Document:

ex10-1_1414947.htm

EXHIBIT 10.1

 

EXECUTION COPY

 

 

 

$172,500,000

 

CREDIT AGREEMENT

 

DATED AS OF MAY 6, 2010

 

AMONG

 

CINEDIGM DIGITAL FUNDING I, LLC

 

AS THE BORROWER,

 

SOCIÉTÉ GÉNÉRALE, NEW YORK BRANCH,

 

AS CO-ADMINISTRATIVE AGENT AND PAYING AGENT,

 

GENERAL ELECTRIC CAPITAL CORPORATION,

AS CO-ADMINISTRATIVE AGENT AND COLLATERAL AGENT,

 

NATIXIS NEW YORK BRANCH, AS SYNDICATION AGENT,

 

AND

 

THE LENDERS PARTY HERETO

 

SG AMERICAS SECURITIES, LLC AND

GE CAPITAL MARKETS, INC.,

AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS

 

 

  

  

  

TABLE OF CONTENTS

Page

	ARTICLE I      DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS	
1  

	
Section 1.1

	
Defined Terms

	
1  

	
Section 1.2

	
UCC Terms

	
29  

	
Section 1.3

	
Accounting Terms and Principles

	
29  

	
Section 1.4

	
Payments

	
29  

	
Section 1.5

	
Interpretation

	
29  

	ARTICLE II      THE FACILITIES	
30  

	
Section 2.1

	
Term Loan Commitments

	
30  

	
Section 2.2

	
Borrowing Procedures

	
30  

	
Section 2.3

	
Repayment of Obligations

	
32  

	
Section 2.4

	
Voluntary Prepayments

	
32  

	
Section 2.5

	
Mandatory Prepayments

	
32  

	
Section 2.6

	
Interest

	
33  

	
Section 2.7

	
Conversion and Continuation Options

	
34  

	
Section 2.8

	
Fees

	
35  

	
Section 2.9

	
Application of Payments

	
35  

	
Section 2.10

	
Payments and Computations

	
36  

	
Section 2.11

	
Evidence of Debt

	
37  

	
Section 2.12

	
Suspension of Eurodollar Rate Option

	
38  

	
Section 2.13

	
Breakage Costs; Increased Costs; Capital Requirements

	
39  

	
Section 2.14

	
Taxes

	
40  

	
Section 2.15

	
Substitution of Lenders

	
43  

	ARTICLE III      CONDITIONS TO TERM LOANS	
43  

	
Section 3.1

	
Conditions Precedent to Term Loans

	
43  

	
Section 3.2

	
Determinations of Initial Borrowing Conditions

	
49  

	ARTICLE IV      REPRESENTATIONS AND WARRANTIES	
49  

	
Section 4.1

	
Corporate Existence; Compliance with Law

	
49

	
Section 4.2

	
Power and Authority; No Conflicts; Due Execution, Delivery and Enforceability

	
49

	
Section 4.3

	
Ownership of Group Members

	
50

	
Section 4.4

	
Financial Statements

	
50

 

	  	
-i-

	  

  

  

  

TABLE OF CONTENTS

(continued)

Page

 

	
Section 4.5

	
Material Adverse Effect

	
51

	
Section 4.6

	
Solvency

	
51

	
Section 4.7

	
Litigation

	
51

	
Section 4.8

	
Taxes

	
51

	
Section 4.9

	
Margin Regulations

	
52

	
Section 4.10

	
No Burdensome Obligations; No Defaults

	
52

	
Section 4.11

	
Investment Company Act

	
52

	
Section 4.12

	
Labor Matters

	
52

	
Section 4.13

	
ERISA

	
52

	
Section 4.14

	
Environmental Matters

	
53

	
Section 4.15

	
Intellectual Property

	
53

	
Section 4.16

	
Title; Real Property

	
54

	
Section 4.17

	
Full Disclosure

	
54

	
Section 4.18

	
Deposit and Disbursement Accounts

	
54

	
Section 4.19

	
Agreements and Other Documents

	
54

	
Section 4.20

	
DCI Spec Compliance

	
55

	
Section 4.21

	
Material Digital Cinema Deployment Agreements

	
55

	ARTICLE V      FINANCIAL COVENANTS	
55

	
Section 5.1

	
Maximum Consolidated Leverage Ratio

	
55

	
Section 5.2

	
Minimum Consolidated Fixed Charge Coverage Ratio

	
56

	
Section 5.3

	
Calculation of Financial Covenants.(a)  Consolidated EBITDA

	
56

	ARTICLE VI      REPORTING COVENANTS	
57

	
Section 6.1

	
Financial Statements

	
57

	
Section 6.2

	
Other Events

	
60

	
Section 6.3

	
Copies of Notices and Reports

	
61

	
Section 6.4

	
Taxes

	
61

	
Section 6.5

	
Labor Matters

	
61

	
Section 6.6

	
ERISA Matters

	
61

	
Section 6.7

	
Environmental Matters

	
62

	
Section 6.8

	
Other Information

	
62

	  	
-ii-

	  

  

  

  

TABLE OF CONTENTS

(continued)

Page

 

	ARTICLE VII      AFFIRMATIVE COVENANTS	
62

	
Section 7.1

	
Maintenance of Corporate Existence

	
62

	
Section 7.2

	
Compliance with Laws, Etc

	
63

	
Section 7.3

	
Payment of Obligations

	
63

	
Section 7.4

	
Maintenance of Property

	
63

	
Section 7.5

	
Maintenance of Insurance

	
63

	
Section 7.6

	
Keeping of Books

	
64

	
Section 7.7

	
Access to Books and Property; Audit Rights

	
64

	
Section 7.8

	
Environmental

	
64

	
Section 7.9

	
Use of Proceeds

	
65

	
Section 7.10

	
Additional Collateral and Guaranties

	
65

	
Section 7.11

	
Cash Management and Waterfall

	
66

	
Section 7.12

	
Required Hedging

	
71

	
Section 7.13

	
Corporate Separateness

	
71

	
Section 7.14

	
Digital Cinema Deployment Agreements

	
73

	
Section 7.15

	
Exhibitor Agreements

	
73

	
Section 7.16

	
DCI Spec Compliance

	
73

	
Section 7.17

	
Certificates of Insurance

	
73

	
Section 7.18

	
Management Services Agreement

	
73

	ARTICLE VIII      NEGATIVE COVENANTS	
74

	
Section 8.1

	
Indebtedness

	
74

	
Section 8.2

	
Liens

	
74

	
Section 8.3

	
Investments

	
75

	
Section 8.4

	
Asset Sales; Stock Issuances

	
75

	
Section 8.5

	
Restricted Payments

	
76

	
Section 8.6

	
Prepayment of Indebtedness

	
76

	
Section 8.7

	
Fundamental Changes

	
77

	
Section 8.8

	
Change in Nature of Business

	
77

	
Section 8.9

	
Transactions with Affiliates

	
77

	  	
-iii-

	  

  

  

  

TABLE OF CONTENTS

(continued)

Page

 

	
Section 8.10

	
Third-Party Restrictions on Indebtedness, Liens, Investments or Restricted Payments

	
77

	
Section 8.11

	
Modification of Certain Documents

	
78

	
Section 8.12

	
Accounting Changes; Fiscal Year

	
78

	
Section 8.13

	
Margin Regulations

	
78

	
Section 8.14

	
Compliance with ERISA

	
78

	
Section 8.15

	
Hazardous Materials

	
78

	
Section 8.16

	
Capital Expenditures

	
78

	
Section 8.17

	
No Foreign Subsidiaries

	
78

	
Section 8.18

	
Bank Accounts

	
79

	ARTICLE IX      EVENTS OF DEFAULT	
79

	
Section 9.1

	
Events of Default

	
79

	
Section 9.2

	
Remedies

	
81

	ARTICLE X      THE AGENTS	
81

	
Section 10.1

	
Appointment and Authorization of the Agents

	
81

	
Section 10.2

	
Binding Effect

	
83

	
Section 10.3

	
Use of Discretion

	
83

	
Section 10.4

	
Delegation of Rights and Duties

	
83

	
Section 10.5

	
Reliance and Liability

	
84

	
Section 10.6

	
Agents Individually

	
85

	
Section 10.7

	
Lender Credit Decision

	
85

	
Section 10.8

	
Expenses; Indemnities

	
85

	
Section 10.9

	
Resignation of Paying Agent

	
86

	
Section 10.10

	
Resignation of Collateral Agent

	
86

	
Section 10.11

	
Resignation of Co-Administrative Agents

	
87

	
Section 10.12

	
Release of Collateral or Guarantors

	
88

	
Section 10.13

	
Additional Secured Parties

	
88

	
Section 10.14

	
Removal of Agents

	
89

	ARTICLE XI      MISCELLANEOUS	
89

	
Section 11.1

	
Amendments, Waivers, Etc

	
89

	  	
-iv-

	  

  

  

  

TABLE OF CONTENTS

(continued)

Page

 

	
Section 11.2

	
Assignments and Participations; Binding Effect

	
91

	
Section 11.3

	
Costs and Expenses

	
95

	
Section 11.4

	
Indemnities

	
96

	
Section 11.5

	
Survival

	
97

	
Section 11.6

	
Limitation of Liability for Certain Damages

	
97

	
Section 11.7

	
Lender-Creditor Relationship

	
97

	
Section 11.8

	
Right of Setoff

	
97

	
Section 11.9

	
Sharing of Payments, Etc

	
97

	
Section 11.10

	
Marshaling; Payments Set Aside

	
98

	
Section 11.11

	
Notices

	
98

	
Section 11.12

	
Electronic Transmissions

	
99

	
Section 11.13

	
Governing Law

	
100

	
Section 11.14

	
Jurisdiction

	
100

	
Section 11.15

	
WAIVER OF JURY TRIAL

	
101

	
Section 11.16

	
Severability

	
101

	
Section 11.17

	
Execution in Counterparts

	
101

	
Section 11.18

	
Entire Agreement

	
101

	
Section 11.19

	
Use of Name

	
101

	
Section 11.20

	
Non-Public Information; Confidentiality

	
102

	
Section 11.21

	
USA Patriot Act; OFAC

	
102

 

	  	
-v-

	  

  

  

  

TABLE OF CONTENTS

(continued)

SCHEDULES

 

	
Schedule I

	
–

	
Term Loan Commitments

	
Schedule II

	
–

	
Addresses for Notices

	
Schedule 4.2

	
–

	
Governmental Permits

	
Schedule 4.3

	
–

	
Ownership of Group Members and Subsidiaries

	
Schedule 4.13

	
–

	
ERISA

	
Schedule 4.14

	
–

	
Environmental Matters

	
Schedule 4.16

	
–

	
Real Property

	
Schedule 4.19

	
–

	
Agreements and Other Documents

	
Schedule 4.20

	
–

	
DCI Spec Compliance

	
Schedule 4.21

	
–

	
Distributors - Material Digital Cinema Deployment

	  	  	
Agreements

	
Schedule 7.5

	
–

	
Insurance

	
Schedule 8.1

	
–

	
Existing Indebtedness

	
Schedule 8.2

	
–

	
Existing Liens

	
Schedule 8.3

	
–

	
Existing Investments

	
Schedule 9.1(i)

	
–

	
Distributors

	
Schedule 9.1(k)

	
–

	
Intercompany Agreements

EXHIBITS

 

	
Exhibit A-1

	
–

	
Form of Assignment

	
Exhibit A-2

	
–

	
Form of Term Loan Purchase Assignment

	
Exhibit B

	
–

	
Form of Note

	
Exhibit C

	
–

	
Form of Notice of Borrowing

	
Exhibit D

	
–

	
Form of Notice of Conversion or Continuation

	
Exhibit E

	
–

	
Form of Compliance Certificate

	
Exhibit F

	
–

	
Form of Guaranty and Security Agreement

	
Exhibit G

	
–

	
Form of Exhibitor Agreement

	
Exhibit H

	
–

	
Form of Service Agreement

	  	
-vi-

	  

  

  

  

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT dated as of May 6, 2010, is entered into among CINEDIGM DIGITAL FUNDING I, LLC, a Delaware limited liability company (the "Borrower"), the Lenders, SOCIÉTÉ GÉNÉRALE, NEW YORK BRANCH ("SG"), as Paying Agent and Co-Administrative Agent and GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"), as Collateral Agent and Co-Administrative Agent.

 

The parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS

 

Section 1.1  Defined Terms.  As used in this Agreement, the following terms have the following meanings:

 

"Accrued Default Interest" has the meaning specified in Section 2.6(c).

 

"Affected Lender" has the meaning specified in Section 2.15(a).

 

"Affiliate" means, with respect to any Person, each officer, director, general partner or joint-venturer of such Person and any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person; provided, however, that no Secured Party shall be an Affiliate of the Borrower.  For purpose of this definition, "control" means the possession of either (a) the power to vote, or the beneficial ownership of, 10% or more of the Voting Stock of such Person or (b) the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

"Agents" means, collectively, the Paying Agent, the Collateral Agent and the Co-Administrative Agents, and "Agent" means any of them.

 

"Agreement" means this Credit Agreement.

 

"Applicable Margin" means a percentage equal to (a) with respect to Base Rate Loans, 2.50% per annum and (b) with respect to Eurodollar Rate Loans, 3.50% per annum.

 

"Approved Exhibitor" means (a) an operator of cinema complexes operating Installed Digital Systems as of the Closing Date and (b) each operator subsequently approved by Cinedigm in accordance with its underwriting criteria in effect as of the Closing Date (or as updated in a manner acceptable to the Co-Administrative Agents) and acceptable to the Co-Administrative Agents in whose theaters Digital Systems are installed.

 

"Approved Fund" means, with respect to any Lender, any Person (other than a natural Person) that (a) is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business and (b) is advised or managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other than an individual) or any Affiliate of any Person (other than an individual) that administers or manages such Lender.

 

  

  

  

"Arrangers" means SG Americas Securities, LLC and GE Capital Markets, Inc., each in its capacity as joint lead arranger and joint bookrunner with respect to this Agreement.

 

"Assignment" means an assignment agreement entered into by a Lender, as assignor, and any prospective assignee thereof and accepted by the Paying Agent, in substantially the form of Exhibit A-1.

 

"Back-Up Services Expenses" has the meaning set forth in the Management Services Agreement.

 

"Base Rate" means, for any day, a rate per annum equal to the highest of (a) the rate last quoted by The Wall Street Journal as the "base rate on corporate loans posted by at least 75% of the nation's largest banks" in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519)(Selected Interest Rates) as the "bank prime loan" rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Paying Agent) or any similar release by the Federal Reserve Board (as determined by Paying Agent), (b) the sum of 1.50% per annum and the Federal Funds Rate, and (c)  the sum of (i) the Eurodollar Rate (based on an Interest Period of one month determined two (2) Business Days prior to such day) plus (ii) 1.00%. Any change in the Base Rate due to a change in any of the foregoing shall be effective on the effective date of such change in the "base" rate, the Federal Funds Rate or Eurodollar Rate for an interest period of one month, as the case may be.

 

"Base Rate Loan" means any Term Loan that bears interest based on the Base Rate.

 

"Benefit Plan" means any employee benefit plan as defined in Section 3(3) of ERISA (whether governed by the laws of the United States or otherwise) to which any Group Member incurs or otherwise has any obligation or liability, contingent or otherwise.

 

"Borrower" has the meaning specified in the preamble hereto.

 

"Borrowing" means a borrowing consisting of Term Loans made on the same day by the Lenders according to their respective Term Loan Commitments.

 

"Budget" means, with respect to any period, an annual operating budget for the Group Members, including an income statement, balance sheet and statement of cash flows, including all line item categories, line items and cumulative amounts (with a detailed breakout of Capital Expenditures), details and a statement of underlying assumptions and estimates, in form and substance reasonably satisfactory to the Paying Agent based upon a good faith determination.

 

"Business Day" means any day of the year that is not a Saturday, Sunday or a day on which banks are required or authorized to close in New York City or the State of New Jersey and, when determined in connection with notices and determinations in respect of any Eurodollar Rate or Eurodollar Rate Loan or any funding, conversion, continuation, Interest Period or payment of any Eurodollar Rate Loan, that is also a day on which dealings in Dollar deposits are carried on in the London interbank market.

 

  

-2-

  

"Capital Expenditures" means, for any Person for any period, the aggregate of all expenditures, whether or not made through the incurrence of Indebtedness, by such Person and its Subsidiaries during such period for the purchase, acquisition, leasing (pursuant to a Capital Lease), receipt, delivery, construction, installation, replacement, repair, redeployment, substitution or improvement of fixed or capital assets or additions to such assets, in each case required to be capitalized under GAAP on a Consolidated balance sheet of such Person, excluding interest capitalized during construction.

 

"Capital Lease" means, with respect to any Person, any lease of, or other arrangement conveying the right to use, any property (whether real, personal or mixed) by such Person as lessee that has been or is required to be accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP.

 

"Capitalized Lease Obligations" means, at any time, with respect to any Capital Lease, any lease entered into as part of any Sale and Leaseback Transaction or any synthetic lease of any Person, the amount of all obligations of such Person that is (or that would be required to be, if such synthetic lease or other lease were accounted for as a Capital Lease) capitalized on a balance sheet of such Person prepared in accordance with GAAP.

 

"Cash Collateral Account" means a deposit account or securities account in the name of the Borrower and under the exclusive "control" (as defined in the applicable UCC) of the Collateral Agent and (a) in the case of a deposit account, from which the Borrower may not make withdrawals except as permitted by the Collateral Agent and (b) in the case of a securities account, with respect to which the Collateral Agent shall be the entitlement holder and the only Person authorized to give (or to authorize another Person to give) entitlement orders with respect thereto.

 

"Cash Equivalents" means (a) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the United States federal government or (ii) issued by any agency of the United States federal government the obligations of which are fully backed by the full faith and credit of the United States federal government, (b) any readily-marketable direct obligations issued by any other agency of the United States federal government, any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case having a rating of at least "A-1" from S&P or at least "P-1" from Moody's, (c) any commercial paper rated at least "A-1" by S&P or "P-1" by Moody's and issued by any Person organized under the laws of any state of the United States, (d) any Dollar-denominated time deposit, certificate of deposit, overnight bank deposit or bankers' acceptance issued or accepted by any Lender or any commercial bank that is, in each case, rated investment grade by both S&P and Moody's, (e) interests in any money market fund registered under the Investment Company Act of 1940 that (i) has substantially all of its assets invested continuously in the types of investments referred to in clause (a), (b), (c) or (d) above with maturities as set forth in the proviso below, (ii) has net assets in excess of $500,000,000 and (iii) has obtained from either S&P or Moody's the highest rating obtainable for money market funds in the United States; provided, however, that the maturities of all obligations specified in any of clauses (a) through (d) above shall not exceed 365 days and (f) other cash equivalents determined by the Co-Administrative Agents to have a risk equivalent to items rated at least "A-

 

  

-3-

  

1" by S&P or "P-1" by Moody's and otherwise acceptable from time to time to the Co-Administrative Agents.

 

"Cash Expense Report" means a report delivered pursuant to Section 6.1(j)

 

"Cash Management Accounts" has the meaning set forth in Section 7.11.

 

"CERCLA" means the United States Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. §§ 9601 et seq.).

 

"Change of Control" means the occurrence of any of the following:  (a) Cinedigm shall cease to own and control legally and beneficially a majority of the economic and voting rights associated with ownership of the outstanding Voting Stock of all classes of Voting Stock of Holdings, (b) Holdings shall cease to own and control legally and beneficially a majority of the economic and voting rights associated with ownership of the outstanding Voting Stock of all classes of Voting Stock of Christie, or (c) Christie shall cease to own and control legally and beneficially a majority of the economic and voting rights associated with ownership of the outstanding Voting Stock of all classes of Voting Stock of the Borrower; provided, that, (i) in the case of clauses (b) and (c) above, it shall be a condition to the Sale by Holdings or Christie (or any subsequent owner) of any of the Voting Stock of Christie or the Borrower, as the case may be, that the same be pledged to the Collateral Agent, for the benefit of the Secured Parties, to secure the Obligations and (ii) any of the foregoing which is consented to in advance in writing by the Required Lenders in their sole discretion shall not constitute an Event of Default under Section 9.1(h).

 

"Christie" means Christie/AIX, Inc., a Delaware corporation.

 

"Cinedigm" means Cinedigm Digital Cinema Corp., a Delaware corporation.

 

"Closing Date" means the date on which the conditions precedent set forth in Section 3.1 have been satisfied.

 

"Closing EBITDA" has the meaning set forth in Section 3.1(d).

 

"Co-Administrative Agents" means, collectively, SG and GE Capital, each in its capacity as a co-administrative agent under the Loan Documents or any successor to either such Person in such capacity.  If at any time only one Person is serving as a Co-Administrative Agent hereunder, such term shall mean such Person.

 

"Code" means the U.S. Internal Revenue Code of 1986.

 

"Collateral" means (a) in the case of Holdings or Christie, all Securities of Christie or the Borrower and the proceeds thereof on a non-recourse basis (other than to the extent of remedies expressly provided under the Loan Documents to which Holdings or Christie is a party) and (b) in the case of any other Loan Party, all property and interests in property and proceeds thereof now owned or hereafter acquired by such Loan Party in or upon which a Lien is granted or purported to be granted pursuant to any Loan Document.

 

  

-4-

  

"Collateral Agent" means GE Capital in its capacity as collateral agent under the Loan Documents or any successor collateral agent.

 

"Collection Account" means the Cash Collateral Account identified as the "Collection Account" in Section 7.11 and any replacement Cash Collateral Account with a depository bank that is, or whose holding company is, rated at least BBB- by S&P and at least Baa3 by Moody's reasonably requested by the Borrower and acceptable to the Paying Agent and the Collateral Agent.

 

"Compliance Certificate" means a certificate substantially in the form of Exhibit E.

 

"Consents" mean a consent from each Distributor party to a Digital Cinema Deployment Agreement, in form and substance acceptable to the Co-Administrative Agents.

 

"Consolidated" means, with respect to any Person, the financial results of such Person and its Subsidiaries consolidated in accordance with GAAP.

 

"Consolidated Cash Interest Expense" means, with respect to the Borrower and its Subsidiaries on a Consolidated basis for any period, the Consolidated Interest Expense for such period less the sum of, in each case to the extent included in the definition of Consolidated Interest Expense, (a) the amortized amount of debt discount and debt issuance costs, (b) charges relating to write-ups or write-downs in the book or carrying value of existing Consolidated Total Debt, (c) interest payable in issuances of Indebtedness or by addition to the principal of the related Indebtedness and (d) other non-cash interest expense.

 

"Consolidated Debt Service" means, with respect to the Borrower and its Subsidiaries on a Consolidated basis as of any date of determination, the sum of (a) Consolidated Cash Interest Expense for the four Fiscal Quarter period most recently ended and (b) the product of (i) scheduled principal payments on Consolidated Total Debt for the Fiscal Quarter ending on such date and (ii) four.

 

"Consolidated EBITDA" means, with respect to the Borrower and its Subsidiaries on a Consolidated basis as of any date of determination, revenues determined in accordance with GAAP for the four Fiscal Quarter period most recently ended minus (a) extraordinary and non-recurring revenues during such period, (b) all operating expenses paid or, without duplication, payable in cash during such period and (c) the Servicing Fee paid or, without duplication, payable for such period (but, in any case, without the deduction of any accrued Incentive Servicing Fees which are not payable).

 

"Consolidated Fixed Charge Coverage Ratio" means, with respect to the Borrower and its Subsidiaries on a Consolidated basis as of any date of determination, the ratio of (a) Consolidated EBITDA to (b) Consolidated Fixed Charges.

 

"Consolidated Fixed Charges" means, with respect to the Borrower and its Subsidiaries on a Consolidated basis as of any date of determination, the sum of (a) Consolidated Debt Service, plus (b) Capital Expenditures made by the Borrower and its Subsidiaries during the four Fiscal Quarter period most recently ended and (c) Consolidated Income Tax Liability in respect of the four Fiscal Quarter period most recently ended.

 

  

-5-

  

"Consolidated Income Tax Liability" means, for any Person for any period, the total liability for United States federal income taxes and other taxes measured by net income actually paid or, without duplication, payable in cash (including distributions for taxes) of such Person for such period.

 

"Consolidated Interest Expense" means, with respect to the Borrower and its Subsidiaries on a Consolidated basis for any period, (a) Consolidated total interest expense (including that attributable to Capital Lease Obligations) of the Borrower and its Subsidiaries for such period and including, in any event, (i) interest capitalized during such period and net recurring costs under Interest Rate Contracts permitted hereunder for such period including the amortized portion of any premium paid for any such Interest Rate Contract containing a premium payment (but excluding, for avoidance of doubt, all payments that would be required to be made in respect of any Interest Rate Contract in the event of a termination (including an early termination thereof)) and (ii) all fees, charges, commissions, discounts and other similar obligations (other than reimbursement obligations) with respect to letters of credit, bank guarantees, banker's acceptances, surety bonds and performance bonds (whether or not matured) payable by the Borrower and its Subsidiaries during such period minus (b) the sum of (i) net recurring amounts received by the Borrower and its Subsidiaries under Interest Rate Contracts permitted hereunder for such period (other than amounts that would be received in respect of any Interest Rate Contract in the event of a termination (including an early termination thereof)) and (ii) Consolidated interest income of the Borrower and its Subsidiaries for such period.

 

"Consolidated Leverage Ratio" means, with respect to the Borrower and its Subsidiaries on a consolidated basis as of any date of determination, the ratio of (a) Consolidated Total Debt outstanding as of such date to (b) Consolidated EBITDA.

 

"Consolidated Total Debt" means, with respect to the Borrower and its Subsidiaries on a consolidated basis, all Indebtedness of a type described in clause (a), (b), (c)(i), (d) or (f) of the definition thereof and, without duplication, all Guaranty Obligations with respect to any such Indebtedness less the amount by which the aggregate amount of cash and Cash Equivalents on deposit in the Debt Service Account and the Collection Account exceeds $3,000,000.

 

"Constituent Documents" means, with respect to any Person, collectively and, in each case, together with any modification of any term thereof, (a) the articles of incorporation, certificate of incorporation, constitution or articles or certificate of organization or formation of such Person, (b) the bylaws, operating agreement, partnership agreement or joint venture agreement of such Person, (c) any other constitutive, organizational or governing document of such Person, whether or not equivalent, and (d) any other document setting forth the manner of election or duties of the directors, officers, managers, managing members or partners of such Person or the designation, amount or relative rights, limitations and preferences of any Stock of such Person.

 

"Contractual Obligation" means, with respect to any Person, any provision of any Security issued by such Person or of any document or undertaking (other than a Loan Document) to which such Person is a party or by which it or any of its property is bound or to which any of its property is subject, including all Exhibitor Agreements, the Management Services Agreement, all Service Agreements and all Digital Cinema Deployment Agreements.

 

  

-6-

  

"Control Agreement" means, with respect to any lockbox, deposit account, securities account, commodity account, securities entitlement or commodity contract, an agreement, in form and substance reasonably satisfactory to the Collateral Agent, among the Collateral Agent, the applicable Deposit Bank or other Person at which such account or contract is maintained or with which such entitlement or contract is carried and the Loan Party maintaining such account or contract, effective to grant "control" (as defined under the applicable UCC) or, if required hereunder, exclusive "control" over such account to the Collateral Agent.

 

"Copyrights" means all rights, title and interests (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to copyrights and all mask work, database and design rights, whether or not registered or published, all registrations and recordations thereof and all applications in connection therewith.

 

"Corporate Chart" means a document in form reasonably acceptable to the Co-Administrative Agents and setting forth, as of a date set forth therein, for each Person that is a Loan Party, that is subject to Section 7.10 or that is a Subsidiary or joint venture of any of them, (a) the full legal name of such Person, (b) the jurisdiction of organization and any organizational number and tax identification number of such Person, (c) the location of such Person's chief executive office (or, if applicable, sole place of business) and (d) the number of shares of each class of Stock of such Person authorized, the number outstanding and the number and percentage of such outstanding shares for each such class owned, directly or indirectly, by any Loan Party or any Subsidiary of any of them.

 

"Customary Permitted Liens" means, with respect to any Person, any of the following:

 

(a)  Liens (i) with respect to the payment of taxes, assessments or other governmental charges or (ii) of suppliers, carriers, materialmen, warehousemen, workmen or mechanics and other similar Liens, in each case imposed by law or arising in the ordinary course of business, and, for each of the Liens in clauses (i) and (ii) above for amounts that are not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with GAAP;

 

(b)  Liens of a collection bank on items in the course of collection arising under Section 4-208 of the UCC as in effect in the State of New York or any similar section under any applicable UCC or any similar Requirement of Law of any foreign jurisdiction;

 

(c)  pledges or cash deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance or other types of social security benefits (other than any Lien imposed by ERISA), (ii) to secure the performance of bids, tenders, leases (other than Capital Leases) sales or other trade contracts (other than for the repayment of borrowed money) or (iii) made in lieu of, or to secure the performance of, surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation);

 

(d)  judgment liens (other than for the payment of taxes, assessments or other governmental charges) securing judgments and other proceedings not constituting an Event of

 

  

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Default under Section 9.1(f) and pledges or cash deposits made in lieu of, or to secure the performance of, judgment or appeal bonds in respect of such judgments and proceedings;

 

(e)  Liens (i) arising by reason of zoning restrictions, easements, licenses, reservations, restrictions, covenants, rights-of-way, encroachments, minor defects or irregularities in title (including leasehold title) and other similar encumbrances on the use of real property or (ii) consisting of leases, licenses or subleases granted by a lessor, licensor or sublessor on its property (in each case other than Capital Leases) otherwise permitted under Section 8.4 that, for each of the Liens in clauses (i) and (ii) above, do not, in the aggregate, materially (x) impair the value or marketability of such real property or (y) interfere with the ordinary conduct of the business conducted and proposed to be conducted at such real property;

 

(f)  Liens of landlords and mortgagees of landlords (i) arising by statute or under any lease or related Contractual Obligation entered into in the ordinary course of business, (ii) on fixtures and movable tangible property located on the real property leased or subleased from such landlord, (iii) for amounts not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and (iv) for which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with GAAP; and

 

(g)  the title and interest of a lessor or sublessor in and to personal property permitted to be leased or subleased under this Agreement (other than through a Capital Lease), in each case extending only to such personal property.

