IMAX CORPORATION
EXHIBIT 10.31
     THIS FIFTH AMENDMENT TO THE LOAN AGREEMENT is made as of the 5th day of
May, 2008.
BETWEEN:
IMAX CORPORATION
(“Borrower”)
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WACHOVIA CAPITAL FINANCE CORPORATION (CANADA)
(formerly, CONGRESS FINANCIAL CORPORATION (CANADA))
(“Lender”)
     WHEREAS Borrower and Lender entered into a loan agreement dated February 6,
2004 as amended by a first amendment to the loan agreement made as of June 30,
2005, a second amendment to the loan agreement made as of and with effect from
the 16th day of May, 2006, a third amendment to the loan agreement made as of
and with effect from the 30th day of September, 2007 and a fourth amendment to
the loan agreement made as of and with effect from the 5th day of December, 2007
(collectively, the “Loan Agreement”), pursuant to which certain credit
facilities were established in favour of Borrower;
     AND WHEREAS the parties hereto wish to amend certain terms and conditions
of the Loan Agreement with effect from January 1, 2008 as hereinafter set forth;
     NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
covenants and agreements contained herein and for other good and valuable
consideration, the parties hereto agree to amend the Loan Agreement as provided
herein:

1.   General       In this Fifth Amendment to the Loan Agreement, unless
otherwise defined or the context otherwise requires, all capitalized terms shall
have the respective meanings specified in the Loan Agreement.   2.   To be Read
with Loan Agreement       Unless the context of this Fifth Amendment to the Loan
Agreement otherwise requires, the Loan Agreement and this Fifth Amendment to the
Loan Agreement shall be read together and shall have effect as if the provisions
of the Loan Agreement and this Fifth Amendment to the Loan Agreement were
contained in one agreement. The term “Agreement” when used in the Loan Agreement
means the Loan Agreement as amended by this Fifth Amendment to the Loan
Agreement, together with all amendments, supplements, restatements and
replacements thereto or therefore from time to time.

 

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3.   No Novations       Nothing in this Fifth Amendment to the Loan Agreement,
nor in the Loan Agreement when read together with this Fifth Amendment to the
Loan Agreement, shall constitute a novation, payment, re-advance or reduction or
termination in respect of any Obligations of Borrower.   4.   Amendments to the
Loan Agreement

  (a)   Section 1.19 of the Loan Agreement (Definitions — Cash Dominion Event)
is hereby deleted in its entirety and replaced with the following:         “1.19
”Cash Dominion Event”         “Cash Dominion Event” shall mean the occurrence
and continuance of the earlier of: (i) an Event of Default or (ii) Excess
Availability falling below $5,000,000.”     (b)   Section 1 of the Loan
Agreement (Definitions — Eligible Contracts in Backlog) is hereby amended as
follows:

  (i)   to delete the last “and” in subparagraph (viii);     (ii)   to delete
the period at the end of the subparagraph (ix) and replace it with “; and”; and
    (iii)   to add a new subparagraph (x) after subparagraph (ix) that reads as
follows:         “(x) it is with a Client formed under a joint venture
arrangement by the Borrower on terms acceptable to the Lender.”

  (c)   Section 1.42 of the Loan Agreement (Definitions — Interest Rate) is
hereby amended to replace the lead-in sentence of subparagraph (b) and
subparagraphs (i), (ii) and (iii) with the following:         “(b) commencing on
May 1st, 2008 the Applicable Prime Rate or a rate of one and three quarters of
one (1.75%) percent per annum in excess of the Libor Rate, as applicable;”    
(d)   Section 2.1(a)(iii) of the Loan Agreement (Revolving Loans) is hereby
amended as follows:

  (i)   to add the following after the word “Inventory” in subparagraph (A):    
    “; provided however that, for the purposes of this subparagraph (A), the
amount of all Eligible Finished Goods Inventory attributable to joint venture
arrangements in accordance with the definition of Eligible Contracts in Backlog
in Section 1 herein after applying the foregoing formula shall not exceed
$3,000,000;”     (ii)   to add the following after the word “Appraiser” in
subparagraph (B):

 

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      “; provided however that, for the purposes of this subparagraph (B), the
amount of all Eligible Finished Goods Inventory attributable to joint venture
arrangements in accordance with the definition of Eligible Contracts in Backlog
in Section 1 herein after applying the foregoing formula shall not exceed
$3,000,000;”

