Period, appearing on Page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the beginning
of such Interest Period. In the event that such rate does not appear on Page
3750 of the Telerate screen (or otherwise on such screen), the "Eurodollar Rate"
shall be determined by reference to such other publicly available service for
displaying eurodollar rates as may be agreed upon by the Administrative Agent
and DW Animation or, in the absence of such agreement, the "Eurodollar Rate"
shall instead be the rate per annum equal to the rate at which JPMorgan Chase
Bank is offered Dollar deposits at or about 11:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period, in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period, for a period equal to such
Interest Period, and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period.
"Eurodollar Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Eurodollar Loans shall
originally have been made on the same day).
"Event of Default": any of the events specified in Section 8.1.
"Excluded Asset Sale": with respect to DW Animation and its Subsidiaries,
(a) any sale or other disposition of assets in the ordinary course of business,
(b) any sale or other disposition of rights in films (or participations therein)
and (c) any sale or other disposition of accounts receivable.
"Excluded Lease Debt": (a) Indebtedness of DW Animation or any Subsidiary
Guarantor pursuant to any guarantee of (i) the Indebtedness of any Person (the
"Lessor") incurred to finance the acquisition, design and construction of the
animation division facility constructed by DW Animation in Glendale, California,
and leased by the Lessor to Animation, and any refinancing thereof if the terms
of such refinancing (other than monetary terms so long as such monetary terms
are comparable to those obtainable in similar transactions) are no less
favorable to the Lessor, the lessee and the Lenders in any material respect than
those applicable to the Indebtedness being refinanced and (ii) certain related
obligations of the Lessor and (b) Indebtedness pursuant to any refinancing of
the Indebtedness referred to in clause (a) above so long as recourse for payment
of such refinancing is expressly limited to such animation division facility.
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6
"Facility Exposure": at any time, the sum of the Aggregate Revolving
Extensions of Credit of all Lenders at such time.
"FDIC": the Federal Deposit Insurance Corporation or any successor to the
functions and powers thereof.
"Federal Funds Effective Rate": for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by JPMorgan Chase Bank from
three federal funds brokers of recognized standing selected by it.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"First Cycle Residual Value": as of any date of determination with respect
to each Motion Picture, an amount equal to (a) DW Animation's remaining first
cycle ultimates commencing with the second weekend after release of such Motion
Picture (to be defined in a manner consistent with calculations of residual
ultimates made in connection with any financial statements of DW Animation,
whether pursuant to this Agreement or otherwise and including a ten-year limit)
as of such date, less (b) all anticipated cash expenses (including distribution
fees) directly associated with such ultimate as of such date.
"Foreign Free Television Exhibition": Free Television Exhibition outside
of the Domestic Territories.
"Foreign Pay Television Exhibition": Pay Television Exhibition outside of
the Domestic Territories.
"Foreign Subsidiary": any Subsidiary of DW Animation organized under the
laws of any jurisdiction outside the United States of America.
"Free Television Exhibition": Television Exhibition, other than Pay
Television Exhibition, without any fee being charged to the viewer for the
privilege of unimpaired reception of such exhibition. For purposes of this
definition, any government-imposed fees or taxes applicable to the use of
television receivers generally or a regular periodic access, carriage or
equipment fee (but not any optional premium subscription charge or fee paid with
respect to Pay Television Exhibition) paid by a subscriber to a cable television
transmission service or other transmission service or agency for the privilege
of unimpaired reception shall not be deemed a fee charged to the viewer.
"Funded Debt": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within one
year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or arises under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including, without
limitation, all amounts of Funded Debt required to be paid or prepaid within one
year from the date of its creation and, in the case of DW Animation,
Indebtedness in respect of the Loans.
"GAAP": generally accepted accounting principles in the United States of
America.
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"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including the National Association of Securities Dealers.
"Guarantee Obligation": as to any Person (the "guaranteeing person"), any
obligation, including a reimbursement, counterindemnity or similar obligation,
of the guaranteeing person that guarantees or in effect guarantees, or which is
given to induce the creation of a separate obligation by another Person
(including any bank under any letter of credit) that guarantees or in effect
guarantees, any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by DW Animation in good faith.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed by DW Animation and each Subsidiary Guarantor,
substantially in the form of Exhibit A.
"HBO": Home Box Office, a division of Time Warner Entertainment Company,
L.P.
"HBO License Agreement": the License Agreement, dated as of March 7,
1995, between DreamWorks and HBO, as amended, supplemented or otherwise
modified from time to time.
"HBO Subordinated Debt": Indebtedness of DW Animation pursuant to the HBO
Subordinated Loan Agreement in an aggregate principal amount not to exceed
$50,000,000 (after giving effect to the prepayment referred to in Section
7.9(a)(ii)).
"HBO Subordinated Debt Documents": the collective reference to (a) the HBO
Subordinated Loan Agreement, (b) the other "Subordinated Loan Documents"
referred to therein and (c) any other document or instrument entered into by DW
Animation in connection therewith, in each case as amended, supplemented or
otherwise modified from time to time.
"HBO Subordinated Loan Agreement": the Subordinated Loan Agreement between
DW Animation and HBO pursuant to which DW Animation assumed the HBO Subordinated
Debt, as amended, supplemented or otherwise modified from time to time.
"Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender
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8
under such agreement in the event of default are limited to repossession or sale
of such property), (e) all obligations of such Person in respect of Financing
Leases, (f) all obligations, contingent or otherwise, of such Person as an
account party under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire or otherwise acquire for
value any Equity Interest in respect of such Person, (h) all Guarantee
Obligations of such Person in respect of Indebtedness of any other Person, (i)
all obligations of the kind referred to in clauses (a) through (h) above secured
by (or for which the holder of such obligation has an existing right, contingent
or otherwise, to be secured by) any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation and
(j) for purposes of Section 8.1(e) only, all obligations of such Person in
respect of Swap Agreements. For purposes of Section 8.1(e) only, the "principal
amount" of the obligations of any Person in respect of any Swap Agreement at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Person would be required to pay if such Swap Agreement
were terminated at such time. It is understood that the Universal Advance shall
not constitute Indebtedness for the purpose of this Agreement.
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any ABR Loan or Swingline Loan (other
than Swingline Loans which do not constitute Unrefunded Swingline Loans), the
last day of each March, June, September and December and the Scheduled
Termination Date, (b) as to any Swingline Loan which does not constitute an
Unrefunded Swingline Loan, the last day such Loan is outstanding, (c) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period and (d) as to any Eurodollar Loan having an Interest
Period longer than three months, each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and the last day
of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter (or, to the
extent available from all the Lenders, nine or twelve months
thereafter), as selected by DW Animation in its notice of borrowing
or notice of conversion, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan
and ending one, two, three or six months thereafter (or, to the
extent available from all the Lenders, nine or twelve months
thereafter), as selected by DW Animation by irrevocable notice to
the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect
thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar
<PAGE>
9
month, in which event such Interest Period shall end on the
immediately preceding Business Day;
(2) no Interest Period may be selected with respect to any
Eurodollar Loan that would extend beyond the Scheduled Termination
Date; and
(3) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Joint Venture": any joint venture, partnership or other minority-owned
entity (other than a Subsidiary) in which DW Animation or any of its
Subsidiaries owns an interest.
"L/Cs": as defined in Section 3.1(a).
"L/C Commitment": $50,000,000.
"L/C Fee Payment Date": three Business Days after the last day of each
March, June, September and December and the last day of the Commitment Period.
"L/C Issuer": JPMorgan Chase Bank, in its capacity as issuer of any L/C,
provided that at the option of JPMorgan Chase Bank, any L/C may instead be
issued by JPMorgan Chase Bank Delaware, in which case JPMorgan Chase Bank
Delaware shall be subject to, and entitled to the benefits of, the applicable
provisions of this Agreement, as a "L/C Issuer", with respect to any such L/C.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding L/Cs and (b)
the aggregate amount of drawings under L/Cs which have not then been reimbursed
pursuant to Section 3.5.
"L/C Participants": the collective reference to all Lenders other than the
L/C Issuer
"Lenders": as defined in the preamble hereto; provided that, unless the
context otherwise requires, each reference herein to the Lenders shall be deemed
to include any Conduit Lender.
"Leverage Ratio": at any date of determination, the ratio of Total Debt at
such date to Total Capitalization at such date.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents, the Distribution
Intercreditor Agreement and the Applications.
"Loan Parties": the collective reference to DW Animation and each
Subsidiary Guarantor.
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10
"Material Adverse Effect": a material adverse effect on (a) the business,
property, operations or condition (financial or otherwise) of DW Animation and
its Subsidiaries taken as a whole or (b) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder and thereunder.
"Moody's": Moody's Investors Service, Inc.
"Motion Picture": pictures produced and distributed of every kind and
character whatsoever, including all present and future technological
developments, whether produced by means of any photographic, electrical,
electronic, mechanical or other processes or devices now known or hereafter
devised, and their accompanying devices and processes whether pictures, images,
visual and aural representations are recorded or otherwise preserved for
projection, reproduction, exhibition, or transmission by any means or media now
known or hereafter devised in such manner as to appear to be in motion or
sequence, including computer generated pictures and graphics other than video
games.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": in connection with any asset sale, the cash proceeds
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such asset sale, net
of attorneys' fees, accountants' fees, investment banking fees, amounts required
to be applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset which is the subject of such asset sale and
other customary fees actually incurred in connection therewith and net of taxes
paid or reasonably estimated to be payable on a current basis, by DW Animation
or its members, as a result thereof (after taking into account any available tax
credits or deductions available to DW Animation and any tax sharing
arrangements).
"Non-Excluded Asset Sale": any asset sale by DW Animation or its
Subsidiaries that is not an Excluded Asset Sale.
"Non-Excluded Taxes": as defined in Section 2.17(a).
"Non-U.S. Lender": any Lender (or Transferee) that is not (i) a citizen or
resident of the United States of America, (ii) a corporation or partnership, or
other entity treated as a corporation or partnership for U.S. federal tax
purposes, created or organized in and under the laws of the United States of
America or a political subdivision thereof or (iii) an estate or trust that is
subject to U.S. federal income taxation regardless of the source of its income.
"Notes": the collective reference to any promissory note evidencing the
Loans.
"Obligations": the unpaid principal of and interest on (including interest
accruing after the maturity of the Loans and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
DW Animation, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of DW Animation to the Administrative Agent or to any Lender (or, in
the case of Specified Swap Agreements or Specified Cash Management Arrangements,
any Affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, any other Loan
Document, the L/Cs, any Specified Swap Agreement, any Specified Cash Management
Arrangement or any other document made, delivered or given in connection
herewith or
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11
therewith, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that are
required to be paid by DW Animation pursuant hereto) or otherwise.
"Organizational Agreements": the collective reference to (a) the Restated
Certificate of Incorporation and By-Laws of DW Animation and (b) the Principal
Agreement.
"Participant": as defined in Section 10.6(c).
"Pay Television Exhibition": Television Exhibition that is available on
the basis of the payment of a premium subscription charge or fee (as
distinguished from an access, carriage or equipment fee) to any Person for the
privilege of unimpaired reception of a transmission for viewing in a private
residence or in a hotel, motel, hospital or other living accommodation or other
non-public area, whether or not (i) such transmission is on a pay-per-view,
pay-per-show, pay-per-channel or pay-per-time period basis, or (ii) such premium
subscription charge or fee is charged to the operator of a hotel, motel,
hospital or other living accommodation.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is covered
by ERISA and in respect of which DW Animation or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Principal Agreement": the agreement entered into pursuant to Section
5.1(d), as such agreement may be amended from time to time in accordance with
Section 7.8.
"Projected Sources": for any Test Period, with respect to DW Animation and
its Subsidiaries, the sum of (a) cash held by DW Animation and its Subsidiaries
on the relevant Test Date and (b) the aggregate amount, without duplication and
to the extent not already deducted in the definition of "Projected Uses", of
cash projected by DW Animation in good faith to be received during such Test
Period by DW Animation or any of its Subsidiaries from the following sources:
(i) Unutilized Commitments to the extent Revolving Credit Loans could be
borrowed thereunder on the relevant Test Date without resulting in a Default or
Event of Default; (ii) other available commitments to make advances to DW
Animation or any of its Subsidiaries during such Test Period and commitments to
make payments of royalties to DW Animation or any of its Subsidiaries during
such Test Period so long as, in each case, such commitments are subject to no
conditions other than (x) performance by DW Animation or the relevant Subsidiary
of the agreements giving rise to such commitments or (y) the passage of time;
(iii) accounts receivables to be paid to DW Animation or any of its Subsidiaries
during such Test Period; (iv) cash collections to be received during such Test
Period (determined by reference to the ultimates used in calculating any
component of Borrowing Availability) in respect of any completed and released
film or television product; (v) cash collections to be received during such Test
Period (determined on a break even basis) in respect of any uncompleted or
completed but unreleased film or television product which is projected to be
completed (if then uncompleted) and released during such Test Period; and (vi)
distributions DW Animation or any of its Subsidiaries is entitled to receive
during such Test Period from any Joint Ventures so long as (x) such entitlement
is subject to no condition other than (1) performance by
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12
DW Animation or the relevant Subsidiary of the agreements giving rise to such
entitlement, (2) any other condition the satisfaction of which is solely within
the control of DW Animation or the relevant Subsidiary or (3) the passage of
time and (y) each condition referred to in clause (x) above is expected by DW
Animation in good faith to be satisfied during such Test Period, in each case
determined on a consolidated basis by reference to the Section 6.2 Projections.