 

"Debt Rating" means, as of any date of determination, the issuer rating of the Borrower as determined by Moody's.

 

"Debt Service Account" means the Cash Collateral Account identified as the "Debt Service Account" in Section 7.11 and any replacement Cash Collateral Account with a depository bank that is, or whose holding company is, rated at least BBB- by S&P and at least Baa3 by Moody's reasonably requested by the Borrower and acceptable to the Paying Agent and the Collateral Agent.

 

"Debt Service Reserve" means, as of any Monthly Application Date or Quarterly Application Date, an amount equal to $5,750,000.

 

"Debt Service Reserve Account" means the Cash Collateral Account identified as the "Debt Service Reserve Account" in Section 7.11 and any replacement Cash Collateral Account with a depository bank that is, or whose holding company is, rated at least BBB- by S&P and at least Baa3 by Moody's reasonably requested by the Borrower and acceptable to the Paying Agent and the Collateral Agent.

 

"Default" means any Event of Default and any event that, with the passing of time or the giving of notice or both, would become an Event of Default.

 

"Defaulting Lender" means, at any time, a Lender as to which the Paying Agent has notified the Borrower that (a) such Lender has failed for three or more Business Days to comply with its obligations under this Agreement to make a Term Loan or other payment obligation (a

 

  

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"funding obligation"), (b) such Lender has notified the Paying Agent, or has stated publicly, that it will not comply with a funding obligation hereunder, or has defaulted on its funding obligations under any other loan agreement or credit agreement or other similar/other financing agreement, (c) such Lender has, for three or more Business Days, failed to confirm in writing to the Paying Agent, in response to a written request of the Paying Agent, that it will comply with its funding obligations hereunder, or (d) a Lender Insolvency Event has occurred and is continuing with respect to such Lender.  Any determination that a Lender is a Defaulting Lender under clauses (a) through (d) above will be made by the Paying Agent in its sole discretion acting in good faith.  The Paying Agent will promptly send to all parties hereto a copy of any notice to the Borrower provided for in this definition.

 

"Deposit Bank" means SG or any other financial institution reasonably acceptable to the Co-Administrative Agents.

 

"Digital Cinema Deployment Agreement" means a digital cinema deployment agreement between the Borrower and a Distributor and in a form and substance reasonably acceptable to the Co-Administrative Agents.

 

"Digital Systems" means, collectively, (a) a DLP Cinema 2k projector, capable of both 2-D and 3-D display, (b) a digital cinema server and (c) a central storage server with management software and other such components required to meet, except as set forth on Schedule 4.20, the Digital Cinema System Specification V1.0 (issued July 20, 2005 by Digital Cinema Initiatives, LLC, as amended from time to time) or such other similar systems as are acceptable to the Co-Administrative Agents, in each case, owned by a Group Member.

 

"Digital Systems Servicer" means Christie Digital Systems USA, Inc., a California corporation, or any qualified successor supplier or provider of maintenance and other services with respect to Installed Digital Systems acceptable to the Co-Administrative Agents.  Barco, Inc. is an acceptable supplier or provider of maintenance and other services with respect to Installed Digital Systems.

 

"Disclosure Documents" means, collectively, (a) all confidential information memoranda and related written materials prepared by or on behalf of (and with the consent or at the direction of) a Loan Party or Cinedigm in connection with the syndication of the Term Loans and (b) all other documents filed by any Group Member with the United States Securities and Exchange Commission.

 

"Distributor" means a Person in the business of distributing theatrical feature films or other traditional or non-traditional motion picture content for exhibition in a theater.

 

"Dollars" and the sign "$" each mean the lawful money of the United States.

 

"Domestic Person" means any "United States person" under and as defined in Section 770l(a)(30) of the Code.

 

"E-Fax" means any system used to receive or transmit faxes electronically.

 

  

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"E-Signature" means the process of attaching to or logically associating with an Electronic Transmission an electronic symbol, encryption, digital signature or process (including the name or an abbreviation of the name of the party transmitting the Electronic Transmission) with the intent to sign, authenticate or accept such Electronic Transmission.

 

"E-System" means any electronic system, including Intralinks® and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by either Co-Administrative Agent, any of their respective Related Persons or any other Person, providing for access to data protected by passcodes or another reasonably adequate security system.

 

"Electronic Transmission" means each document, instruction, authorization, file, information and any other communication transmitted, posted or otherwise made or communicated by e-mail or E-Fax, or otherwise to or from an E-System or other equivalent service.

 

"Eligible Assignee" means any commercial bank, institutional investor or other financial institution organized under the laws of the United States or any of the countries parties to the Organization for Economic Cooperation and Development or any political subdivision of any thereof other than Cinedigm, any Affiliate of Cinedigm, or any other holder of Stock or Stock Equivalents of Cinedigm or any Affiliate of Cinedigm which Stock constitutes (or, in the case of Stock Equivalents, would constitute if exercised) 5% or more of the Voting Stock of Cinedigm or such Affiliate.

 

"Environmental Laws" means all Requirements of Law and Permits imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources or hazardous material, transportation, reuse, recycling, potential resale or disposal of the Digital Systems, including CERCLA, the SWDA, the Hazardous Materials Transportation Act (49 U.S.C. §§ 5101 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.), the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.), the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.), Basel Convention on the control of Transboundary Movements of Hazardous Wastes and their Disposal (BASEL); the Waste Electrical and Electronic Equipment (WEEE), Directive 2002/96/EC of the European Parliament and the Council of 27 January 2003; and any other similar federal, state or local laws relating to the environment, the transportation, disposal, reuse or recycling of the Digital Systems, all regulations promulgated under any of the foregoing, all analogous Requirements of Law and Permits and any environmental transfer of ownership notification or approval statutes, including the Industrial Site Recovery Act (N.J. Stat. Ann. §§ 13:1K-6 et seq.).

 

"Environmental Liabilities" means all Liabilities (including costs of Remedial Actions, natural resource damages and costs and expenses of investigation and feasibility studies) that may be imposed on, incurred by or asserted against any Group Member as a result of, or related to, any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law or otherwise, arising under any Environmental Law or in connection with any environmental,

 

  

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health or safety condition or with any Release and (a) arising out of the use, transportation, sale, recycling or disposal of the Digital Systems or (b) resulting from the ownership, lease, sublease or other operation or occupation of property by any Group Member, whether on, prior or after the date hereof.

 

"ERISA" means the United States Employee Retirement Income Security Act of 1974.

 

"ERISA Affiliate" means, collectively, any Group Member, and any Person under common control, or treated as a single employer, with any Group Member, within the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

"ERISA Event" means any of the following: (a) a reportable event described in Section 4043 of ERISA (other than those events with respect to which the 30-day notice requirement has been duly waived under the applicable regulations) with respect to a Title IV Plan, (b) the withdrawal of any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA, (c) the complete or partial withdrawal of any ERISA Affiliate from any Multiemployer Plan, (d) with respect to any Multiemployer Plan, the filing of a notice of reorganization, insolvency or termination (or treatment of a plan amendment as termination) under Section 4041A of ERISA, (e) the filing of a notice of intent to terminate a Title IV Plan (or treatment of a plan amendment as termination) under Section 4041(c) of ERISA, (f) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC, (g) the failure to make any required contribution to any Title IV Plan or Multiemployer Plan when due, (h) the imposition of a lien under Section 412 of the Code or Section 303 or 4068 of ERISA on any property (or rights to property, whether real or personal) of any ERISA Affiliate, (i) the failure of a Benefit Plan or any trust thereunder intended to qualify for tax exempt status under Section 401 or 501 of the Code or other Requirements of Law to qualify thereunder and (j) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for a distress or involuntary termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the imposition of any liability upon any ERISA Affiliate under Title IV of ERISA other than for PBGC premiums due but not delinquent.

 

"Eurodollar Base Rate" means, with respect to any Interest Period for any Eurodollar Rate Loan, the greater of (a) the offered rate per annum for deposits of Dollars for such Interest Period that appears on Reuters Screen LIBOR01 Page as of 11:00 A.M. (London, England time) two (2) Business Days prior to the first day of such Interest Period and (b) 1.75%.  If no such offered rate exists, such rate will be the rate of interest per annum as determined by the Paying Agent (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits of Dollars in immediately available funds are offered at 11:00 A.M. (London, England time) two (2) Business Days prior to the first day such Interest Period by major financial institutions reasonably satisfactory to the Paying Agent in the London interbank market for such Interest Period and for an amount equal or comparable to the principal amount of the Term Loans borrowed, converted or continued as Eurodollar Rate loans on such date of determination.

 

"Eurodollar Rate" means, with respect to any Interest Period and for any Eurodollar Rate Loan, an interest rate per annum determined as the ratio of (a) the Eurodollar Base Rate with respect to such Interest Period for such Eurodollar Rate Loan to (b) the difference between the

 

  

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number one and the Eurodollar Reserve Requirements with respect to such Interest Period and for such Eurodollar Rate Loan.

 

"Eurodollar Rate Loan" means any Term Loan that bears interest based on the Eurodollar Rate.

 

"Eurodollar Reserve Requirements" means, with respect to any Interest Period and for any Eurodollar Rate Loan, a rate per annum equal to the aggregate, without duplication, of the maximum rates (expressed as a decimal number) of reserve requirements in effect 2 Business Days prior to the first day of such Interest Period (including basic, supplemental, marginal and emergency reserves) under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as "eurocurrency liabilities" in Regulation D of the Federal Reserve Board) maintained by a member bank of the United States Federal Reserve System; provided, that if no Lender is a member bank at the time of determination, the Eurodollar Reserve Requirement shall be deemed to be zero.

 

"Event of Default" has the meaning specified in Section 9.1.

 

"Excess Cash Flow" means, as of any Quarterly Application Date and following the application of funds pursuant to Section 7.11(e)(i) through (v), the amount on deposit in the Collection Account in excess of $3,000,000.

 

"Exhibitor Agreement" means each master license agreement between a Group Member and an Approved Exhibitor with an expiration date no earlier than December 31, 2020 and otherwise in substantially the same form as Exhibit G (or with such modifications thereto as are acceptable to the Co-Administrative Agents) with respect to the installation of Digital Systems in such Approved Exhibitor's theaters.

 

"Exhibitor Payment" means any payment due and payable to a Group Member under an Exhibitor Agreement for exhibition of alternative content, for usage of systems to display advertising or for any other use of Installed Digital Systems generating a payment obligation for which payment has not been received by such Group Member from another agreed source.

 

"Existing Administrative Agent" means the "Administrative Agent" as defined in the Existing Facility.

 

"Existing Facility" means the Credit Agreement dated as of August 1, 2006 among Christie, General Electric Capital Corporation, as administrative agent, and the lenders parties thereto, together with all amendments, supplements and other modifications thereto.

 

"Existing Secured Parties" means the "Secured Parties" as defined in the Existing Facility.

 

"Existing Secured Hedging Documents" means all "Secured Hedging Documents" as defined in the Existing Facility.

 

  

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"Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as determined by the Paying Agent in its sole discretion.

 

"Federal Reserve Board" means the Board of Governors of the United States Federal Reserve System and any successor thereto.

 

"Fee Letter" means the letter agreement dated April 20, 2010 among the Borrower, the Co-Administrative Agents and the Arrangers.

 

"Financial Statement" means the Initial Financial Statements and each financial statement delivered pursuant to Sections 6.1(a), (b) or (c).

 

"Fiscal Quarter" means each three month fiscal period ending on March 31, June 30, September 30 or December 31.

 

"Fiscal Year" means each twelve month period ending on March 31.

 

"Foreign Subsidiary" means any Subsidiary that is not a Domestic Person.

 

"GAAP" means generally accepted accounting principles in the United States, as in effect from time to time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, in the statements and pronouncements of the Financial Accounting Standards Board and in such other statements by such other Person as may be in general use by significant segments of the accounting profession in the United States that are applicable to the circumstances as of the date of determination.  Subject to Section 1.3, all references to "GAAP" shall be to GAAP applied consistently with the principles used in the preparation of the audited Initial Financial Statements referred to in clause (a) of the definition of Initial Financial Statements.

 

"GE Capital" has the meaning specified in the preamble hereto.

 

"Governmental Authority" means any nation, sovereign or government, any state or other political subdivision thereof, any agency, authority or instrumentality thereof and any entity or authority exercising executive, legislative, taxing, judicial, regulatory or administrative functions of or pertaining to government, including any central bank, stock exchange, regulatory body, arbitrator, public sector entity, supra-national entity (including the European Union and the European Central Bank) and any self-regulatory organization (including the National Association of Insurance Commissioners).

 

"Group Members" means, collectively, the Loan Parties (other than Holdings and Christie).

 

"Group Members' Accountants" means Eisner LLP or any nationally-recognized independent registered certified public accountants reasonably acceptable to the Paying Agent.

 

  

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"Guarantor" means each Subsidiary of the Borrower and each other Person that enters into any Guaranty Obligation with respect to any Obligation of any Loan Party.

 

"Guaranty and Security Agreement" means a guaranty and security agreement, in substantially the form of Exhibit F, among the Collateral Agent, the Borrower and other Guarantors from time to time party thereto.

 

"Guaranty Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of such Person for any Indebtedness, lease, dividend or other obligation (the "primary obligation") of another Person (the "primary obligor"), if the purpose or intent of such Person in incurring such liability, or the economic effect thereof, is to guarantee such primary obligation or provide support, assurance or comfort to the holder of such primary obligation or to protect or indemnify such holder against loss with respect to such primary obligation, including (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of any primary obligation, (b) the incurrence of reimbursement obligations with respect to any letter of credit or bank guarantee in support of any primary obligation, (c) the existence of any Lien, or any right, contingent or otherwise, to receive a Lien, on the property of such Person securing any part of any primary obligation and (d) any liability of such Person for a primary obligation through any Contractual Obligation (contingent or otherwise) or other arrangement (i) to purchase, repurchase or otherwise acquire such primary obligation or any security therefor or to provide funds for the payment or discharge of such primary obligation (whether in the form of a loan, advance, stock purchase, capital contribution or otherwise), (ii) to maintain the solvency, working capital, equity capital or any balance sheet item, level of income or cash flow, liquidity or financial condition of any primary obligor, (iii) to make take-or-pay or similar payments, if required, regardless of non-performance by any other party to any Contractual Obligation, (iv) to purchase, sell or lease (as lessor or lessee) any property, or to purchase or sell services, primarily for the purpose of enabling the primary obligor to satisfy such primary obligation or to protect the holder of such primary obligation against loss or (v) to supply funds to or in any other manner invest in, such primary obligor (including to pay for property or services irrespective of whether such property is received or such services are rendered); provided, however, that "Guaranty Obligations" shall not include (x) endorsements for collection or deposit in the ordinary course of business and (y) product warranties given in the ordinary course of business. The outstanding amount of any Guaranty Obligation shall equal the outstanding amount of the primary obligation so guaranteed or otherwise supported or, if lower, the stated maximum amount for which such Person may be liable under such Guaranty Obligation.

 

"Hazardous Material" means (a) any substance, material or waste that is classified, regulated or otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant or a pollutant or by other words of similar meaning or regulatory effect, including petroleum or any fraction thereof, asbestos, polychlorinated biphenyls and radioactive substances or (b) electronic waste and parts or materials derived from the Digital Systems destined for recycling or disposal but not for direct reuse that consists of lead or beryllium containing circuit boards, cathode ray tubes (CRTs), CRT glass (processed and unprocessed), as well as computers, monitors, peripherals and other electronics containing such circuit boards and/or CRTs.

 

  

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"Hedging Agreement" means any Interest Rate Contract, foreign exchange, swap, option or forward contract, spot, cap, floor or collar transaction, any other derivative instrument and any other similar transaction and any other similar agreement or arrangement designed to provide protection against fluctuations in any interest rate.

 

"Holdings" means Access Digital Media, Inc., a Delaware corporation.

 

"Incentive Servicing Fee" has the meaning set forth in the Management Services Agreement.

 

"Indebtedness" of any Person means, without duplication, any of the following, whether or not matured:  (a) all indebtedness for borrowed money, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all reimbursement and other obligations with respect to (i) letters of credit (whether drawn or undrawn), bank guarantees or bankers' acceptances or (ii) surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation) other than those entered into in the ordinary course of business, (d) all obligations to pay the deferred purchase price of property or services, other than trade payables incurred in the ordinary course of business, (e) all obligations created or arising under any conditional sale or other title retention agreement, regardless of whether the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property, (f) all Capitalized Lease Obligations, (g) all obligations, whether or not contingent, to purchase, redeem, retire, defease or otherwise acquire for value any of its own Stock or Stock Equivalents (or any Stock or Stock Equivalent of a direct or indirect parent entity thereof) prior to the date that is 180 days after the Maturity Date, valued at, in the case of redeemable preferred Stock, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such Stock plus accrued and unpaid dividends, (h) all payments that would be required to be made in respect of any Hedging Agreement in the event of a termination (including an early termination) on the date of determination and (i) all Guaranty Obligations for obligations of any other Person constituting Indebtedness of such other Person; provided, however, that the items in each of clauses (a) through (i) above shall constitute "Indebtedness" of such Person solely to the extent, directly or indirectly, (x) such Person is liable for any part of any such item, (y) any such item is secured by a Lien on such Person's property or (z) any other Person has a right, contingent or otherwise, to cause such Person to become liable for any part of any such item or to grant such a Lien.

 

"Indemnified Matter" has the meaning specified in Section 11.4.

 

"Indemnitee" has the meaning specified in Section 11.4.

 

"Initial Financial Statements" means (a) the audited Consolidated and consolidating balance sheet of the Group Members for the Fiscal Year ending March 31, 2009 and related Consolidated and consolidating statements of income, stockholders' equity and cash flow for such Fiscal Year, (b) the Consolidated and consolidating unaudited balance sheet of the Group Members for the Fiscal Quarters ending June 30, 2009, September 30, 2009 and December 31, 2009 and related Consolidated and consolidating statements of income and cash flow for each such Fiscal Quarter and that portion of the Fiscal Year ending as of the close of each such Fiscal Quarter and (c) the Consolidated and consolidating unaudited balance sheet of Cinedigm for the

 

  

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Fiscal Quarters ending June 30, 2009, September 30, 2009 and December 31, 2009 and related Consolidated and consolidating statements of income and cash flow for each such Fiscal Quarter and that portion of the Fiscal Year ending as of the close of such Fiscal Quarter.

 

"Initial Projections" means a financial forecast for the Group Members prepared by or on behalf of Borrower's management and dated on or around the Closing Date (and otherwise in form and substance satisfactory to the Co-Administrative Agents) demonstrating on a quarterly basis for the first twelve months after the Closing Date, and on an annual basis thereafter through the one year anniversary of the Maturity Date, compliance with all financial covenants through the Maturity Date.

 

"Installed Digital Systems" means installed and fully operational Digital Systems subject to an Exhibitor Agreement and a Service Agreement.

 

"Intellectual Property" means all rights, title and interests in or relating to intellectual property and industrial property arising under any Requirement of Law and all IP Ancillary Rights relating thereto, including all Copyrights, Patents, Trademarks, Internet Domain Names, Trade Secrets and IP Licenses.

 

"Intercompany Agreements" means all agreements among the Borrower, Christie, Holdings, Hollywood Software, Inc. and/or Cinedigm.

 

"Interest Period" means, with respect to any Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is made or converted to a Eurodollar Rate Loan or, if such loan is continued, on the last day of the immediately preceding Interest Period therefor and, in each case, ending 1, 2 or 3 months thereafter, as selected by the Borrower pursuant hereto; provided, however, that (v) 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 extend such Interest Period into the next calendar month, in which case such Interest Period shall end on the immediately preceding Business Day, (w) 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, (x) the Borrower may not select any Interest Period for Eurodollar Rate Loans ending after the Maturity Date, (y) the Borrower may not select any Interest Period in respect of Term Loans having an aggregate principal amount of less than $1,000,000 and (z) there shall be outstanding at any one time no more than six (6) Interest Periods for Eurodollar Rate Loans.

 

"Interest Rate Contracts" means any interest rate swap agreement, interest rate cap agreement, agreement for the repurchase of the imbedded Eurodollar floor, interest rate collar agreement and interest rate insurance entered into with a Secured Hedging Counterparty or otherwise acceptable to the Co-Administrative Agents that protects against increases in the Eurodollar Rate or the Base Rate, as the case may be, as such rates would reasonably impact the Term Loans.

 

"Internet Domain Names" means all rights, title and interests (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to Internet domain names.

 

  

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"Investment" means, with respect to any Person, directly or indirectly, (a) the ownership, purchase or other acquisition, in each case whether beneficially or otherwise, of any investment in, including any interest in, any Security of any other Person (other than any evidence of any Obligation), (b) the purchase or other acquisition, whether in one transaction or in a series of transactions, of all or a significant part of the property of any other Person or a business conducted by any other Person or all or substantially all of the assets constituting the business of a division, branch, brand or other unit operation of any other Person, (c) to incur, or to remain liable under, any Guaranty Obligation for Indebtedness of any other Person, to assume the Indebtedness of any other Person or to make, hold, purchase or otherwise acquire, in each case directly or indirectly, any deposit, loan, advance, commitment to lend or advance, or other extension of credit (including by deferring or extending the date of, in each case outside the ordinary course of business, the payment of the purchase price for Sales of property or services to any other Person, to the extent such payment obligation constitutes Indebtedness of such other Person), excluding deposits with financial institutions available for withdrawal on demand and prepaid expenses, accounts receivable and similar items created in the ordinary course of business, (d) to make, directly or indirectly, any contribution to the capital of any other Person or (e) to Sell any property for less than fair market value (including a disposition of cash or Cash Equivalents in exchange for consideration of lesser value); provided, however, that such Investment shall be valued at the difference between the value of the consideration for such Sale and the fair market value of the property Sold.

 

"IP Ancillary Rights" means, with respect to any other Intellectual Property, as applicable, all foreign counterparts to, and all divisionals, reversions, continuations, continuations-in-part, reissues, reexaminations, renewals and extensions of, such Intellectual Property and all income, royalties, proceeds and Liabilities at any time due or payable or asserted under or with respect to any of the foregoing or otherwise with respect to such Intellectual Property, including all rights to sue or recover at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof, and, in each case, all rights to obtain any other IP Ancillary Right.

 

"IP Escrow Agreement" means the Three-Party Master Beneficiary Escrow Service Agreement dated effective as of May 6, 2010 among the Collateral Agent, as beneficiary, Holdings and Hollywood Software, Inc., as depositor, and Iron Mountain Intellectual Property Management, Inc.,

 

"IP License" means all Contractual Obligations (and all related IP Ancillary Rights), whether written or oral, granting any right, title and interest in or relating to any Intellectual Property.

 

"IRS" means the Internal Revenue Service of the United States and any successor thereto.

 

"Lender" means, collectively, any financial institution or other Person that (a) is listed on the signature pages hereof as a "Lender" or (b) from time to time becomes a party hereto by execution of an Assignment, in each case together with its successors.

 

"Lender Insolvency Event" means that (a) a Lender or its Lender Parent Company is insolvent, or is generally unable to pay its debts as they become due, or admits in writing its

 

  

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inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, or (b) such Lender or its Lender Parent Company is the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Lender or its Lender Parent Company, or such Lender or its Lender Parent Company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment.

 

"Lender Parent Company" means, with respect to a Lender, the bank holding company (as defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or any Person owning, beneficially or of record, directly or indirectly, a majority of the shares of such Lender.

 

"Liabilities" means all claims, actions, suits, judgments, damages, losses, liability, obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions, charges, disbursements and expenses, in each case of any kind or nature (including interest accrued thereon or as a result thereto and fees, charges and disbursements of financial, legal and other advisors and consultants), whether joint or several, whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise.

 

"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest or other security arrangement and any other preference, priority or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

 

"Loan Documents" means, collectively, this Agreement, any Notes, the Guaranty and Security Agreement, the Pledge Agreement, the Mortgages, the Control Agreements, the Consents, the Fee Letter, the IP Escrow Agreement and, when executed, each document executed by a Loan Party and delivered to the Paying Agent, the Collateral Agent or any Lender in connection with or pursuant to any of the foregoing or the Obligations (other than any Secured Hedging Document), together with any modification of any term, or any waiver with respect to, any of the foregoing.

 

"Loan Party" means Holdings, Christie, the Borrower and each Guarantor.

 

"Lockbox Account" means the lockbox and Cash Collateral Account identified as the "Lockbox Account" in Section 7.11 and any replacement lockbox and Cash Collateral Account with a depository bank that is, or whose holding company is, rated at least BBB- by S&P and at least Baa3 by Moody's reasonably requested by the Borrower and acceptable to the Paying Agent and the Collateral Agent.

 

"Management Report" means the management report delivered pursuant to Section 6.1(a)

 

"Management Services Agreement" means that certain Management Services Agreement dated as of May 6, 2010 between Cinedigm, as administrative servicer, and the Borrower in form and substance satisfactory to the Co-Administrative Agents and under which Cinedigm has agreed to provide certain management services and accounting, technical, operational, general and administrative services for the Group Members.

 

  

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"Material Adverse Effect" means an effect that results in or causes, or could reasonably be expected to result in or cause, a material adverse change in any of (a) the condition (financial or otherwise), business, performance, prospects (in the reasonable judgment of the Co-Administrative Agents), operations or property of the Loan Parties, taken as a whole, or the Group Members, taken as a whole, (b) the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party and (c) the validity or enforceability of any Loan Document or the rights and remedies of any Agent, the Lenders or any other Secured Party under any Loan Document.

 

"Material Digital Cinema Deployment Agreement" means a Digital Cinema Deployment Agreement (a) with a Distributor listed on Schedule 9.1(i) or (b) for which the VPFs paid or, without duplication, payable by the Distributor party thereto to the Group Members during the twelve month period most recently ended equal or exceed 12.00% (on a dollar received basis) of all VPFs paid or, without duplication, payable by all Distributors parties to Digital Cinema Deployment Agreements to the Group Members during such period.

 

"Material Environmental Liabilities" means Environmental Liabilities exceeding $250,000 in the aggregate.

 

"Material Exhibitor Agreement" means any Exhibitor Agreement or Exhibitor Agreements covering more than 250 screens, individually or in the aggregate, of one or more Approved Exhibitors.

 

"Material Service Agreement" means any Service Agreement or Service Agreements covering Installed Digital Systems subject to a Material Exhibitor Agreement or Material Exhibitor Agreements.

 

"Maturity Date" means April 29, 2016.

 

"MLA Prepayment Amount" means the product of (a) the outstanding principal amount of the Term Loans as of the date of the prepayment to be made in accordance Section 2.5(d) and (b) a fraction (i) the numerator of which is the number of Digital Systems covered by a Material Exhibitor Agreement or Material Service Agreement which have not been redeployed or remain or are otherwise inactive as of such date of prepayment, and (ii) the denominator of which is the aggregate number of Installed Digital Systems (including Digital Systems referred to in clause (i)) as of such date of prepayment.  For avoidance of doubt, in the case of a MLA Prepayment Event resulting from a default by a Group Member under a Material Exhibitor Agreement or Material Service Agreement, Digital Systems covered by such Material Exhibitor Agreement or Material Service Agreement shall not be included for purposes of clause (i) above so long as such Digital Systems continue to generate VPFs payable to such Group Member at a level consistent with the average VPFs generated by such Digital Systems prior to such default.

 

"MLA Prepayment Event" means (a) any default by a Group Member under, or the termination or invalidation of, any Material Exhibitor Agreement or Material Service Agreement and (b) within 120 days of such default, termination or invalidation, the Borrower shall not have (i) with respect to any default by a Group Member, delivered to the Co-Administrative Agents written evidence of the cure or waiver of such default by the applicable Approved Exhibitor or

 

  

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Digital Systems Servicer or (ii) with respect to any termination or invalidation of such Material Exhibitor Agreement or Material Service Agreement, redeployed a number of the Digital Systems covered by such Material Exhibitor Agreement or Material Service Agreement equal to or greater than the difference between (A) the number of screens covered by such Material Exhibitor Agreement or Material Service Agreement and (B) 50.

 

"Moody's" means Moody's Investors Service, Inc.

 

"Monthly Application Date" means the 10th day of each January, February, April, May, July, August, October and November of each calendar year.

 

"Mortgage" means any mortgage, deed of trust or other document executed or required herein to be executed by any Loan Party and granting a security interest over real property in favor of the Collateral Agent as security for the Obligations.

 

"Mortgage Supporting Documents" means, with respect to any Mortgage for a parcel of real property, each document (including title policies or marked-up unconditional insurance binders (in each case, together with copies of all documents referred to therein), maps, ALTA (or TLTA, if applicable) as-built surveys (in form and as to date that is sufficiently acceptable to the title insurer issuing title insurance to the Collateral Agent for such title insurer to deliver endorsements to such title insurance as reasonably requested by the Collateral Agent), environmental assessments and reports and evidence regarding recording and payment of fees, insurance premium and taxes) that the Collateral Agent may reasonably request, to create, register, perfect, maintain, evidence the existence, substance, form or validity of or enforce a valid lien on such parcel of real property in favor of the Collateral Agent for the benefit of the Secured Parties, subject only to Permitted Liens.

 

"Multiemployer Plan" means any multiemployer plan, as defined in Section 400l(a)(3) of ERISA, to which any ERISA Affiliate incurs or otherwise has any obligation or liability, contingent or otherwise.