  (e)   Section 9.13 of the Loan Agreement (EBITDA) is hereby deleted and
replaced with the following:         “9.13 EBITDA

     Borrower shall, at all times after a breach of the Cash and Excess
Availability Covenant under Section 9.23 hereof, maintain EBITDA, calculated
quarterly by Lender on a trailing four quarter basis, of not less than
$20,000,000 or, in the case of the four fiscal quarters ending on September 30,
2007 only, not less than $17,000,000 or, in the case of the four fiscal quarters
ending each of December 31, 2007, March 31, 2008, June 30, 2008 and
September 30, 2008, only, not less than $12,500,000. The EBITDA calculation for
the first four quarters occurring subsequent to the date hereof will be based on
the historical results set forth on Schedule 9.13 attached hereto until such
time as there are a full four quarters of post-closing results.”

  (f)   Section 9.23 of the Loan Agreement (Cash and Excess Availability
Covenant), is hereby amended by deleting the reference to “$15,000,000” and
replacing it with “$7,500,000”.     (g)   Section 10.1 of the Loan Agreement
(Events of Default) is hereby amended as follows:

  (i)   to add the following after the words “this Agreement” in
Section 10.1(a)(ii):         “or fails to perform any of the covenants contained
in Section 9.23 of this Agreement,”     (ii)   to delete the words “within three
(3) days of” in Section 10.1(a)(ii) and replace it with the following:        
“by 5:00 pm on”     (iii)    to delete the reference to “9.13” in
Section 10.1(a)(iv); and     (iv)   to delete Section 10.1(a)(vi) in its
entirety.

  (h)   Section 12.1(a) of the Loan Agreement (Term), is hereby amended by
deleting the following:         “October 31, 2009; provided that the Borrower
may request that the Lender extend the term to October 31, 2010 by giving the
Lender notice in writing at least sixty (60) days prior to October 31, 2009. If
the Lender agrees to such extension by notice in writing to the

 

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      Borrower on or before October 31, 2009, the term will thereby be extended
to October 31, 2010.”         and replacing it with the following:        
“October 31, 2010. Upon the effective date of termination or non-renewal”

5.   Representations and Warranties       In order to induce Lender to enter
into this Fifth Amendment to the Loan Agreement, Borrower represents and
warrants to Lender the following, which representations and warranties shall
survive the execution and delivery hereof:

  (a)   all necessary action, corporate or otherwise, has been taken to
authorize the execution, delivery and performance of this Fifth Amendment to the
Loan Agreement by Borrower;     (b)   Borrower has duly executed and delivered
this Fifth Amendment to the Loan Agreement;     (c)   this Fifth Amendment to
the Loan Agreement is a legal, valid and binding obligation of Borrower,
enforceable against it by Lender in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
limited the enforcement of creditor’s rights generally and the fact that the
courts may deny the granting or enforcement of equitable remedies;     (d)   the
representations and warranties set forth in Section 8 of the Loan Agreement, as
amended by this Fifth Amendment to the Loan Agreement, continue to be true and
correct as of the date hereof; and     (e)   no Event of Default, or event
which, with the passage of time or giving of notice or both, would constitute an
Event of Default, exists.

6.   Amendment Fee       Borrower shall pay to Lender a one-time amendment fee
in the amount of US$100,000, which shall be fully earned as of and payable upon
the execution of this Fifth Amendment to the Loan Agreement.

 

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  7.   Expenses         Borrower shall pay to Lender on demand all reasonable
fees and expenses, including, without limitation, legal fees, incurred by Lender
in connection with the preparation, negotiation, completion, execution, delivery
and review of this Fifth Amendment to the Loan Agreement and all other
documents, registrations and instruments arising therefrom and/or executed in
connection therewith.     8.   Conditions Precedent         This Fifth Amendment
to the Loan Agreement shall not be effective until each of the following
conditions has been satisfied, or has been waived in writing (in whole or in
part) by Lender in its sole discretion. The execution of this Fifth Amendment to
the Loan Agreement by Lender shall constitute evidence of the satisfaction
and/or waiver of each of the following conditions by Lender:

  (a)   Lender has received, in form and substance satisfactory to Lender, an
original copy of this Fifth Amendment to the Loan Agreement duly executed and
delivered by Borrower and each Obligor.