"Projected Uses": for any Test Period, with respect to DW Animation and
its Subsidiaries, the sum, without duplication and to the extent not already
deducted in the definition of "Projected Sources", of the following amounts as
projected by DW Animation in good faith: (a) cash overhead for such Test Period;
(b) Consolidated Cash Interest Expense for such Test Period; (c) tax expense for
such Test Period; (d) cash expense for such Test Period attributable to
remaining negative costs and prints and advertising expenses for films which
have commenced principal photography or are projected to have commenced
principal photography (and are also projected to be released) during such Test
Period; (e) cash expenses for such Test Period in respect of television product
for which confirmed orders have been received; (f) capital expenditures to be
made during such Test Period; and (g) investments or advances to be made during
such Test Period in or to Joint Ventures, in each case determined on a
consolidated basis by reference to the Section 6.2 Projections.
"Refunded Swingline Loans": as defined in Section 2.5(a).
"Register": as defined in Section 10.6(b).
"Regulation U": Regulation U of the Board as in effect from time to time.
"Reimbursement Obligation": the obligation of DW Animation to reimburse
the L/C Issuer pursuant to Section 3.5 for amounts drawn under L/Cs.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty-day notice period is
waived.
"Required Lenders": at any date, the holders of more than 50% of (a) the
aggregate Commitments, or (b) if the Commitments have been terminated or for the
purposes of determining whether to accelerate the Loans and L/C Obligations
pursuant to Section 8.1, the Facility Exposure.
"Requirement of Law": as to any Person, (a) the organizational or
governing documents of such Person and (b) any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": any officer of DW Animation holding the title (or
performing the functions) of chief executive officer, president, chief financial
officer or treasurer.
"Revolving Credit Loans": as defined in Section 2.1.
"Scheduled Termination Date": the fifth anniversary of the Closing Date.
"Second Cycle Residual Value": as of any date of determination with
respect to any Motion Picture released on or prior to such date, an amount equal
to (a) DW Animation's remaining projected
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13
second cycle value as of such date, which have been reviewed by Ernst & Young
LLP pursuant to procedures reasonably satisfactory to the Administrative Agent,
less (b) all anticipated cash expenses directly associated with such ultimate as
of such date. For the purposes of determining Second Cycle Value, (i) only the
values associated with Domestic Free Television Exhibition, Foreign Pay
Television Exhibition and Foreign Free Television Exhibition shall be included
and (ii) second cycle ultimates (other than those that will derive from binding
contracts in effect at the time of calculation) shall be limited to 50% of the
first cycle ultimate.
"Section 6.2 Projections": as defined in Section 6.2.
"Secured Obligations": as of any date of determination, the aggregate
amount as of such date of all Indebtedness and other obligations of DW Animation
or any of its Subsidiaries secured by a consensual Lien on any asset of DW
Animation or any of its Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"S&P": Standard & Poor's.
"Specified Cash Management Arrangement": any cash management arrangement
entered into by DW Animation and any Lender or Affiliate thereof.
"Specified Subordinated Indebtedness": Indebtedness of DW Animation which
is evidenced by a promissory note substantially identical to Exhibit E.
"Specified Swap Agreement": any Swap Agreement entered into by DW
Animation and any Lender or Affiliate thereof in respect of interest rates or
currency exchange rates.
"Subsidiary": as to any Person, a corporation, limited liability company,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, limited liability company, partnership or other entity are at the
time owned by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of DW Animation.
"Subsidiary Guarantor": each Subsidiary of DW Animation party to the
Guarantee and Collateral Agreement.
"Swap Agreement": any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments
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14
only on account of services provided by current or former directors, officers,
employees or consultants of DW Animation or any of its Subsidiaries or
Affiliates shall be deemed a "Swap Agreement".
"Swingline Commitment": the obligation of the Swingline Lender to make
Swingline Loans pursuant to Section 2.3 in an aggregate principal amount at any
one time outstanding not to exceed $25,000,000.
"Swingline Lender": as defined in Section 2.3.
"Swingline Loans": as defined in Section 2.3.
"Swingline Participation Amount": as defined in Section 2.5(c).
"Television Exhibition": with respect to any film, exhibition of such film
using any form of motion picture copy for transmission by any means now known or
hereafter devised (including over-the-air, cable, wire, fiber, master antennae,
satellite, microwave, closed circuit, laser, multi-point distribution services
or direct broadcast systems), which transmission is received, directly or
indirectly by retransmission or otherwise, impaired or unimpaired, for viewing
such film on the screen of a television receiver or comparable device now known
or hereafter devised (including high definition television), other than home
video exhibition, any exhibition pursuant to the HBO License Agreement or any
theatrical exhibition.
"Test Date": as defined in Section 7.1(a).
"Test Period": as defined in Section 7.1(a).
"Total Capitalization": at any date of determination, the sum of Total
Debt at such date and book equity of DW Animation at such date, determined
without giving effect to unrealized accounting gains and losses relating to
interest rate hedge agreements. For the purpose of determining the Leverage
Ratio pursuant to Section 7.1(b) at any time, book equity shall be deemed to
include the Second Cycle Residual Value at such date.
"Total Debt": at any date of determination, all Indebtedness of DW
Animation and its Subsidiaries (other than Excluded Lease Debt and the HBO
Subordinated Debt) determined on a consolidated basis in accordance with GAAP.
"Transferee": any Assignee or Participant.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
"Universal": Universal Studios, Inc., a Delaware corporation.
"Universal Advance": the Animation Advance (as defined in the Universal
Interparty Agreement) in an amount not to exceed $75,000,000.
"Universal Advance Documents": the Universal Master Agreement and the
Universal Interparty Agreement, together with all other documents or instruments
(or portions thereof) governing the terms of the Universal Advance, as amended,
supplemented or otherwise modified from time to time.
"Universal Interparty Agreement": the Interparty Agreement, dated on or
prior to the Closing Date, among DreamWorks, DW Animation and Vivendi Universal
Entertainment LLLP.
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15
"Universal Master Agreement": the Master Agreement dated as of June 14,
1995, as amended and restated as of June 20, 2001, as further amended and
restated as of October 31, 2003, among DreamWorks, Universal and Vivendi
Universal Entertainment LLP, as further amended, supplemented or otherwise
modified from time to time.
"Unrefunded Swingline Loans": as defined in Section 2.5(c).
"Unutilized Commitment": as to any Lender at any time, an amount equal to
the excess, if any, of (a) the amount of such Lender's Commitment over (b) such
Lender's Aggregate Revolving Extensions of Credit.
1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any other Loan Document or any certificate or other document made or delivered
pursuant hereto or thereto.
(b) Unless otherwise specified herein, all accounting terms used
herein (and in any other Loan Document and any certificate or other document
made or delivered pursuant hereto or thereto) shall be interpreted, all
accounting determinations shall be made, and all financial statements required
to be delivered hereunder shall be prepared, in accordance with GAAP as in
effect from time to time; provided, however, that if DW Animation notifies the
Administrative Agent that DW Animation wishes to amend any covenant in Section 7
to eliminate the effect of any change in GAAP on the operation of such covenant
(or if the Administrative Agent notifies DW Animation that the Required Lenders
wish to amend Section 7 for such purpose), then compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant is amended in a manner satisfactory to DW Animation and the
Required Lenders.
(c) Unless otherwise stated herein, all calculations of ultimates
pursuant to this Agreement shall be made in a manner consistent with
calculations of ultimates made in connection with any financial statements
prepared by DW Animation whether pursuant to this Agreement or otherwise.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified. The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation".
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. LOANS
2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make revolving credit loans ("Revolving
Credit Loans") to DW Animation from time to time during the Commitment Period.
DW Animation may use the Commitments by borrowing, prepaying the Revolving
Credit Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be Eurodollar
Loans or ABR Loans, as determined by DW Animation and notified to the
Administrative Agent in accordance with
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Sections 2.2 and 2.10, provided that no Revolving Credit Loan of a particular
Lender shall be made as a Eurodollar Loan after the day that is one month prior
to the Scheduled Termination Date.
2.2 Procedure for Revolving Credit Borrowing. DW Animation may borrow
under the Commitments during the Commitment Period on any Business Day, provided
that DW Animation shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to (a) 3:00 P.M., New
York City time, three Business Days prior to the requested Borrowing Date, in
the case of Eurodollar Loans or (b) 12:00 noon, New York City time on the
requested Borrowing Date, in the case of ABR Loans), specifying (i) the amount
to be borrowed, (ii) the requested Borrowing Date, (iii) whether such borrowing
shall consist of Eurodollar Loans or ABR Loans, and (iv) in the case of
Eurodollar Loans, the respective amounts thereof and the respective lengths of
the initial Interest Periods therefor. Each borrowing under the Commitments
shall be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a
whole multiple of $100,000 in excess thereof (or, if the then Unutilized
Commitments are less than $1,000,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $5,000,000 or a whole multiple of $500,000 in excess thereof.
Upon receipt of any such notice from DW Animation, the Administrative Agent
shall promptly notify each relevant Lender thereof. Each relevant Lender will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of DW Animation at the office of the
Administrative Agent specified in Section 10.2 prior to 1:00 P.M., New York City
time, on the Borrowing Date requested by DW Animation in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to DW Animation by the Administrative Agent crediting the account of
DW Animation on the books of such office with the aggregate of the amounts made
available to the Administrative Agent by the relevant Lenders and in like funds
as received by the Administrative Agent; provided that if, on the Borrowing Date
of any Revolving Credit Loans, any Swingline Loans shall be outstanding, the
proceeds of such Revolving Credit Loans shall first be applied to pay in full
such Swingline Loans, with any remaining proceeds to be made available to DW
Animation as provided above.
2.3 Swingline Commitment. Subject to the terms and conditions hereof,
JPMorgan Chase Bank (in such capacity, the "Swingline Lender") agrees to make
available to DW Animation a portion of the credit otherwise available under the
Commitments from time to time during the Commitment Period by making Swingline
loans ("Swingline Loans") to DW Animation in an aggregate principal amount not
to exceed at any one time outstanding the Swingline Commitment (notwithstanding
that the Swingline Loans outstanding at any time, when aggregated with the
Swingline Lender's other outstanding Loans hereunder, may exceed such Lender's
Commitment then in effect). During the Commitment Period, DW Animation may use
the Swingline Commitment by borrowing, repaying and reborrowing, all in
accordance with the terms and conditions hereof. All Swingline Loans shall at
all times be ABR Loans.
2.4 Procedure for Swingline Borrowing. Whenever DW Animation desires that
the Swingline Lender make Swingline Loans under Section 2.3 it shall give the
Swingline Lender irrevocable telephonic notice confirmed promptly in writing
(which telephonic notice must be received by the Swingline Lender not later than
3:00 P.M., New York City time, on the proposed Borrowing Date), specifying (a)
the amount to be borrowed and (b) the requested Borrowing Date. Each borrowing
under the Swingline Commitment shall be in an amount equal to $500,000 or a
whole multiple of $100,000 in excess thereof. Not later than 5:00 P.M., New York
City time, on the Borrowing Date specified in a notice in respect of Swingline
Loans, the Swingline Lender shall make available to the Administrative Agent for
the account of DW Animation at the office of the Administrative Agent specified
in Section 10.2 an amount in immediately available funds equal to the amount of
the Swingline Loan to be made by the Swingline Lender. The proceeds of such
Swingline Loan will then be made available to DW Animation on such Borrowing
Date by the Administrative Agent crediting the account of DW Animation on the
books of such office with the aggregate of the amounts made available to the
Administrative Agent by the Swingline Lender and in like funds as received by
the Administrative Agent.