 

"Net Cash Proceeds" means proceeds received in cash from (a) any Sale of, or Property Loss Event with respect to, property, any casualty insurance or any business interruption insurance, net of (i) the customary out-of-pocket cash costs, fees and expenses paid or required to be paid in connection therewith, (ii) taxes paid or reasonably estimated to be payable as a result thereof and (iii) any amount required to be paid or prepaid on Indebtedness (other than the Obligations and Indebtedness owing to any Group Member) secured by the property or (b) any sale or issuance of Stock or incurrence of Indebtedness, in each case net of brokers', advisors' and investment banking fees and other customary out-of-pocket underwriting discounts, commissions and other customary out-of-pocket cash costs, fees and expenses, in each case incurred in connection with such transaction; provided, however, that any such proceeds received by any Subsidiary of the Borrower that is not a Wholly Owned Subsidiary of the Borrower shall constitute "Net Cash Proceeds" only to the extent of the aggregate direct and indirect beneficial ownership interest of the Borrower therein.

 

"Non-U.S. Lender Party" means each of the Agents, each Lender, each SPV and each participant, in each case that is not a Domestic Person.

 

  

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"Non-Participating Distributor" means any Distributor that has not signed a Digital Cinema Deployment Agreement.

 

"Note" means a promissory note of the Borrower, in substantially the form of Exhibit B, payable to the order of a Lender in a principal amount equal to the amount of such Lender's Term Loan Commitment.

 

"Notice of Borrowing" has the meaning specified in Section 2.2.

 

"Notice of Conversion or Continuation" has the meaning specified in Section 2.7.

 

"Obligations" means, with respect to any Loan Party, (a) all amounts, obligations, liabilities, covenants and duties of every type and description owing by such Loan Party to the Agents, any Lender, any other Indemnitee, any participant or any SPV, in each case arising out of, under, or in connection with, any Loan Document, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether or not evidenced by any instrument or for the payment of money, including, without duplication, (i) if such Loan Party is the Borrower, all Term Loans, (ii) all interest, whether or not accruing after the filing of any petition in bankruptcy or after the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding, and (iii) all other fees, expenses (including fees, charges and disbursement of counsel), interest, commissions, charges, costs, disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to such Loan Party under any Loan Document and (b) all Secured Hedging Obligations owing to a Secured Hedging Counterparty.

 

"Operating Account" means the deposit account identified as the "Operating Account" in Section 7.11 and that is subject to a Control Agreement entered into on or before the Closing Date and any replacement deposit account with a depository bank that is, or whose holding company is, rated at least BBB- by S&P and at least Baa3 by Moody's reasonably requested by the Borrower and acceptable to the Paying Agent and the Collateral Agent.

 

"Other Taxes" has the meaning specified in Section 2.14(c).

 

"Patents" means all rights, title and interests (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to letters patent and applications therefor.

 

"Paying Agent" means SG in its capacity as paying agent under the Loan Documents or any successor paying agent.

 

"Payment Date" means the 15th day of each calendar month, or if such day is not a Business Day, the immediately preceding Business Day.

 

"PBGC" means the United States Pension Benefit Guaranty Corporation and any successor thereto.

 

  

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"Permit" means, with respect to any Person, any permit, approval, authorization, license, registration, certificate, concession, grant, franchise, variance or permission from, and any other Contractual Obligations with, any Governmental Authority, in each case whether or not having the force of law and applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

"Permitted Back-Up Services Expenses" means, as of the end of the most recent fiscal month, Back-Up Services Expenses in an amount (if positive and without duplication) equal to (a) the maximum amount of Permitted Operating Expenses permitted to be paid or reimbursed pursuant to Section 7.11(d)(i) or 7.11(e)(i) during the twelve month period most recently ended, plus (b) $600,000, minus (c) Permitted Operating Expenses actually paid or reimbursed pursuant to Section 7.11(d)(i) or 7.11(e)(i) during the twelve month period most recently ended, minus (d) Permitted Tax Expenses actually paid or reimbursed pursuant to Section 7.11(d)(i) or 7.11(e)(i) during the twelve month period most recently ended minus (e) Back-Up Services Expenses actually paid or reimbursed pursuant to Section 7.11(d)(i)(D) or 7.11(e)(i)(D) during the twelve month period most recently ended.  Calculations of Permitted Back-Up Services Expenses made for any twelve month period ending on or prior to April 30, 2011 shall be annualized for the number of months elapsed in a manner satisfactory to the Co-Administrative Agents.

 

"Permitted Indebtedness" means any Indebtedness of any Group Member that is permitted by Section 8.1.

 

"Permitted Investment" means any Investment of any Group Member that is permitted by Section 8.3.

 

"Permitted Lien" means any Lien on or with respect to the property of any Group Member that is permitted by Section 8.2.

 

"Permitted Operating Expenses" means, with respect to the Borrower and its Subsidiaries, (a) all legal and accounting expenses, (b) all expenses relating to business interruption and general liability insurance policies and (c) expenses of the credit facility evidenced by this Agreement and the other Loan Documents, in each case, to the extent not otherwise provided for in Section 7.11(d) or 7.11(e) (including all payments due and payable to the escrow agent under the IP Escrow Agreement).

 

"Permitted Refinancing" means Indebtedness constituting a refinancing or extension of Permitted Indebtedness that (a) has an aggregate outstanding principal amount not greater than the aggregate principal amount of such Permitted Indebtedness outstanding at the time of such refinancing or extension, (b) has a weighted average maturity (measured as of the date of such refinancing or extension) and maturity no shorter than that of such Permitted Indebtedness, (c) is not entered into as part of a Sale and Leaseback transaction, (d) is not secured by any property or any Lien other than those securing such Permitted Indebtedness and (e) is otherwise on terms no less favorable to the Group Members, taken as a whole, than those of such Permitted Indebtedness; provided, however, that, notwithstanding the foregoing, no Guaranty Obligation for such Indebtedness shall constitute part of such Permitted Refinancing unless similar Guaranty Obligations with respect to such Permitted Indebtedness existed and constituted Permitted Indebtedness prior to such refinancing or extension.

 

  

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"Permitted Reinvestment" means, with respect to the Net Cash Proceeds of any Sale of property (other than Sales of property permitted under clauses (a), (b), (c)(i) and (d) of Section 8.4) or Property Loss Event (including Net Cash Proceeds constituting insurance proceeds from any casualty or business interruption insurance policy of any Group member), to acquire (or make Capital Expenditures to finance the acquisition, repair, improvement or construction of), to the extent otherwise permitted hereunder, property substantially similar to the property subject to such Sale or Property Loss Event or, if such Property Loss Event involves loss or damage to property, to repair such loss or damage.

 

"Permitted Tax Expenses" means cash tax obligations of the Borrower, including the property taxes of the Borrower and federal income tax obligations attributable to the holders of the Borrower as a result of their ownership of the Borrower's Stock (but in an amount not to exceed the actual liability that would be incurred by the Borrower on a standalone basis and, in any event, excluding tax obligations owing as a result of a purchase of Term Loans by any Affiliate of the Borrower).

 

"Person" means any individual, partnership, corporation (including a business trust and a public benefit corporation), joint stock company, estate, association, firm, enterprise, trust, limited liability company, unincorporated association, joint venture and any other entity or Governmental Authority.

 

"Pledge Agreements" means (a) the Pledge Agreement dated as of the date hereof between Holdings and the Collateral Agent and (b) the Pledge Agreement dated as of the date hereof between Christie and the Collateral Agent.

 

"Potential Defaulting Lender" means, at any time, a Lender (a) as to which the Paying Agent has notified the Borrower that an event of the kind referred to in the definition of "Lender Insolvency Event" has occurred and is continuing in respect of any Subsidiary or financial institution Affiliate of such Lender, (b) as to which the Co-Administrative Agents have in good faith determined and notified the Borrower that such Lender or its Lender Parent Company or a Subsidiary or financial institution Affiliate thereof has notified the Paying Agent, or has stated publicly, that it will not comply with its funding obligations under any other loan agreement or credit agreement or other similar/other financing agreement or (c) that has, or whose Lender Parent Company has, a non-investment grade rating from Moody's or S&P or another nationally recognized rating agency.  Any determination that a Lender is a Potential Defaulting Lender under either of clause (b) or (c) above will be made by the Co-Administrative Agents in their sole discretion acting in good faith.  The Paying Agent will promptly send to all parties hereto a copy of any notice to the Borrower provided for in this definition.

 

"Projections" means, collectively, the Initial Projections and any additional forecasts delivered pursuant to Section 6.1(f).

 

"Property Loss Event" means, with respect to any property of any Group Member, any loss of or damage to such property or any taking of such property or condemnation thereof.

 

"Pro Rata Outstandings" of any Lender at any time means the outstanding principal amount of the Term Loans owing to such Lender.

 

  

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"Pro Rata Share" means, with respect to any Lender at any time, the percentage obtained by dividing (a) the Term Loan Commitment (or, after the funding of the Term Loans on the Closing Date, the Pro Rata Outstandings) of such Lender by (b) the sum of the Term Loan Commitments (or, after the funding of the Term Loans on the Closing Date, the aggregate Pro Rata Outstandings) of all Lenders; provided, however, that, if the Term Loans have been funded and there are no Pro Rata Outstandings, such Lender's Pro Rata Share in the Term Loan Commitments or Term Loans shall be determined based on the Pro Rata Share in such Term Loan Commitments or Term Loans, respectively, most recently in effect, after giving effect to any subsequent assignment and any subsequent non-pro rata payments of any Lender pursuant to Section 2.15.

 

"Quarterly Application Date" means the 10th day of each March, June, September and December of each calendar year.

 

"Register" has the meaning specified in Section 2.11(b).

 

"Reinvestment Prepayment Amount" means, with respect to any Net Cash Proceeds received from any Sale of property (other than Sales of property permitted under clauses (a), (b), (c)(i) and (d) of Section 8.4) or Property Loss Event (including Net Cash Proceeds constituting insurance proceeds from any casualty or business interruption insurance policy of any Group member), the amount of such Net Cash Proceeds less (a) Permitted Reinvestments made by a Group Member using such Net Cash Proceeds prior to the Reinvestment Prepayment Date relating to such Net Cash Proceeds and (b) Permitted Reinvestments required to be made by a Group Member from such Net Cash Proceeds as a result of a Contractual Obligation entered into prior to such Reinvestment Prepayment Date with any Person that is not an Affiliate of any Group Member.

 

"Reinvestment Prepayment Date" means, with respect to any portion of Net Cash Proceeds of any Sale of property (other than Sales of property permitted under clauses (a), (b), (c)(i) and (d) of Section 8.4) or Property Loss Event (including Net Cash Proceeds constituting insurance proceeds from any casualty or business interruption insurance policy of any Group member), the earlier of (a) the 180th day after the completion of the portion of such Sale or Property Loss Event corresponding to such Net Cash Proceeds and (b) the date that is five (5) Business Days after the date on which the Borrower shall have notified the Paying Agent of the Borrower's determination not to make Permitted Reinvestments with such Net Cash Proceeds.

 

"Related Person" means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor (including those retained in connection with the satisfaction or attempted satisfaction of any condition set forth in Article III) and other consultants and agents of or to such Person or any of its Affiliates, together with, if such Person is the Paying Agent, each other Person or individual designated, nominated or otherwise mandated by or helping the Paying Agent pursuant to and in accordance with Section 10.4 or any comparable provision of any Loan Document.

 

"Related Purchaser" has the meaning set forth in Section 11.2(g).

 

  

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"Release" means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material into or through the environment.

 

"Release Conditions" means, as of any date of determination, each of the following: (a) the prepayment in full of the principal amount of the Term Loans due on the Maturity Date (whether through the application of mandatory or voluntary prepayments pursuant to Section 2.4 or Section 2.5 hereof), (b) (i) the Consolidated Leverage Ratio is less than 2.00 to 1.00 and (ii) the Consolidated Fixed Charge Coverage Ratio is greater than 1.33 to 1.00, in each case, as demonstrated in the most recent Compliance Certificate delivered pursuant to Section 6.1(d) and (c) no MLA Prepayment Amount remains unpaid.

 

"Remedial Action" means all actions required to (a) clean up, remove, treat or in any other way address any Hazardous Material in the indoor or outdoor environment, (b) prevent or minimize any Release so that a Hazardous Material does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care with respect to any Hazardous Material.

 

"Required Lenders" means, at any time, (a) Lenders holding in the aggregate at such time in excess of 50% of the aggregate Pro Rata Outstandings and (b) in the event one Lender holds in excess of 50% of the aggregate Pro Rata Outstandings, at least two (2) Lenders holding in the aggregate in excess of 50% of the aggregate Pro Rata Outstandings, in each case, ignoring in such calculations amounts held by any Defaulting Lender.

 

"Requirements of Law" means, with respect to any Person, collectively, the common law and all federal, state, local, foreign, multinational or international laws, statutes, codes, treaties, standards, rules and regulations, guidelines, ordinances, orders, judgments, writs, injunctions, decrees (including administrative or judicial precedents or authorities) and the interpretation or administration thereof by, and other determinations, directives, requirements or requests of, any Governmental Authority, in each case whether or not having the force of law and that are 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" means, with respect to any Person, any of the president, chief executive officer, treasurer, assistant treasurer, controller, managing member or general partner of such Person but, in any event (a) with respect to financial matters, any such officer that is responsible for preparing the Financial Statements delivered hereunder and (b) with respect to the Corporate Chart, other documents delivered pursuant to Section 6.1(e), documents delivered on the Closing Date and documents delivered pursuant to Section 7.10, the secretary or assistant secretary of such Person or any other officer responsible for maintaining the corporate and similar records of such Person.

 

"Restricted Payment" means (a) any dividend, return of capital, distribution or any other payment or Sale of property for less than fair market value, whether direct or indirect (including through the use of Hedging Agreements, the making, repayment, cancellation or forgiveness of Indebtedness and similar Contractual Obligations) and whether in cash, Securities or other

 

  

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property, on account of any Stock or Stock Equivalent of the Borrower or any of its Subsidiaries, in each case now or hereafter outstanding, including with respect to a claim for rescission of a Sale of such Stock or Stock Equivalent and (b) any redemption, retirement, termination, defeasance, cancellation, purchase or other acquisition for value, whether direct or indirect (including through the use of Hedging Agreements, the making, repayment, cancellation or forgiveness of Indebtedness and similar Contractual Obligations), of any Stock or Stock Equivalent of any Group Member or of any direct or indirect parent entity of the Borrower, now or hereafter outstanding, and any payment or other transfer setting aside funds for any such redemption, retirement, termination, cancellation, purchase or other acquisition, whether directly or indirectly and whether to a sinking fund, a similar fund or otherwise.

 

"S&P" means Standard & Poor's Rating Services.

 

"Sale and Contribution Agreement" means the Sale and Contribution Agreement dated as of May 6, 2010, between Christie and the Borrower, including all schedules and exhibits thereto, in each case, form and substance satisfactory to the Co-Administrative Agents.

 

"Sale and Leaseback Transaction" means, with respect to any Person (the "obligor"), any Contractual Obligation or other arrangement with any other Person (the "counterparty") consisting of a lease by such obligor of any property that, directly or indirectly, has been or is to be Sold by the obligor to such counterparty or to any other Person to whom funds have been advanced by such counterparty based on a Lien on, or an assignment of, such property or any obligations of such obligor under such lease.

 

"Secured Hedging Counterparty" means (a) a Co-Administrative Agent, (b) any other Person (other than any Group Member) that entered into a Hedging Agreement with the Borrower at a time when such Person was a Lender or an Affiliate of a Lender or (c) any other Person (other than any Group Member) which has entered into a Hedging Agreement with the Borrower provided or arranged by a Lender or an Affiliate of a Lender, and any assignee of such Person, provided that such assignee was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into.

 

"Secured Hedging Documents" means, collectively, any Hedging Agreement that (a) is entered into by the Borrower and any Secured Hedging Counterparty therefor, (b) in the case of any Secured Hedging Counterparty that is not (i) an Agent, (ii) an Affiliate of an Agent or (iii) a Person party to a Hedging Arrangement provided for or arranged by an Agent, is expressly identified as being a "Secured Hedging Document" hereunder in a joint notice from the Borrower and such Secured Hedging Counterparty delivered to the Paying Agent reasonably promptly after the execution of such Hedging Agreement and (c) meets the requirements of Section 7.12.

 

"Secured Hedging Obligation" means any obligation of the Borrower to make payments to any Secured Hedging Counterparty under any Secured Hedging Documents to which such Secured Hedging Counterparty is a party.

 

"Secured Parties" means the Lenders, the Agents, the Secured Hedging Counterparties, each other Indemnitee and any other holder of any Obligation of any Loan Party.

 

  

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"Security" means all Stock, Stock Equivalents, voting trust certificates, bonds, debentures, instruments and other evidence of Indebtedness, whether or not secured, convertible or subordinated, all certificates of interest, share or participation in, all certificates for the acquisition of, and all warrants, options and other rights to acquire, any Security.

 

"Sell" means, with respect to any property of any Person, to sell, convey, transfer, assign, license, lease or otherwise dispose of, any interest therein or to permit any other Person to acquire any such interest, including, in each case, through a operating lease, Capital Lease, Sale and Leaseback Transaction or through a sale, factoring at maturity, collection of or other disposal, with or without recourse, of any notes or accounts receivable.  Conjugated forms thereof and the noun "Sale" have correlative meanings.

 

"Service Agreement" means each service agreement with a minimum 10 year term and otherwise in substantially the form of Exhibit H (or with such modifications thereto as are reasonably acceptable to the Co-Administrative Agents) between an Approved Exhibitor and a Digital Systems Servicer in connection with the installation of Digital Systems in such Approved Exhibitor's theaters pursuant to an Exhibitor Agreement.

 

"Servicing Fee" has the meaning set forth in the Management Services Agreement.

 

"SG" has the meaning specified in the preamble hereto.

 

"Solvent" means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person (both at fair value and present fair saleable value) is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital.  In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

"SPV" means any special purpose funding vehicle identified as such in writing by any Lender to the Paying Agent.

 

"Stock" means all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless of how designated) of or in a Person (other than an individual), whether voting or non-voting.

 

"Stock Equivalents" means all securities convertible into or exchangeable for Stock or any other Stock Equivalent and all warrants, options or other rights to purchase, subscribe for or otherwise acquire any Stock or any other Stock Equivalent, whether or not presently convertible, exchangeable or exercisable.

 

"Subsidiary" means, with respect to any Person, any corporation, partnership, joint venture, limited liability company, association or other entity, the management of which is, directly or indirectly, controlled by, or of which an aggregate of more than 50% of the

 

  

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outstanding Voting Stock is, at the time, owned or controlled directly or indirectly by, such Person or one or more Subsidiaries of such Person.

 

"Substitute Lender" has the meaning specified in Section 2.15(a).

 

"SWDA" means the Solid Waste Disposal Act (42 U.S.C. §§ 6901 et seq.).

 

"Tax Affiliate" means, (a) the Borrower and its Subsidiaries and (b) any Affiliate of the Borrower with which the Borrower files or is eligible to file consolidated, combined or unitary tax returns.

 

"Tax Return" has the meaning specified in Section 4.8.

 

"Taxes" has the meaning specified in Section 2.14(a).

 

"Term Loan" has the meaning specified in Section 2.1.

 

"Term Loan Commitment" means, with respect to each Lender, the obligation of such Lender to make Term Loans to the Borrower in an aggregate principal amount not to exceed the amount set forth under the heading "Term Loan Commitment" opposite such Lender's name on Schedule I hereto, or, as the case may be, in the Assignment pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof.  The aggregate amount of the Term Loan Commitments on the Closing Date is $172,500,000.

 

"Term Loan Purchase Assignment" means an assignment agreement entered into by a Lender, as assignor, and any Related Purchaser and accepted by the Paying Agent, in substantially the form of Exhibit A-2.

 

"Title IV Plan" means a pension plan subject to Title IV of ERISA, other than a Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any obligation or liability, contingent or otherwise.

 

"Trade Secrets" means all right, title and interest (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to trade secrets.

 

"Trademarks" means all rights, title and interests (and all related IP Ancillary Rights) arising under any Requirement of Law in or relating to trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers and, in each case, all goodwill associated therewith, all registrations and recordations thereof and all applications in connection therewith.

 

"UCC" means the Uniform Commercial Code of any applicable jurisdiction and, if the applicable jurisdiction shall not have any Uniform Commercial Code, the Uniform Commercial Code as in effect in the State of New York.

 

"United States" means the United States of America.

 

  

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"U.S. Lender Party" means each of the Agents, each Lender, each SPV and each participant, in each case that is a Domestic Person.

 

"VPF" means the virtual print fee payment owing to the Borrower from (a) a Distributor pursuant to a Digital Cinema Deployment Agreement or (b) a Non-Participating Distributor.

 

"Voting Stock" means Stock of any Person having ordinary power to vote in the election of members of the board of directors, managers, trustees or other controlling Persons, of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the occurrence of any contingency).

 

"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person, all of the Stock of which (other than nominal holdings and director's qualifying shares) is owned by such Person, either directly or through one or more Wholly Owned Subsidiaries of such Person.

 

"Withdrawal Liability" means, at any time, any liability incurred (whether or not assessed) by any ERISA Affiliate and not yet satisfied or paid in full at such time with respect to any Multiemployer Plan pursuant to Section 4201 of ERISA.

 

Section 1.2  UCC Terms.  The following terms have the meanings given to them in the applicable UCC:  "commodity account," "commodity contract," "commodity intermediary," "deposit account," "entitlement holder," "entitlement order," "equipment," "financial asset," "general intangible," "goods," "instruments," "inventory," "securities account," "securities intermediary" and "security entitlement".

 

Section 1.3  Accounting Terms and Principles.  All accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in accordance with GAAP.  No change in the accounting principles used in the preparation of any Financial Statement hereafter adopted by the Borrower shall be given effect if such change would affect a calculation that measures compliance with any provision of Article V or VIII unless the Co-Administrative Agents and the Required Lenders agree to modify such provisions to reflect such change in GAAP and, unless such provisions are modified, all Financial Statements, Compliance Certificates and similar documents provided hereunder shall be provided together with a reconciliation between the calculations and amounts set forth therein before and after giving effect to such change in GAAP.

 

Section 1.4  Payments.  The Paying Agent may set up standards and procedures to determine or redetermine the equivalent in Dollars of any amount expressed in any currency other than Dollars and otherwise may, but shall not be obligated to, rely on any determination made by any Loan Party.  Any such determination or redetermination by the Paying Agent shall be conclusive and binding for all purposes, absent manifest error.  No determination or redetermination by any Secured Party or Loan Party and no other currency conversion shall change or release any obligation of any Loan Party or of any Secured Party (other than the Paying Agent and its Related Persons) under any Loan Document, each of which agrees to pay separately for any shortfall remaining after any conversion and payment of the amount as converted.  The Paying Agent may round up or down, and may set up appropriate mechanisms to

 

  

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round up or down, any amount hereunder to nearest higher or lower amounts and may determine reasonable de minimis payment thresholds.

 

Section 1.5  Interpretation.  (a) Certain Terms.  Except as otherwise expressly set forth in any Loan Document, all accounting terms not specifically defined herein shall be construed in accordance with GAAP (except for the term "property," which shall be interpreted as broadly as possible, including, in any case, cash, Securities, other assets, rights under Contractual Obligations and Permits and any right or interest in any property).  The terms "herein," "hereof" and similar terms refer to this Agreement as a whole.  In the computation of periods of time from a specified date to a later specified date in any Loan Document, the terms "from" means "from and including" and the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including."  In any other case, the term "including" when used in any Loan Document means "including without limitation."  The term "documents" when used in any Loan Document means all writings, however evidenced and whether in physical or electronic form, including all documents, instruments, agreements, notices, demands, certificates, forms, financial statements, opinions and reports.  The term "incur" when used in any Loan Document means incur, create, make, issue, assume or otherwise become directly or indirectly liable in respect of or responsible for, in each case whether directly or indirectly, and the terms "incurrence" and "incurred" and similar derivatives shall have correlative meanings.  The terms "payment in full" or "paid in full" or "satisfied", in each case, as used with respect to any Obligation means the receipt of immediately available funds equal to the full amount of such Obligation.

 

(b)  Certain References.  Unless otherwise expressly indicated, references (i) in this Agreement to an Exhibit, Schedule, Article, Section or clause refer to the appropriate Exhibit or Schedule to, or Article, Section or clause in, this Agreement and (ii) in any Loan Document, to (A) any agreement shall include, without limitation, all exhibits, schedules, appendixes and annexes to such agreement and, unless the prior consent of any Secured Party required therefor is not obtained, any amendment, restatement, amendment and restatement, supplement or other modification to any term of such agreement, (B) any statute shall be to such statute as modified from time to time and to any successor legislation thereto, in each case as in effect at the time any such reference is operative and (C) any time of day shall be a reference to New York time.  Titles of articles, sections, clauses, exhibits, schedules and annexes contained in any Loan Document are without substantive meaning or content of any kind whatsoever and are not a part of the agreement among the parties hereto.  Unless otherwise expressly indicated, the meaning of any term defined (including by reference) in any Loan Document shall be equally applicable to both the singular and plural forms of such term.

 

ARTICLE II

THE FACILITIES

 

Section 2.1  Term Loan Commitments.  On the terms and subject to the conditions contained in this Agreement, each Lender severally, but not jointly, agrees to make a single term loan (each a "Term Loan") in Dollars to the Borrower on the Closing Date in an aggregate principal amount not to exceed such Lender's Term Loan Commitment.  Amounts of Term Loans repaid may not be reborrowed.

 

  

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Section 2.2  Borrowing Procedures.  (a) Notice From the Borrower.  Each Borrowing shall be made on notice given by the Borrower to the Paying Agent not later than 11:00 a.m. on (i) the first Business Day, in the case of a Borrowing of Base Rate Loans and (ii) the third Business Day, in the case of a Borrowing of Eurodollar Rate Loans, prior to the Closing Date.  Such notice may be made in a writing substantially in the form of Exhibit C (a "Notice of Borrowing") duly completed or by telephone if confirmed promptly, but in any event at least one Business Day prior to such Borrowing, with such a Notice of Borrowing.  Term Loans shall be made as Base Rate Loans unless, outside of a suspension period pursuant to Section 2.12, the Notice of Borrowing specifies that all or a portion thereof shall be Eurodollar Rate Loans.  Each Borrowing shall be in an aggregate amount that is an integral multiple of $500,000.

 

(b)  Notice to Each Lender.  The Paying Agent shall give to each Lender prompt notice of the Paying Agent's receipt of a Notice of Borrowing and, if Eurodollar Rate Loans are properly requested in such Notice of Borrowing, prompt notice of the applicable interest rate.  Each Lender shall, before 11:00 a.m. on the Closing Date, make available to the Paying Agent at its address referred to in Section 11.11, such Lender's Pro Rata Share of such proposed Borrowing.  Upon fulfillment or due waiver on or prior to the Closing Date of the applicable conditions set forth in Section 3.1, the Paying Agent shall make such funds available to the Borrower.

 

(c)  Defaulting Lenders. (i) Unless the Paying Agent shall have received notice from any Lender prior to the Closing Date that such Lender will not make a payment in the amount of such Lender's Term Loan Commitment (or any portion thereof) available to the Paying Agent on the Closing Date, the Paying Agent may assume that such Lender has made such payment available to the Paying Agent on the Closing Date and the Paying Agent may, in reliance upon such assumption, make available to the Borrower on the Closing Date a corresponding amount.  The Borrower agrees to repay to the Paying Agent on demand such deficient amount (until repaid by such Lender) with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Paying Agent, at the interest rate applicable to the Obligations that would have been created when the Paying Agent made available such amount to the Borrower had such Lender made a corresponding payment available; provided, however, that such payment by the Borrower shall not relieve such Lender of any obligation it may have to the Borrower.  In addition, any Lender that shall not have made available to the Paying Agent any portion of any payment described above shall be deemed a Defaulting Lender and agrees to pay such amount to the Paying Agent on demand together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Paying Agent, at the Federal Funds Rate for the first Business Day and thereafter (x) in the case of a payment in respect of a Term Loan, at the interest rate applicable at the time to such Term Loan and (y) otherwise, at the interest rate applicable to Base Rate Loans.  Such repayment shall then constitute the funding of the corresponding Term Loan (including any Term Loan deemed to have been made hereunder with such payment) or participation, and promptly paid to the Borrower.  The existence of any Defaulting Lender shall not relieve any other Lender of its obligations under any Loan Document, but no other Lender shall be responsible for the failure of any Defaulting Lender to make any payment required under any Loan Document.

 

  

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(ii)  Reallocation of Payments.  With respect to any Defaulting Lender who has failed to make payments when due under this Agreement or any other Loan Document, any payment of principal, interest, fees or other amounts received by the Paying Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity or otherwise), shall be applied at such time or times as may be determined by the Paying Agent as follows: first, to the ratable payment of any amounts owing by such Defaulting Lender to the Agents; second, to the payment of any amounts owing to the Agents as a result of any judgment of a court of competent jurisdiction obtained by any Agent against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and third, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction.

 

(d)  Defaulting Lender – Right to Cure.  If the Borrower and the Co-Administrative Agents agree in writing in their discretion that a Lender that is a Defaulting Lender or a Potential Defaulting Lender should no longer be deemed to be a Defaulting Lender or Potential Defaulting Lender, as the case may be, the Paying Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender will cease to be a Defaulting Lender or Potential Defaulting Lender; provided, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender or Potential Defaulting Lender to non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender's having been a Defaulting Lender or Potential Defaulting Lender.

 

Section 2.3  Repayment of Obligations.  (a)  The Borrower promises to pay to the Paying Agent for the account of the Lenders all outstanding principal amounts of the Term Loans (together with all accrued but unpaid interest) on the Maturity Date.