9.   Continuance of the Loan Agreement and Security       The Loan Agreement, as
changed, altered, amended or modified by this Fifth Amendment to the Loan
Agreement, shall be and continue in full force and effect and is hereby
confirmed and the rights and obligations of all parties thereunder shall not be
affected or prejudiced in any manner except as specifically provided for herein.
It is agreed and confirmed that after giving effect to this Fifth Amendment to
the Loan Agreement, all security and guarantees delivered by Borrower and/or any
Obligor secures the payment of all of the Obligations including, without
limitation, the obligations arising under the Loan Agreement, as amended by the
terms of this Fifth Amendment to the Loan Agreement.   10.   Counterparts &
Facsimile       This Fifth Amendment to the Loan Agreement may be executed in
any number of counterparts, by original or facsimile signature, each of which
shall be deemed an original and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.   11.   Governing Law      
The validity, interpretation and enforcement of this Fifth Amendment to the Loan
Agreement and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
laws of the Province of Ontario and the federal laws of Canada therein.

(Signature Page Follows)

 

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     IN WITNESS WHEREOF the parties hereto have executed this Fifth Amendment to
the Loan agreement as of and with effect from the day and year first above
written.

              LENDER   BORROWER
 
            WACHOVIA CAPITAL FINANCE   IMAX CORPORATION CORPORATION (CANADA)    
   
 
           
By:
  /s/ Niall Hamilton   By:   /s/ Ed MacNeil
 
           
 
            Title: Senior Vice President   Title: Senior Vice President, Finance
 
           
 
      By:   /s/ Joseph Sparacio
 
           
 
                    Title: Executive Vice President and Chief Financial Officer
 
           
 
           
 
            Address:   Address: 141 Adelaide Street West, Suite 1500   110 East
59th Street Toronto, Ontario M5H 3L5   New York, New York 10022 Fax:
(416) 364-6060   Fax: (212) 371-7584

 

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Each of IMAX U.S.A. Inc., IMAX II U.S.A. Inc. and 1329507 Ontario Inc.
(collectively, the “Guarantors” and each a “Guarantor”) hereby acknowledges,
consents and confirms as follows:

  (a)   it has reviewed and understands the terms of this Fifth Amendment to the
Loan Agreement and consents to the amendment of the Loan Agreement as
contemplated herein;     (b)   its liability under the guarantee to which it is
a party dated February 6, 2004 (each hereinafter referred to as a “Guarantee”),
is affected by this Fifth Amendment to the Loan Agreement;     (c)   the
“Guaranteed Obligations” (as respectively defined in each Guarantee, as
applicable) shall extend to and include all of the obligations of Borrower under
the Loan Agreement as amended by this Fifth Amendment to the Loan Agreement;    
(d)   each of the Guarantees shall continue in full force and effect,
enforceable against each of the Guarantors, as applicable, in accordance with
its terms; and     (e)   each of the security documents or instruments creating
a security interest, assignment, hypothec, lien, pledge or other charge granted
by the Guarantors to Lender together with all amendments, supplements,
restatements or replacements thereto or therefore from time to time remains in
full force and effect as at the date hereof, in respect of each of the
Guarantor’s obligations under the Loan Agreement and Financing Agreements, as
amended by this Fifth Amendment to the Loan Agreement.         DATED as of and
with effect from 5th day of May, 2008.

              IMAX U.S.A. INC.   IMAX II U.S.A. INC.
 
           
By:
  /s/ Ed MacNeil   Per:   /s/ Ed MacNeil
 
           
Name:
  Ed MacNeil   Name:   Ed MacNeil
Title:
  Vice President   Title:   Vice President
By:
  /s/ Joseph Sparacio   Per:   /s/ Joseph Sparacio
 
           
Name:
  Joseph Sparacio   Name:   Joseph Sparacio
Title:
  Vice President, Finance   Title:   Vice President, Finance
 
            1329507 ONTARIO INC.        
 
           
By:
  /s/ Ed MacNeil        
 
           
Name:
  Ed MacNeil        
Title:
  Vice President        
By:
  /s/ Joseph Sparacio        
 
           
Name:
  Joseph Sparacio        
Title:
  Vice President, Finance