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2.5 Refunding of Swingline Loans. (a) The Swingline Lender, at any time
and from time to time in its sole and absolute discretion may, on behalf of DW
Animation (which hereby irrevocably directs the Swingline Lender to act on its
behalf), upon notice given by the Swingline Lender no later than 10:00 A.M., New
York City time, on the relevant refunding date, request each Lender to make, and
each such Lender hereby agrees to make, a Revolving Credit Loan (which shall be
an ABR Loan), in an amount equal to such Lender's Commitment Percentage of the
aggregate amount of the Swingline Loans (the "Refunded Swingline Loans")
outstanding on the date of such notice, to refund such Swingline Loans. Each
Lender shall make the amount of such Revolving Credit Loan available to the
Administrative Agent at its office set forth in Section 10.2 in immediately
available funds, no later than 1:00 P.M., New York City time, on the date of
such notice. The proceeds of such Revolving Credit Loans shall be distributed by
the Administrative Agent to the Swingline Lender and immediately applied by the
Swingline Lender to repay the Refunded Swingline Loans. Effective on the day
such Revolving Credit Loans are made, the portion of the Swingline Loans so paid
shall no longer be outstanding as Swingline Loans.
(b) The making of any Swingline Loan hereunder shall be subject to
the satisfaction of the applicable conditions precedent thereto set forth in
Section 5.2 (unless otherwise waived in accordance with Section 10.1). The
Swingline Lender shall notify DW Animation of its election not to make Swingline
Loans hereunder as a result of the failure to satisfy such conditions precedent,
unless an Event of Default of the type specified in Section 8.1(f) shall have
occurred and be continuing.
(c) If, for any reason, Revolving Credit Loans may not be (as
determined by the Administrative Agent in its sole discretion), or are not, made
pursuant to Section 2.5(a) to repay Swingline Loans as required by said Section,
then, effective on the date such Revolving Credit Loans would otherwise have
been made, each Lender severally, unconditionally and irrevocably agrees that it
shall purchase a participating interest in such Swingline Loans ("Unrefunded
Swingline Loans") in an amount equal to the amount of Revolving Credit Loans
which would otherwise have been made by such Lender pursuant to Section 2.5(a).
Each such Lender will immediately transfer to the Administrative Agent, in
immediately available funds, the amount of its participation (the "Swingline
Participation Amount"), and the proceeds of such participation shall be
distributed by the Administrative Agent to the Swingline Lender in such amount
as will reduce the amount of the participating interest retained by the
Swingline Lender in its Swingline Loans to the amount of the Revolving Credit
Loans which were to have been made by it pursuant to Section 2.5(a).
(d) Whenever, at any time after the Swingline Lender has received
from any Lender such Lender's Swingline Participation Amount, the Swingline
Lender receives any payment on account of the Swingline Loans, the Swingline
Lender will distribute to such Lender its Swingline Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender's participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Lender's pro rata portion of such payment if such payment is not sufficient to
pay the principal of and interest on all Swingline Loans then due); provided,
however, that in the event that such payment received by the Swingline Lender is
required to be returned, such Lender will return to the Swingline Lender any
portion thereof previously distributed to it by the Swingline Lender.
(e) Each Lender's obligation to make the Loans referred to in
Section 2.5(a) and to purchase participating interests pursuant to Section
2.5(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense or other right which such Lender or DW Animation may have
against the Swingline Lender, DW Animation or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions specified in
Section 5; (iii) any adverse change in the condition (financial or otherwise) of
DW Animation; (iv) any breach of
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this Agreement or any other Loan Document by DW Animation or any Lender; or (v)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.
2.6 Commitment Fee. DW Animation agrees to pay to the Administrative Agent
for the account of each Lender a commitment fee (a "Commitment Fee"), computed
at a rate per annum equal to the Commitment Fee Rate on the average daily amount
of the unutilized Commitment of such Lender for the period for which such
payment is made. The Commitment Fee shall be payable quarterly in arrears on the
last day of each March, June, September and December and on the last day of the
Commitment Period, commencing on the first of such dates to occur after the
Effective Date. For the purposes of this Section 2.6, Swingline Loans shall be
deemed not to constitute utilization of the Commitments.
2.7 Termination or Reduction of Commitments; Mandatory Prepayments. (a) DW
Animation shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments; provided that no such termination or
reduction of the Commitments shall be permitted if, after giving effect thereto
and to any repayments of the Loans made on the effective date thereof, (i) the
Facility Exposure would exceed the aggregate Commitments then in effect or (ii)
the Aggregate Revolving Extensions of Credit of any Lender would exceed such
Lender's Commitment. Any such reduction shall be in an amount equal to
$10,000,000 or a whole multiple thereof and shall reduce permanently the
Commitments then in effect.
(b) The Commitments shall automatically be permanently reduced on
the date of any Non-Excluded Asset Sale (each, a "Specified Non-Excluded Asset
Sale") occurring on or after the date on which the aggregate fair market value
of all assets sold or otherwise disposed of in connection with Non-Excluded
Asset Sales since the Closing Date exceeds $50,000,000, such reduction to be in
an amount equal to 100% of the Net Cash Proceeds of such asset sale (or the
Specified Percentage of such Net Cash Proceeds, in the case of the first
Specified Non-Excluded Asset Sale). As used in this Section 2.7(b), the term
"Specified Percentage" means, with respect to the first Specified Non-Excluded
Asset Sale, the quotient, expressed as a percentage, of (i) the excess of the
aggregate fair market value of all assets sold or otherwise disposed of in
connection with Non-Excluded Asset Sales (including such Specified Non-Excluded
Asset Sale) since the Closing Date through the date of such Specified
Non-Excluded Asset Sale over $50,000,000 and (ii) the aggregate fair market
value of the assets sold or otherwise disposed of in connection with such
Specified Non-Excluded Asset Sale.
(c) If, after giving effect to any reduction in the Commitments
pursuant to Section 2.7(b), (i) the Aggregate Revolving Extensions of Credit of
any Lender exceeds such Lender's Commitment or (ii) the Facility Exposure
exceeds the aggregate Commitments, DW Animation shall, on the date of such
reduction, prepay the Revolving Credit Loans and/or Swingline Loans to the
extent necessary to eliminate any such excess; provided that if any such
prepayment is insufficient to eliminate any such excess (because L/C Obligations
constitute a portion thereof), DW Animation shall, on the date of such
reduction, to the extent of the balance of such excess, deposit an amount in
cash in a cash collateral account established with the Administrative Agent for
the benefit of the relevant Lenders on terms and conditions reasonably
satisfactory to the Administrative Agent, which deposit shall be released to DW
Animation from time to time in the amount of each subsequent reduction of such
L/C Obligations.
(d) Within ten Business Days after (i) the date of delivery of any
Borrowing Availability Certificate showing that the Facility Exposure exceeds
the Borrowing Availability then in effect or (ii) any date on which DW Animation
shall otherwise become aware that the Facility Exposure exceeds the Borrowing
Availability then in effect, DW Animation shall prepay the Revolving Credit
Loans or Swingline Loans (or, if no such Loans remain outstanding, cash
collateralize L/Cs on terms satisfactory to the Administrative Agent) in an
amount sufficient to cause the Facility Exposure to be no greater than the
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19
Borrowing Availability then in effect. The application of any prepayment
pursuant to this paragraph (d) shall be made first to ABR Loans and second to
Eurodollar Loans.
2.8 Repayment of Loans; Evidence of Debt. (a) DW Animation hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender on the Scheduled Termination Date, the then unpaid principal amount
of each Revolving Credit Loan and Swingline Loan made by such Lender. DW
Animation hereby further agrees to pay interest in immediately available funds
at the office of the Administrative Agent on the unpaid principal amount of the
Loans from time to time outstanding from the Closing Date until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 2.12.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of DW Animation to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
Section 10.6(b), and a subaccount therein for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount of each Loan made
hereunder, whether such Loan is a Revolving Credit Loan or Swingline Loan,
whether, if applicable, such Loan is an ABR Loan or a Eurodollar Loan, and any
Interest Period applicable to such Loan, (ii) the amount of any principal or
interest due and payable or to become due and payable from DW Animation to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from DW Animation and each Lender's share
thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of DW Animation therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of DW Animation to repay (with applicable interest) the Loans made to
DW Animation by such Lender in accordance with the terms of this Agreement.
2.9 Optional Prepayments. DW Animation may at any time and from time to
time prepay the Loans, in whole or in part, without premium or penalty, upon at
least one Business Day's irrevocable notice to the Administrative Agent,
specifying the date and amount of prepayment, whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each; provided that notice of any prepayment of
Swingline Loans may be delivered to the Administrative Agent as late as, but not
later than, 12:00 Noon, New York City time, on the date of such prepayment. Upon
receipt of any such notice, the Administrative Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with (in the
case of any Eurodollar Loans) any amounts payable pursuant to Section 2.18 and
(except in the case of ABR Loans) accrued interest to such date on the amount
prepaid. Partial prepayments of Loans (other than Swingline Loans) pursuant to
this Section 2.9 shall be in an aggregate principal amount of $1,000,000 or a
whole multiple thereof (or, if less, the remaining outstanding principal amount
thereof). Partial prepayments of Swingline Loans shall be in an aggregate
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
(or, if less, the remaining outstanding principal amount thereof).
2.10 Conversion and Continuation Options. (a) DW Animation may elect from
time to time to convert Eurodollar Loans to ABR Loans by giving the
Administrative Agent at least one Business Day's prior irrevocable notice of
such election; provided that any such conversion of Eurodollar Loans
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20
may only be made on the last day of an Interest Period with respect thereto. DW
Animation may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election. Any such notice of conversion to Eurodollar
Loans shall specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice the Administrative Agent shall
promptly notify each Lender thereof. All or any part of outstanding Eurodollar
Loans and ABR Loans may be converted as provided herein; provided that no ABR
Loan made by a particular Lender may be converted into a Eurodollar Loan after
the date that is one month prior to the Scheduled Termination Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by DW
Animation giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans; provided
that no Eurodollar Loan may be continued as such after the date that is one
month prior to the Scheduled Termination Date or when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such
continuations, and provided, further, that if DW Animation shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period.
2.11 Minimum Amounts and Maximum Number of Tranches. Notwithstanding
anything to the contrary in this Agreement, all borrowings, conversions,
continuations and prepayments of Eurodollar Loans and all selections of Interest
Periods shall be in such amounts and be made pursuant to such elections so that,
after giving effect thereto, (a) the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) there shall be no more than 10
Eurodollar Tranches outstanding at any time.
2.12 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such Interest Period plus
the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any Loan,
(ii) any interest payable thereon or (iii) any Commitment Fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 2.12 plus 2% or (y) in the case of any overdue interest, Commitment Fee
or other amount, equal to the rate then applicable to ABR Loans plus 2%, in each
case from the date of such non-payment until such amount is paid in full
(whether before or after judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
2.13 Computation of Interest and Fees. (a) Commitment Fees and interest
(other than interest calculated on the basis of the Prime Rate) shall be
calculated on the basis of a 360-day year for the actual days elapsed. Interest
calculated on the basis of the Prime Rate shall be calculated on the basis of a
365- or 366- (as the case may be) day year for the actual days elapsed. The
Administrative Agent shall as soon as practicable notify DW Animation and the
Lenders of each determination of a Eurodollar Rate in
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21
respect of any Eurodollar Tranche. Any change in the interest rate on a Loan
resulting from a change in the ABR shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify DW Animation and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on DW Animation and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of DW Animation, deliver to DW
Animation a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.12(a).
2.14 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon DW Animation) that, by reason
of circumstances affecting the eurodollar market, adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Eurodollar Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to DW
Animation and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as ABR Loans and (y) any Loans that, on the first
day of such Interest Period, were to be converted to or continued as Eurodollar
Loans shall be converted to or continued as ABR Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be
made or continued as such, nor shall DW Animation have the right to convert ABR
Loans to Eurodollar Loans.
2.15 Pro Rata Treatment and Payments. (a) Except as contemplated by
Section 2.7, (i) each reduction of the Commitments and each payment in respect
of Commitment Fees shall be made pro rata according to the respective Commitment
Percentages of the Lenders and (ii) each payment (including each prepayment) by
DW Animation on account of principal of and interest on Loans shall be made pro
rata according to the respective outstanding principal amount of such Loans then
held by the Lenders. Notwithstanding anything to the contrary in this Agreement,
if an Event of Default shall have occurred and be continuing, each payment
(including each prepayment) by DW Animation on account of principal of and
interest on Loans shall be made pro rata according to the respective outstanding
principal amount of all such Loans then held by all Lenders. All payments
(including prepayments) to be made by DW Animation hereunder, whether on account
of principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 Noon, New York City time, on the
due date thereof to the Administrative Agent, for the account of the Lenders, at
the Administrative Agent's office specified in Section 10.2, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the relevant Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension)
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22
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to DW Animation a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.15(b) shall be conclusive in
the absence of manifest error. If such Lender's share of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans, on demand, from DW Animation.
2.16 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority (other than tax
laws), in each case made subsequent to the date hereof:
(i) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate; or
(ii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender
(other than an increase in taxes), by an amount which such Lender deems to be
material, of making, converting into, continuing or maintaining Eurodollar Loans
or issuing or participating in L/Cs or to reduce any amount receivable hereunder
in respect thereof, then, in any such case, DW Animation shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim any additional amounts pursuant to this Section
2.16(a), it shall promptly notify DW Animation, through the Administrative
Agent, of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, in each case made subsequent to the date hereof, has the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any L/C to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such
Lender to DW Animation (with a copy to the Administrative Agent) of a written
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23
request therefor, DW Animation shall promptly pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction.