 

(b)  Commencing June 15, 2010 and on each Payment Date thereafter, the Borrower promises to pay to the Paying Agent for the account of the Lenders the outstanding principal amount of the Term Loans in an amount equal to the product of (i) the percentage set forth below corresponding to the period in which such Payment Date occurs and (ii) the aggregate principal amount of the Term Loans made on the Closing Date:

 

	
Period

	
Amount

	
June 2010 through April 2013

	
1.1667%

	
May 2013 through April 2014

	
1.2500%

	
May 2014 through April 2015

	
1.3333%

	
May 2015 through March 2016

	
1.4167%

Section 2.4  Voluntary Prepayments.  The Borrower may prepay the outstanding principal amount of any Term Loan in whole or in part at any time; provided, however, that each partial prepayment of principal shall be in an aggregate amount that is an integral multiple of $1,000,000.  Any prepayments under this Section 2.4 shall be accompanied by (a) any amounts due and payable pursuant to Section 2.13(a) and (b) all accrued and unpaid interest on the amount prepaid.

 

  

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Section 2.5  Mandatory Prepayments.

 

(a)  Excess Cash Flow.  Until the Obligations shall have been paid in full, the Borrower shall pay or cause to be paid to the Paying Agent on each Quarterly Application Date for the prepayment of the outstanding principal amount of the Term Loans (i) on each Quarterly Application Date on which all Release Conditions are satisfied and no Default has occurred and is continuing, 50% of all Excess Cash Flow and (ii) at all other times, 100% of all Excess Cash Flow; provided that, all such prepayments of Excess Cash Flow shall be in a principal amount of at least $500,000 or a whole multiple of $250,000 in excess thereof.  To the extent Excess Cash Flow otherwise required to be applied as a pre-payment as of any Quarterly Application Date is less than the thresholds described in the preceding sentence, such Excess Cash Flow shall remain on deposit in the Collection Account until the next Monthly Application Date or Quarterly Application Date.

 

(b)  Equity and Debt Issuances. Until the Obligations shall have been paid in full, within one Business Day of receipt by any Loan Party or any of its Subsidiaries of Net Cash Proceeds arising from (i) the issuance or Sale by the Borrower of its own Stock (other than any issuance of common Stock by the Borrower occurring in the ordinary course of business to any director, member of the management or employee of the Borrower or its Subsidiaries pursuant to a stock option or stock purchase or employee benefit plan as in effect from time to time or issuance of directors' qualifying shares), provided, in each case, that it shall be a condition to the issuance or Sale of such Stock of the Borrower that such Stock be pledged to the Collateral Agent, for the benefit of the Secured Parties, to secure the Obligations), the Borrower shall pay or cause to be paid to the Paying Agent a prepayment of the outstanding principal amount of the Term Loans in an amount equal to 100% of such Net Cash Proceeds or (ii) the incurrence by any Group Member of Indebtedness of the type specified in clause (a) or (b) of the definition thereof (other than any such Indebtedness permitted hereunder in reliance upon any of clauses (a) through (g) of Section 8.1), the Borrower shall pay or cause to be paid to the Paying Agent a prepayment in an amount equal to 100% of such Net Cash Proceeds.

 

(c)  Asset Sales and Property Loss Events. Until the Obligations shall have been paid in full, within one Business Day of receipt on or after the Closing Date in any Fiscal Year by any Loan Party of Net Cash Proceeds arising from (i) any Sale by any Group Member of any of its property (other than Sales of its own Stock and Sales of property permitted under clauses (a), (b), (c)(i) and (d) of Section 8.4), (ii) any Property Loss Event, or (iii) any business interruption insurance policy, the Borrower shall pay or cause to be paid to the Paying Agent a prepayment of the outstanding principal amount of the Term Loans in an amount equal to 100% of such Net Cash Proceeds; provided, however, that within one Business Day of receipt of such Net Cash Proceeds and as long as no Event of Default has occurred and is continuing, any Group Member may deposit and maintain such Net Cash Proceeds in a Cash Collateral Account and thereafter make Permitted Reinvestments with such Net Cash Proceeds (and the Borrower shall not be required to make or cause such prepayment) so long as (A) such Net Cash Proceeds so deposited are intended to be used to make Permitted Reinvestments, (B) on each Reinvestment Prepayment Date for such Net Cash Proceeds, the Borrower shall pay or cause to be paid to the Paying Agent a prepayment of the outstanding principal amount of the Term Loans in an amount equal to the Reinvestment Prepayment Amount applicable to such Reinvestment Prepayment Date and such Net Cash Proceeds and (C) such Net Cash Proceeds used for Permitted

 

  

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Reinvestments under this Section 2.5(c) does not exceed $50,000 in any Fiscal Year without the prior written consent of the Co-Administrative Agents.  Upon the occurrence and during the continuation of an Event of Default, the Group Members' right to make Permitted Reinvestments shall be suspended and all Net Cash Proceeds described above (including existing Permitted Reinvestments held in the Cash Collateral Accounts) shall, at the direction of the Paying Agent or the Required Lenders (and automatically upon any Event of Default under Section 9.1(e)) be used to prepay the outstanding principal amount of the Term Loans in accordance with Section 2.9 below.

 

(d)  MLA Prepayment Event.  Upon the occurrence of an MLA Prepayment Event, the Borrower shall pay to the Paying Agent as a prepayment on the outstanding principal amount of the Term Loans an amount equal to the MLA Prepayment Amount.  Such principal payment shall be made pursuant to Sections 7.11(d) and (e).

 

Section 2.6  Interest.  (a)  Rate.  All Term Loans shall bear interest on the unpaid principal amount thereof from the Closing Date until paid in full, except as otherwise provided in clause (c) below, as follows: (i) in the case of Base Rate Loans, at a rate per annum equal to the sum of the Base Rate as in effect from time to time and the Applicable Margin, (ii) in the case of Eurodollar Rate Loans, at a rate per annum equal to the sum of the Eurodollar Rate as in effect for the applicable Interest Period and the Applicable Margin and (iii) in the case of other Obligations that are past due and payable, at a rate per annum equal to the sum of the Base Rate as in effect from time to time and the Applicable Margin for Base Rate Loans.

 

(b)  Payments.  Interest accrued shall be payable in arrears (i) if accrued on the principal amount of any Term Loan, (A) at maturity (whether by acceleration or otherwise), (B) upon the payment or prepayment of the principal amount on which such interest has accrued and (C) on each Payment Date commencing with June 15, 2010 and (ii) if accrued on any other Obligation, on demand from and after the time such Obligation is due and payable (whether by acceleration or otherwise).

 

(c)  Default Interest.  Notwithstanding the rates of interest specified in clause (a) above or elsewhere in any Loan Document, effective immediately upon the occurrence of any Event of Default, in each case, for as long as such Event of Default shall be continuing, the principal balance of all Obligations (including any Obligation that bears interest by reference to the rate applicable to any other Obligation) then due and payable shall bear interest at a rate that is two percent (2.00%) per annum in excess of the interest rate applicable to such Obligations from time to time (such interest accrued solely as a result of such excess rate of interest, the "Accrued Default Interest").  Accrued Default Interest shall be payable during the continuance of an Event of Default pursuant to Section 7.11(d) and 7.11(e).  Until such amounts are paid in full, MLA Prepayment Amounts shall bear interest at a per annum rate equal to the sum of (i) the Base Rate in effect from time to time, (ii) the Applicable Margin for Base Rate Loans and (iii) 2.00% per annum.

 

Section 2.7  Conversion and Continuation Options.  (a)  Option.  The Borrower may elect (i) in the case of any Eurodollar Rate Loan, (A) to continue such Eurodollar Rate Loan or any portion thereof for an additional Interest Period on the last day of the Interest Period applicable thereto and (B) to convert such Eurodollar Rate Loan or any portion thereof into a

 

  

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Base Rate Loan at any time on any Business Day, subject to the payment of any breakage costs required by Section 2.13(a), and (ii) in the case of Base Rate Loans, to convert such Base Rate Loans or any portion thereof into Eurodollar Rate Loans at any time on any Business Day upon three (3) Business Days' prior notice; provided, however, that, (x) for each Interest Period, the aggregate amount of Eurodollar Rate Loans having such Interest Period must be an integral multiple of $1,000,000 and (y) no conversion in whole or in part of Base Rate Loans to Eurodollar Rate Loans and no continuation in whole or in part of Eurodollar Rate Loans shall be permitted at any time at which (1) an Event of Default has occurred and is continuing or (2) such continuation or conversion would be made during a suspension imposed by Section 2.12.

 

(b)  Procedure.  Each such election shall be made by giving the Paying Agent at least three (3) Business Days' prior notice in substantially the form of Exhibit D (a "Notice of Conversion or Continuation") duly completed.  The Paying Agent shall promptly notify each Lender of its receipt of a Notice of Conversion or Continuation and of the options selected therein.  If the Paying Agent does not receive a timely Notice of Conversion or Continuation from the Borrower containing a permitted election to continue or convert any Eurodollar Rate Loan, then, upon the expiration of the applicable Interest Period, such Term Loan shall be automatically converted to a Base Rate Loan.  Each partial conversion or continuation shall be allocated ratably among the Lenders in accordance with their Pro Rata Share.

 

Section 2.8  Fees.  The Borrower shall pay all fees described in the Fee Letter in the amount, at the times and to the Persons specified therein.

 

Section 2.9  Application of Payments.  (a) Application of Voluntary Prepayments.  Subject to the provisions of clause (c) below, all voluntary prepayments of principal received by the Paying Agent from the Borrower pursuant to Section 2.4 shall be applied to the remaining scheduled installments of the Term Loans in the order directed by the Borrower.

 

(b)  Application of Mandatory Prepayments.  Subject to the provisions of clause (c) below, any mandatory prepayments of principal made by the Borrower to the Paying Agent pursuant to Section 2.5 shall be applied (i) first, to the ratable payment of the outstanding principal amounts of the Term Loans and all amounts then owing with respect to Secured Hedging Documents and (ii) second, to the ratable payment of all other Obligations.  Payments of the Term Loans made pursuant to clause (i) shall be applied (A) first, to the scheduled installment of the Term Loans due on the Maturity Date until the non-amortized amount of such installment (taking into account all voluntary and mandatory prepayments applied against such installment) is zero, and (B) second, to reduce ratably the remaining scheduled installments of the Term Loans.

 

(c)  Application of Payments During an Event of Default.  The Borrower hereby irrevocably waives, and agrees to cause each Loan Party and each other Group Member to waive, the right to direct the application during the continuance of an Event of Default of any and all payments in respect of any Obligation and any proceeds of Collateral and agrees that, notwithstanding the provisions of clauses (a) and (b) above, the Paying Agent, with the consent of the Collateral Agent, may, and, upon either (i) the direction of the Required Lenders or (ii) the acceleration of any Obligations pursuant to Section 9.2, shall, apply or cause the application of all payments in respect of any Obligation, all funds on deposit in any Cash Collateral Account

 

  

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and all other proceeds of Collateral (A) first, to pay Obligations in respect of any cost or expense reimbursements, fees or indemnities then due to the Paying Agent, (B) second, to pay Obligations in respect of any cost or expense reimbursements, fees or indemnities then due to the other Agents, (C) third, to pay Obligations in respect of any cost or expense reimbursements, fees or indemnities then due to the Lenders, (D) fourth, to pay interest then due and payable in respect of the Term Loans, (E) fifth, to the ratable payment of the outstanding principal amounts of the Term Loans and all amounts then owing with respect to Secured Hedging Documents and (F) sixth, to the ratable payment of all other Obligations.

 

(d)  Application of Payments Generally.  All repayments of any Term Loans shall be applied first, to repay such Term Loans outstanding as Base Rate Loans and then, to repay such Term Loans outstanding as Eurodollar Rate Loans, with those Eurodollar Rate Loans having earlier expiring Interest Periods being repaid prior to those having later expiring Interest Periods.  All repayments of Term Loans shall be applied to reduce the remaining installments of such outstanding principal amounts of the Term Loans in the inverse order of their maturities unless otherwise provided in any Loan Document.  If sufficient amounts are not available to repay all outstanding Obligations described in any priority level set forth in this Section 2.9, the available amounts shall be applied, unless otherwise expressly specified herein, to such Obligations ratably based on the proportion of the Secured Parties' interest in such Obligations.  Any priority level set forth in this Section 2.9 that includes interest shall include all such interest, whether or not accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or similar proceeding, and whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding.  This Section 2.9(d) shall not apply to any Term Loans purchased by Cinedigm pursuant to Section 11.2(g).

 

Section 2.10  Payments and Computations.  (a)  Procedure.  The Borrower shall make each payment under any Loan Document not later than 12:00 noon on the day when due to the Paying Agent by wire transfer to such account or by such other means to such other address as the Paying Agent shall have notified the Borrower in writing within a reasonable time prior to such payment in immediately available Dollars and without setoff or counterclaim.  The Paying Agent shall promptly thereafter cause to be distributed immediately available funds relating to the payment of principal, interest or fees to the Lenders, in accordance with the application of payments set forth in Section 2.9.  The Lenders shall make any payment under any Loan Document in immediately available Dollars and without setoff or counterclaim.  Payments received by the Paying Agent after 12:00 noon shall be deemed to be received on the next Business Day.

 

(b)  Computations of Interests and Fees.  All computations of interest and of fees shall be made by the Paying Agent on the basis of a year of 360 days (or, in the case of Base Rate Loans whose interest rate is calculated based on the rate set forth in clause (a) of the definition of "Base Rate", 365/366 days), in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest and fees are payable.  Each determination of an interest rate or the amount of a fee hereunder shall be made by the Paying Agent (including determinations of a Eurodollar Rate or Base Rate in accordance with the definitions of "Eurodollar Rate" and "Base Rate", respectively) and shall be conclusive, binding and final for all purposes, absent manifest error.

 

  

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(c)  Payment Dates.  Unless otherwise specified herein, whenever any payment hereunder shall be stated to be due on a day other than a Business Day, the due date for such payment shall be extended to the next succeeding Business Day without any increase in such payment as a result of additional interest or fees; provided, however, that such interest and fees shall continue accruing as a result of such extension of time.

 

(d)  Advancing Payments.  Unless the Paying Agent shall have received notice from the Borrower to the Lenders prior to the date on which any payment is due hereunder that the Borrower will not make such payment in full, the Paying Agent may assume that the Borrower has made such payment in full to the Paying Agent on such date and the Paying Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent that the Borrower shall not have made such payment in full to the Paying Agent, each Lender shall repay to the Paying Agent on demand such amount distributed to such Lender together with interest thereon (at the Federal Funds Rate for the first Business Day and thereafter, at the rate applicable to Base Rate Loans) for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Paying Agent.

 

Section 2.11  Evidence of Debt.  (a)  Records of Lenders.  Each Lender shall maintain in accordance with its usual practice accounts evidencing Indebtedness of the Borrower to such Lender resulting from each Term Loan of such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.  In addition, each Lender having sold a participation in any of its Obligations or having identified an SPV as such to the Paying Agent, acting as agent of the Borrower solely for this purpose and solely for tax purposes, shall establish and maintain at its address referred to in Section 11.11 (or at such other address as such Lender shall notify the Borrower) a record of ownership, in which such Lender shall register by book entry (i) the name and address of each such participant and SPV (and each change thereto, whether by assignment or otherwise) and (ii) the rights, interest or obligation of each such participant and SPV in any Obligation, in any Term Loan Commitment and in any right to receive any payment hereunder.

 

(b)  Records of Paying Agent.  The Paying Agent, acting as agent of the Borrower solely for tax purposes and solely with respect to the actions described in this Section 2.11, shall establish and maintain at its address referred to in Section 11.11 (or at such other address as the Paying Agent may notify the Borrower) (i) a record of ownership (the "Register") in which the Paying Agent agrees to register by book entry the interests (including any rights to receive payment hereunder) of the Paying Agent, and each Lender in the Term Loans, and any assignment of any such interest, obligation or right and (ii) accounts in the Register in accordance with its usual practice in which it shall record (A) the names and addresses of the Lenders (and each change thereto pursuant to Section 2.15 and Section 11.2), (B) the Term Loan Commitments of each Lender, (C) the amount of each Term Loan and each funding of any participation described in clause (b)(i) above and for Eurodollar Rate Loans, the Interest Period applicable thereto, (D) the amount of any principal or interest due and payable or paid, and (E) any other payment received by the Paying Agent from the Borrower and its application to the Obligations.

 

  

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(c)  Registered Obligations.  Notwithstanding anything to the contrary contained in this Agreement, the Term Loans (including any Notes evidencing such Term Loans) are registered obligations, the right, title and interest of the Lenders and their assignees in and to such Term Loans shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein.  This Section 2.11 and Section 11.2 shall be construed so that the Term Loans are at all times maintained in "registered form" within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (and any successor provisions).  This Section 2.11(c) shall not apply to any Term Loans purchased by Cinedigm or its Affiliates pursuant to Section 11.2(g).

 

(d)  Prima Facie Evidence.  The entries made in the Register and in the accounts maintained pursuant to clauses (a) and (b) above shall, to the extent permitted by applicable Requirements of Law, be prima facie evidence of the existence and amounts of the obligations recorded therein; provided, however, that no error in such account and no failure of any Lender or the Paying Agent to maintain any such account shall affect the obligations of any Loan Party to repay the Term Loans in accordance with their terms.  In addition, the Loan Parties, the Paying Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender for all purposes of this Agreement.  Information contained in the Register with respect to any Lender shall be available for access by the Borrower, the Paying Agent or such Lender at any reasonable time and from time to time upon reasonable prior notice.  No Lender shall, in such capacity, have access to or be otherwise permitted to review any information in the Register other than information with respect to such Lender unless otherwise agreed by the Paying Agent.

 

(e)  Notes.  Upon any Lender's request, the Borrower shall promptly execute and deliver Notes to such Lender evidencing the Term Loans of such Lender and substantially in the form of Exhibit B; provided, however, that only one Note shall be issued to each Lender, except (i) to an existing Lender exchanging existing Notes to reflect changes in the Register relating to such Lender, in which case the new Notes delivered to such Lender shall be dated the date of the original Notes and (ii) in the case of loss, destruction or mutilation of existing Notes and similar circumstances.  Each Note, if issued, shall only be issued as means to evidence the right, title or interest of a Lender or a registered assignee in and to the related Term Loan, as set forth in the Register, and in no event shall any Note be considered a bearer instrument or obligation.

 

Section 2.12  Suspension of Eurodollar Rate Option.  Notwithstanding any provision to the contrary in this Article II, the following shall apply:

 

(a)  Interest Rate Unascertainable, Inadequate or Unfair.  In the event that (A) the Paying Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rates by reference to which the Eurodollar Rate is determined or (B) the Required Lenders notify the Paying Agent that the Eurodollar Rate for any Interest Period will not adequately reflect the cost to the Lenders of making or maintaining such Term Loans for such Interest Period, the Paying Agent shall promptly so notify the Borrower and the Lenders, whereupon the obligation of each Lender to make or to continue Eurodollar Rate Loans shall be suspended as provided in clause (c) below until the Paying Agent shall notify the Borrower that the Required Lenders have determined that the circumstances causing such suspension no longer

 

  

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exist.  The Paying Agent and the Lenders shall promptly so notify the Borrower once such circumstances no longer exist; provided that the Paying Agent shall not be liable for any failure to give such notice.

 

(b)  Illegality.  If any Lender determines that the introduction of, or any change in or in the interpretation of, any Requirement of Law after the date of this Agreement shall make it unlawful, or any Governmental Authority shall assert that it is unlawful, for any Lender or its applicable lending office to make Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor by such Lender to the Borrower through the Paying Agent, the obligation of such Lender to make or to continue Eurodollar Rate Loans shall be suspended as provided in clause (c) below until such Lender shall, through the Paying Agent, notify the Borrower that it has determined that it may lawfully make Eurodollar Rate Loans.  The Paying Agent and each such Lender shall promptly so notify the Borrower once such circumstances no longer exist; provided that the Paying Agent shall not be liable for any failure to give such notice.

 

(c)  Effect of Suspension.  If the obligation of any Lender to make or to continue Eurodollar Rate Loans is suspended, (A) the obligation of such Lender to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended, (B) such Lender shall make a Base Rate Loan at any time such Lender would otherwise be obligated to make a Eurodollar Rate Loan, (C) the Borrower may revoke any pending Notice of Borrowing or Notice of Conversion or Continuation to make or continue any Eurodollar Rate Loan or to convert any Base Rate Loan into a Eurodollar Rate Loan and (D) each Eurodollar Rate Loan of such Lender shall automatically and immediately (or, in the case of any suspension pursuant to clause (a) above, on the last day of the current Interest Period thereof) be converted into a Base Rate Loan.

 

Section 2.13  Breakage Costs; Increased Costs; Capital Requirements.  (a)  Breakage Costs.  The Borrower shall compensate each Lender, upon demand from such Lender to such Borrower (with copy to the Paying Agent), for all Liabilities (including, in each case, those incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to prepare to fund, to fund or to maintain the Eurodollar Rate Loans of such Lender to the Borrower but excluding any loss of the Applicable Margin on the relevant Term Loans) that such Lender may incur (A) to the extent, for any reason other than solely by reason of such Lender being a Defaulting Lender, a Borrowing, conversion into or continuation of Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of Borrowing or a Notice of Conversion or Continuation or in a similar request made by telephone by the Borrower, (B) to the extent any Eurodollar Rate Loan is paid (whether through a scheduled, optional or mandatory prepayment) or converted to a Base Rate Loan (including because of Section 2.12) on a date that is not the last day of the applicable Interest Period or (C) as a consequence of any failure by the Borrower to repay Eurodollar Rate Loans when required by the terms hereof.  For purposes of this clause (a), each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it using a matching deposit or other borrowing in the London interbank market.

 

(b)  Increased Costs.  If at any time any Lender determines that the adoption of, after the date hereof, or any change, after the date hereof, in or in the interpretation, application or administration of any Requirement of Law (other than any imposition or increase of Eurodollar Reserve Requirements) from any Governmental Authority, or compliance with any

 

  

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such adoption of or any change in, or in the interpretation, application or administration of, any such Requirement of Law shall have the effect of (i) increasing the cost to such Lender of making, funding or maintaining any Eurodollar Rate Loan or to agree to do so or of participating, or agreeing to participate, in extensions of credit or (ii) imposing any other cost to such Lender with respect to compliance with its obligations under any Loan Document, then, upon demand by such Lender (with copy to the Paying Agent), the Borrower shall pay to the Paying Agent for the account of such Lender amounts sufficient to compensate such Lender for such increased cost.

 

(c)  Increased Capital Requirements.  If at any time any Lender determines that the adoption of, after the date hereof, or any change, after the date hereof, in or in the interpretation, application or administration of any Requirement of Law (other than any imposition or increase of Eurodollar Reserve Requirements) from any Governmental Authority, or compliance with any such adoption of or any change in, or in the interpretation, application or administration of, any such Requirement of Law, in each case, regarding capital adequacy, reserves, special deposits, compulsory loans, insurance charges against property of, deposits with or for the account of, Obligations owing to, or other credit extended or participated in by, any Lender or any similar requirement (in each case other than any imposition or increase of Eurodollar Reserve Requirements) shall have the effect of reducing the rate of return on the capital of such Lender as a consequence of its obligations under or with respect to any Loan Document to a level below that which, taking into account the capital adequacy policies of such Lender, such Lender could have achieved but for such adoption or change, then, upon demand from time to time by such Lender (with a copy of such demand to the Paying Agent), the Borrower shall pay to the Paying Agent for the account of such Lender amounts sufficient to compensate such Lender for such reduction.

 

(d)  Compensation Certificate.  Each demand for compensation under this Section 2.13 shall be accompanied by a certificate of the Lender claiming such compensation, setting forth the amounts to be paid hereunder and stating that it is seeking such compensation from its borrowers generally, which certificate shall be conclusive, binding and final for all purposes, absent manifest error.  In determining such amount, such Lender may use any reasonable averaging and attribution methods.

 

Section 2.14  Taxes.  (a)  Payments Free and Clear of Taxes.  Except as otherwise provided in this Section 2.14, each payment by any Loan Party under any Loan Document shall be made free and clear of all present or future taxes, levies, imposts, deductions, charges or withholdings and all liabilities with respect thereto (and without deduction for any of them) (collectively, but excluding the taxes set forth in clauses (i) and (ii) below, the "Taxes") other than for (i) taxes imposed on or measured by net income or profits (including branch profits taxes) and franchise taxes imposed in lieu of net income taxes, in each case imposed on any Secured Party as a result of a present or former connection between such Secured Party and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than such connection arising solely from any Secured Party having executed, delivered or performed its obligations or received a payment under, or enforced, any Loan Document) or (ii) taxes that are directly attributable to the failure (other than as a result of a change in any Requirement of Law) by any Secured Party to deliver the documentation required to be delivered pursuant to clause (f) below.

 

  

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(b)  Gross-Up.  If any Taxes shall be required by law to be deducted from or in respect of any amount payable under any Loan Document to any Secured Party (i) such amount shall be increased as necessary to ensure that, after all required deductions for Taxes are made (including deductions applicable to any increases to any amount under this Section 2.14), such Secured Party receives the amount it would have received had no such deductions been made, (ii) the relevant Loan Party shall make such deductions, (iii) the relevant Loan Party shall timely pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable Requirements of Law and (iv) within 30 days after such payment is made, the relevant Loan Party shall deliver to the Paying Agent an original or certified copy of a receipt evidencing or other evidence reasonably satisfactory to the Paying Agent of such payment; provided, however, that no such increase shall be made with respect to, and no Loan Party shall be required to indemnify any such Secured Party pursuant to clause (d) below for, withholding taxes to the extent that the obligation to withhold amounts existed on the date that such Secured Party became a "Secured Party" under this Agreement in the capacity under which such Secured Party makes a claim under this clause (b), except in each case to the extent such Secured Party is a direct or indirect assignee (other than pursuant to Section 2.15) of any other Secured Party that was entitled, at the time the assignment of such other Secured Party became effective, to receive additional amounts under this clause (b).

 

(c)  Other Taxes.  In addition, the Borrower agrees to pay, and authorizes the Paying Agent to pay in its name, any stamp, documentary, excise or property tax, charges or similar levies imposed by any applicable Requirement of Law or Governmental Authority and all Liabilities with respect thereto (including by reason of any delay in payment thereof), in each case arising from the execution, delivery or registration of, or otherwise with respect to, any Loan Document or any transaction contemplated therein (collectively, "Other Taxes").  Within 30 days after the date of any payment of Taxes or Other Taxes by any Loan Party, the Borrower shall furnish to the Paying Agent, at its address referred to in Section 11.11, the original or a certified copy of a receipt evidencing or other evidence reasonably satisfactory to the Paying Agent of payment thereof.

 

(d)  Indemnification.  The Borrower shall reimburse and indemnify, within 30 days after receipt of demand therefor (with copy to the Paying Agent), each Secured Party for all Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 2.14) paid by such Secured Party and any Liabilities arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted.  A certificate of the Secured Party (or of the Paying Agent on behalf of such Secured Party) claiming any compensation under this clause (d), setting forth the amounts to be paid thereunder and delivered to the Borrower with copy to the Paying Agent, shall be conclusive, binding and final for all purposes, absent manifest error; provided, that such Secured Party shall reasonably cooperate with the Borrower, at Borrower's expense, in contesting any such Taxes or Other Taxes that the Borrower determines in good faith to have not been correctly or legally asserted.  In determining such amount, the Paying Agent and such Secured Party may use any reasonable averaging and attribution methods.

 

(e)  Mitigation.  Any Lender claiming any additional amounts payable pursuant to this Section 2.14 shall use its reasonable efforts (consistent with its internal policies and Requirements of Law) to change the jurisdiction of its lending office if such a change would

 

  

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reduce any such additional amounts (or any similar amount that may thereafter accrue) and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender.

 

(f)  Tax Forms.  (i)  Each Non-U.S. Lender Party shall (w) on or prior to the date such Non-U.S. Lender Party becomes a "Non-U.S. Lender Party" hereunder, (x) on or prior to the date on which any such form or certification expires or becomes obsolete, (y) after the occurrence of any event requiring a change in the most recent form or certification previously delivered by it pursuant to this clause (i) and (z) from time to time if requested by the Borrower or the Paying Agent (or, in the case of a participant or SPV, the relevant Lender), provide the Paying Agent and the Borrower (or, in the case of a participant or SPV, the relevant Lender) with two completed originals of each of the following, as applicable:  (A) Forms W-8ECI (claiming complete exemption from U.S. withholding tax because the income is effectively connected with a U.S. trade or business), W-8BEN (claiming complete exemption from U.S. withholding tax under an income tax treaty) or any successor forms, (B) in the case of a Non-U.S. Lender Party claiming exemption under Sections 871(h) or 881(c) of the Code, Form W-8BEN (claiming exemption from U.S. withholding tax under the portfolio interest exemption) or any successor form and a certificate in form and substance acceptable to the Paying Agent that such Non-U.S. Lender Party is not (1) a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (2) a "10 percent shareholder" of the Borrower within the meaning of Section 881(c)(3)(B) of the Code or (3) a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Code or (C) any other applicable document prescribed by the IRS certifying as to the entitlement of such Non-U.S. Lender Party to such exemption from United States withholding tax with respect to all payments to be made to such Non-U.S. Lender Party under the Loan Documents.  Unless the Borrower and the Paying Agent have received forms or other documents satisfactory to them indicating that payments under any Loan Document to or for a Non-U.S. Lender Party are not subject to United States withholding tax, the Loan Parties and the Paying Agent shall withhold amounts required to be withheld by applicable Requirements of Law from such payments at the applicable statutory rate, and the relevant Loan Party shall not be obligated pursuant to clause (b) to gross-up payments to be made to such Non-U.S. Lender Party in respect of income or similar taxes imposed by the United States or pursuant to clause (d) to indemnify such Non-U.S. Lender Party in respect thereto; provided, however, that a Non-U.S. Lender Party shall not be obligated to deliver such forms if after the date it becomes a Non-U.S. Lender Party it no longer legally qualifies for an exemption from tax; and, provided, further, that the relevant Loan Party will be obligated to gross-up payments to such Non-U.S. Lender Party only if the reason for such Non-U.S. Lender Party's inability to claim an exemption (or a full exemption) from tax results from a change-in-law arising after it becomes a Non-U.S. Lender Party.

 

(ii)  Each U.S. Lender Party shall (A) on or prior to the date such U.S. Lender Party becomes a "U.S. Lender Party" hereunder, (B) on or prior to the date on which any such form or certification expires or becomes obsolete, (C) after the occurrence of any event requiring a change in the most recent form or certification previously delivered by it pursuant to this clause (f) and (D) from time to time if requested by the Borrower or the Paying Agent (or, in the case of a participant or SPV, the relevant Lender), provide the Paying Agent and the Borrower (or, in the case of a participant or SPV, the relevant Lender) with two completed originals of Form W-9

 

  

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(certifying that such U.S. Lender Party is entitled to an exemption from U.S. backup withholding tax) or any successor form.

 

(iii)  Each Lender having sold a participation in any of its Obligations or identified an SPV as such to the Paying Agent shall collect from such participant or SPV the documents described in this clause (f) and provide them to the Paying Agent.

 

(g)  Refunds. If the Paying Agent or a Lender determines in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay over to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Paying Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Paying Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Paying Agent or such Lender in the event the Paying Agent or such Lender is required to repay such refund to such Governmental Authority.  This Section shall not be construed to require the Paying Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

 

Section 2.15  Substitution of Lenders.  (a)  Substitution Right.  In the event that any Lender (an "Affected Lender"), (i) makes a claim under clause (b) or (c) of Section 2.13, (ii) notifies the Paying Agent pursuant to Section 2.12(b) that it becomes illegal for such Lender to continue to fund or make any Eurodollar Rate Loan, (iii) makes a claim for payment pursuant to Section 2.14(b), (iv) becomes a Defaulting Lender or (v) does not consent to any amendment, waiver or consent to any Loan Document for which the consent of the Required Lenders is obtained but that requires the consent of other Lenders, the Borrower may either pay in full such Affected Lender with respect to amounts due with the consent of the Paying Agent or substitute for such Affected Lender any Lender or any Affiliate or Approved Fund of any Lender or any other Person acceptable (which acceptance shall not be unreasonably withheld or delayed) to the Paying Agent (in each case, a "Substitute Lender").

 

(b)  Procedure.  To substitute such Affected Lender or pay in full the Obligations owed to such Affected Lender, the Borrower shall deliver a notice to the Paying Agent and such Affected Lender.  The effectiveness of such payment or substitution shall be subject to the delivery to the Paying Agent by the Borrower (or, as may be applicable in the case of a substitution, by the Substitute Lender) of (i) payment for the account of such Affected Lender, of, to the extent accrued through, and outstanding on, the effective date for such payment or substitution, all Obligations owing to such Affected Lender (including those that will be owed because of such payment and all Obligations that would be owed to such Lender if it was solely a Lender) and (ii) in the case of a substitution, (A) payment of the assignment fee set forth in Section 11.2(c) and (B) an Assignment whereby the Substitute Lender shall, among other things, agrees to be bound by the terms of the Loan Documents and assume the Term Loans of the Affected Lender.

 

  

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(c)  Effectiveness.  Upon satisfaction of the conditions set forth in clause (b) above, the Paying Agent shall record such substitution or payment in the Register, whereupon (i) the Affected Lender shall sell and be relieved of, and the Substitute Lender shall purchase and assume, all rights and claims of such Affected Lender under the Loan Documents, except that the Affected Lender shall retain such rights expressly providing that they survive the repayment of the Obligations, (ii) the Substitute Lender shall become a "Lender" hereunder holding the outstanding Term Loans of such Affected Lender and (iii) the Affected Lender shall execute and deliver to the Paying Agent an Assignment to evidence such substitution and deliver any Note in its possession; provided, however, that the failure of any Affected Lender to execute any such Assignment or deliver any such Note shall not render such sale and purchase (or the corresponding assignment) invalid.

 

ARTICLE III

CONDITIONS TO TERM LOANS

 

Section 3.1  Conditions Precedent to Term Loans.  The obligation of each Lender to make any Term Loan hereunder is subject to the satisfaction or due waiver of each of the following conditions precedent on or before May 31, 2010.

 

(a)  Certain Documents.  The Co-Administrative Agents shall have received on or prior to the Closing Date each of the following, each dated the Closing Date (or such other date as may be indicated below) unless otherwise agreed by the Co-Administrative Agents, in form and substance satisfactory to the Paying Agent and each Lender:

 

(i)  this Agreement duly executed by the Borrower and each Guarantor and, for the account of each Lender requesting the same by notice to the Paying Agent and the Borrower received by each at least three (3) Business Days prior to the Closing Date (or such later date as may be agreed by the Borrower), Notes conforming to the requirements set forth in Section 2.11(e);

 

(ii)  the Guaranty and Security Agreement, duly executed by each Guarantor, and the Pledge Agreements, duly executed by Holdings and Christie, as applicable, together with (A) copies of UCC, tax, judgment lien, Intellectual Property and other appropriate search reports and of all effective prior filings listed therein, together with evidence of the termination of such prior filings and other documents with respect to the priority of the security interest of the Collateral Agent in the Collateral, in each case, as may be reasonably requested by the Paying Agent or the Collateral Agent, (B) all documents representing all Securities being pledged pursuant to such Guaranty and Security Agreement and the Pledge Agreements and related undated powers or endorsements duly executed in blank and (C) all Control Agreements in favor of the Collateral Agent that, in the reasonable judgment of the Co-Administrative Agents, are required for the Loan Parties to comply with the Loan Documents as of the Closing Date, each duly executed by, in addition to the applicable Loan Party, the applicable Deposit Bank;

 

(iii)  duly executed opinions of counsel to the Loan Parties, each addressed to the Paying Agent, the Collateral Agent, the Co-Administrative Agents and

 

  

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the Lenders and addressing such matters as the Paying Agent or Lenders may reasonably request (including, without limitation, non-consolidation, true sale and corporate separateness opinions);

 

(iv)  to the extent required by Article II, a written, timely and duly executed and completed Notice of Borrowing;

 

(v)  a copy of each Constituent Document of each Loan Party that is on file with any Governmental Authority in any jurisdiction, amended as reasonably required by the Co-Administrative Agents to obtain the Debt Rating referred to in Section 3.1(j) and certified as of a recent date by such Governmental Authority, together with, if applicable, certificates attesting to the good standing of such Loan Party in its jurisdiction of organization and each other jurisdiction where such Loan Party is qualified to do business as a foreign entity or where such qualification is necessary (and, if appropriate in any such jurisdiction, related tax certificates);

 

(vi)  a certificate of the secretary or other officer of each Loan Party in charge of maintaining books and records of such Loan Party certifying as to (A) the names and signatures of each officer of such Loan Party authorized to execute and deliver any Loan Document, (B) the Constituent Documents of such Loan Party attached to such certificate are complete and correct copies of such Constituent Documents as in effect on the date of such certification and (C) the resolutions of such Loan Party's board of directors or other appropriate governing body approving and authorizing the execution, delivery and performance of each Loan Document to which such Loan Party is a party;

 

(vii)  a certificate of the President, Chief Executive Officer or Chief Financial Officer of the Borrower certifying that as of the Closing Date and both before and after giving effect to the funding of the Term Loans: (A) the representations and warranties of the Loan Parties set forth in any Loan Document shall be true and correct on and as of such date, (B) each Loan Party is Solvent after giving effect to the funding of the Term Loans pursuant to Section 2.1, the application of the proceeds thereof in accordance with Section 7.9 and the payment of all estimated legal, accounting and other fees and expenses related hereto and (C) no Default has occurred and is continuing;

 

(viii)  insurance certificates in form and substance satisfactory to the Collateral Agent demonstrating that the insurance policies required by Section 7.5 (other than any insurance policies in respect of equipment subject to an Exhibitor Agreement which policies are maintained by the applicable Approved Exhibitor in accordance with the terms of such Exhibitor Agreement) are in full force and effect and have all terms required by Section 7.5;

 

(ix)  a certificate of a Responsible Officer of the Borrower certifying true, complete and correct executed copies of all material contracts attached to such certificate and in effect as of the Closing Date (including, without limitation, (A) all Exhibitor Agreements, (B) all Digital Cinema Deployment Agreements, (C) software license agreements between the Borrower and Holdings, including, without limitation, the Software License Agreement dated as of May 6, 2010 by and between Holdings and

 

  

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the Borrower, (D) all Intercompany Agreements, (E) the Management Services Agreement and (F) all material employment agreements, and that each such material contract is in full force and effect and the Borrower is in compliance with all such material contracts as of the Closing Date;

 

(x)  a Budget for the period following the Closing Date through March 31, 2011;

 

(xi)  the Consents, duly executed by the respective Distributors;

 

(xii)  consents, waivers, acknowledgements and other agreements from any Loan Party or third parties which the Paying Agent or the Collateral Agent may deem necessary in order to permit, protect or perfect the Collateral Agent's security interests in and Liens upon the Collateral and to effectuate the provisions of this Agreement and the other Loan Documents, including, without limitation, mortgagee or landlord waivers, estoppel certificates, bailee letters, consignment notices and other similar agreements; and

 

(xiii)  a certificate of a Responsible Officer of the Borrower setting forth a detailed report of the locations and status of operation of all Digital Systems as of the Closing Date and attaching copies of all Digital Cinema Installation Certificates executed by Christie Digital Systems USA, Inc. confirming as of the Closing Date the delivery, installation and operation of such Digital Systems.

 

(b)  Fees and Expenses.  There shall have been paid to the Paying Agent, for the account of the applicable Person all fees and all reimbursements of costs or expenses, in each case due and payable under any Loan Document on or before the Closing Date.

 

(c)  Copies of Sale and Contribution Agreement.  The Co-Administrative Agents shall have received fully executed copies of the Sale and Contribution Agreement and all documents executed in connection therewith (including all documents providing for the assignment by Christie to the Borrower of all agreements relating to the Digital Systems to which Christie is a party and all other agreements that are purported to be conveyed to the Borrower pursuant to the Sale and Contribution Agreement) and such documents shall not have been altered, amended or otherwise modified or supplemented without the prior written consent of the Co-Administrative Agents.

 

(d)  Consummation of Sale and Contribution Agreement; Refinancing of Existing Facility; Release of Liens.  The Co-Administrative Agents shall have received written evidence satisfactory to them and their counsel that substantially concurrent with the funding of the Term Loans (i) the transactions contemplated by the Sale and Contribution Agreement shall have been consummated in accordance with terms thereof, (ii) all amounts due to the Existing Secured Parties under the Existing Facility and the related loan documents (other than indemnification obligations not yet due and payable that expressly survive the termination thereof) will be paid in full, (iii) all Liens in favor of the Existing Administrative Agent for the benefit of the Existing Secured Parties shall have been irrevocably released, and (iv) all

 

  

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obligations of Christie under the Subordinated Loan Agreement dated as of August 9, 2007 between Christie and Christie Digital Systems, Inc. have been paid in full.

 

(e)  Pro Forma Certificate.

 

(i)  Pro Forma Ratios.  The Co-Administrative Agents shall have received an officer's certificate from the Chief Financial Officer of Cinedigm and the Chief Financial Officer of the Borrower demonstrating as of the Closing Date for the trailing twelve-month period ending December 31, 2009 and after adjusting and giving effect on a pro forma basis to the provisions of the Management and Services Agreement (i) a pro forma Consolidated EBITDA of the Group Members (the "Closing EBITDA") that is not less than $39,700,000, (ii) a ratio of pro forma Consolidated Total Debt of the Group Members to Closing EBITDA of no more than 4.35:1.00 and (iii) a pro forma Consolidated Fixed Charge Coverage Ratio of less than 1.10 to 1.  Such certificate shall be addressed to the Lenders in form and substance satisfactory to the Co-Administrative Agents and accompanied by the Initial Financial Statements.

 

(ii)  Calculations of Pro Forma Ratios.

 

(A)  For purposes of calculating Closing EBITDA for the trailing twelve-month period ending December 31, 2009, the pro forma Consolidated EBITDA of the Group Members shall be calculated using the revenues and operating expenses of Christie and its Subsidiaries (including the Borrower) for such twelve-month period and the Servicing Fee for such period shall be deemed to be 5% of such revenues.

 

(B)  For purposes of calculating the pro forma Consolidated Fixed Charge Coverage Ratio for the trailing twelve-month period ending December 31, 2009, (1) pro forma Consolidated Debt Service shall be determined as follows: (I) pro forma Consolidated Cash Interest Expense shall be calculated based on the assumption that the Term Loans made on the Closing Date had accrued interest at the interest rate in effect on the Closing Date for the full twelve-month period ending December 31, 2009 and (II) scheduled principal payments during such twelve month period shall equal the product of (a) scheduled principal payments payable on the Term Loans during the three-month period following the Closing Date and (b) 4, (2) pro forma Capital Expenditures during the twelve-month period shall be deemed to be $50,000 and (3) pro forma Consolidated Income Tax Liability shall be calculated using the Consolidated Income Tax Liability of Christie and its Subsidiaries (including the Borrower) for such twelve-month period.

 

(f)  Pro Forma Balance Sheet; Business Plan.  The Paying Agent and the Lenders shall have received and be satisfied with (i) a pro forma estimated balance sheet of the Group Members as of the Closing Date after giving effect to the transactions contemplated hereby (including without limitation the Management Services Agreement), (ii) recent screen turnover data, and (iii) the Borrower's business plan which shall include the Initial Projections.

 

  

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(g)  Consents.  Each Group Member shall have received all consents and authorizations required pursuant to any material Contractual Obligation with any other Person and shall have obtained all Permits of, and effected all notices to and filings with, any Governmental Authority, in each case, as may be necessary in connection with the consummation of the transactions contemplated in any Loan Document.

 

(h)  Material Adverse Effect.  Since March 31, 2009, there shall not have occurred or become known to either Co-Administrative Agent any event, development or circumstance that has caused or could reasonably be expected to cause a Material Adverse Effect or any material adverse condition or material adverse change in or affecting the industry in which Cinedigm or the Loan Parties operate.

 

(i)  Litigation.  No litigation shall have been commenced which would challenge the transactions contemplated hereunder or which, if successful, would have a material adverse impact on the transactions contemplated hereunder, the Borrower, its business or its ability to repay the Term Loans.

 

(j)  Minimum Operating Cash Balance.  The Co-Administrative Agents shall have received the evidence in form reasonably satisfactory to them that as of the Closing Date (i) the Operating Account has a minimum cash balance of $500,000 and (ii) the Collection Account has a minimum cash balance of $3,250,000.

 

(k)  Debt Rating.  A Debt Rating of Ba1 or higher shall have been received from Moody's.

 

(l)  Cash Management.  The Co-Administrative Agents shall be satisfied that the Borrower shall have established a cash management system consistent with Section 7.11.

 

(m)  New Information.  There shall not have occurred or become known to either Co-Administrative Agent since April 20, 2010 any information or other matter affecting any Loan Party or any of its Affiliates or the transactions contemplated by the Loan Documents that, in the Paying Agent's judgment, is inconsistent in a material and adverse manner with any such information or other matter disclosed to the Paying Agent prior to such date;

 

(n)  Corporate Structure, Etc.  The management, corporate structure, capital structure, other instruments governing Indebtedness, material contracts and governing documents of the Group Members shall be acceptable to the Co-Administrative Agents.

 

(o)  IP Escrow; Licenses.  The Paying Agent and the Lenders shall be satisfied that the escrow arrangements contemplated in Section 6 of the Management Services Agreement with respect to Intellectual Property necessary to properly support the Digital Systems and otherwise perform the Services (as defined therein) shall have been consummated.  The Collateral Agent shall have received license agreements, in form and substance acceptable to the Co-Administrative Agents, with respect to the software subject to such escrow.

 

(p)  Termination of Existing Hedges.  The Paying Agent and the Lenders shall be satisfied that all Existing Secured Hedging Documents, related obligations (including all application termination payment), all "Secured Hedging Support Documents" as defined in the

 

  

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Existing Facility and all "Secured Hedging Reimbursement Obligations" as defined in the Existing Facility shall have been terminated and paid in full, as applicable.

 

(q)  Payment of Past-Due Obligations to Cinedigm.  The Paying Agent and the Lenders shall be satisfied that substantially concurrent with the funding of the Term Loans, Cinedigm will receive payment from the Borrower in an amount not to exceed the lesser of (i) the amount determined to be necessary to satisfy intercompany payment obligations in connection with the establishment by the Borrower of corporate separateness from Cinedigm and (ii) $5,000,000 which payment (A) may be paid from cash on hand prior to the Closing Date or from proceeds of the Term Loans and (B) shall satisfy in full all unreimbursed expenses and fees (including any servicing fees) owing by Christie or the Borrower to Cinedigm for services rendered prior to the Closing Date.  Such expenses and fees and payment thereof shall be evidenced by documentation reasonably satisfactory to the Co-Administrative Agents which documentation shall provide, among other things, that payment of such expenses and fees satisfies in full all unreimbursed expenses and fees owing by Christie or the Borrower to Cinedigm for services rendered prior to the Closing Date.

 

(r)  Agreed Upon Procedures.  The Co-Administrative Agents and the Borrower have agreed with the Group Members' Accountants on procedures relating to adjustments to the audited financial statements to be delivered pursuant to Section 6.1(c) to reflect the figures used to calculate Consolidated EBITDA as defined herein.

 

(s)  Additional Matters.  The Co-Administrative Agents shall have received such additional documents and information as any Lender, through the Co-Administrative Agents, may reasonably request.

 

Section 3.2  Determinations of Initial Borrowing Conditions.  For purposes of determining compliance with the conditions specified in Section 3.1, each Lender shall be deemed to be satisfied with each document and each other matter required to be satisfactory to such Lender upon delivery of its executed signature page to this Agreement to the Paying Agent unless, prior to the Closing Date, the Paying Agent receives notice from such Lender specifying such Lender's objections and such Lender has not made available its Pro Rata Share of any Borrowing scheduled to be made on the Closing Date.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders and the Agents to enter into the Loan Documents, the Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) represents and warrants to each of them each of the following as of the Closing Date:

 

Section 4.1  Corporate Existence; Compliance with Law.  Each of Holdings and each Group Member (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) is duly qualified to do business as a foreign entity and in good standing under the laws of each jurisdiction where such qualification is necessary, except where the failure to be so qualified or in good standing would not, in the aggregate, have a Material Adverse Effect, (c) has all requisite power and authority and the legal right to own, pledge,

 

  

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mortgage and operate its property, to lease or sublease any property it operates under lease or sublease and to conduct its business as now or currently proposed to be conducted, (d) is in compliance with its Constituent Documents, (e) is in compliance with all applicable Requirements of Law except where the failure to be in compliance would not have a Material Adverse Effect and (f) has all necessary Permits from or by, has made all necessary filings with, and has given all necessary notices to, each Governmental Authority having jurisdiction, to the extent required for such ownership, lease, sublease, operation, occupation or conduct of its business, except where the failure to obtain such Permits, make such filings or give such notices would not, in the aggregate, have a Material Adverse Effect.

 

Section 4.2  Power and Authority; No Conflicts; Due Execution, Delivery and Enforceability.  (a)  Power and Authority; No Conflicts.  The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party and the consummation of the transactions contemplated therein (i) are within such Loan Party's corporate or similar powers and, at the time of execution thereof, shall have been duly authorized by all necessary corporate or similar action (including, if applicable, consent of holders of its Securities), (ii) do not (A) contravene such Loan Party's Constituent Documents, (B) violate any applicable Requirement of Law, (C) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material Contractual Obligation of any Loan Party or any of its Subsidiaries (including other Loan Documents) other than those that (1) would not, in the aggregate, have a Material Adverse Effect and (2) are not created or caused by, or a conflict, breach, default or termination or acceleration event under, any Loan Document or (D) result in the imposition of any Lien (other than a Permitted Lien) upon any property of any Loan Party or any of its Subsidiaries and (iii) do not require any Permit of, or filing with, any Governmental Authority or any consent of, or notice to, any Person, other than (A) with respect to the Loan Documents, the filings required to perfect the Liens created by the Loan Documents and (B) those listed on Schedule 4.2 and that have been, or will be prior to the Closing Date, obtained or made, copies of which have been, or will be prior to the Closing Date, delivered to the Paying Agent, and each of which on the Closing Date will be in full force and effect.

 

(b)  Due Execution, Delivery and Enforceability.  From and after its delivery to the Paying Agent, each Loan Document (i) has been duly executed and delivered to the other parties thereto by each Loan Party party thereto and (ii) is the legal, valid and binding obligation of such Loan Party enforceable against such Loan Party in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and the effects of general principles of equity.

 

Section 4.3  Ownership of Group Members.  Set forth on Schedule 4.3 is a complete and accurate list showing for each Group Member and each Subsidiary of any Group Member and each joint venture of any of them, its jurisdiction of organization, the number of shares of each class of Stock authorized (if applicable), the number outstanding on the Closing Date and the number and percentage of the outstanding shares of each such class owned (directly or indirectly) by the Borrower and, in the case of the Stock of the Borrower, Holdings.  All outstanding Stock of each of them has been validly issued, is fully paid and non-assessable (to the extent applicable) and is owned beneficially and of record by a Group Member (or, in the case of the Borrower, by Holdings) free and clear of all Liens other than the security interests

 

  

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created by the Loan Documents and non-consensual Permitted Liens.  There are no Stock Equivalents with respect to the Stock of any Group Member or any Subsidiary of any Group Member or any joint venture of any of them as of the Closing Date, except as set forth on Schedule 4.3.  Except as provided in the Constituent Documents delivered to the Paying Agent on or prior to the Closing Date, there are no Contractual Obligations or other understandings to which Holdings, any Group Member, any Subsidiary of any Group Member or any joint venture of any of them is a party with respect to (including any restriction on) the issuance, voting, Sale or pledge of any Stock or Stock Equivalent of any Group Member or any such Subsidiary or joint venture.

 

Section 4.4  Financial Statements.  (a)  Subject to the absence of footnote disclosure and normal recurring year-end audit adjustments, each of the Initial Financial Statements fairly present in all material respects the Consolidated financial position, results of operations and cash flow of the Group Members and Cinedigm, as applicable, as at the date indicated and for the period indicated in accordance with GAAP.

 

(b)  On the Closing Date, (i) no Group Member has any material liability or other obligation (including Indebtedness, Guaranty Obligations, contingent liabilities and liabilities for taxes, long-term leases and unusual forward or long-term commitments) that is not reflected in the Financial Statements referred to in clause (a) above or in the notes thereto and not otherwise permitted by this Agreement and (ii) since the date of the Financial Statements referenced in clause (a) above, there has been no Sale of any material property of the Group Members and no purchase or other acquisition of any material property.

 

(c)  The Initial Projections have been prepared by the Borrower, in consultation with Cinedigm, as administrative servicer, in light of the operations of the business of the Group Members and reflect projections for the 7 year period beginning on the Closing Date on a quarterly basis for the first year and on a year by year basis thereafter.  As of the Closing Date, the Initial Projections are based upon estimates and assumptions stated therein, all of which the Borrower believes to be reasonable and fair in light of conditions and facts known to such Persons as of the Closing Date and reflect the good faith, reasonable and fair estimates by such Persons of the future consolidated financial performance of the Group Members and the other information projected therein for the periods set forth therein.

 

Section 4.5  Material Adverse Effect.  Since March 31, 2009, there have been no events, circumstances, developments or other changes in facts that would, in the aggregate, have a Material Adverse Effect.

 

Section 4.6  Solvency.  Both before and after giving effect to (a) the Term Loans made on or prior to the date this representation and warranty is made, (b) the disbursement of the proceeds of such Term Loans and (c) the payment and accrual of all transaction costs in connection with the foregoing, each of the Loan Parties is Solvent.

 

Section 4.7  Litigation.  There are no pending (or, to the knowledge of any Group Member, threatened) actions, investigations, suits, proceedings, audits, claims, demands, orders or disputes affecting any Group Member with, by or before any Governmental Authority other than those that (a) cannot reasonably be expected to affect the Obligations, the Loan Documents,

 

  

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the other transactions contemplated therein, any Digital Cinema Deployment Agreement, any Exhibitor Agreement, any Service Agreement or the Management Services Agreement and (b) would not have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.8  Taxes.  All federal and material state, local and foreign income and franchise and other tax returns, reports and statements (collectively, the "Tax Returns") required to be filed by any Tax Affiliate have been filed with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax Returns are true and correct in all material respects, and all taxes, charges and other impositions reflected therein or otherwise due and payable have been paid prior to the date on which any Liability may be added thereto for non-payment thereof (except for those contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Tax Affiliate in accordance with GAAP).  No Tax Return is under audit or examination by any Governmental Authority and no notice of such an audit or examination or any assertion of any claim for Taxes has been given or made by any Governmental Authority, except such audit, examination or claim as could not, if adversely determined, reasonably be expected to have a Material Adverse Effect.  Proper and accurate amounts have been withheld by each Tax Affiliate from their respective employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable Requirements of Law and such withholdings have been timely paid to the respective Governmental Authorities.  No Tax Affiliate has participated in a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4(b) or has been a member of an affiliated, combined or unitary group other than the group of which a Tax Affiliate is the common parent.

 

Section 4.9  Margin Regulations.  None of the Group Members is engaged in the business of extending credit for the purpose of, and no proceeds of any Term Loan or other extensions of credit hereunder will be used for the purpose of, buying or carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board) or extending credit to others for the purpose of purchasing or carrying any such margin stock, in each case in contravention of Regulation T, U or X of the Federal Reserve Board.

 

Section 4.10  No Burdensome Obligations; No Defaults.  No Group Member is a party to any Contractual Obligation, no Group Member has Constituent Documents containing obligations, and, to the knowledge of any Group Member, there are no applicable Requirements of Law, in each case the compliance with which would have, in the aggregate, a Material Adverse Effect.  No Group Member (and, to the knowledge of each Group Member, no other party thereto) is in default under or with respect to any Contractual Obligation of any Group Member, which Contractual Obligation is material to the operation of the Group Member's business and which default gives the applicable third party the right to terminate such Contractual Obligation.

 

Section 4.11  Investment Company Act.  No Group Member is an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act of 1940.

 

Section 4.12  Labor Matters.  There are no strikes, work stoppages, slowdowns or lockouts existing, pending (or, to the knowledge of any Group Member, threatened) against or

 

  

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involving any Group Member, except, for those that would not, in the aggregate, have a Material Adverse Effect.  As of the Closing Date, (a) there is no collective bargaining or similar agreement with any union, labor organization, works council or similar representative covering any employee of any Group Member, (b) no petition for certification or election of any such representative is existing or pending with respect to any employee of any Group Member and (c) no such representative has sought certification or recognition with respect to any employee of any Group Member.

 

Section 4.13  ERISA.  Schedule 4.13 sets forth, as of the Closing Date, a complete and correct list of, and that separately identifies, (a) all Title IV Plans, (b) all Multiemployer Plans and (c) all material Benefit Plans.  Each Benefit Plan, and each trust thereunder, intended to qualify for tax exempt status under Section 401 or 501 of the Code or other Requirements of Law so qualifies.  Except for those that would not, in the aggregate, have a Material Adverse Effect, (x) each Benefit Plan is in compliance with applicable provisions of ERISA, the Code and other Requirements of Law, (y) there are no existing or pending (or to the knowledge of any Group Member, threatened) claims (other than routine claims for benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigation involving any Benefit Plan to which any Group Member incurs or otherwise has or could have an obligation or any Liability and (z) no ERISA Event is reasonably expected to occur.  On the Closing Date, no ERISA Event has occurred in connection with which obligations and liabilities (contingent or otherwise) remain outstanding.  No ERISA Affiliate would have any Withdrawal Liability as a result of a complete withdrawal from any Multiemployer Plan on the date this representation is made.  No ERISA Affiliate has incurred any liability under Title IV of ERISA that remains outstanding (other than PBGC premiums due but not delinquent).

 

Section 4.14  Environmental Matters.  Except as set forth on Schedule 4.14, (a) the operations of each Group Member are and have been in compliance with all applicable Environmental Laws, including obtaining, maintaining and complying with all Permits required by any applicable Environmental Law, other than non-compliances that, in the aggregate, would not have a reasonable likelihood of resulting in Material Environmental Liabilities, (b) no Group Member is party to, and no Group Member and no real property currently (or to the knowledge of any Group Member previously) owned, leased, subleased, operated or otherwise occupied by or for any Group Member is subject to or the subject of, any Contractual Obligation or any pending (or, to the knowledge of any Group Member, threatened) order, action, investigation, suit, proceeding, audit, claim, demand, dispute or notice of violation or of potential liability or similar notice under or pursuant to any Environmental Law other than those that, in the aggregate, are not reasonably likely to result in Material Environmental Liabilities, (c) no Lien in favor of any Governmental Authority securing, in whole or in part, Environmental Liabilities has attached to any property of any Group Member and, to the knowledge of each Group Member, no facts, circumstances or conditions exist that could reasonably be expected to result in any such Lien attaching to any such property, (d) no Group Member has caused or suffered to occur a Release of Hazardous Materials at, to or from any real property of any Group Member and each such real property is free of contamination by any Hazardous Materials except for such Release or contamination that could not reasonably be expected to result, in the aggregate, in Material Environmental Liabilities, (e) no Group Member (i) is or has been engaged in, or has permitted any current or former tenant to engage in, operations, or (ii) knows of any facts, circumstances or conditions, including receipt of any information request or notice of potential responsibility

 

  

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under CERCLA or other Environmental Laws, that, in the aggregate, would have a reasonable likelihood of resulting in Material Environmental Liabilities and (f) each Group Member has made available to the Paying Agent copies of all existing environmental reports, reviews and audits and all documents pertaining to actual or potential Environmental Liabilities, in each case to the extent such reports, reviews, audits and documents are in their possession, custody or control.