(c) DW Animation agrees to pay to each Lender which requests
compensation under this Section 2.16(c) (by notice to DW Animation), on the last
day of each Interest Period with respect to any Eurodollar Loan made by such
Lender, so long as such Lender shall be required to maintain reserves against
"Eurocurrency liability" under Regulation D of the Board (or, so long as such
Lender may be required by the Board or by any other Governmental Authority to
maintain reserves against any other "category of liabilities" under Regulation D
of the Board (or, so long as such Lender may be required by the Board or by any
other Governmental Authority to maintain reserves against any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or against any
category of extensions of credit or other assets of such Lender which includes
any Eurodollar Loans), an additional amount (determined by such Lender and
notified to DW Animation) representing such Lender's calculation or, if an
accurate calculation is impracticable, reasonable estimate (using such
reasonable means of allocation as such Lender shall determine) of the actual
costs, if any, incurred by such Lender during such Interest Period, as a result
of the applicability of the foregoing reserves to such Eurodollar Loans, which
amount in any event shall not exceed the product of the following for each day
of such Interest Period:
(i) the principal amount of the Eurodollar Loans made by such Lender
to which such Interest Period relates and outstanding on such day; and
(ii) the difference between (x) a fraction, the numerator of which
is the Eurodollar Rate (expressed as a decimal) applicable to such
Eurodollar Loan and the denominator of which is one minus the maximum rate
(expressed as a decimal) at which such reserve requirements are imposed by
the Board or other Governmental Authority on such date, minus (y) such
numerator; and
(iii) a fraction the numerator of which is one and the denominator
of which is 360.
Any Lender which gives notice under this Section 2.16(c) shall promptly withdraw
such notice (by written notice of withdrawal given to the Administrative Agent
and DW Animation) in the event such Lender is no longer required to maintain
such reserves or the circumstances giving rise to such notice shall otherwise
cease to exist.
(d) A certificate as to any additional amounts payable pursuant to
this Section 2.16 submitted by any Lender, through the Administrative Agent, to
DW Animation shall specify in reasonable detail the basis for the request for
compensation of such additional amounts and the method of computation thereof
and shall be conclusive in the absence of manifest error. DW Animation shall
(except as otherwise provided in Section 2.16(c)) pay each Lender the amount
shown as due on any such certificate delivered by it within 30 days after
receipt thereof. The obligations of DW Animation pursuant to this Section 2.16
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
(e) Promptly after any Lender has determined that it will make a
request for additional amounts pursuant to this Section 2.16, such Lender will
notify DW Animation thereof. Failure on the part of any Lender so to notify DW
Animation or to demand additional amounts with respect to any period shall not
constitute a waiver of such Lender's right to demand additional amounts with
respect to such period or any other period; provided that DW Animation shall not
be under any obligation to compensate any Lender with respect to increased costs
or reductions with respect to any period prior to the date (the "Cut-Off Date")
that is six months prior to such request if such Lender was aware on the
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Cut-Off Date of the circumstances giving rise to such increased costs or
reductions and of the fact that such circumstances would in fact result in such
increased costs or reduction and provided, further, that the limitation in the
preceding proviso shall not apply to any increased costs or reductions arising
out of the retroactive application of any Requirement of Law.
2.17 Taxes. (a) Except as otherwise required by law, all payments made by
DW Animation under this Agreement and the other Loan Documents shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) and
branch profits taxes imposed on the Administrative Agent or any Lender (or
Transferee) as a result of a present or former connection between the
Administrative Agent or such Lender (or Transferee) and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Administrative Agent or such Lender (or Transferee) having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement). If any such non-excluded taxes, levies, imposts, duties,
charges, fees deductions or withholdings ("Non-Excluded Taxes") are required to
be withheld from any amounts payable to the Administrative Agent or any Lender
(or Transferee) hereunder, the amounts so payable to the Administrative Agent or
such Lender (or Transferee) shall be increased to the extent necessary to yield
to the Administrative Agent or such Lender (or Transferee) (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement; provided, however, that DW
Animation shall not be required to increase any such amounts payable to any
Non-U.S. Lender if such Non-U.S. Lender fails to comply with the requirements of
paragraph (c) of this Section 2.17. Whenever any Non-Excluded Taxes are payable
by DW Animation, as promptly as possible thereafter DW Animation shall send to
the Administrative Agent for its own account or for the account of such Lender
(or Transferee), as the case may be, a certified copy of an original official
receipt received by DW Animation showing payment thereof. If DW Animation fails
to pay any Non-Excluded Taxes when due to the appropriate taxing authority or
fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, DW Animation shall indemnify the Administrative
Agent and the Lenders (and the Transferees) for any incremental taxes, interest
or penalties that may become payable by the Administrative Agent or any Lender
(or Transferee) as a result of any such failure. The agreements in this Section
2.17 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) If any Lender (or Transferee) or the Administrative Agent, as
applicable, receives a refund of a tax for which a payment has been made by DW
Animation pursuant to this Section 2.17, which refund in the good faith judgment
of such Lender (or Transferee) or the Administrative Agent, as the case may be,
is attributable to such payment made by DW Animation, then the Lender (or
Transferee) or the Administrative Agent, as the case may be, shall reimburse DW
Animation (without interest, other than interest paid by the relevant taxing
authority with respect to such refund) for such amount as the Lender (or
Transferee) or the Administrative Agent, as the case may be, determines to be
the proportion of the refund as will leave it, after such reimbursement, in no
better or worse position than it would have been if the payment had not been
required. Each Lender (or Transferee) and the Administrative Agent, as the case
may be, shall claim any refund that it determines is available to it, unless it
concludes in its reasonable discretion that it would be adversely affected by
making such a claim. Neither any Lender (or Transferee) nor the Administrative
Agent shall be obligated to disclose any information regarding its tax affairs
or computations to DW Animation in connection with this paragraph (b) or any
other provision of this Section 2.17.
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(c) Each Non-U.S. Lender shall deliver to DW Animation and the
Administrative Agent two copies of either U.S. Internal Revenue Service Form
W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest", a statement substantially in
the form of Exhibit F and a Form W-8BEN, or any subsequent versions thereof or
successors thereto, properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from, or a reduced rate of, U.S. federal withholding
tax on all payments by DW Animation under this Agreement and the other Loan
Documents. Such forms shall be delivered by each Non-U.S. Lender on or before
the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation) and on or before the date, if any, such Non-U.S. Lender changes
its applicable lending office by designating a different lending office (a "New
Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify DW Animation at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to DW Animation (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 2.17(c), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.17(c) that
such Non-U.S. Lender is not legally able to deliver.
(d) Notwithstanding any other provision of this Section 2.17, DW
Animation shall not be required to indemnify any Non-U.S. Lender, or to pay any
additional amounts to any Non-U.S. Lender, in respect of United States federal
withholding tax pursuant to paragraph (a) above to the extent that the
obligation to withhold amounts with respect to United States federal withholding
tax existed on the date such Non-U.S. Lender became a party to this Agreement
(or, in the case of a Transferee that is a Participant, on the date such
Participant became a Transferee hereunder) or, with respect to payments to a New
Lending Office, the date such Non-U.S. Lender designated such New Lending Office
with respect to a Loan.
(e) Any Lender (or Transferee) claiming any indemnity payment or
additional amounts payable pursuant to this Section 2.17 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested in writing by DW Animation if the
making of such a filing would avoid the need for or reduce the amount of any
such indemnity payment or additional amounts that may thereafter accrue and
would not, in the sole determination of such Lender (or Transferee), be
otherwise disadvantageous to such Lender (or Transferee).
(f) Each Lender (or Transferee) represents that it is not, and
agrees that at all times during the term of this Agreement will not be, a
conduit entity participating in a conduit financing arrangement (as defined in
Section 7701(l) of the Code and the regulations thereunder) with respect to any
Loan.
2.18 Indemnity. DW Animation agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by DW Animation in making a borrowing of
Eurodollar Loans or in the conversion into or continuation of Eurodollar Loans
after DW Animation has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by DW Animation in making any
prepayment of Eurodollar Loans after DW Animation has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or the proposed
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Interest Period), in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the margin included therein) over (ii)
the amount of interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank eurodollar market. The
obligations contained in this Section 2.18 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
2.19 Change of Lending Office. Each Lender (or Transferee) agrees that,
upon the occurrence of any event giving rise to the operation of Section 2.16 or
2.17 with respect to such Lender (or Transferee), it will, if requested by DW
Animation, use reasonable efforts (subject to overall policy considerations of
such Lender (or Transferee)) to designate another lending office for any Loans
affected by such event with the object of avoiding the consequences of such
event; provided that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no material economic, legal or regulatory disadvantage, and provided, further,
that nothing in this Section 2.19 shall affect or postpone any of the
obligations of DW Animation or the rights of any Lender (or Transferee) pursuant
to Sections 2.16 and 2.17.
2.20 Replacement of Lenders under Certain Circumstances. DW Animation
shall be permitted to replace any Lender which (a) requests reimbursement for
amounts owing pursuant to Section 2.16 or 2.17 or (b) defaults in its obligation
to make Revolving Credit Loans or Swingline Loans hereunder, with a replacement
bank or other financial institution; provided that (i) such replacement does not
conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) DW Animation
shall repay (or the replacement bank or institution shall purchase, at par) all
Loans and other amounts owing to such replaced Lender prior to the date of
replacement, (iv) DW Animation shall be liable to such replaced Lender under
Section 2.18 if any Eurodollar Loan owing to such replaced Lender shall be
prepaid (or purchased) other than on the last day of the Interest Period
relating thereto, (v) the replacement bank or institution, if not already a
Lender, and the terms and conditions of such replacement, shall be reasonably
satisfactory to the Administrative Agent, (vi) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
10.6 (provided that DW Animation shall be obligated to pay the registration and
processing fee referred to therein), (vii) until such time as such replacement
shall be consummated, DW Animation shall pay all additional amounts (if any)
required pursuant to Section 2.16 or 2.17, as the case may be, and (viii) any
such replacement shall not be deemed to be a waiver of any rights which DW
Animation, the Administrative Agent or any other Lender shall have against the
replaced Lender or that the replaced Lender shall have under this Agreement.
SECTION 3. L/CS
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
L/C Issuer, in reliance on the agreements of the other Lenders set forth in
Section 3.3(a), agrees to issue L/Cs ("L/Cs") for the account of DW Animation on
any Business Day during the Commitment Period in such form as may be approved
from time to time by the L/C Issuer; provided that the L/C Issuer shall have no
obligation to issue any L/C if, after giving effect to such issuance, the sum of
the L/C Obligations would exceed the L/C Commitment. Each L/C (i) shall be
denominated in Dollars, (ii) shall expire no later than the earlier of (x) the
fifth Business Day prior to the Scheduled Termination Date and (y) the first
anniversary of the date of issuance thereof, provided that any L/C with a
one-year tenor may provide for the renewal thereof for additional one-year
periods, and provided, further, that in no event shall such L/C extend beyond
the date that is the fifth Business Day prior to the Scheduled Termination Date)
and (iii) unless otherwise agreed by the L/C Issuer in its sole discretion,
shall be in a face amount of at least $1,000,000. It is understood that the
letter of credit described on Schedule 3.1 hereto shall be a "L/C" for all
purposes of this Agreement.
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27
(b) The L/C Issuer shall not at any time be obligated to issue any
L/C hereunder if such issuance would conflict with, or cause the L/C Issuer or
any L/C Participant to exceed any limits imposed by, any applicable Requirement
of Law.
3.2 Procedure for Issuance of L/Cs. DW Animation may from time to time
request that the L/C Issuer issue an L/C by delivering to the L/C Issuer at its
address for notices specified herein an Application therefor, completed to the
reasonable satisfaction of the L/C Issuer, and such other certificates,
documents and other papers and information as the L/C Issuer may reasonably
request. Upon receipt of any Application, the L/C Issuer will process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the L/C requested thereby (but in no event
shall the L/C Issuer be required to issue any L/C earlier than three Business
Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such L/C to the beneficiary thereof or as otherwise may
be agreed by the L/C Issuer and DW Animation. The L/C Issuer shall furnish a
copy of such L/C to DW Animation and each Lender promptly following the issuance
thereof.