 

Section 4.15  Intellectual Property.  Each Group Member owns or licenses all material Intellectual Property that is necessary for the operations of its business.  To the knowledge of each Group Member, (a) the conduct and operation of the business of each Group Member does not infringe, misappropriate, dilute, violate or otherwise impair any Intellectual Property owned by any other Person and (b) no other Person has contested any right, title or interest of any Group Member in, or relating to, any Intellectual Property, other than, in each case, as would not, in the aggregate, have a Material Adverse Effect.  In addition, (x) there are no pending (or, to the knowledge of any Group Member, threatened) actions, investigations, suits, proceedings, audits, claims, demands, orders or disputes affecting any Group Member with respect to, (y) no judgment or order regarding any such claim has been rendered by any competent Governmental Authority, no settlement agreement or similar Contractual Obligation has been entered into by any Group Member, with respect to and (z) no Group Member knows or has any reason to know of any valid basis for any claim based on, any such infringement, misappropriation, dilution, violation or impairment or contest, other than, in each case, as would not, in the aggregate, have a Material Adverse Effect.

 

Section 4.16  Title; Real Property.  (a) Each Group Member has good and marketable fee simple title to all owned real property and valid leasehold interests in all leased real property, and owns all personal property, in each case that is purported to be owned or leased by it, including those reflected on the most recent Financial Statements delivered by the Borrower, and none of such property is subject to any Lien except Permitted Liens.

 

(b)  Set forth on Schedule 4.16 is, as of the Closing Date, (i) a complete and accurate list of all real property owned in fee simple by any Group Member or in which any Group Member owns a leasehold interest setting forth, for each such real property, the current street address (including, where applicable, county, state and other relevant jurisdictions), the record owner thereof and, where applicable, each lessee and sublessee thereof, (ii) any lease, sublease, license or sublicense of such real property by any Group Member and (iii) for each such real property that the Collateral Agent or the Paying Agent has requested be subject to a Mortgage or that is otherwise material to the business of any Group Member, each Contractual Obligation by any Group Member, whether contingent or otherwise, to Sell such real property.

 

Section 4.17  Full Disclosure.  The written information prepared or furnished by or on behalf of (and with the consent or at the direction of) Cinedigm, Holdings or any Group Member in connection with any Loan Document (including the information contained in any Financial Statement or Disclosure Document) or the consummation of any transaction contemplated therein, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light of the circumstances when made, not misleading in any material respect; provided, however, that projections contained therein are not to be viewed as factual and that actual results during the periods covered thereby may differ from

 

  

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the results set forth in such projections by a material amount.  All projections that are part of such information (including those set forth in any Projections delivered subsequent to the Closing Date) are based upon good faith estimates and stated assumptions believed to be reasonable and fair as of the date made in light of conditions and facts then known and, as of such date, reflect good faith, reasonable and fair estimates of the information projected for the periods set forth therein.  All facts known to Cinedigm, Holdings or any Group Member and material to the financial condition, business, property or prospects of Cinedigm, Holdings or the Group Members taken as one enterprise have been disclosed to the Lenders.

 

Section 4.18  Deposit and Disbursement Accounts.  Other than the Cash Management Accounts, no Group Member owns or has an interest (whether ownership interest, an interest in deposited funds or otherwise) in any deposit or other bank account (including any securities account or any zero balance, payroll, withholding or other fiduciary account).

 

Section 4.19  Agreements and Other Documents.  As of the Closing Date, each Group Member has provided to the Paying Agent accurate and complete copies of all of the following agreements or documents to which it is subject and each of which is listed on Schedule 4.19: all Exhibitor Agreements; all Service Agreements; all Digital Cinema Deployment Agreements; the Management Services Agreement, all material licenses and permits held by the Group Members; instruments and documents evidencing any Indebtedness of such Group Member and any Lien granted by such Group Member with respect thereto; and  instruments and agreements evidencing the issuance of any equity securities, warrants, rights or options to purchase equity securities of such Group Member.

 

Section 4.20  DCI Spec Compliance.  As of the Closing Date, except as set forth on Schedule 4.20, all Digital Systems comply with the Digital Cinema System Specification V1.0 issued July 20, 2005 by Digital Cinema Initiatives, LLC, as amended from time to time.

 

Section 4.21  Material Digital Cinema Deployment Agreements.  Schedule 4.21 sets forth, as of the Closing Date, a complete and accurate list of all Distributors party to a Material Digital Cinema Deployment Agreement.

 

ARTICLE V

 

FINANCIAL COVENANTS

 

The Borrower agrees with the Lenders and the Agents to each of the following, as long as any Obligation remains outstanding:

 

Section 5.1  Maximum Consolidated Leverage Ratio.  The Borrower shall not have, as of the last day of any Fiscal Quarter set forth below, a Consolidated Leverage Ratio greater than the maximum ratio set forth opposite such Fiscal Quarter:

 

	
Fiscal Quarter(s) Ending

	
Maximum Consolidated Leverage Ratio

	
September 30, 2010

	
4.50 to 1

	
December 31, 2010

	
4.25 to 1

  

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Fiscal Quarter(s) Ending

	
Maximum Consolidated Leverage Ratio

	
March 31, 2011 and June 30, 2011

	
4.00 to 1

	
September 30, 2011 and December 31, 2011

	
3.75 to 1

	
March 31, 2012 and June 30, 2012

	
3.50 to 1

	
September 30, 2012

	
3.25 to 1

	
December 31, 2012

	
3.00 to 1

	
March 31, 2013 and June 30, 2013

	
2.75 to 1

	
September 30, 2013

	
2.50 to 1

	
December 31, 2013

	
2.25 to 1

	
March 31, 2014 and June 30, 2014

	
2.00 to 1

	
September 30, 2014

	
1.75 to 1

	
December 31, 2014

	
1.50 to 1

	
March 31, 2015

	
1.25 to 1

	
June 30, 2015

	
1.00 to 1

	
September 30, 2015

	
0.75 to 1

	
December 31, 2015 and each Fiscal Quarter thereafter

	
0.50 to 1

Section 5.2  Minimum Consolidated Fixed Charge Coverage Ratio.  Commencing with the Fiscal Quarter ended September 30, 2010, the Borrower shall not have, as of the last day of such Fiscal Quarter or any Fiscal Quarter ended thereafter, a Consolidated Fixed Charge Coverage Ratio of less than 1.05 to 1.00.

 

Section 5.3  Calculation of Financial Covenants. (a)  Consolidated EBITDA.  Solely for purposes of calculating the Consolidated Leverage Ratio and Consolidated Fixed Charge Coverage Ratio for the Fiscal Quarters ending September 30, 2010, December 31, 2010 and March 31, 2011, the Consolidated EBITDA of the Borrower and its Subsidiaries shall be determined as follows: (i) the Consolidated EBITDA for the Fiscal Quarter ended December 31, 2009 shall be $11,253,639, (ii) the Consolidated EBITDA for the Fiscal Quarter ended March 31, 2010 shall be $9,053,090 (as such amount may be reasonably adjusted by the Co-Administrative Agents to account for material differences between such amount and the Consolidated EBITDA calculated for such period using the financial information provided in the audited financial statements of Christie for the Fiscal Year ending March 31, 2010) and (iii) the Consolidated EBITDA for the Fiscal Quarter ended June 30, 2010 shall be calculated using the revenues and operating expenses (other than servicing fees paid to Cinedigm prior to the Closing Date) of Christie and its Subsidiaries (including the Borrower) for such period and the Servicing Fee for such period shall be deemed to be 5% of such revenues.

 

  

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(b)  Consolidated Fixed Charge Coverage Ratio.

 

(i)  Consolidated Cash Interest Expense and Consolidated Income Tax Liability.  The Consolidated Fixed Charge Coverage Ratio for the Fiscal Quarters ending September 30, 2010, December 31, 2010, and March 30, 2011 shall be calculated using "Annualized Consolidated Cash Interest Expense" and "Annualized Consolidated Income Tax Liability".  For purposes of this Section 5.3(b), (A) "Annualized Consolidated Cash Interest Expense" means (1) with respect to the Fiscal Quarter ending September 30, 2010, Consolidated Cash Interest Expense for such Fiscal Quarter multiplied by 4; (2) with respect to the Fiscal Quarter ending December 31, 2010, Consolidated Cash Interest Expense for the period commencing on June 30, 2010 through December 31, 2010 multiplied by 2; and (3) with respect to the Fiscal Quarter ending March 30, 2011, Consolidated Cash Interest Expense for the period commencing on June 30, 2010 through March 30, 2011 multiplied by 4/3; and (B) "Annualized Consolidated Income Tax Liability" means (1) with respect to the Fiscal Quarter ending September 30, 2010, Consolidated Income Tax Liability of the Borrower and its Subsidiaries for such Fiscal Quarter multiplied by 4; (2) with respect to the Fiscal Quarter ending December 31, 2010, Consolidated Income Tax Liability of the Borrower and its Subsidiaries for the period commencing on June 30, 2010 through December 31, 2010 multiplied by 2; and (3) with respect to the Fiscal Quarter ending March 30, 2011, Consolidated Income Tax Liability of the Borrower and its Subsidiaries for the period commencing on June 30, 2010 through March 30, 2011 multiplied by 4/3.

 

(ii)  Capital Expenditures.  The Consolidated Fixed Charge Coverage Ratio for the Fiscal Quarters ending September 30, 2010, December 31, 2010, and March 30, 2011 shall be calculated using "Combined Capital Expenditures".  For purposes of this Section 5.3(b), "Combined Capital Expenditures" means the Capital Expenditures of Christie and its Subsidiaries (including the Borrower) during the applicable testing period.

 

ARTICLE VI

REPORTING COVENANTS

 

The Borrower (and, to the extent set forth in any other Loan Document, each other Group Member) agrees with the Lenders and the Agents to each of the following, as long as any Obligation remains outstanding:

 

Section 6.1  Financial Statements.  The Borrower shall deliver to the Paying Agent (for further distribution to the Lenders and Moody's in respect of the items listed in clauses (a), (b) and (c) below) each of the following:

 

(a)  Monthly Reports.  As soon as available, and in any event within 30 days after the end of each fiscal month in each Fiscal Quarter, a management report in form and substance acceptable to the Paying Agent, setting forth in reasonable detail, among other things (i) the income, cash flow and selling, general and administrative expense for such fiscal month and that portion of the Fiscal Year ending as of the close of such fiscal month, (ii) in comparative form the figures for (A) the corresponding period in the Budget and (B) the corresponding period

 

  

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in the prior Fiscal Year, (iii) the aggregate amount of cash on hand as of the end of such fiscal month, (iv) on an aggregate and per distributor basis (A) the number of digital titles released pursuant to a Digital Cinema Deployment Agreement and (B) the VPFs and associated accounts receivable, (v) on an aggregate and per exhibitor basis (A) the revenue generated from Non-Traditional Content (as defined in the applicable Exhibitor Agreement) and (B) the revenue generated from Traditional Motion Picture Content (as defined in the applicable Exhibitor Agreement) distributed by a Non-Participating Distributor, (vi) the amount of Capital Expenditures, (vii) with respect to the Cash Management Accounts not maintained with SG, a copy of the bank statement for each such account as at the end of such fiscal month, (viii) a list of all Digital Systems that are not Installed Digital Systems, the location of same and a list of each such Digital System projected to be redeployed in the following 30-day period, (ix) copies of internally prepared reports detailing the utilization of the Installed Digital Systems and amounts billed to contracted parties, each in form and substance reasonably satisfactory to the Paying Agent, it being acknowledged that, to the extent the above enumerated information is provided, the form of internally prepared report previously delivered pursuant to the Existing Facility is acceptable, (x) all taxes (including property taxes) paid for such fiscal month and that portion of the Fiscal Year ending as of the close of such fiscal month; provided that, if amounts for taxes exceeds $600,000 in the aggregate in any Fiscal Year, the Borrower must provide additional documentation evidencing such excess as the Co-Administrative Agents may reasonably request, (xi) the calculations of the Servicing Fees paid for such fiscal month and that portion of the Fiscal Year ending as of the close of such fiscal month, (xii) the calculations of any MLA Prepayment Amount owing as of the close of such fiscal month and any amounts paid for the MLA Prepayment Amount pursuant to Section 7.11(d) and 7.11(e) paid for such fiscal month and that portion of the Fiscal Year ending as of the close of such fiscal month, (xiii) the calculations of Permitted Back-Up Services Expenses owing as the close of such fiscal month together with all other Back-Up Services Expenses owing as of the close of such fiscal month and (xiv) a reconciliation with respect to differences between expenses reflected in the Cash Expense Report delivered for such fiscal month, expenses reflected pursuant to clause (i) above and disbursements from the Operating Account pursuant to Section 7.11(d)(i) and 7.11(e)(i), as applicable.

 

(b)  Quarterly Reports.  As soon as available, and in any event within 45 days after the end of each Fiscal Quarter of each Fiscal Year, the Consolidated and consolidating unaudited balance sheet of the Group Members as of the close of such Fiscal Quarter and related Consolidated and consolidating statements of income and cash flow for such Fiscal Quarter and that portion of the Fiscal Year ending as of the close of such Fiscal Quarter, setting forth in comparative form the figures for the corresponding period in the prior Fiscal Year and the figures contained in the latest Projections, in each case certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the Consolidated and consolidating financial position, results of operations and cash flow of the Group Members as at the dates indicated and for the periods indicated in accordance with GAAP (subject to the absence of footnote disclosure and normal year-end audit adjustments).

 

(c)  Annual Reports.  Commencing with the Fiscal Year ended March 31, 2010, as soon as available, and in any event within 90 days after the end of each Fiscal Year, the Consolidated and consolidating balance sheet of the Group Members as of the end of such Fiscal Year and related Consolidated and consolidating statements of income, stockholders' equity and

 

  

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cash flow for such Fiscal Year, each prepared in accordance with GAAP, together with a certification by the Group Members' Accountants that (i) such Consolidated and consolidating Financial Statements fairly present in all material respects the Consolidated financial position, results of operations and cash flow of the Group Members as at the dates indicated and for the periods indicated therein in accordance with GAAP without qualification as to the scope of the audit or as to going concern and without any other similar qualification and (ii) in the course of the regular audit of the businesses of the Group Members, which audit was conducted in accordance with the standards of the United States' Public Company Accounting Oversight Board (or any successor entity), such Group Members' Accountants have obtained no knowledge that a Default in respect of any financial covenant contained in Article V has occurred and is continuing or, if in the opinion of the Group Members' Accountants such a Default has occurred and is continuing, a statement as to the nature thereof (which certification with respect to clause (ii) may be limited or omitted to the extent required by accounting rules or guidelines).

 

(d)  Compliance Certificate.  Together with each delivery of any Financial Statement pursuant to clause (b) or (c) above, a Compliance Certificate duly executed by a Responsible Officer of the Borrower that, among other things, (i) demonstrates compliance with each financial covenant contained in Article V, (ii) shows in reasonable detail the amount of Capital Expenditures as of the end of such fiscal period and any amounts paid by Cinedigm, as administrative servicer, for Capital Expenditures, (iii) provides a list of all Installed Digital Systems and the location of the same and (iv) states that no Default has occurred and is continuing as of the date of delivery of such Compliance Certificate or, if a Default has occurred and is continuing, states the nature thereof and the action that the Borrower proposes to take with respect thereto.

 

(e)  Corporate Chart and Other Collateral Updates.  As part of the Compliance Certificate delivered pursuant to clause (d) above, each in form and substance satisfactory to the Paying Agent, a certificate by a Responsible Officer of the Borrower that (i) the Corporate Chart attached thereto (or the last Corporate Chart delivered pursuant to this clause (e)) is correct and complete as of the date of such Compliance Certificate, (ii) the Loan Parties have delivered all documents (including updated schedules as to locations of Collateral and acquisition of Intellectual Property or real property) they are required to deliver pursuant to any Loan Document on or prior to the date of delivery of such Compliance Certificate and (iii) complete and correct copies of all documents modifying any term of any Constituent Document of any Loan Party or joint venture thereof on or prior to the date of delivery of such Compliance Certificate have been delivered to the Paying Agent or are attached to such certificate.

 

(f)  Additional Projections.  As soon as available and in any event not later than 60 days prior to the end of each Fiscal Year, (i) the annual business plan and the Budget of the Group Members for the Fiscal Year next succeeding such Fiscal Year approved by the Borrower's Board of Directors and (ii) forecasts prepared by management of the Borrower (A) for each month in such next succeeding Fiscal Year and (B) for each other succeeding Fiscal Year through the Fiscal Year containing the Maturity Date, in each case including in such forecasts (x) a projected year-end Consolidated and consolidating balance sheet, income statement and statement of cash flows for the Group Members, (y) a statement of all of the material assumptions on which such forecasts are based and (z) substantially the same type of financial information as that contained in the Initial Projections.

 

  

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(g)  Management Discussion and Analysis.  Together with each delivery of any Compliance Certificate pursuant to clause (d) above, a discussion and analysis of the financial condition and results of operations of the Group Members for the portion of the Fiscal Year then elapsed and discussing the reasons for any significant variations from the Projections for such period and the figures for the corresponding period in the previous Fiscal Year.

 

(h)  Audit Reports, Management Letters, Etc.  Together with each delivery of any Financial Statement for any Fiscal Year pursuant to clause (c) above, copies of each management letter, audit report or similar letter or report received by any Group Member from any independent registered certified public accountant (including the Group Members' Accountants) in connection with such Financial Statements or any audit thereof, each certified to be complete and correct copies by a Responsible Officer of the Borrower as part of the Compliance Certificate delivered in connection with such Financial Statements.

 

(i)  Insurance Certifications.

 

(i)  At each policy renewal, but not less than annually, a certification from each insurer or by an authorized representative of each insurer identifying the underwriters, the type of insurance, the limits, deductibles, and term thereof and shall specifically list the provisions delineated in clause (b) of Schedule 7.5;

 

(ii)  Concurrently with the furnishing of all certificates referred to in clause (i) above, a statement from an independent insurance broker, reasonably acceptable to the Paying Agent, stating that (A) all premiums then due have been paid and (B) in the opinion of such broker, the insurance then maintained by the Borrower is in accordance with clause (b) of Schedule 7.5;

 

(iii)  The Borrower shall request such insurance broker, upon its first knowledge, to advise the Paying Agent promptly in writing of any default in the payment of any premiums or any other act or omission, on the part of any Person, which might invalidate or render unenforceable, in whole or in part, any insurance provided by the Borrower hereunder; and

 

(iv)  Promptly after becoming available, but in any event within 45 days of the redeployment of any Digital System on or after the Closing Date, an insurance certificate in form and substance satisfactory to the Collateral Agent demonstrating that the insurance policies required by Section 7.5 in respect of such Digital System are in full force and effect and have all the terms required by Section 7.5.

 

(j)  Cash Expense Report.  As soon as available, and in any event at least two (2) Business Days prior to each Monthly Application Date and Quarterly Application Date, a report in form and substance acceptable to the Paying Agent setting forth in reasonable detail (i) the cash balance of each Cash Management Account as of the fiscal month most recently ended, (ii) actual cash disbursements from the Operating Account for such fiscal month and (iii) categorizing each such cash disbursement with respect to its placement in the application of funds provisions described in Sections 7.11(d) or 7.11(e), as applicable.

 

  

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(k)  Other Agreements.  Promptly after the execution thereof, copies of all Digital Cinema Deployment Agreements, Exhibitor Agreements, Service Agreements and any Intercompany Agreements not previously delivered to the Paying Agent in accordance with this Agreement.

 

Section 6.2  Other Events.  The Borrower shall give the Co-Administrative Agents notice of each of the following (which notice may be made by telephone if promptly confirmed in writing) promptly (but, in any event, no later than five (5) days) after any Responsible Officer of any Group Member knows or has reason to know of it: (a)(i) any Default and (ii) any event that would reasonably be expected to have a Material Adverse Effect, specifying, in each case, the nature and anticipated effect thereof and any action proposed to be taken in connection therewith, (b) any event (other than any event involving loss or damage to property) reasonably expected to result in a mandatory prepayment of the Obligations pursuant to Section 2.5, stating the material terms and conditions of such transaction and estimating the Net Cash Proceeds thereof, (c) the commencement of, or any material developments in, any action, investigation, suit, proceeding, audit, claim, demand, order or dispute with, by or before any Governmental Authority affecting any Group Member or any property of any Group Member that (i) seeks injunctive or similar relief, (ii) in the reasonable judgment of the Borrower, exposes any Group Member to liability in an aggregate amount in excess of $250,000 or (iii) if adversely determined, would reasonably be expected to have a Material Adverse Effect and (d) the acquisition of any material real property or the entering into any material lease.

 

Section 6.3  Copies of Notices and Reports.  The Borrower shall promptly deliver to the Co-Administrative Agents copies of each of the following: (a) all reports that the Borrower transmits to its security holders generally, (b) all documents that any Group Member files with the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., any securities exchange or any Governmental Authority exercising similar functions, (c) all press releases issued by any Group Member or, to the extent such press release relates to a Group Member, Cinedigm or Holdings not made available directly to the general public, (d) all material documents, notices or reports transmitted or delivered or received pursuant to, or in connection with, any Digital Deployment Agreement, Exhibitor Agreement, Service Agreement, Intercompany Agreement or the Management Services Agreement and (e) any material document transmitted or received pursuant to, or in connection with, any Contractual Obligation governing Indebtedness of any Group Member.

 

Section 6.4  Taxes.  The Borrower shall give the Co-Administrative Agents notice of each of the following (which may be made by telephone if promptly confirmed in writing) promptly after any Responsible Officer of any Group Member knows or has reason to know of it:  (a) the creation, or filing with the IRS or any other Governmental Authority, of any Contractual Obligation or other document extending, or having the effect of extending, the period for assessment or collection of any taxes with respect to any Tax Affiliate and (b) the creation of any Contractual Obligation of any Tax Affiliate, or the receipt of any request directed to any Tax Affiliate, to make any adjustment under Section 481(a) of the Code, by reason of a change in accounting method or otherwise, which would reasonably be expected to have a Material Adverse Effect.

 

  

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Section 6.5  Labor Matters.  The Borrower shall give the Co-Administrative Agents notice of each of the following (which may be made by telephone if promptly confirmed in writing), promptly after, and in any event within 30 days after any Responsible Officer of any Group Member knows of it: (a) the commencement of any material labor dispute to which any Group Member is or may become a party, including any strikes, lockouts or other disputes relating to any of such Person's plants and other facilities and (b) the incurrence by any Group Member of liability under the Worker Adjustment and Retraining Notification Act or related or similar liability incurred with respect to the closing of any plant or other facility of any such Person (other than, in the case of this clause (b), those that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect).

 

Section 6.6  ERISA Matters.  The Borrower shall give the Co-Administrative Agents (a) on or prior to any filing by any ERISA Affiliate of any notice of intent to terminate any Title IV Plan, a copy of such notice and (b) promptly, and in any event within 10 days, after any Responsible Officer of any ERISA Affiliate knows or has reason to know that an ERISA Event has occurred, a notice (which may be made by telephone if promptly confirmed in writing) describing such ERISA Event and any action that any ERISA Affiliate proposes to take with respect thereto, together with a copy of any notice filed with the PBGC or the IRS pertaining thereto.

 

Section 6.7  Environmental Matters.  (a)  The Borrower shall provide the Co-Administrative Agents notice of each of the following (which may be made by telephone if promptly confirmed in writing) promptly (but, in any event, no later than five (5) days) after any Responsible Officer of any Group Member knows or has reason to know of it (and, upon reasonable request of the Paying Agent, documents and information in connection therewith): (i)(A) unpermitted Releases, (B) the receipt by any Group Member of any notice of violation of or potential liability or similar notice under, or the existence of any condition that could reasonably be expected to result in violations of or liabilities under, any Environmental Law or (C) the commencement of, or any material change to, any action, investigation, suit, proceeding, audit, claim, demand, dispute alleging a violation of or liability under any Environmental Law, that, for each of clauses (A), (B) and (C) above (and, in the case of clause (C), if adversely determined), in the aggregate for each such clause, could reasonably be expected to result in Environmental Liabilities in excess of $250,000, (ii) the receipt by any Group Member of notification that any property of any Group Member is subject to any Lien in favor of any Governmental Authority securing, in whole or in part, Environmental Liabilities and (iii) any proposed acquisition or lease of real property if such acquisition or lease would have a reasonable likelihood of resulting in aggregate Environmental Liabilities in excess of $250,000.

 

(b)  Upon request of the Co-Administrative Agents, the Borrower shall provide the Co-Administrative Agents a report containing an update as to the status of any environmental, health or safety compliance, hazard or liability issue identified in any document delivered to any Secured Party pursuant to any Loan Document or as to any condition reasonably believed by the Co-Administrative Agents to have a reasonable likelihood of resulting in Material Environmental Liabilities.

 

Section 6.8  Other Information.  The Borrower shall provide the Co-Administrative Agents with such other documents and information with respect to the business, property,

 

  

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condition (financial or otherwise), legal, financial or corporate or similar affairs or operations of any Group Member as the Co-Administrative Agents or such Lender through the Co-Administrative Agents may from time to time reasonably request.

 

ARTICLE VII

AFFIRMATIVE COVENANTS

 

The Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees with the Lenders and the Agents to each of the following, as long as any Obligation remains outstanding:

 

Section 7.1  Maintenance of Corporate Existence.  Holdings and each Group Member shall (a) preserve and maintain its legal existence, except in the consummation of transactions expressly permitted by Section 8.7, and (b) preserve and maintain it rights (charter and statutory), privileges franchises and Permits necessary or desirable in the conduct of its business, except, in the case of this clause (b), where the failure to do so would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 7.2  Compliance with Laws, Etc.  Each Group Member shall comply in all material respects with (i) all applicable Requirements of Law, (ii) all Contractual Obligations and (iii) all Permits.

 

Section 7.3  Payment of Obligations.  Each Group Member shall pay or discharge before they become delinquent (a) all material claims, taxes, assessments, charges and levies imposed by any Governmental Authority and (b) all other lawful claims that if unpaid would, by the operation of applicable Requirements of Law, become a Lien upon any property of any Group Member, except, in the case of clauses (a) and (b), for those (x) whose amount or validity is being contested in good faith by proper proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Group Member in accordance with GAAP or (y) which encumber property that, individually or in the aggregate, has a value of less than $250,000.

 

Section 7.4  Maintenance of Property.  Each Group Member shall maintain and preserve (a) in good working order and condition all of its property necessary in the conduct of its business and (b) all rights, permits, licenses, approvals and privileges (including all Permits) necessary, used or useful, whether because of its ownership, lease, sublease or other operation or occupation of property or other conduct of its business, and shall make all necessary or appropriate filings with, and give all required notices to, Government Authorities, except for such failures to maintain and preserve the items set forth in clauses (a) and (b) above that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 7.5  Maintenance of Insurance.  (a)  Each Group Member shall (i) maintain or cause to be maintained in full force and effect all policies of insurance of any kind with respect to the property and businesses of the Group Members (including policies of life, fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers' compensation, business interruption and employee health and welfare insurance) with financially sound and reputable insurance companies or associations (in each case that are not Affiliates of

 

  

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the Borrower) of a nature and providing such coverage as is sufficient and as is customarily carried by businesses of the size and character of the business of the Group Members and in any event in form and substance reasonably acceptable to the Collateral Agent; it being agreed that the insurance set forth on Schedule 7.5 is acceptable and (ii) cause all such insurance relating to any property or business of any Group Member to name the Collateral Agent, on behalf of the Secured Parties, as additional insured or loss payee, as appropriate and with any requested endorsements and to provide that no cancellation, material addition in amount or material change in coverage shall be effective until after 30 days (or 10 days in the case of a payment default) notice thereof to the Collateral Agent.

 

(b)  General.  The Agents shall be entitled, upon reasonable advance notice, to review the Group Members' insurance policies carried and maintained pursuant to this Section 7.5. Upon request, the Borrower shall furnish the requesting Agent with copies of all insurance policies, binders, and cover notes or other evidence of such insurance. Notwithstanding anything to the contrary herein, no provision of this Section 7.5 or any provision of this Agreement shall impose on any Agent any duty or obligation to verify the existence or adequacy of the insurance coverage maintained by the Group Members, nor shall any Agent be responsible for any representations or warranties made by or on behalf of the Group Members to any insurance broker, company or underwriter.  The Collateral Agent, at its sole option, may obtain such insurance if not provided by the Borrower and in such event, the Borrower shall reimburse the Collateral Agent upon demand for the cost thereof together with interest.  The Group Members shall also carry and maintain, should their risk profile change during the term of this Agreement, any other insurance that the Paying Agent may reasonably require from time to time.

 

Section 7.6  Keeping of Books.  The Group Members shall keep proper books of record and account, in which full, true and correct entries shall be made in accordance with GAAP and all other applicable Requirements of Law of all financial transactions and the assets and business of each Group Member.

 

Section 7.7  Access to Books and Property; Audit Rights.  Each Group Member shall permit the Agents, the Lenders and any Related Person of any of them, as often as reasonably requested, at any reasonable time during normal business hours and with reasonable advance notice (except that, during the continuance of an Event of Default, no such notice shall be required) to (a) visit and inspect the property of each Group Member and examine and make copies of and abstracts from, the corporate (and similar), financial, operating and other books and records of each Group Member, (b) discuss the affairs, finances and accounts of each Group Member with any officer or director of any Group Member, (c) communicate directly with any registered certified public accountants (including the Group Members' Accountants) of any Group Member and (d) conduct such appraisals, audits, reviews, and investigations of the Collateral and any documents, instruments or agreements relating thereto; provided that, so long as no Event of Default has occurred and is continuing, the Agents, the Lenders and any Related Persons shall not, collectively or individually, exercise the rights granted under this Section 7.7 more often than twice in the aggregate in any Fiscal Year.  Each Group Member shall authorize their respective registered certified public accountants (including the Group Members' Accountants) to communicate directly with the Agents, the Lenders and their Related Persons and to disclose to the Agents, the Lenders and their Related Persons all financial statements and

 

  

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other documents and information as they might have and any Agent or any Lender reasonably requests with respect to any Group Member.

 

Section 7.8  Environmental.  Each Group Member shall comply with, and maintain its property, whether owned, leased, subleased or otherwise operated or occupied, in compliance with, all applicable Environmental Laws (including by implementing any Remedial Action necessary to achieve such compliance or that is required by orders and directives of any Governmental Authority) except for failures to comply that would not, in the aggregate, have a Material Adverse Effect.  Without limiting the foregoing, if an Event of Default has occurred and is continuing or if the Co-Administrative Agents at any time have a reasonable basis to believe that there exist violations of Environmental Laws by any Group Member or that there exist any Environmental Liabilities, in each case, that would reasonably be expected to have, in the aggregate, a Material Adverse Effect, then each Group Member shall, promptly upon receipt of request from the Co-Administrative Agents, cause the performance of, and allow the Co-Administrative Agents and their Related Persons access to such real property for the purpose of conducting, such environmental audits and assessments, including subsurface sampling of soil and groundwater, and cause the preparation of such reports, in each case as the Co-Administrative Agents may from time to time reasonably request.  Such audits, assessments and reports, to the extent not conducted by the Co-Administrative Agents or any of their Related Persons, shall be conducted and prepared by reputable environmental consulting firms reasonably acceptable to the Co-Administrative Agents and shall be in form and substance reasonably acceptable to the Co-Administrative Agents.

 

Section 7.9  Use of Proceeds.  The proceeds of the Term Loans shall be used by the Borrower (and, to the extent distributed to them by the Borrower, each other Group Member) solely (a) for the payment of the purchase price owing to Christie, as seller, under the Sale and Contribution Agreement, (b) to fund the Debt Service Reserve, (c) to fulfill the obligations owing to Cinedigm as set forth in Section 3.1(q) and (d) for the payment of transaction costs, fees and expenses incurred in connection with the Loan Documents and the transactions contemplated therein.

 

Section 7.10  Additional Collateral and Guaranties.  To the extent not delivered to the Paying Agent on or before the Closing Date (including in respect of after-acquired property and Persons that become Subsidiaries of any Group Member after the Closing Date to the extent permitted under Section 8.17), each Group Member shall, promptly, do each of the following, unless otherwise agreed by the Co-Administrative Agents:

 

(a)  deliver to the Paying Agent such modifications to the terms of the Loan Documents (or, to the extent applicable as determined by the Paying Agent or the Collateral Agent, such other documents), in each case in form and substance reasonably satisfactory to the Paying Agent and the Collateral Agent and as the Paying Agent or the Collateral Agent deems necessary or advisable in order to ensure the following:

 

(i)  (A) each Subsidiary of any Group Member that has entered into Guaranty Obligations with respect to any Indebtedness of the Borrower and (B) each Wholly Owned Subsidiary of any Group Member shall guaranty, as primary obligor and not as surety, the payment of the Obligations of the Borrower; and

 

  

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(ii)  each Group Member (including any Person required to become a Guarantor pursuant to clause (i) above) shall effectively grant to the Collateral Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in all of its property, including all of its Stock and Stock Equivalents and other Securities, as security for the Obligations of such Group Member.

 

(b)  deliver to the Collateral Agent all documents representing all Stock, Stock Equivalents and other Securities pledged pursuant to the documents delivered pursuant to clause (a) above, together with undated powers or endorsements duly executed in blank;

 

(c)  upon request of the Collateral Agent, deliver to it a Mortgage on any real property owned by any Loan Party (other than Holdings) and on any of its leases, together with all Mortgage Supporting Documents relating thereto (or, if such real property or the real property subject to such lease is located in a jurisdiction outside the United States, similar documents deemed appropriate by the Collateral Agent to obtain the equivalent in such jurisdiction of a first-priority mortgage on such real property or lease);

 

(d)  to take all other actions necessary or advisable to ensure the validity or continuing validity of any guaranty for any Obligation or any Lien securing any Obligation, to perfect, maintain, evidence or enforce any Lien securing any Obligation or to ensure such Liens have the same priority as that of the Liens on similar Collateral set forth in the Loan Documents executed on the Closing Date (or, for Collateral located outside the United States, a similar priority acceptable to the Collateral Agent), including the filing of UCC financing statements in such jurisdictions as may be required by the Loan Documents or applicable Requirements of Law or as the Collateral Agent may otherwise reasonably request; and

 

(e)  deliver to the Paying Agent legal opinions relating to the matters described in this Section 7.10, which opinions shall be as reasonably required by, and in form and substance and from counsel reasonably satisfactory to, the Paying Agent.

 

Section 7.11  Cash Management and Waterfall.

 

(a)  Establishment of Cash Management Accounts.  The Borrower agrees to establish with a Deposit Bank on or prior to the Closing Date (and maintain until the payment in full of the Obligations in accordance with this Section 7.11) each of the following lockbox or other Dollar deposit accounts listed (all of which Dollar deposit accounts shall, at the Borrower's option, be interest-bearing) below on terms satisfactory to the Co-Administrative Agents in their sole discretion (each to be referred to herein by the defined term provided below and, collectively, the "Cash Management Accounts"):

 

	
Name of Account

	
Deposit Bank

	
PO Box/Account Number

	
Defined Term for Account

	
Lockbox Account

	
JPMorgan Chase Bank, N.A.

	  	
"Lockbox Account"

  

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Name of Account

	
Deposit Bank

	
PO Box/Account Number

	
Defined Term for Account

	
Collection Account

	
SG

	  	
"Collection Account"

	
Debt Service Account

	
SG

	  	
"Debt Service Account"

	
Operating Account

	
JPMorgan Chase Bank, N.A.

	  	
"Operating Account"

	
Debt Service Reserve Account

	
SG

	  	
"Debt Service Reserve Account"

 

(b)  Deposits into Lockbox Account; Transfer to Collection Account.  Each Group Member  shall  deposit or cause to be deposited all revenues and earnings derived from Installed Digital Systems (including all VPFs and Exhibitor Payments) into the Lockbox Account.  On or before the Closing Date, the Borrower shall enter into a Control Agreement with the applicable Deposit Bank and the Collateral Agent which provides for the Collateral Agent's exclusive control over all cash collections and deposits received in the Lockbox Account and allows the Collateral Agent to require that such collections and deposits be transferred to the Collection Account within one (1) Business Day after receipt (or such longer period as required for funds clearance or required by the applicable Deposit Bank with which the Lockbox Account is maintained and agreed by the Paying Agent and the Collateral Agent).

 

(c)  Debt Service Reserve and Debt Service Reserve Account.  The Borrower shall fund and maintain at all times the Debt Service Reserve in the Debt Service Reserve Account in accordance with the terms of this Agreement and the Control Agreement governing the Debt Service Reserve Account.  On any Payment Date when no Event of Default has occurred and is continuing, the Paying Agent may, with the consent of the Co-Administrative Agents, cause the Debt Service Reserve Account to be debited for the purpose of paying interest (other than Accrued Default Interest) and/or principal then due and payable to the extent amounts then on deposit in the Debt Service Account or otherwise available are insufficient.  During the continuance of an Event of Default, the Paying Agent may, with the consent of the Collateral Agent (which consent shall not be unreasonably withheld) or, at the request of the Required Lenders, shall, cause the Debt Service Reserve Account to be debited for the purpose of paying interest and/or principal then due and payable to the extent amounts then on deposit in the Debt Service Account or otherwise available are insufficient.  Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Paying Agent, on behalf of the Lenders and with the consent of the Collateral Agent (which consent shall not be unreasonably withheld), shall have recourse to the amounts in the Debt Service Reserve Account, if any, for (A) the payment of the principal of the Term Loans on the Maturity Date (or such earlier date on which the Term Loans become due and payable pursuant to Section 9.2) and (ii) the payment in full of all other Obligations on the Maturity Date or during the continuance of an Event of

 

  

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Default.  All earnings on the Debt Service Reserve shall be credited to the Debt Service Reserve Account and on the Quarterly Application Date, such earnings shall, if the Debt Service Reserve Account is fully-funded, be remitted to the Collection Account so long as no Default has occurred and is continuing or would be caused thereby.

 

(d)  Applications on Monthly Application Date.  So long as no Event of Default has occurred and is continuing and until the Obligations have been repaid in full, funds in the Collection Account will be applied on each Monthly Application Date in the following priority:

 

(i)  First, to the Operating Account, an amount sufficient to pay or reimburse, as applicable, payment of (A) the Servicing Fee earned during the fiscal month reporting period reflected in the most recently delivered Management Report and payable as of such Monthly Application Date, (B) to the extent the Borrower is in compliance with its reporting requirements under Section 6.1(a)(x), Permitted Tax Expenses, (C) Permitted Operating Expenses (subject to a maximum disbursement under this clause (C) of (1) for the Fiscal Year ending March 31, 2011, $200,000 and (2) for each Fiscal Year thereafter, 103% of the maximum disbursements permitted pursuant to this parenthetical for the immediately preceding Fiscal Year), (D) Permitted Back-Up Services Expenses, (E) Back-Up Services Expenses (other than Permitted Back-Up Services Expenses) and other operating expenses (other than Permitted Operating Expenses) to the extent such Back-Up Services Expenses and other operating expenses are deducted from the calculation of the Servicing Fee referenced in clause (A) above and (F) Capital Expenditures to the extent permitted under Section 8.16, in the case of the amounts to be disbursed pursuant to clauses (B), (C), (D), (E) and (F) above, that are paid by the Group Members in the preceding fiscal month as reflected in the most recently delivered Cash Expense Report (with such adjustments by the Paying Agent as necessary to reflect any applicable reconciliations reflected in the most recently delivered Management Report);

 

(ii)  Second, to the Paying Agent, an amount equal to the unpaid costs and expenses, including attorneys' fees and expenses, of any Agent or any Lender that are required to be reimbursed pursuant to this Agreement or any other Loan Document;

 

(iii)  Third, to the Debt Service Account, an amount equal to the sum of (A) the scheduled payment of principal of Term Loans due on the next Payment Date, (B) all interest (other than Accrued Default Interest) due and payable on the next Payment Date and (C) any scheduled amounts due under any Secured Hedging Documents on or prior to the next Payment Date;

 

(iv)  Fourth, to the Paying Agent, an amount equal to all Accrued Default Interest, if any, the MLA Prepayment Amount, if any, and any fees and other amounts owing to the Lenders under this Agreement, including amounts owing pursuant to Section 2.13 of this Agreement; provided that, to the extent amounts on deposit in the Collection Account are insufficient to pay in full all Accrued Default Interest and the MLA Prepayment Amount pursuant to this clause (iv), any unpaid Accrued Default Interest and MLA Prepayment Amounts shall remain outstanding and accrue interest at

 

  

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the rate specified in Section 2.6(c) until paid in full pursuant to a subsequent application of funds under this Section 7.11 or Section 2.9(c);

 

(v)  Fifth, to the Debt Service Reserve Account, an amount (if any) necessary to cause the amount on deposit therein to equal the Debt Service Reserve.

 

    Subject to Section 2.9(c), amounts not utilized on a Monthly Application Date as set forth above shall be retained in the Collection Account for application on the next Monthly Application Date or Quarterly Application Date, as applicable.

 

(e)  Applications on Quarterly Application Date.  So long as no Event of Default has occurred and is continuing and until the Obligations have been repaid in full, funds in the Collection Account will be applied on each Quarterly Application Date in the following priority:

 

(i)  First, to the Operating Account, an amount sufficient to pay or reimburse, as applicable, payment of (A) the Servicing Fee earned during the fiscal month reporting period reflected in the most recently delivered Management Report and payable as of such Quarterly Application Date, (B) to the extent the Borrower is in compliance with its reporting requirements under Section 6.1(a)(x), Permitted Tax Expenses, (C) Permitted Operating Expenses (subject to a maximum disbursement under this clause (C) of (1) for the Fiscal Year ending March 31, 2011, $200,000 and (2) for each Fiscal Year thereafter, 103% of the maximum disbursements permitted pursuant to this parenthetical for the immediately preceding Fiscal Year), (D) Permitted Back-Up Services Expenses, (E) Back-Up Services Expenses (other than Permitted Back-Up Services Expenses) and other operating expenses (other than Permitted Operating Expenses) to the extent such Back-Up Services Expenses and other operating expenses are deducted from the calculation of the Servicing Fee referenced in clause (A) above and (F) Capital Expenditures to the extent permitted under Section 8.16, in the case of the amounts to be disbursed pursuant to clauses (B), (C), (D), (E) and (F) above, that are paid by the Group Members in the preceding fiscal month as reflected in the most recently delivered Cash Expense Report (with such adjustments by the Paying Agent as necessary to reflect any applicable reconciliations reflected in the most recently delivered Management Report);

 

(ii)  Second, to the Paying Agent, an amount equal to the unpaid costs and expenses, including attorneys' fees and expenses, of any Agent or any Lender that are required to be reimbursed pursuant to this Agreement or any other Loan Document;

 

(iii)  Third, to the Debt Service Account, an amount equal to the sum of (A) the scheduled payment of principal of Term Loans due on the next Payment Date, (B) all interest (other than Accrued Default Interest) due and payable on the next Payment Date and (C) any scheduled amounts due under any Secured Hedging Documents on or prior to the next Payment Date;

 

(iv)  Fourth, to the Paying Agent, an amount equal to all Accrued Default Interest, if any, the MLA Prepayment Amount, if any, and any fees and other

 

  

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amounts owing to the Lenders under this Agreement, including amounts owing pursuant to Section 2.13 of this Agreement; provided that, to the extent amounts on deposit in the Collection Account are insufficient to pay in full all Accrued Default Interest and the MLA Prepayment Amount pursuant to this clause (iv), any unpaid Accrued Default Interest and MLA Prepayment Amounts shall remain outstanding and accrue interest at the rate specified in Section 2.6(c) until paid in full pursuant to a subsequent application of funds under this Section 7.11 or Section 2.9(c);

 

(v)  Fifth, to the Debt Service Reserve Account, an amount (if any) necessary to cause the amount on deposit therein to equal the Debt Service Reserve;

 

(vi)  Sixth, to the Paying Agent, the applicable percentage of the Excess Cash Flow as a mandatory prepayment of the Term Loans to the extent required pursuant to Section 2.5(a); and

 

(vii)  Seventh, at the Borrower's request, to Christie as a Restricted Payment, any Excess Cash Flow remaining after the application of funds pursuant to clause (vi) above but only if such Restricted Payment is permitted under Section 8.5(d).

 

(f)  Subject to Section 2.9(c), amounts not utilized on a Quarterly Application Date as set forth above shall be retained in the Collection Account for application on the next Monthly Application Date or Quarterly Application Date, as applicable.

 

(g)  Distributions from the Debt Service Account on Payment Date.  On each Payment Date, amounts on deposit in the Debt Service Account shall be applied by the Paying Agent to the payment of all principal and interest amounts (other than Accrued Default Interest) due with respect to the Term Loans as of such Payment Date and any scheduled amounts due under any Secured Hedging Documents as of such Payment Date.

 

(h)  Payment Instructions.  All payments in Sections 7.11(d) and (e) shall be paid through amounts on deposit in the Collection Account and effected by the Paying Agent providing the Collateral Agent or, if a standing instruction has been issued by the Collateral Agent pursuant to this clause (h) below, the applicable Deposit Bank, notice of the amounts to be disbursed from the Collection Account; provided, that, while an Event of Default has occurred and is continuing, (i) the Paying Agent shall effect all payments via notice to the Collateral Agent, (ii) provide the Collateral Agent at least two (2) days advance notice of requested disbursements from the Collection Account and (iii) such requested disbursements shall require the consent of the Collateral Agent (not to be unreasonably withheld).  So long as no Event of Default has occurred and is continuing and to the extent the consent of the Collateral Agent is not required pursuant to Section 7.11(c), (d), (e) or (g) to effect payments in accordance with the terms thereof, the Collateral Agent agrees to take such action requested by the Paying Agent (including providing for a standing instruction to the applicable Deposit Bank authorizing the Paying Agent, as sub-agent for the Collateral Agent, to direct the disbursement of funds) to allow for payments to be made in accordance with the terms thereof.  With respect to amounts on deposit in the Lockbox Account, the Collateral Agent agrees to take such action requested by the Paying Agent (including providing for a standing instruction to the applicable Deposit Bank) to

 

  

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cause the applicable Deposit Bank to transfer such amounts to the Collection Account in accordance with Section 7.11(b).

 

(i)  Operating Account Insufficiency.  Provided that (i) no Event of Default has occurred and is continuing, and (ii) the Paying Agent received the Management Report delivered pursuant to Section 6.1(a), then on any date other than a Monthly Application Date or Quarterly Application Date on which amounts credited to the Operating Account will be insufficient to pay all amounts to be paid pursuant to Section 7.11(d)(i) or 7.11(e)(i) above, prior to the next Monthly Application Date or Quarterly Application Date, as the case may be, the Borrower may provide the Paying Agent with notice of the amounts and the proposed use of such amounts (with a description in reasonable detail of such use and related amounts) needed to cure such insufficiency.  Upon receipt of any such notice and confirmation by the Paying Agent of such insufficiency, the Paying Agent shall request consent from the Collateral Agent (which consent shall not be unreasonably withheld) to transfer, within two (2) Business Days, the amount set forth in such notice to the Operating Account.

 

(j)  No Agent Liability.  Neither the Paying Agent nor the Collateral Agent shall have any responsibility for, or bear any risk of loss of, any investment or income of any funds in any Cash Collateral Account.  From time to time after funds are deposited in any Cash Collateral Account, the Collateral Agent may apply funds then held in such Cash Collateral Account to the payment of Obligations in accordance with this Agreement.  No Group Member and no Person claiming on behalf of or through any Group Member shall have any right to demand payment of any funds held in any Cash Collateral Account at any time prior to the termination of all Commitments and the payment in full of all Obligations.

 

Section 7.12  Required Hedging.

 

(a)  The Borrower shall, within 30 days after the Closing Date (or such later date as the Co-Administrative Agents may agree), enter into and thereafter maintain Interest Rate Contracts with a Secured Hedging Counterparty to provide protection against fluctuation of interest rates until at least the third anniversary of the Closing Date in a notional principal amount that equals at least 66.67% of the aggregate principal amount of the Term Loans outstanding at such time and taking into account the scheduled amortization thereof during the applicable period and at a fixed rate or a capped per annum eurodollar rate, in each case, not more than 1.00% higher than the Eurodollar Base Rate (based on an Interest Period of one month) or on such other terms satisfactory to the Co-Administrative Agents to protect the Borrower against increases in the Eurodollar Rate or the Base Rate, as the case may be, as such rates would reasonably impact the Term Loans.

 

(b)  On the second anniversary of the Closing Date and on each subsequent anniversary on which the outstanding principal amount of the Term Loans is not less than 33% of the aggregate principal amount of the Term Loans outstanding on the Closing Date, the Borrower shall take such actions as are necessary to provide protection against fluctuation of interest rates for the 18 month period following such anniversary date in the notional principal amount that equals at least 66.67% of the aggregate principal amount of the Term Loans outstanding as of such anniversary and taking into account the scheduled amortization thereof during the applicable period and at a fixed rate or a capped per annum eurodollar rate, in each

 

  

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case, not more than 1.00% higher than the Eurodollar Base Rate (based on an Interest Period of one month) or on such other terms satisfactory to the Co-Administrative Agents to protect the Borrower against increases in the Eurodollar Rate or the Base Rate, as the case may be, as such rates would reasonably impact the Term Loans.

 

Section 7.13  Corporate Separateness.  Each Group Member shall take, or refrain from taking, as the case may be, all actions, including, but not limited to the following, that are necessary or advisable to be taken or not to be taken in order to ensure that its existence shall be maintained and respected separate and apart from that of any other Person:

 

(a)  Each Group Member shall maintain its own deposit, securities or other account or accounts, separate from those of any Affiliate, with commercial banking institutions or broker-dealers.  Each Group Member shall ensure that its funds will not be diverted to any other Person or for other than corporate uses of such Group Member, as the case may be, and such funds will not be commingled with the funds of any other Person.

 

(b)  To the extent that it shares the same officers or other employees as any of its Affiliates, each Group Member shall ensure that the salaries of and the expenses related to providing benefits to such officers and other employees shall be fairly allocated among such entities, to the extent practicable, on the basis of such entity's actual share of such costs and to the extent such allocation is not practicable, on a basis reasonably related to such entity's fair share of the salary and benefit costs associated with all such common officers and employees.

 

(c)  To the extent that it jointly contracts with any of its Affiliates to do business with vendors or service providers or to share overhead expenses, each Group Member shall ensure that the costs incurred in so doing shall be allocated fairly among such entities, to the extent practicable, on the basis of such entities' actual share of such costs and to the extent such allocation is not practicable, on a basis reasonably related to such entities' fair share of such costs.  To the extent that any Group Member contracts or does business with vendors or service providers where the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing shall be fairly allocated to or among such entities for whose benefit the goods or services are provided on the basis of such entities' actual share of such costs and to the extent such allocation is not practicable, on a basis reasonably related to such entities' fair share of such costs.  All material transactions between or among a Group Member and any of its respective Affiliates, whether currently existing or hereafter entered into, shall be only on an arm's-length basis.

 

(d)  Each Group Member shall maintain a principal executive office at a separate address from the address of each of its Affiliates (other than any Group Member or its respective Subsidiaries); provided that reasonably segregated offices in the same building shall constitute separate addresses for purposes of this clause (d) so long as such office space is leased or subleased to any Group Member under a separate written agreement between such Group Member and such Affiliate on arm's-length terms.  To the extent that any Group Member or any of its Affiliates have offices in the same location, there shall be a fair and appropriate allocation of overhead costs among them, and each such entity shall bear its fair share of such expenses.

 

  

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(e)  Each Group Member shall maintain and issue separate financial statements prepared not less frequently than annually and prepared in accordance with GAAP.

 

(f)  Each Group Member shall conduct its affairs in its own name and strictly in accordance with its Constituent Documents and observe all necessary, appropriate and customary corporate formalities, including, but not limited to, holding all regular and special officers' and directors' meetings appropriate to authorize all corporate action, keeping separate and accurate minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts.

 

(g)  None of the Group Members shall, nor shall they permit any of their respective Subsidiaries to, assume or guarantee any of the liabilities of any Affiliate except as expressly permitted herein.

 

(h)  Each Group Member shall have stationery and other business forms separate and distinct from that of any other Person.

 

(i)  Each Group Member shall cause its assets to be maintained in a manner that facilitates their identification and segregation from those of any other Person.

 

(j)  At all times thereafter, the board of directors of the Borrower shall have at least 1 director who is not an officer, director, employee, material shareholder or material supplier of any Affiliate of the Borrower (other than any Loan Party) and whose vote is required in order for the Borrower to file a voluntary petition for bankruptcy or to commence any other event that would constitute an Event of Default under Section 9.1(e).

 

Section 7.14  Digital Cinema Deployment Agreements.  No Group Member shall, on or after the Closing Date, enter into any Digital Cinema Deployment Agreement other than such Digital Cinema Deployment Agreements that are in form and substance reasonably acceptable to the Co-Administrative Agents.  The Borrower shall cause each Distributor party to a Digital Cinema Deployment Agreement entered into on or after the Closing Date to (a) consent to the assignment of such Digital Cinema Deployment Agreement in favor of the Collateral Agent, (b) confirm that the Lenders are acceptable financing sources and (c) acknowledge the security interests granted by the Group Members to the Collateral Agent and the Lenders.

 

Section 7.15  Exhibitor Agreements.  No Group Member shall, after the Closing Date, enter into any Exhibitor Agreement, other than such Exhibitor Agreements that are in form and substance, and with Approved Exhibitors and for such locations, in each case that are reasonably satisfactory to the Co-Administrative Agents.

 

Section 7.16  DCI Spec Compliance.  The Group Members shall deploy or redeploy only Digital Systems that are compliant with the Digital Cinema System Specification V1.0 issued July 20, 2005 by Digital Cinema Initiatives, LLC, as amended from time to time, issued by Digital Cinema Initiatives, or any updated specifications required by any Digital Cinema Deployment Agreement, in each case, unless such compliance has been waived in writing by a Distributor and such waiver has been provided to the Co-Administrative Agents or is otherwise referenced on Schedule 4.20 hereof.

 

  

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Section 7.17  Certificates of Insurance.  To the extent not previously delivered to the Collateral Agent, the Borrower shall deliver, or cause to be delivered by the applicable Approved Exhibitor, on or before 30 days after the Closing Date (or such later date as the Co-Administrative Agents may agree in writing so long as such later date is not more than 60 days after the Closing Date) certificates of insurance in respect of any Digital System installed prior to or after the Closing Date, in each case, in form and substance satisfactory to the Collateral Agent, demonstrating that the insurance policies required by Section 7.5 in respect of such Digital System are in full force and effect and have all the terms required by Section 7.5.

 

Section 7.18  Management Services Agreement.  The Borrower acknowledges and agrees that pursuant to the Management Services Agreement it has appointed the Paying Agent and the Collateral Agent each to serve as its representatives and agents to, subject to the terms thereof, take actions, make decisions, and grant consents or approvals thereunder on behalf of the Borrower.  The Borrower shall cooperate with the Paying Agent and the Collateral Agent with respect to any exercise by either of them of any such right or power, and shall not impede or obstruct the Paying Agent or the Collateral Agent (or any sub-agent of either of them) in the event any such right or power is exercised.  Except as may otherwise be agreed by the Paying Agent and the Collateral Agent, the Borrower shall obtain the consent or approval of the Paying Agent and the Collateral Agent prior to making any election or taking any action under the Management Services Agreement which requires the agreement, approval, or consent of the Paying Agent and the Collateral Agent.

 

ARTICLE VIII

NEGATIVE COVENANTS

 

The Borrower (and, to the extent set forth in any other Loan Document, each other Group Member) agrees with the Lenders and the Agents to each of the following, as long as any Obligation remains outstanding:

 

Section 8.1  Indebtedness.  No Group Member shall, directly or indirectly, incur or otherwise remain liable with respect to or responsible for, any Indebtedness except for the following:

 

(a)  the Obligations;

 

(b)  Indebtedness existing on the date hereof and set forth on Schedule 8.1, together with any Permitted Refinancing thereof;

 

(c)  Indebtedness consisting of Capitalized Lease Obligations (other than with respect to a lease entered into as part of a Sale and Leaseback Transaction) and purchase money Indebtedness, in each case incurred by any Group Member to finance the acquisition, repair, improvement or construction of fixed or capital assets of such Group Member, together with any Permitted Refinancing thereof; provided, however, that (i) the aggregate outstanding principal amount of all such Indebtedness does not exceed $250,000 at any time and (ii) the principal amount of such Indebtedness does not exceed the lower of the cost or fair market value of the property so acquired or built or of such repairs or improvements financed, whether directly or

 

  

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through a Permitted Refinancing, with such Indebtedness (each measured at the time such acquisition, repair, improvement or construction is made);

 

(d)  intercompany loans made by a Group Member to any other Group Member so long as such loans constitute Permitted Investments of such Group Member;

 

(e)  Guaranty Obligations of any Group Member with respect to Permitted Indebtedness of any other Group Member (other than Indebtedness permitted hereunder in reliance upon clause (b) above, for which Guaranty Obligations may be permitted to the extent set forth in such clause);

 

(f)  to the extent constituting Indebtedness, endorsements for collection or deposit; and

 

(g)  unsecured Indebtedness not otherwise permitted hereby in an aggregate principal amount not to exceed $250,000 at any time outstanding and which has no cash pay interest.

 

Section 8.2  Liens.  No Group Member shall incur, maintain or otherwise suffer to exist any Lien upon or with respect to any of its property, whether now owned or hereafter acquired, or assign any right to receive income or profits, except for the following:

 

(a)  Liens created pursuant to any Loan Document;

 

(b)  With respect to each Group Member, Customary Permitted Liens;

 

(c)  Liens existing on the date hereof and set forth on Schedule 8.2;

 

(d)  Liens on the property of any Group Member securing Indebtedness (whether directly or through a Permitted Refinancing) permitted under Section 8.1(c); provided, however, that (i) such Liens exist prior to the acquisition of, or attach substantially simultaneously with, or within 90 days after, the acquisition, repair, improvement or construction of, such property financed by such Indebtedness (whether directly or through a Permitted Refinancing) and (ii) such Liens do not extend to any property of any Group Member other than the property (and proceeds thereof) acquired or built, or the improvements or repairs, financed by such Indebtedness (whether directly or through a Permitted Refinancing); and

 

(e)  Liens arising by operation of applicable Requirements of Law as a result of the non-payment of lawful claims; provided, that such Liens do not encumber property that, individually or in the aggregate, has a value greater than or equal to $250,000.

 

Section 8.3  Investments.  No Group Member shall make or maintain, directly or indirectly, any Investment except for the following:

 

(a)  Investments existing on the date hereof and set forth on Schedule 8.3;

 

(b)  Investments in cash and Cash Equivalents maintained in Cash Collateral Accounts;

 

  

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(c)  (i) endorsements for collection or deposit in the ordinary course of business consistent with past practice, (ii) extensions of trade credit (other than to Affiliates of the Borrower) arising or acquired in the ordinary course of business and (iii) Investments received in settlements in the ordinary course of business of past due receivables; and

 

(d)  Investments by any Group Member in any other Group Member.