3.3 L/C Participations. (a) The L/C Issuer irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the L/C Issuer to issue
L/Cs hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the L/C Issuer, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk,
an undivided interest equal to such L/C Participant's Commitment Percentage in
the L/C Issuer's obligations and rights under each L/C and the amount of each
draft paid by the L/C Issuer thereunder. Each L/C Participant unconditionally
and irrevocably agrees with the L/C Issuer that, if a draft is paid under any
L/C for which the L/C Issuer is not reimbursed in full by DW Animation in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the L/C Issuer upon demand at the L/C Issuer's address for notices specified
herein an amount equal to such L/C Participant's Commitment Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
L/C Issuer pursuant to Section 3.3(a) in respect of any unreimbursed portion of
any payment made by the L/C Issuer under any L/C is paid to the L/C Issuer
within three Business Days after the date such payment is due, such L/C
Participant shall pay to the L/C Issuer on demand an amount equal to the product
of (i) such amount, times (ii) the daily average Federal funds rate, as quoted
by the L/C Issuer, during the period from and including the date such payment is
required to the date on which such payment is immediately available to the L/C
Issuer, times (iii) a fraction the numerator of which is the number of days that
elapse during such period and the denominator of which is 360. If any such
amount required to be paid by any L/C Participant pursuant to Section 3.3(a) is
not in fact made available to the L/C Issuer by such L/C Participant within
three Business Days after the date such payment is due, the L/C Issuer shall be
entitled to recover from such L/C Participant, on demand, such amount with
interest thereon calculated from such due date at the rate per annum applicable
to ABR Loans. A certificate of the L/C Issuer submitted to any L/C Participant
with respect to any amounts owing under this Section 3.3 shall be conclusive in
the absence of manifest error.
(c) Whenever, at any time after the L/C Issuer has made payment
under any L/C and has received from any L/C Participant its pro rata share of
such payment in accordance with Section 3.3(a), the L/C Issuer receives any
payment related to such L/C (whether directly from DW Animation or otherwise),
or any payment of interest on account thereof, the L/C Issuer will distribute to
such L/C Participant its pro rata share thereof; provided, however, that in the
event that any such payment received by the L/C Issuer shall be required to be
returned by the L/C Issuer, such L/C Participant shall return to the L/C Issuer
the portion thereof previously distributed by the L/C Issuer to it.
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3.4 Fees, Commissions and Other Charges. (a) DW Animation shall pay to
the Administrative Agent, for the account of the Lenders, a letter of credit
commission with respect to each L/C at a rate per annum equal to 1.75% on the
average daily amount available to be drawn under such L/C during the period for
which payment is made. Such commission shall be payable to the Lenders
(including JPMorgan Chase Bank) to be shared ratably among them in accordance
with their respective Commitment Percentages. In addition, DW Animation shall
pay to the Administrative Agent, for the sole account of the L/C Issuer, a
fronting fee with respect to each L/C at a rate per annum equal to 0.125% on the
average daily amount available to be drawn under such L/C during the period for
which payment is made. Each such letter of credit commission and fronting fee
shall be payable in arrears on each L/C Fee Payment Date.
(b) In addition to the foregoing commissions and fees, DW
Animation shall pay or reimburse the L/C Issuer for such reasonable and
customary costs and expenses as are incurred or charged by the L/C Issuer in
issuing, effecting payment under, amending or otherwise administering any L/C.
3.5 Reimbursement Obligation of DW Animation. DW Animation agrees to
reimburse the L/C Issuer on each date on which the L/C Issuer notifies DW
Animation of the date and amount of a draft presented under any L/C and paid by
the L/C Issuer for the amount of (a) such draft so paid and (b) any taxes, fees,
charges or other reasonable costs or expenses incurred by the L/C Issuer in
connection with such payment. Each such payment shall be made to the L/C Issuer
at its address for notices specified herein in Dollars and in immediately
available funds. Interest shall be payable on any and all amounts remaining
unpaid by DW Animation under this Section 3.5 from and including the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) to but not including the date of payment in full at the rate which
would be payable on any outstanding ABR Loans which were then overdue. Each
drawing under any L/C shall constitute a request by DW Animation to the
Administrative Agent for a borrowing of Revolving Credit Loans which are ABR
Loans pursuant to Section 2.2 in the amount of such drawing. The Borrowing Date
with respect to such borrowing shall be the date of such drawing, and the
proceeds of such Revolving Credit Loans shall be applied by the Administrative
Agent to reimburse the L/C Issuer for the amounts drawn under such L/C.
3.6 Obligations Absolute. DW Animation's obligations under this Section
3 shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which DW
Animation may have or have had against the L/C Issuer or any beneficiary of an
L/C. DW Animation also agrees with the L/C Issuer that, except as contemplated
by the next succeeding sentence, the L/C Issuer shall not be responsible for,
and DW Animation's Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among DW Animation and
any beneficiary of any L/C or any other party to which such L/C may be
transferred or any claims whatsoever of DW Animation against any beneficiary of
such L/C or any such transferee. The L/C Issuer shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any L/C, except
to the extent of any errors or omissions found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the L/C Issuer. DW Animation agrees that any
action taken or omitted by the L/C Issuer under or in connection with any L/C or
the related drafts or documents, if done in the absence of gross negligence and
willful misconduct, shall be binding on DW Animation and shall not result in any
liability of the L/C Issuer to DW Animation.
3.7 L/C Payments. If any draft shall be presented for payment under any
L/C, the applicable L/C Issuer shall promptly notify DW Animation of the date
and amount thereof. The responsibility of the L/C Issuer to DW Animation in
connection with any draft presented for payment under any L/C shall, in
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addition to any payment obligation expressly provided for in such L/C, be
limited to determining that the documents (including each draft) delivered under
such L/C in connection with such presentment are in conformity with such L/C.
3.8 Applications; Uniform Customs. To the extent that any provision of
any Application related to any L/C is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply. Each L/C shall be
subject to the Uniform Customs and, to the extent not inconsistent therewith,
the laws of the State of New York.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the L/Cs,
DW Animation hereby represents and warrants to the Administrative Agent and each
Lender that:
4.1 Financial Statements. The audited consolidated balance sheets of DW
Animation as at December 31, 2001, December 31, 2002 and December 31, 2003, and
the related consolidated statements of income and retained earnings and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report from Ernst & Young LLP, present fairly the consolidated
financial condition of DW Animation as at each such date, and the consolidated
results of its operations and its consolidated retained earnings and cash flows
for the respective fiscal years then ended. The unaudited consolidated balance
sheets of DW Animation as at March 31, 2004 and June 30, 2004, and the related
unaudited consolidated statements of income and retained earnings and of cash
flows for the portion of the fiscal year ended on each such date, present fairly
the consolidated financial condition of DW Animation as at such date, and the
consolidated results of its operations and its consolidated retained earnings
and cash flows for the portion of the fiscal year then ended (subject to normal
year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). Except as set forth
in Schedule 4.1, DW Animation and its Subsidiaries do not have any material
Guarantee Obligations, contingent liabilities and liabilities for taxes, or any
long-term leases or unusual forward or long-term commitments, including any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, that are not reflected in the audited
financial statements as at December 31, 2003 referred to in this paragraph.
Except as set forth on Schedule 4.1, during the period from December 31, 2003 to
and including the date hereof there has been no sale, transfer or other
disposition by DW Animation or any of its Subsidiaries of any material part of
its business or property.
4.2 No Material Adverse Change. Since December 31, 2003 there has been
no development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Existence; Compliance with Law. Each of DW Animation and each of
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the power and
authority, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is qualified to do business in each jurisdiction where
such qualification is required, except to the extent that the failure to qualify
therein could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and (d) is in compliance with all Requirements of Law, except to
the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4 Power; Authorization; Enforceable Obligations. Each Loan Party has
the power and authority, and the legal right, to make, deliver and perform each
Loan Document to which it is a party
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and, in the case of DW Animation, to borrow hereunder and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party and, in the case
of DW Animation, the borrowings on the terms and conditions of this Agreement.
No consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or the other Loan
Documents. This Agreement has been, and each other Loan Document to which it is
a party will be, duly executed and delivered on behalf of each Loan Party party
thereto. This Agreement constitutes, and each other Loan Document to which it is
a party when executed and delivered will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents to which any Loan Party is a party, the borrowings hereunder and the
use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of DW Animation or of any of its Subsidiaries and will
not result in, or require, the creation or imposition of any Lien on any of its
or their respective properties or revenues pursuant to any such Requirement of
Law or Contractual Obligation (other than the Liens created by the Security
Documents).
4.6 No Material Litigation. Except as set forth on Schedule 4.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of DW Animation,
threatened by or against DW Animation or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to any of the
Loan Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Neither DW Animation nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of DW Animation and its
Subsidiaries has good title to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in, all
its other material property, and none of such property is subject to any Lien
except as permitted by Section 7.2.
4.9 Intellectual Property. DW Animation and each of its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes (the "Intellectual Property") necessary for the conduct
of its business as currently conducted except for those the failure to own or
license which could not reasonably be expected to have a Material Adverse
Effect. No material claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does DW
Animation know of any valid basis for any such claim. The use of such
Intellectual Property by DW Animation and its Subsidiaries does not infringe on
the rights of any Person, except for such claims and infringements that, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
4.10 Taxes. Each of DW Animation and its Subsidiaries has filed or
caused to be filed all material tax returns which, to the knowledge of DW
Animation, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property by any Governmental Authority (other than any the amount or validity of
which is currently
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being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of DW
Animation or its Subsidiaries, as the case may be); no tax Lien has been filed,
and, to the knowledge of DW Animation, no claim is being asserted, with respect
to any such tax, fee or other charge.
4.11 Accuracy of Information. Neither the Confidential Information
Memorandum (taken as a whole and as supplemented by DW Animation prior to the
date hereof) nor this Agreement, any other Loan Document or any other document,
certificate or statement furnished to the Administrative Agent or the Lenders or
any of them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents
(excluding the projections, financial models and business plans referred to in
the next succeeding sentence), contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the Closing Date) any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements contained herein or therein not materially
misleading. The projections, financial models and business plans that have been
or are hereafter prepared by DW Animation or any of its representatives and made
available to the Administrative Agent or the Lenders have been or will be
prepared in good faith based upon assumptions believed by the management of DW
Animation to be reasonable, it being recognized that such projections, financial
models and business plans, as they relate to future events, are not to be viewed
as fact and that actual results during the period or periods covered thereby may
differ materially from the projected results set forth therein. There is no fact
known to any Credit Party on the Closing Date that could reasonably be expected
to have a Material Adverse Effect that has not been expressly disclosed herein,
in the other Loan Documents, in the Confidential Information Memorandum or in
such other documents, certificates and statements furnished to the
Administrative Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents.
4.12 Federal Regulations. No part of the proceeds of any Loans will be
used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board as now and
from time to time hereafter in effect. If requested by any Lender or the
Administrative Agent, DW Animation will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in said
Regulation U.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code, except in each case to the extent that the liability which could
reasonably be expected to result could not reasonably be expected to have a
Material Adverse Effect. No termination of a Single Employer Plan has occurred
except where, in connection with any such termination, the liability that could
reasonably be expected to result could not reasonably be expected to have a
Material Adverse Effect, and no Lien that remains undischarged in favor of the
PBGC or a Plan has arisen, during such five-year period. The present value of
all accrued benefits under each Single Employer Plan (based on those assumptions
used to fund such Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits, except in each
case to the extent that the same could not reasonably be expected to have a
Material Adverse Effect. Neither DW Animation nor any Commonly Controlled Entity
has had a complete or partial withdrawal from any Multiemployer Plan, and
neither DW Animation nor any Commonly Controlled Entity would become subject to
any liability under ERISA if DW Animation or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made,
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except in each case to the extent that the same could not reasonably be expected
to have a Material Adverse Effect. No such Multiemployer Plan is in
Reorganization or Insolvent except where, in any such case, the liability that
could reasonably be expected to result could not reasonably be expected to have
a Material Adverse Effect.
4.14 Investment Company Act; Other Regulations. DW Animation is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. DW
Animation is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board) which limits its ability to
incur Indebtedness.
4.15 Subsidiaries. Set forth on Schedule 4.15 are the Subsidiaries of
DW Animation as of the date hereof.
4.16 Purpose of Loans. The proceeds of the Loans shall be used by DW
Animation for general purposes including, without limitation, to finance the
development, production and distribution costs of entertainment software and to
finance acquisitions and investments.
4.17 Security Documents. The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements and other filings specified on Schedule
4.17(a) in appropriate form are filed in the offices specified on Schedule
4.17(a), the Guarantee and Collateral Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement), in each
case prior and superior in right to any other Person (except, in the case of
Collateral other than Pledged Stock, Liens permitted by Section 7.2).
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent
[on or prior to November 15, 2004]:
(a) Credit Agreement; Guarantee and Collateral Agreement. The
Administrative Agent shall have received (i) this Agreement, executed and
delivered by a duly authorized officer of DW Animation and each of the Persons
listed on Schedule 1.1A, (ii) the Guarantee and Collateral Agreement, executed
and delivered by DW Animation and by a duly authorized officer of each
Subsidiary Guarantor (other than any Excluded Foreign Subsidiary), (iii) the
Distribution Intercreditor Agreement, executed and delivered by DreamWorks, DW
Animation and the Administrative Agent and (iv) an Acknowledgement and Consent
in the form attached to the Guarantee and Collateral Agreement, executed and
delivered by each Subsidiary which is an Issuer (as defined in the Guarantee and
Collateral Agreement) but not a Loan Party.
(b) Closing Certificate. The Administrative Agent shall have
received a certificate of each Loan Party, dated the Closing Date, substantially
in the form of Exhibit B, with appropriate insertions and attachments, in each
case reasonably satisfactory in form and substance to the Administrative Agent
and, in any event, in the case of DW Animation, certifying that no Default or
Event
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33
of Default is then in existence, executed by a Responsible Officer and the
Secretary or any Assistant Secretary of such Loan Party.
(c) DW Animation IPO. (i) The initial public offering of the
common stock of DW Animation shall have been consummated and (ii) the amount of
cash retained by DW Animation from such proceeds shall equal at least
$150,000,000.
(d) Employment Agreement. Jeffrey Katzenberg shall have
entered into an employment agreement reasonably satisfactory to the
Administrative Agent.
(e) DreamWorks Securitization Documents. The documents
relating to DreamWorks' existing securitization shall have been amended in a
manner reasonably satisfactory to the Administrative Agent to permit the
exclusion of the animated film library from DreamWorks' existing securitization.
(f) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions, or substitute opinions, dated
the Closing Date, reasonably satisfactory to the Administrative Agent:
(i) the executed legal opinion of Cravath, Swaine & Moore LLP,
special counsel to DW Animation, substantially in the form of Exhibit C-1;
(ii) the executed legal opinion of Katherine Kendrick, General
Counsel of DW Animation, substantially in the form of Exhibit C-2;
(iii) the executed legal opinion of Seyfarth Shaw, special
counsel to DW Animation, substantially in the form of Exhibit C-3; and
(iv) the executed legal opinion of Richards, Layton & Finger,
special counsel to DW Animation, substantially in the form of Exhibit C-4.
(g) Fees. The Administrative Agent shall have received, for
the benefit of the Lenders, all fees and expenses required to be paid to the
Lenders on or prior to (i) the Effective Date or (ii) the Closing Date, as the
case may be.
(h) Financial Statements. The Lenders shall have received the
financial statements referred to in Section 4.1.
(i) Projections. The Administrative Agent shall have received
satisfactory projections through the 2009 fiscal year.
(j) Pledged Stock; Stock Powers; Pledged Notes. The
Administrative Agent shall have received (i) the certificates, if any,
representing the shares of Capital Stock pledged pursuant to the Guarantee and
Collateral Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof and (ii) each promissory note (if any) pledged to the Administrative
Agent pursuant to the Guarantee and Collateral Agreement endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by the
pledgor thereof.
(k) Filings, Registrations and Recordings. Each document
(including any Uniform Commercial Code financing statement) required by the
Security Documents or under law or reasonably requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of the
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34
Administrative Agent, for the benefit of the Lenders, a perfected Lien on the
Collateral described therein, prior and superior in right to any other Person
(other than with respect to Liens expressly permitted by Section 7.2), shall be
in proper form for filing, registration or recordation on the Closing Date.
(l) HBO Subordinated Debt. DW Animation shall have executed a
written notice to HBO designating this Agreement as the "Senior Credit
Agreement" for the purposes of the HBO Subordinated Loan Agreement.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit (other than the conversion or
continuation of ABR Loans or Eurodollar Loans) requested to be made by it on any
date (including, without limitation, its initial extension of credit) is subject
to the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of such
date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the extensions
of credit requested to be made on such date.
(c) Credit Limits. After giving effect to such extension of
credit, (i) the Aggregate Revolving Extensions of Credit of each Lender shall
not exceed such Lender's Commitment then in effect and (ii) the Facility
Exposure shall not exceed the aggregate Commitments then in effect.
(d) Borrowing Availability. Either (i) DW Animation shall have
delivered, within 10 calendar days prior to such extension of credit, an updated
calculation of the Borrowing Availability demonstrating that, after giving
effect to such extension of credit, the Facility Exposure would not exceed the
Borrowing Availability or (ii) to DW Animation's knowledge, after giving effect
to such extension of credit, the Facility Exposure would not exceed the Facility
Exposure if the most recent calculation of the Borrowing Availability were to be
updated as of the date of such extension of credit.
Each borrowing by and issuance of an L/C on behalf of DW Animation hereunder
shall constitute a representation and warranty by DW Animation as of the date of
such extension of credit that the conditions contained in this Section 5.2 have
been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
DW Animation hereby agrees that, so long as the Commitments
remain in effect, any L/C remains outstanding, or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
DW Animation shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to each Lender (through the
Administrative Agent):
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of DW Animation, a copy of the consolidated
balance sheet of DW Animation and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without
qualification, by independent certified public accountants of nationally
recognized standing; and
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35
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of DW Animation (commencing with the fiscal quarter ending September 30,
2004), the unaudited consolidated balance sheet of DW Animation and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of DW Animation and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as may be
approved by such Responsible Officer or accountants, as the case may be, and
disclosed therein).
6.2 Certificates; Other Information. Furnish to each Lender (through
the Administrative Agent):
(a) within 15 days after the delivery of the financial
statements referred to in Section 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Section 6.1(a) and within 15 days after the delivery of the
financial statements referred to in Section 6.1(b), a certificate of a
Responsible Officer (i) stating that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate, (ii) including calculations in reasonable detail with respect to
compliance with Sections 7.1 and 7.4 and (iii) certifying that the financial
statements delivered for such period are fairly stated in all material respects
(subject to normal year-end audit adjustments);
(c) concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and within 15 days after the delivery of the
financial statements referred to in Section 6.1(b), projections in form and
scope reasonably acceptable to the Administrative Agent (the "Section 6.2
Projections"), for the Test Period commencing immediately after the fiscal
period covered by such financial statements, including an operating budget and
cash flow budget of DW Animation and its Subsidiaries for such period and
sufficient information in reasonable detail to support the calculation of
Projected Sources and Projected Uses for such Test Period, such projections to
be accompanied by a certificate of a Responsible Officer to the effect that such
projections have been prepared on the basis of sound financial planning practice
and that such Responsible Officer has no reason to believe they are incorrect or
misleading in any material respect;
(d) no later than five Business Days prior to the effective
date thereof, a copy of any amendment, supplement, waiver or other modification
to any Organizational Agreement;
(e) promptly after the same become publicly available, copies
of all periodic reports, proxy statements and other materials filed by DW
Animation or any of its Subsidiaries with the Securities and Exchange Commission
(or any successor thereto) or any national securities exchange, or distributed
by DW Animation or any of its Subsidiaries to its security holders generally, as
the case may be;
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request; and
(g) no later than the 20th calendar day after the last
Business Day of each calendar month,
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36
a certificate of a Responsible Officer setting forth an updated calculation of
the Borrowing Availability as of such last Business Day of such calendar month;
provided that DW Animation shall (i) be entitled to deliver at any time an
updating certificate calculating the Borrowing Availability at such time and
(ii) shall not be required to deliver such certificate if the Facility Exposure
is zero on the date such certificate is required to be delivered hereunder.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy, at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where (a) the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on the
books of DW Animation or its Subsidiaries, as the case may be or (b) the failure
to do so could not reasonably be expected to have a Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence. Continue to
engage in the entertainment business and preserve, renew and keep in full force
and effect its existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of such
business.
6.5 Compliance with Contractual Obligations and Laws. Comply with all
Contractual Obligations and Requirements of Law except to the extent that
failure to comply therewith, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
6.6 Maintenance of Property; Insurance. (a) Keep all material property
useful and necessary in its business in good working order and condition and (b)
maintain with financially sound and reputable insurance companies insurance in
such form and upon such terms and in such amounts and against such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business, in each case (i) providing that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 10 days after receipt by the Administrative Agent of
written notice thereof and (ii) naming the Administrative Agent as insured party
or loss payee.
6.7 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which complete and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit appropriate representatives of the Administrative Agent or any Lender to
(i) visit and inspect any of its properties and examine and make abstracts from
any of its financial records as often as may be reasonably requested, in each
case during normal business hours and upon reasonable prior notice specifying
the purpose of such visit and inspection, and (ii) discuss the business,
operations, properties and financial and other condition of DW Animation and its
Subsidiaries with officers and employees of DW Animation and its Subsidiaries
and with DW Animation's independent certified public accountants (any such
discussion with such accountants to be in the presence of a Responsible Officer
of DW Animation unless an Event of Default has occurred and is continuing). In
light of the nature of the businesses in which DW Animation and its Subsidiaries
will engage, it is understood and agreed that, unless an Event of Default has
occurred and is continuing, DW Animation may limit the access of representatives
of the Administrative Agent and any Lender to any property of DW Animation and
its Subsidiaries if DW Animation determines in good faith, after consultation
with the Administrative Agent, that such access to such property would
significantly disrupt the normal conduct of the business conducted on such
property.
6.8 Notices. Promptly give written notice to each Lender (through the
Administrative Agent) of:
(a) the occurrence of any Default or Event of Default;
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37
(b) any (i) default or event of default under any Contractual
Obligation of DW Animation or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between DW Animation or
any of its Subsidiaries and any other Person, which in the case of clause (i) or
(ii) above, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect (including, in any
event, notice of any such litigation or proceeding in which the amount involved
is $15,000,000 or more and not covered by insurance);
(c) the following events, as soon as possible and in any event
within 30 days after DW Animation knows thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or DW Animation or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the withdrawal from,
or the terminating, Reorganization or Insolvency of, any Plan, to the extent
that, in the case of clause (i) or (ii) above, the amount involved is
$15,000,000 or more; and
(d) any development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.8 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action, if any, DW Animation proposes to take with
respect thereto.
6.9 Additional Collateral, etc. (a) With respect to any property
acquired after the Closing Date by DW Animation or any Loan Party (other than
(x) any property that would have been excluded from the definition of Collateral
as set forth in Section III of the Guarantee and Collateral Agreement if such
property had been owned by DW Animation or any Grantor prior to the Closing
Date, (y) any property described in paragraph (b), (c) or (d) below and (z) any
property subject to a Lien expressly permitted by Section 7.2(g)) as to which
the Administrative Agent, for the benefit of the Lenders, does not have a
perfected Lien, promptly (i) execute and deliver to the Administrative Agent
such amendments to the Guarantee and Collateral Agreement or such other
documents as the Administrative Agent deems reasonably necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a security
interest in such property and (ii) take all actions necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such property, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
reasonably requested by the Administrative Agent.
(b) With respect to any fee interest in any real property
having a value (together with improvements thereof) of at least $500,000
acquired after the Closing Date by any Loan Party (other than any such real
property subject to a Lien expressly permitted by Section 7.2(g)), promptly (i)
execute and deliver a first priority mortgage, in favor of the Administrative
Agent, for the benefit of the Lenders, covering such real property, (ii) if
reasonably requested by the Administrative Agent, provide the Lenders with (x)
title and extended coverage insurance covering such real property in an amount
at least equal to the purchase price of such real property (or such other amount
as shall be reasonably specified by the Administrative Agent) and (y) any
consents or estoppels reasonably deemed necessary or advisable by the
Administrative Agent in connection with such mortgage, each of the foregoing in
form and substance reasonably satisfactory to the Administrative Agent and (iii)
if reasonably requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
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(c) With respect to any new Subsidiary (other than a Foreign
Subsidiary) created or acquired after the Closing Date by DW Animation or its
Subsidiaries (which for purposes of this paragraph (c) shall include any
existing Subsidiary that ceases to be a Foreign Subsidiary), promptly (i)
execute and deliver to the Administrative Agent such amendments to the Guarantee
and Collateral Agreement as the Administrative Agent deems reasonably necessary
or advisable to grant to the Administrative Agent, for the benefit of the
Lenders, a perfected first priority security interest in the Capital Stock of
such new Subsidiary that is owned by DW Animation or its Subsidiaries, (ii)
deliver to the Administrative Agent the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the relevant Loan Party, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B)
to take such actions necessary or advisable to grant to the Administrative Agent
for the benefit of the Lenders a perfected first priority security interest in
the Collateral described in the Guarantee and Collateral Agreement with respect
to such new Subsidiary, including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be reasonably requested by the
Administrative Agent and (C) to deliver to the Administrative Agent a
certificate of such Subsidiary, substantially in the form of Exhibit B, with
appropriate insertions and attachments, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any new Foreign Subsidiary created or
acquired after the Closing Date by any Loan Party, promptly (i) execute and
deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement as the Administrative Agent deems reasonably necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a perfected first priority security interest in the Capital Stock of such new
Foreign Subsidiary that is owned by any such Loan Party (provided that in no
event shall more than 66% of the total issued and outstanding voting Capital
Stock of any such new Foreign Subsidiary be required to be so pledged), (ii)
deliver to the Administrative Agent the certificates representing the Capital
Stock, if any, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of the relevant Loan Party, and take such
other action as may be necessary or, in the opinion of the Administrative Agent,
desirable to perfect the Administrative Agent's security interest therein, and
(iii) if requested by the Administrative Agent, deliver to the Administrative
Agent legal opinions relating to the matters described above, which opinions
shall be in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
6.10 Further Assurances. DW Animation, at its expense, will take such
action with respect to the recording, filing, re-recording and refiling of any
financing statements or other instruments as are necessary to maintain, so long
as this Agreement is in effect, the perfection of the security interests under
this Agreement or the Loan Documents, or will furnish timely notice to the
Administrative Agent of the necessity of such action, together with such
instruments, in execution form, and such other information as may be required to
enable the Administrative Agent to take such action. DW Animation will notify
the Administrative Agent in the event that any Loan Party intends to change its
name on the public record of the state of its organization or its "location" (as
such term is used in Article 9 of any applicable Uniform Commercial Code) at
least 30 days before such change is made.
SECTION 7. NEGATIVE COVENANTS
DW Animation hereby agrees that, so long as the Commitments
remain in effect, any L/C remains outstanding, or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document,
DW Animation shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:
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39
7.1 Financial Condition Covenants
(a) As of the last day of any fiscal quarter (each such day, a
"Test Date") ending on or after September 30, 2004, permit the ratio of
Projected Sources to Projected Uses for the twelve-month period (each such
period, a "Test Period") commencing on the date immediately succeeding such Test
Date to be less than 1.20 to 1.0.
(b) Permit the Leverage Ratio to exceed at any time ___ to
1.0.
7.2 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings; provided that adequate reserves with
respect thereto are maintained on the books of DW Animation or its Subsidiaries,
as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which do not in any
case materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of DW Animation
or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule
7.2(f);
(g) Liens securing Indebtedness of DW Animation and its
Subsidiaries incurred to finance the acquisition of fixed or capital assets;
provided that (i) such Liens shall be created substantially simultaneously with
the acquisition of such fixed or capital assets, (ii) such Liens do not at any
time encumber any property other than the property financed by such Indebtedness
and (iii) the amount of Indebtedness secured thereby is not increased;
(h) Liens arising out of any financing or other transaction in
which a Person purchases, factors or otherwise finances accounts receivable (or
interests therein) of DW Animation or any of its Subsidiaries;
(i) Rights of licensees under access agreements pursuant to
which such licensees have access to duplicating material for the purpose of
making prints of films licensed to them, and rights of distributors, exhibitors,
licensees and other Persons in films created in connection with the distribution
and exploitation of such films in the ordinary course of business and not
securing any Indebtedness;
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(j) Liens securing Indebtedness incurred in connection with
acquiring rights to films in the ordinary course of business; provided that (i)
the Indebtedness secured by such Liens does not constitute a general obligation
of DW Animation or any of its Subsidiaries and that under the terms of such
Indebtedness the lender thereof has recourse only to such films and the rights
pertaining thereto and, in each case, to the proceeds thereof, (ii) such Liens
shall be created substantially simultaneously with the acquisition or production
of such films and (iii) such Liens do not at any time encumber any property
other than the films being produced or acquired;
(k) Liens securing Indebtedness arising from advances to DW
Animation or any of its Subsidiaries made by licensees of product in order to
finance the production thereof; provided that the aggregate principal amount of
such Indebtedness shall not exceed (as to DW Animation and all of its
Subsidiaries) $50,000,000 at any time outstanding;
(l) Liens securing the performance of DW Animation's
obligations to DreamWorks under the Distribution Agreement; provided that such
Liens (i) cover only the "DWA Collateral" under and as defined in the
Distribution Agreement as in effect on the Closing Date, (ii) are junior to the
Liens created pursuant to the Security Documents and (iii) are subject to the
Distribution Intercreditor Agreement;
(m) Liens securing the HBO Subordinated Debt; provided that
such Liens cover only the rights of DW Animation to receive payments of license
fees from HBO in respect of license arrangements comparable in scope to those
contained in the HBO License Agreement as in effect on the Closing Date.
(n) Liens created pursuant to the Security Documents; and
(o) Liens (not otherwise permitted hereunder) that secure
Indebtedness not exceeding (as to DW Animation and all of its Subsidiaries)
$25,000,000 in aggregate principal amount at any time outstanding.
7.3 Limitation on Fundamental Changes. In the case of DW Animation or
any Subsidiary Guarantor, enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of,
all or substantially all of the property, business or assets of DW Animation and
its Subsidiaries, taken as a whole, except:
(a) any Subsidiary Guarantor may be merged or consolidated
with or into DW Animation (provided that DW Animation shall be the continuing or
surviving entity) or with or into any other Subsidiary Guarantor; and
(b) any Subsidiary Guarantor may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to DW Animation or any other Subsidiary Guarantor.
7.4 Limitation on Distributions. Declare or make any distribution or
other payment in respect of any Equity Interest in DW Animation (or any warrant,
option or similar right in respect thereof) or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Equity Interest
in DW Animation (or any warrant, option or similar right in respect thereof),
whether now or hereafter outstanding, either directly or indirectly, whether in
cash or property or in obligations of DW Animation or any Subsidiary, provided
that, so long as no Event of Default shall have occurred and be continuing, DW
Animation shall be permitted to repurchase Equity Interests in DW Animation
issued under the Employee Equity Plan, by means of cash payments (any such
repurchase, an "Employee Equity Repurchase"), so long as the aggregate cash
amount so expended in making such repurchases shall not exceed (i) $10,000,000
in any fiscal year plus (ii) any portion of the $10,000,000 available under
clause (i) above in any previous fiscal year which has not been expended plus
(iii) the aggregate cash proceeds received in connection with any
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sale of Equity Interests in DW Animation to any employee (other than Jeffrey
Katzenberg) of DW Animation or any of its Subsidiaries after the Closing Date
and on or prior to the date of such repurchase.
7.5 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate other
than any such transaction (a) between a Subsidiary Guarantor and DW Animation or
any other Subsidiary Guarantor which is otherwise permitted by this Agreement or
(b) entered into by DW Animation or any of its Subsidiaries which is (i)
otherwise permitted under this Agreement and (ii) upon terms no less favorable
to DW Animation or such Subsidiary, as the case may be, than it would obtain in
a comparable arm's length transaction with a Person not an Affiliate; provided
that the provisions of this Section 7.5 shall not apply to transactions
expressly permitted by the Distribution Agreement or the Services Agreement,
dated on or prior to the Closing Date, between DreamWorks and DW Animation.
7.6 Limitation on Negative Pledge Clauses. Enter into or suffer to
exist any agreement, other than in connection with Indebtedness secured by any
Lien permitted by Section 7.2 (in which case, any restriction shall only be
effective against the assets subject to such Lien), which restricts the ability
of DW Animation or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, to exclusively secure with such property, assets or
revenues the obligations of DW Animation hereunder or Guarantee Obligations in
respect thereof.
7.7 Limitation on Restrictions on Subsidiary Distributions. Enter into
or suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Subsidiary of DW Animation to (a) pay dividends or make
any other distributions in respect of any Equity Interest in such Subsidiary
held by, or pay any Indebtedness owed to, DW Animation or any Subsidiary of DW
Animation, (b) make loans or advances to DW Animation or any Subsidiary of DW
Animation or (c) transfer any of its assets to DW Animation or any other
Subsidiary of DW Animation, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents or any other agreements in effect on the Closing Date, (ii) any
restrictions, with respect to a Subsidiary that is not a Subsidiary on the
Effective Date, under any agreement in existence at the time such Subsidiary
becomes a Subsidiary, (iii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the capital stock or assets of such
Subsidiary, or (iv) any restrictions existing under any agreement that amends,
refinances or replaces any agreement containing the restrictions referred to in
clause (i), (ii) or (iii) above; provided that the terms and conditions of any
such agreement are no less favorable to the Lenders than those under the
agreement so amended, refinanced or replaced.
7.8 Limitation on Modification of Organizational Agreements. Amend,
supplement, waive, terminate or otherwise modify, or consent or agree to any
amendment, supplement, waiver, termination or other modification of or to, any
of the terms of any Organizational Agreement in any manner which is adverse to
the interests of the Lenders.
7.9 Optional Payments and Modifications of Certain Debt Instruments.
(a) Make or offer to make any payment, prepayment, repurchase or redemption or
otherwise defease or segregate funds (in each case whether in the form of cash,
property or securities) with respect to principal, interest or other amounts in
respect of the HBO Subordinated Debt, other than (i) scheduled payments of
principal and payments of interest required by the terms of the HBO Subordinated
Loan Agreement, in each case made at any time when no Remedies Bar Period (as
defined in the HBO Subordinated Loan Agreement) and no Default or Event of
Default under Section 8.1(a) hereof is in existence, (ii) the prepayment of up
to $30,000,000 of HBO Subordinated Debt on the Closing Date, together with
accrued and unpaid interest thereon to the date of prepayment and (iii) the
repayment of up to $50,000,000 of HBO Subordinated Debt at maturity on November
1, 2007, together with accrued and unpaid interest to such date, so long as no
Default or Event of Default shall be in existence or result therefrom.
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42
(b) Amend, supplement, waive or otherwise modify, or consent
or agree to any amendment, supplement, waiver or other modification to, any of
the HBO Subordinated Debt Documents or the Universal Advance Documents in any
manner which is materially adverse to the interests of the Lenders. A draft of
any proposed amendment, supplement, waiver or other modification to any of the
HBO Subordinated Debt Documents or Universal Advance Documents shall be
furnished to the Administrative Agent no later than five Business Days prior to
the proposed effective date thereof.
(c) Make or offer to make any payment, prepayment, repurchase
or redemption in respect of, or otherwise optionally or voluntarily defease or
segregate funds with respect to, the principal or interest in respect of any
Specified Subordinated Indebtedness unless, on the date of such payment, after
giving pro forma effect thereto and any financing thereof, (i) no Default or
Event of Default shall be in existence (including pursuant to Section 7.1) and
(ii) DW Animation would be able to borrow at least $50,000,000 of Loans in
compliance with Section 5.2.
Amend, modify, waive or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to, any of the terms of any
Specified Subordinated Indebtedness (other than any such amendment,
modification, waiver or other change that would extend the maturity or reduce
the amount of any payment of principal thereof or reduce the rate or extend any
date for payment of interest thereon).
SECTION 8. REMEDIAL PROVISIONS
8.1 Events of Default. If any of the following events shall occur and
be continuing:
(a) DW Animation shall fail to pay any principal of any Loan
or any Reimbursement Obligation when due in accordance with the terms hereof; or
DW Animation shall fail to pay any interest on any Loan, or any other amount
payable hereunder, within five days after any such interest or other amount
becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by DW
Animation or any other Loan Party herein or in any other Loan Document or which
is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) DW Animation shall default in the observance or
performance of any agreement contained in Section 7; or
(d) DW Animation or any other Loan Party shall default in the
observance or performance of any other agreement contained in this Agreement or
any other Loan Document (other than as provided in paragraphs (a) through (c) of
this Section), and such default shall continue unremedied for a period of 30
days after notice to DW Animation from the Administrative Agent or the Required
Lenders; or
(e) DW Animation or any of its Subsidiaries shall (i) default
in making any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation, but excluding the Loans) on the due date
with respect thereto; or (ii) default in making any payment of any interest on
any such Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or (iii)
default in the observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
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43
evidencing, securing or relating thereto or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee
or agent on behalf of such holder or beneficiary) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated maturity
or (in the case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; provided that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not constitute an Event of
Default under this Agreement unless, at the time of such default, event or
condition, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $15,000,000; provided further that a default,
event or condition described in clause (i), (ii) or (iii) of this paragraph (e)
with respect to Excluded Lease Debt shall not constitute an Event of Default
under this Agreement unless, at the time of such default, event or condition,
the amount of the Excluded Lease Debt exceeds (i) the aggregate Commitments then
in effect and available minus (ii) the Facility Exposure then outstanding; or
(f) (i) DW Animation or any of its Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or DW
Animation or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against DW Animation
or any of its Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against DW Animation or any of its Subsidiaries any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) DW Animation or any of its Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) DW Animation or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of DW
Animation or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) DW Animation or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
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44
(h) One or more judgments or decrees shall be entered against
DW Animation or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $15,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason,
to be in full force and effect or any Loan Party or any Affiliate thereof shall
so assert, or any material Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported to be
created thereby; or
(j) An amount of the Universal Advance in excess of
$15,000,000 shall remain outstanding for more than five Business Days after the
Universal Advance has become due and payable pursuant to the Universal Advance
Documents; or
(k) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and effect
or any Loan Party or any Affiliate of any Loan Party shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section 8.1 with respect to DW
Animation, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding L/Cs shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to DW Animation declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to DW
Animation, declare the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding L/Cs shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable.
With respect to all L/Cs with respect to which presentment for
a drawing shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, DW Animation shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such L/Cs. Amounts held in such
cash collateral account shall be applied by the Administrative Agent to the
payment of drafts drawn under such L/Cs, and the unused portion thereof after
all such L/Cs shall have expired or been fully drawn upon, if any, shall be
applied to repay other obligations of DW Animation hereunder and under the other
Loan Documents. After all such L/Cs shall have expired or been fully drawn upon,
all Reimbursement Obligations shall have been satisfied and all other
obligations of DW Animation hereunder and under the other Loan Documents shall
have been paid in full, the balance, if any, in such cash collateral account
shall be returned to DW Animation.
Except as expressly provided above in this Section 8.1,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
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45
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by DW Animation or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of DW Animation to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of DW Animation.
9.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to DW Animation), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the obligations owing by DW Animation
hereunder.
9.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent
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46
has received notice from a Lender or DW Animation referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by any Agent hereafter taken, including any
review of the affairs of DW Animation, shall be deemed to constitute any
representation or warranty by such Agent to any Lender. Each Lender represents
to the Agents that it has, independently and without reliance upon the Agents or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of DW
Animation and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of DW
Animation. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
DW Animation which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by DW Animation and without
limiting the obligation of DW Animation to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their Commitment Percentages immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the amounts owing hereunder) be imposed on,
incurred by or asserted against such Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the such Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the such Agent's gross negligence or willful
misconduct. The agreements in this Section shall survive the payment of the
Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with DW Animation as though the Agent were not an Agent. With respect to the
Loans made by it, each Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any Lender and may exercise the same
as
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47
though it were not an Agent, and the terms "Lender" and "Lenders" shall include
each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may resign
as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by DW Animation (such approval not to be unreasonably withheld),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
9.10 The Documentation Agent and Syndication Agent. None of the
Documentation Agent or the Syndication Agent in its capacity as such shall have
any rights, duties or responsibilities hereunder, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against any of the Documentation Agent or the Syndication Agent in its capacity
as such.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a) enter into with DW Animation
and, in the case of the Subsidiary Guaranty, the Subsidiary Guarantors, written
amendments, supplements or modifications hereto and to the other Loan Documents
for the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of the Loan
Parties hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders or the Administrative Agent, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) eliminate or reduce the voting rights of any Lender under
this Section 10.1, reduce the amount or extend the scheduled date of maturity of
any Loan, reduce the amount of any Reimbursement Obligation, or reduce the
stated rate of any interest, fee or commission payable to any Lender hereunder
or extend the scheduled date of any payment thereof or increase the amount or
extend the scheduled expiration date of any Lender's Commitment, in each case
without the consent of each Lender directly affected thereby; or (ii) reduce the
percentage specified in the definition of the term "Required Lenders", consent
to the assignment or transfer by DW Animation of any of its rights and
obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral, or release all or substantially all of the
Subsidiary Guarantors from their obligations under the Guarantee and Collateral
Agreement, in each case without the written consent of all the Lenders; or (iii)
amend, modify or waive any provision of Section 9 without the written consent of
the then Administrative Agent. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon DW Animation, the other Loan Parties, the Lenders, the
Administrative Agent and all future holders of the obligations owing hereunder.
In the case of any waiver (unless otherwise specified in such waiver), DW
Animation, the other Loan Parties, the Lenders and the Administrative Agent
shall be restored to
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48
their former positions and rights hereunder and under the other Loan Documents,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three Business Days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of DW Animation and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the other parties hereto,
or to such other address as may be hereafter notified by the respective parties
hereto:
DW Animation: DreamWorks Animation SKG, Inc.
1000 Flower Street
Glendale, California 91201
Attention: ______________
Telecopy:
The Administrative
Agent: JPMorgan Chase Bank Loan
and Agency Services Group
1111 Fannin
Houston, Texas 77002
Attention: Maryann Bui
Telecopy: 713-750-2878
with a copy to: JPMorgan Chase Bank
1999 Avenue of the Stars, 27th Floor
Los Angeles, California 90067
Attention: Clark Hallren
Telecopy: 310-860-7260
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.2, 2.4, 2.7, 2.9, 2.10 or 3.2 shall not be
effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 Payment of Expenses and Taxes. DW Animation agrees (a) except as
otherwise expressly agreed by the Administrative Agent in writing, to pay or
reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the development,
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49
preparation and execution of this Agreement, the other Loan Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent, (b) to pay
or reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the any amendment, supplement or
modification to this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the reasonable fees and disbursements
of Simpson Thacher & Bartlett, counsel to the Administrative Agent, (c) to pay
or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (d) to pay, indemnify, and hold
harmless each Lender and the Administrative Agent from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (e) to pay, indemnify, and hold harmless each
Lender, the L/C Issuer and the Administrative Agent and their respective
officers, directors, employees, affiliates, agents and controlling persons
(each, an "indemnitee") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, fees, charges and disbursements of counsel to such indemnitee) with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents or any actual or proposed use of
proceeds of any Loan (all the foregoing in this clause (e), collectively, the
"indemnified liabilities"); provided that DW Animation shall have no obligation
hereunder to any indemnitee with respect to indemnified liabilities to the
extent arising from the gross negligence or willful misconduct of such
indemnitee. The agreements in this Section 10.5 shall survive repayment of the
Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any affiliate of the L/C Issuer that issues any LC), except that (i)
DW Animation may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by DW Animation without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section.
(b) (i) Subject to the conditions set forth in paragraph
(b)(ii) below, any Lender may assign to one or more assignees (each, an
"Assignee") all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans at the time owing
to it) with the prior written consent of:
(A) DW Animation (such consent not to be unreasonably
withheld), provided that no consent of DW Animation shall be required for
an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as
defined below) or, if an Event of Default under Section 8(a) or (f) has
occurred and is continuing, any other Person; and
(B) the Administrative Agent.
(ii) Assignments shall be subject to the following additional
conditions:
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(A) except in the case of an assignment to a Lender, an
affiliate of a Lender or an Approved Fund or an assignment of the entire
remaining amount of the assigning Lender's Commitments or Loans under any
Facility, the amount of the Commitments or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment
and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 unless each of DW
Animation and the Administrative Agent otherwise consent, provided that
(1) no such consent of DW Animation shall be required if an Event of
Default under Section 8(a) or (f) has occurred and is continuing and (2)
such amounts shall be aggregated in respect of each Lender and its
affiliates or Approved Funds, if any;
(B) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; and
(C) the Assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an administrative questionnaire.
For the purposes of this Section 10.6, "Approved Fund" means
any Person (other than a natural person) that is engaged in making, purchasing,
holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a
Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an
entity that administers or manages a Lender.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below, from and after the effective date specified in each
Assignment and Assumption the Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.16, 2.17, 2.18 and 10.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 10.6
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.
(iv) The Administrative Agent, acting for this purpose as an
agent of DW Animation, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amount of the Loans and LC Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and DW Animation, the Administrative Agent, the L/C Issuer
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an Assignee, the Assignee's
completed administrative questionnaire (unless the Assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.
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(c) (i) Any Lender may, without the consent of DW Animation or
the Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitments
and the Loans owing to it); provided that (A) such Lender's obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) DW Animation, the Administrative Agent, the L/C Issuer and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly affected thereby
pursuant to the proviso to the second sentence of Section 10.1 and (2) directly
affects such Participant. Subject to paragraph (c)(ii) of this Section, DW
Animation agrees that each Participant shall be entitled to the benefits of
Sections 2.16, 2.17 and 2.18 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 10.7(b) as though it were a Lender, provided such
Participant shall be subject to Section 10.7(a) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2.16 or 2.17 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with DW
Animation's prior written consent. Any Participant that is a Non-U.S. Lender
shall not be entitled to the benefits of Section 2.17 unless such Participant
complies with Section 2.17(c).
(d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or Assignee for such Lender
as a party hereto.
(e) DW Animation, upon receipt of written notice from the
relevant Lender, agrees to issue Notes to any Lender requiring Notes to
facilitate transactions of the type described in paragraph (d) above.
(f) Notwithstanding the foregoing, any Conduit Lender may
assign any or all of the Loans it may have funded hereunder to its designating
Lender without the consent of DW Animation or the Administrative Agent and
without regard to the limitations set forth in Section 10.6(b). Each of DW
Animation, each Lender and the Administrative Agent hereby confirms that it will
not institute against a Conduit Lender or join any other Person in instituting
against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding under any state bankruptcy or similar law, for one
year and one day after the payment in full of the latest maturing commercial
paper note issued by such Conduit Lender; provided, however, that each Lender
designating any Conduit Lender hereby agrees to indemnify, save and hold
harmless each other party hereto for any loss, cost, damage or expense arising
out of its inability to institute such a proceeding against such Conduit Lender
during such period of forbearance.
10.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
shall at any time receive any payment of all or part of its Loans or the
Reimbursement Obligations, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or
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52
proceedings of the nature referred to in Section 8.1(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans, or interest thereon,
such benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan and/or
of the Reimbursement Obligations owing to such other Lender, or shall provide
such other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such collateral or proceeds ratably with each of
the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right following the occurrence and
during the continuance of any Event of Default, without prior notice to DW
Animation, any such notice being expressly waived by DW Animation to the extent
permitted by applicable law, upon any amount becoming due and payable by DW
Animation hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of DW Animation. Each Lender agrees
promptly to notify DW Animation and the Administrative Agent after any such
set-off and application made by such Lender; provided that the failure to give
such notice shall not affect the validity of such set-off and application.
10.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with DW Animation and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the agreement of DW Animation, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. DW Animation hereby
irrevocably and unconditionally:
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(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to DW
Animation at its address set forth in Section 10.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgements. DW Animation hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to DW Animation arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and DW
Animation, on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among DW Animation and the Lenders.
10.14 Releases of Guarantees and Liens. (a) Notwithstanding anything to
the contrary contained herein or in any other Loan Document, the Administrative
Agent is hereby irrevocably authorized by each Lender (without requirement of
notice to or consent of any Lender except as expressly required by Section 10.1)
to take any action, including all such actions set forth in the Security
Documents, requested by DW Animation having the effect of releasing any
Collateral or guarantee obligations (i) to the extent necessary to permit
consummation of any transaction not prohibited by any Loan Document or that has
been consented to in accordance with Section 10.1 or (ii) under the
circumstances described in paragraph (b) below.
(b) At such time as the Loans, the Reimbursement Obligations
and the other obligations under the Loan Documents shall have been paid in full,
the Commitments have been terminated and no L/Cs shall be outstanding, the
Collateral shall be released from the Liens created by the Security Documents,
and the Security Documents, the guarantee contained therein (subject to any
provisions
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54
relating to reinstatement), the security interests granted therein and all other
obligations (other than those expressly stated to survive such termination) of
the Administrative Agent and each Loan Party under the Security Documents shall
terminate, all without delivery of any instrument or performance of any act by
any Person, and all rights to the Collateral shall revert to the Grantors.
10.15 Confidentiality. Each of the Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Transferee or prospective Transferee which agrees to comply with the
provisions of this Section 10.15, (c) to the employees, directors, officers,
agents, attorneys, accountants, auditors and other professional advisors of such
Lender or its affiliates, (d) upon the request or demand of any Governmental
Authority having jurisdiction over the Administrative Agent or such Lender, (e)
in response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to applicable law or regulation, (f) if requested
or required to do so in connection with any litigation or similar proceeding,
(g) which has been publicly disclosed other than in breach of this Section
10.15, or (h) in connection with the exercise of any remedy hereunder or under
any other Loan Document.
10.16 WAIVERS OF JURY TRIAL. DREAMWORKS, THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
10.17 HBO Subordinated Loan Agreement. DW Animation hereby designates
this Agreement as the "Senior Credit Agreement" for the purposes of the HBO
Subordinated Loan Agreement. The Lenders hereby designate the Administrative
Agent as the "Designated Senior Agent" for the purposes of the HBO Subordinated
Loan Agreement.
10.18 Distribution Intercreditor Agreement. Each Lender acknowledges
and agrees to the terms and conditions contained in the Distribution
Intercreditor Agreement. Each Lender agrees to comply with the terms contained
in the Distribution Intercreditor Agreement as if it were a party thereto.10.19
Effective Date. The Agreement shall be effective as of the Effective Date,
provided that the making of the representations and warranties contained in
Section 4.17 and compliance with Section 7.2 shall not be required until the
Closing Date.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
DREAMWORKS ANIMATION SKG, INC.
By:
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Title:
JPMORGAN CHASE BANK,
as Administrative Agent and a Lender
By:
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Title:
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Schedule 1.1A
Commitments