 

Section 8.4  Asset Sales; Stock Issuances.  No Group Member shall Sell any of its property (other than cash) or issue any shares of its own Stock, except for the following:

 

(a)  In each case to the extent entered into in the ordinary course of business and made to a Person that is not an Affiliate of the Borrower, (i) Sales of Cash Equivalents, inventory or property that has become obsolete or worn out and (ii) non-exclusive licenses of Intellectual Property;

 

(b)  a true lease or sublease of real property not constituting Indebtedness and not entered into as part of a Sale and Leaseback Transaction;

 

(c)  (i) any Sale of any property (other than their own Stock or Stock Equivalents) by any Group Member to any other Group Member to the extent any resulting Investment constitutes a Permitted Investment and (ii) any Restricted Payment by any Group Member permitted pursuant to Section 8.5;

 

(d)  (i) any Sale or issuance by the Borrower of its own Stock, provided, that it shall be a condition to the Sale or issuance of such Stock that such Stock be pledged to the Collateral Agent, for the benefit of the Secured Parties, to secure the Obligations and (ii) any Sale or issuance by any Subsidiary of the Borrower of its own Stock to any Group Member, provided, however, that the proportion of such Stock and of each class of such Stock (both on an outstanding and fully-diluted basis) held by the Loan Parties, taken as a whole, does not change as a result of such Sale or issuance;

 

(e)  any Sale of Installed Digital Systems to an Approved Exhibitor in connection with the exercise by such Approved Exhibitor of its buyout option under the applicable Exhibitor Agreement; provided, however, that the aggregate number of Installed Digital Systems sold pursuant to this clause (e) shall not exceed 10% of the aggregate number of Installed Digital Systems as of the date of such Sale.

 

Section 8.5  Restricted Payments.  No Group Member shall directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment except for the following:

 

(a)  Restricted Payments by any Group Member to any other Group Member;

 

(b)  dividends and distributions declared and paid on the common Stock of any Group Member ratably to the holders of such common Stock and payable only in common Stock of such Group Member;

 

  

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  (c)  Restricted Payments by the Borrower to holders of the Borrower's stock for the sole purpose of funding the payment of net income taxes attributable to such holders' ownership of the Borrower but in an amount not to exceed the actual liability that would be incurred by Borrower on a standalone basis and, in any event, excluding tax obligations owing as a result of a purchase of Term Loans by any Affiliate of the Borrower;

 

(d)  Restricted Payments made from the portion of Excess Cash Flow not required to be applied to prepay the Term Loans in accordance with Section 2.5(a); provided that no Default or Event of Default shall have occurred and be continuing or would result therefrom.

 

Section 8.6  Prepayment of Indebtedness.  No Group Member shall (a) prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof any Indebtedness, (b) set apart any property for such purpose, whether directly or indirectly and whether to a sinking fund, a similar fund or otherwise, or (c) make any payment in violation of any subordination terms of any Indebtedness; provided, however, that each Group Member may, in accordance with and to the extent permitted by the Loan Documents, do each of the following:

 

(i)  (A) prepay the Obligations or (B) consummate a Permitted Refinancing;

 

(ii)  so long as no Event of Default has occurred and is continuing, prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof (or set apart any property for such purpose) any Indebtedness permitted under Section 8.1(d) and owing to any other Group Member; and

 

(iii)  make regularly scheduled or otherwise required repayments or redemptions of Indebtedness (other than Indebtedness owing to any Affiliate of the Borrower).

 

Section 8.7  Fundamental Changes.  No Group Member shall (a) merge, consolidate or amalgamate with any other Person, (b) acquire all or substantially all of the Stock or Stock Equivalents of any other Person or (c) acquire all or substantially all of the assets of any other Person or all or substantially all of the assets constituting any line of business, division, branch, operating division or other unit operation of any other Person, in each case except for the following:  (i) the merger, consolidation or amalgamation of any Group Member (other than the Borrower) into any other Group Member and (ii) the merger, consolidation or amalgamation of any Group Member for the sole purpose, and with the sole material effect, of changing its State of organization within the United States; provided, however, that (A) in the case of any merger, consolidation or amalgamation involving the Borrower, the Borrower shall be the surviving Person ,(B) in the case of any merger, consolidation or amalgamation involving any Group Member (other than the Borrower), a Group Member shall be the surviving Person and (C) prior to or contemporaneously with the consummation of any action permitted under this Section 8.7, all actions required to maintain the perfection of the Liens of the Collateral Agent on the Stock or property of such Group Member shall have been made.

 

Section 8.8  Change in Nature of Business.  No Group Member shall carry on any business, operations or activities (whether directly, through a joint venture, or otherwise)

 

  

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substantially different from those carried on by the Group Members at the date hereof and business, operations and activities reasonably related thereto.

 

Section 8.9  Transactions with Affiliates.  No Group Member shall, except as otherwise expressly permitted herein, enter into any other transaction directly or indirectly with, or for the benefit of, any Affiliate (including Guaranty Obligations with respect to any obligation of any such Affiliate), except for (a) transactions between or among the Group Members, (b) transactions in the ordinary course of business on a basis no less favorable to such Group Member as would be obtained in a comparable arm's length transaction with a Person not an Affiliate of such Group Member, (c) Restricted Payments permitted under Section 8.5, (d) transactions evidenced by the Management Services Agreement (including the payment of any Servicing Fees to the extent permitted hereunder (but excluding payment of any Incentive Servicing Fees)) and (e) reasonable director compensation to directors of any Group Member to the extent such compensation is reflected in the Budget most recently delivered to the Paying Agent.

 

Section 8.10  Third-Party Restrictions on Indebtedness, Liens, Investments or Restricted Payments.  No Group Member shall incur or otherwise suffer to exist or become effective or remain liable on or be responsible for any Contractual Obligation limiting the ability of (a) any Group Member (other than the Borrower) to make Restricted Payments to, or Investments in, or repay Indebtedness or otherwise Sell property to, any other Group Member or (b) any Group Member to incur or suffer to exist any Lien upon its property, whether now owned or hereafter acquired, securing any of its Obligations (including any "equal and ratable" clause and any similar Contractual Obligation requiring, when a Lien is granted on any property, another Lien to be granted on such property or any other property), except, for each of clauses (a) and (b) above, (x) pursuant to the Loan Documents and (y) limitations on Liens (other than those securing any Obligation) on any property whose acquisition, repair, improvement or construction is financed by purchase money Indebtedness, Capitalized Lease Obligations or Permitted Refinancings permitted under Section 8.1(b) or (c) set forth in the Contractual Obligations governing such Indebtedness, Capitalized Lease Obligations or Permitted Refinancing or Guaranty Obligations with respect thereto.

 

Section 8.11  Modification of Certain Documents.  No Group Member shall waive or otherwise modify any term of (a) any Digital Cinema Deployment Agreement, (b) any Exhibitor Agreement, (c) any Intercompany Agreement, (d) the Management Services Agreement or (e) its Constituent Document, except, in each case, with the prior written consent of the Co-Administrative Agents.

 

Section 8.12  Accounting Changes; Fiscal Year.  No Group Member shall change its (a) accounting treatment or reporting practices, except as required by GAAP or any Requirement of Law, or (b) its fiscal year or its method for determining fiscal quarters or fiscal months.

 

Section 8.13  Margin Regulations.  No Group Member shall use all or any portion of the proceeds of any credit extended hereunder to purchase or carry margin stock (within the meaning of Regulation U of the Federal Reserve Board) in contravention of Regulation U of the Federal Reserve Board.

 

  

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Section 8.14  Compliance with ERISA.  No ERISA Affiliate shall cause or suffer to exist (a) any event that could result in the imposition of a Lien with respect to any Title IV Plan or Multiemployer Plan or (b) any other ERISA Event, that would, in the aggregate, have a Material Adverse Effect.  No Group Member shall cause or suffer to exist any event that could result in the imposition of a Lien with respect to any Benefit Plan.

 

Section 8.15  Hazardous Materials.  Other than such violations, Environmental Liabilities and effects that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect, no Group Member shall cause or suffer to exist (a) the disposal, transportation, sale, reuse, recycle or Release of any Hazardous Materials from Digital Systems in violation of Environmental Laws or (b) the Release of any Hazardous Material at, to or from any real property owned, leased, subleased or otherwise operated or occupied by any Group Member that would violate any Environmental Law, form the basis for any Environmental Liabilities or otherwise adversely affect the value or marketability of any real property (whether or not owned by any Group Member).

 

Section 8.16  Capital Expenditures.  No Group Member shall incur, or permit to be incurred, Capital Expenditures (to the extent not the responsibility of Cinedigm under the Management Services Agreement) to exceed $50,000 in any Fiscal Year (the "Capital Expenditure Allowance"); provided, that if any amount of the Capital Expenditure Allowance is not used a Fiscal Year, the Capital Expenditure Allowance for the Fiscal Year immediately following such Fiscal Year shall be increased by such unused amount.

 

Section 8.17  No Foreign Subsidiaries.  No Group Member shall create or have any Foreign Subsidiaries or any interest in any foreign joint ventures.

 

Section 8.18  Bank Accounts.  Other than the Cash Management Accounts, no Group Member shall create, owns or otherwise have an interest (whether ownership interest, an interest in deposited funds or otherwise) in any deposit or other bank account (including any securities account or any zero balance, payroll, withholding or other fiduciary account).

 

 

ARTICLE IX

EVENTS OF DEFAULT

 

Section 9.1  Events of Default.  Each of the following shall be an Event of Default:

 

(a)  the Borrower shall fail to pay (i) any principal of any Term Loan when the same becomes due and payable, (ii) any interest on any Term Loan and such non-payment continues for a period of three Business Days after the due date therefor or (iii) any fee under any Loan Document or any other Obligation (other than those set forth in clauses (i) and (ii) above) and such non-payment continues for a period of five Business Days after the due date therefor; or

 

(b)  any representation, warranty or certification made or deemed made by or on behalf of any Loan Party in any Loan Document or by or on behalf of any Loan Party (or any Responsible Officer thereof) in connection with any Loan Document (including in any document delivered in connection with any Loan Document) shall prove to have been incorrect in any

 

  

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material respect (without duplication of any materiality qualifier contained therein) when made or deemed made; or

 

(c)  any Loan Party or any Affiliate of a Loan Party shall fail to comply with (i) any provision of Article V, Sections 6.2(a)(i), 7.1, 7.9, 7.10, 7.11, 7.13, 7.16, 7.18 or Article VIII or (ii) any other provision of any Loan Document if, in the case of this clause (ii), such failure shall remain unremedied for 30 days after the earlier of (A) the date on which a Responsible Officer of the Borrower becomes aware of such failure and (B) the date on which notice thereof shall have been given to the Borrower by the Paying Agent or the Required Lenders, provided, that, with respect to any non-compliance with Section 6.1, the Borrower shall only be allowed one 30-day grace period in any 12-month period and four 30-day grace periods during the term of this Agreement; or

 

(d)  (i) any Group Member shall fail to make any payment when due (whether due because of scheduled maturity, required prepayment provisions, acceleration, demand or otherwise) on any Indebtedness of any Group Member (other than the Obligations) and, in each case, such failure relates to Indebtedness having a principal amount of $250,000 or more, (ii) any other event shall occur or condition shall exist under any Contractual Obligation relating to any such Indebtedness, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness or (iii) any such Indebtedness shall become or be declared to be due and payable, or be required to be prepaid, redeemed, defeased or repurchased (other than by a regularly scheduled payment or required prepayment), prior to the stated maturity thereof; or

 

(e)  (i) any Group Member shall generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors, (ii) any proceeding shall be instituted by or against any Group Member seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, composition of it or its debts or any similar order, in each case under any Requirement of Law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee, conservator, liquidating agent, liquidator, other similar official or other official with similar powers, in each case for it or for any substantial part of its property and, in the case of any such proceedings instituted against (but not by or with the consent of) any Group Member, either such proceedings shall remain undismissed or unstayed for a period of 60 days or more or any action sought in such proceedings shall occur or (iii) any Group Member shall take any corporate or similar action or any other action to authorize any action described in clause (i) or (ii) above; or

 

(f)  one or more judgments, orders or decrees (or other similar process) shall be rendered against any Group Member (i)(A) in the case of money judgments, orders and decrees, involving an aggregate amount (excluding amounts adequately covered by insurance payable to any Group Member, to the extent the relevant insurer has not denied coverage therefor) in excess of $250,000 or (B) otherwise, that would reasonably be expected to have, in the aggregate, a Material Adverse Effect and (ii)(A) enforcement proceedings shall have been commenced by any creditor upon any such judgment, order or decree or (B) such judgment, order or decree shall not have been vacated or discharged for a period of 30 consecutive days and

 

  

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there shall not be in effect (by reason of a pending appeal or otherwise) any stay of enforcement thereof; or

 

(g)  except pursuant to a valid, binding and enforceable termination or release permitted under the Loan Documents and executed by the Paying Agent or the Collateral Agent, as applicable, or as otherwise expressly permitted under any Loan Document, (i) any provision of any Loan Document shall, at any time after the delivery of such Loan Document, fail to be valid and binding on, or enforceable against, any Loan Party party thereto or (ii) any Loan Document purporting to grant a Lien to secure any Obligation shall, at any time after the delivery of such Loan Document, fail to create a valid and enforceable Lien on any Collateral purported to be covered thereby or such Lien shall fail or cease to be a perfected Lien with the priority required in the relevant Loan Document, or any Group Member shall state in writing that any of the events described in clause (i) or (ii) above shall have occurred; or

 

(h)  there shall occur any Change of Control; or

 

(i)  (i) a Material Digital Cinema Deployment Agreement shall cease to be valid, binding or enforceable in accordance with its terms (other than pursuant to a merger or acquisition of a Distributor party to a Material Digital Cinema Deployment Agreement with or by another Distributor party to a Material Digital Cinema Deployment Agreement) and within 120 days thereafter, the Borrower shall not have delivered to the Paying Agent written evidence of the reinstatement of such Material Digital Cinema Deployment Agreement as a valid, binding and enforceable agreement or (ii) any Group Member shall be in breach of any Material Digital Cinema Deployment Agreement and the effect of such breach is to permit the termination of such Material Digital Cinema Deployment Agreement and within 120 days of such breach the Borrower has not delivered to the Paying Agent written evidence of the cure or waiver of such breach by the applicable Distributor; or

 

(j)  (i)  any Intercompany Agreement set forth on Schedule 9.1(k) shall cease to be valid, binding or enforceable in accordance with its terms and within 120 days thereafter such agreement is not replaced with a new agreement satisfactory to the Co-Administrative Agents or (ii) any Group Member shall be in breach of any of the same and the effect of such breach is to permit the termination of such agreement, and within 180 days thereafter such breach is not cured; or

 

(k)  the occurrence of an ERISA Event that, when take together with all other ERISA Events that have occurred, could reasonably be expected to subject a Group Member to liability in excess of $250,000.

 

Section 9.2  Remedies.  (a) General.  During the continuance of any Event of Default, (a) the Paying Agent may, and, at the request of the Required Lenders, shall, in each case by notice to the Borrower, declare immediately due and payable all or part of any Obligation (including the Term Loans and any accrued but unpaid interest thereon), whereupon the same shall become immediately due and payable, without presentment, demand, protest or further notice or other requirements of any kind, all of which are hereby expressly waived by the Borrower (and, to the extent provided in any other Loan Document, other Loan Parties) and (b) the Paying Agent, Co-Administrative Agents and the Collateral Agent, as applicable, may and, at

 

  

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the request of the Required Lenders, shall, exercise any other right or remedy provided under any Loan Document or by any applicable Requirement of Law; provided, however, that, effective immediately upon the occurrence of the Events of Default specified in Section 9.1(e), (all Obligations (including in each case all Term Loans and any accrued all accrued but unpaid interest thereon) shall automatically become and be due and payable, without presentment, demand, protest or further notice or other requirement of any kind, all of which are hereby expressly waived by the Borrower (and, to the extent provided in any other Loan Document, any other Loan Party)

 

(b)  Actions with respect to Management Services Agreement.  During the continuance of any Event of Default, the Collateral Agent may, and, at the request of the Required Lenders, shall exercise any and all rights of the Borrower under the Management Services Agreement including the right to replace the "Manager" defined therein or terminate the Management Services Agreement or take any other action under the Management Services Agreement that would otherwise be able to be taken by the Borrower as "Owner" thereunder.

 

ARTICLE X

THE AGENTS

 

Section 10.1  Appointment and Authorization of the Agents.  (a)  Appointment and Duties of Co-Administrative Agents.  Each of the Lenders hereby irrevocably appoints each of SG and GE Capital (and any respective successors pursuant to Section 10.11) to act on its behalf as the Co-Administrative Agents hereunder and under the other Loan Documents, and each of the Lenders authorizes the Co-Administrative Agents to take such actions on its behalf and to exercise such powers as are delegated to each Co-Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.

 

(b)  Appointment of Paying Agent.  Each Lender hereby appoints SG (together with any successor Paying Agent pursuant to Section 10.9) as the Paying Agent hereunder and authorizes the Paying Agent to (i) execute and deliver the Loan Documents and accept delivery thereof on its behalf from any Group Member, (ii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to the Paying Agent under such Loan Documents and (iii) exercise such powers as are reasonably incidental thereto.

 

(c)  Duties of Paying Agent as Disbursing Agent.  Without limiting the generality of clause (b) above, the Paying Agent shall have the sole and exclusive right and authority (to the exclusion of the Lenders), and is hereby authorized, to (i) act as the disbursing and collecting agent for the Lenders with respect to all payments and collections arising in connection with the Loan Documents (including in any proceeding described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar proceeding), and each Person making any payment in connection with any Loan Document to any Secured Party is hereby authorized to make such payment to the Paying Agent, (ii) file and prove claims and file other documents necessary or desirable to allow the claims of the Secured Parties with respect to any Obligation in any proceeding described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf of such Secured Party) and (iii)

 

  

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execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender that has consented in writing to such amendment, consent or waiver.

 

(d)  Appointment and Duties of Collateral Agent.  Each Lender hereby appoints GE Capital (together with any successor Collateral Agent pursuant to Section 10.10) as the Collateral Agent hereunder and authorizes the Collateral Agent to (i) execute and deliver the Loan Documents to which it is a party and accept delivery thereof on its behalf from any Group Member, (ii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to the Collateral Agent under such Loan Documents, (iii) act as collateral agent for each Secured Party for purposes of the perfection of all Liens created by such agreements and all other purposes stated therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take such other action as is necessary or desirable to maintain the perfection and priority of the Liens created or purported to be created by the Loan Documents, (vi) except as may be otherwise specified in any Loan Document, exercise all remedies given to the Collateral Agent and the other Secured Parties with respect to the Collateral, whether under the Loan Documents, applicable Requirements of Law or otherwise (vii) execute any amendment, consent or waiver under the Loan Documents to which the Collateral Agent is a party on behalf of any Lender that has consented in writing to such amendment, consent or waiver, and (viii) exercise such powers as are reasonably incidental thereto; provided, however, that the Collateral Agent hereby appoints, authorizes and directs each Lender to act as collateral sub-agent for the Collateral Agent and the Lenders for purposes of the perfection of all Liens with respect to the Collateral, including any deposit account maintained by a Loan Party with, and cash and Cash Equivalents held by, such Lender, and may further authorize and direct the Lenders to take further actions as collateral sub-agents for purposes of enforcing such Liens or otherwise to transfer the Collateral subject thereto to the Collateral Agent, and each Lender hereby agrees to take such further actions to the extent, and only to the extent, so authorized and directed.

 

(e)  Limited Duties.  Under the Loan Documents, the Agents (i) are acting solely on behalf of the Lenders (except to the limited extent provided in Section 2.11(b) with respect to the Register), with duties that are entirely administrative in nature, notwithstanding the use of the defined term "Co-Administrative Agent", "Paying Agent", "Collateral Agent" or the terms "agent," "co-administrative agent", "paying agent" and "collateral agent" and similar terms in any Loan Document to refer to the Paying Agent, the Co-Administrative Agents or the Collateral Agent, which terms are used for title purposes only, (ii) are not assuming any obligation under any Loan Document other than as expressly set forth therein or any role as agent, fiduciary or trustee of or for any Lender or any other Secured Party and (iii) shall have no implied functions, responsibilities, duties, obligations or other liabilities under any Loan Document, and each Lender hereby waives and agrees not to assert any claim against any Agent based on the roles, duties and legal relationships expressly disclaimed in clauses (i) through (iii) above.  None of the Persons identified on the facing page of this Agreement as a "syndication agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Persons that are also Lenders, those obligations applicable to Lenders.

 

Section 10.2  Binding Effect.  Each Lender agrees that (i) any action taken by any Agent or the Required Lenders (or, if expressly required hereby, a greater proportion of the Lenders) in

 

  

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accordance with the provisions of the Loan Documents, (ii) any action taken by such Agent in reliance upon the instructions of Required Lenders (or, where so required, such greater proportion) and (iii) the exercise by such Agent or the Required Lenders (or, where so required, such greater proportion) of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Secured Parties.

 

Section 10.3  Use of Discretion.  (a)  No Action without Instructions.  No Agent shall be required to exercise any discretion or take, or to omit to take, any action, including with respect to enforcement or collection, except any action it is required to take or omit to take (i) under any Loan Document or (ii) pursuant to instructions from the Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion of the Lenders).

 

(b)  Right Not to Follow Certain Instructions.  Notwithstanding clause (a) above, no Agent shall be required to take, or to omit to take, any action (i) unless, upon demand, such Agent receives an indemnification satisfactory to it from the Lenders (or, to the extent applicable and acceptable to such Agent, any other Secured Party) against all Liabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted against such Agent or any Related Person thereof or (ii) that is, in the opinion of such Agent or its counsel, contrary to any Loan Document or applicable Requirement of Law.

 

Section 10.4  Delegation of Rights and Duties.  Each Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Loan Document by or through any trustee, co-agent, employee, attorney-in-fact and any other Person (including any Secured Party).  Any such Person shall benefit from this Article X to the extent provided by such Agent.

 

Section 10.5  Reliance and Liability.  (a)  Each Agent may, without incurring any liability hereunder, (i) treat the payee of any Note as its holder until such Note has been assigned in accordance with Section 11.2(e), (ii) rely on the Register to the extent set forth in Section 2.11, (iii) consult with any of its Related Persons and, whether or not selected by it, any other advisors, accountants and other experts (including advisors to, and accountants and experts engaged by, any Loan Party) and (iv) rely and act upon any document and information (including those transmitted by Electronic Transmission) and any telephone message or conversation, in each case believed by it to be genuine and transmitted, signed or otherwise authenticated by the appropriate parties.

 

(b)  None of the Agents or any of their Related Persons shall be liable for any action taken or omitted to be taken by any of them under or in connection with any Loan Document, and each Lender and the Borrower hereby waive and shall not assert (and the Borrower shall cause each other Loan Party to waive and agree not to assert) any right, claim or cause of action based thereon, except to the extent of liabilities resulting primarily from the gross negligence or willful misconduct of such Agent or, as the case may be, such Related Person (each as determined in a final, non-appealable judgment by a court of competent jurisdiction) in connection with the duties expressly set forth herein.  Without limiting the foregoing, no Agent:

 

  

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(i)  shall be responsible or otherwise incur liability for any action or omission taken in reliance upon the instructions of the Required Lenders or for the actions or omissions of any of its Related Persons selected with reasonable care (other than employees, officers and directors of such Agent, when acting on behalf of such Agent);

 

(ii)  shall be responsible to any Secured Party for the due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with, any Loan Document;

 

(iii)  makes any warranty or representation, or shall be responsible, to any Secured Party for any statement, document, information, representation or warranty made or furnished by or on behalf of any Related Person or any Loan Party in connection with any Loan Document or any transaction contemplated therein or any other document or information with respect to any Loan Party, whether or not transmitted or (except for documents expressly required under any Loan Document to be transmitted to the Lenders) omitted to be transmitted by such Agent, including as to completeness, accuracy, scope or adequacy thereof, or for the scope, nature or results of any due diligence performed by such Agent in connection with the Loan Documents; and

 

(iv)  shall have any duty to ascertain or to inquire as to the performance or observance of any provision of any Loan Document, whether any condition set forth in any Loan Document is satisfied or waived, as to the financial condition of any Loan Party or as to the existence or continuation or possible occurrence or continuation of any Default or Event of Default or shall be deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from the Borrower or any Lender describing such Default or Event of Default clearly labeled "notice of default" (in which case such Agent shall promptly give notice of such receipt to all Lenders);

 

and, for each of the items set forth in clauses (i) through (iv) above, each Lender and the Borrower hereby waives and agrees not to assert (and the Borrower shall cause each other Loan Party to waive and agree not to assert) any right, claim or cause of action it might have against such Agent based thereon.

 

Section 10.6  Agents Individually.  Each Agent and its Affiliates may make loans and other extensions of credit to, acquire Stock and Stock Equivalents of, engage in any kind of business with, any Loan Party or Affiliate thereof as though it were not acting as such Agent and may receive separate fees and other payments therefor.  To the extent an Agent or any of its Affiliates makes any Term Loan or otherwise becomes a Lender hereunder, it shall have and may exercise the same rights and powers hereunder and shall be subject to the same obligations and liabilities as any other Lender and the terms "Lender" and "Required Lender" and any similar terms shall, except where otherwise expressly provided in any Loan Document, include, without limitation, such Agent or such Affiliate, as the case may be, in its individual capacity as Lender or as one of the Required Lenders, respectively.

 

 

 

  

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    Section 10.7  Lender Credit Decision.  Each Lender acknowledges that it shall, independently and without reliance upon any Agent or any Lender or any of their Related Persons or upon any document (including the Disclosure Documents) solely or in part because such document was transmitted by such Agent or any of its Related Persons, conduct its own independent investigation of the financial condition and affairs of each Loan Party and make and continue to make its own credit decisions in connection with entering into, and taking or not taking any action under, any Loan Document or with respect to any transaction contemplated in any Loan Document, in each case based on such documents and information as it shall deem appropriate.  Except for documents expressly required by any Loan Document to be transmitted by a specific Agent to the Lenders, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Loan Party or any Affiliate of any Loan Party that may come in to the possession of such Agent or any of its Related Persons.

 

Section 10.8  Expenses; Indemnities.  (a)  Each Lender agrees to reimburse each Agent and each of their respective Related Persons (to the extent not reimbursed by any Loan Party) promptly upon demand for such Lender's Pro Rata Share of any costs and expenses (including fees, charges and disbursements of financial, legal and other advisors and Other Taxes paid in the name of, or on behalf of, any Loan Party) that may be incurred by such Agent or any of its Related Persons in connection with the preparation, syndication, execution, delivery, administration, modification, consent, waiver or enforcement (whether through negotiations, through any work-out, bankruptcy, restructuring or other legal or other proceeding or otherwise) of, or legal advice in respect of its rights or responsibilities under, any Loan Document.

 

(b)  Each Lender further agrees to indemnify each Agent and each of their respective Related Persons (to the extent not reimbursed by any Loan Party), from and against such Lender's aggregate Pro Rata Share of the Liabilities (including taxes, interests and penalties imposed for not properly withholding or backup withholding on payments made to on or for the account of any Lender) that may be imposed on, incurred by or asserted against such Agent or any of its Related Persons in any matter relating to or arising out of, in connection with or as a result of any Loan Document or any other act, event or transaction related, contemplated in or attendant to any such document, or, in each case, any action taken or omitted to be taken by such Agent or any of its Related Persons under or with respect to any of the foregoing; provided, however, that no Lender shall be liable to such Agent or any of its Related Persons to the extent such liability has resulted primarily from the gross negligence or willful misconduct of such Agent or, as the case may be, such Related Person, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.

 

Section 10.9  Resignation of Paying Agent.  (a)  The Paying Agent may resign at any time by delivering notice of such resignation to the Lenders and the Borrower, effective on the date set forth in such notice or, if no such date is set forth therein, upon the date that is 30 days after such notice is given.  If the Paying Agent delivers any such notice, (i) if GE Capital is a Lender or an Agent at the time of such notice of resignation, GE Capital may choose, in its sole discretion, to be the Paying Agent or (ii) if GE Capital is not a Lender or Agent at such time or chooses not to be the Paying Agent, then the Required Lenders shall have the right to appoint a successor Paying Agent.  If, within 30 days after the retiring Paying Agent having given notice of resignation, no successor Paying Agent has been appointed by the Required Lenders that has 

  

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accepted such appointment, then the retiring Paying Agent may, on behalf of the Lenders, appoint a successor Paying Agent from among the Lenders.  Each appointment under this clause(a) shall be subject to the prior written consent of the Borrower, which may not be unreasonably withheld but shall not be required during the continuance of a Default.

 

(b)  Effective immediately upon its resignation, (i) the retiring Paying Agent shall be discharged from its duties and obligations under the Loan Documents, (ii) the Lenders shall assume and perform all of the duties of the Paying Agent until a successor Paying Agent shall have accepted a valid appointment hereunder, (iii) the retiring Paying Agent and its Related Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions taken or omitted to be taken while such retiring Paying Agent was, or because such Paying Agent had been, validly acting as Paying Agent under the Loan Documents and (iv) subject to its rights under Section 10.3, the retiring Paying Agent shall take such action as may be reasonably necessary to assign to the successor Paying Agent its rights as Paying Agent under the Loan Documents.  Effective immediately upon its acceptance of a valid appointment as Paying Agent, a successor Paying Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Paying Agent under the Loan Documents.

 

Section 10.10  Resignation of Collateral Agent.  (a)  The Collateral Agent may resign at any time by delivering notice of such resignation to the Lenders and the Borrower, effective on the date set forth in such notice or, if no such date is set forth therein, upon the date that is 30 days after such notice is given.  If the Collateral Agent delivers any such notice, (i) if SG is a Lender or an Agent at the time of such notice of resignation, SG may choose, in its sole discretion, to be the Collateral Agent or (ii) if SG is not a Lender or Agent at such time or chooses not to be the Collateral Agent, then the Required Lenders shall have the right to appoint a successor Collateral Agent.  If, within 30 days after the retiring Collateral Agent having given notice of resignation, no successor Collateral Agent has been appointed by the Required Lenders that has accepted such appointment, then the retiring Collateral Agent may, on behalf of the Lenders, appoint a successor Collateral Agent from among the Lenders.  Each appointment under this clause (a) shall be subject to the prior written consent of the Borrower, which may not be unreasonably withheld but shall not be required during the continuance of a Default.

 

(b)  Effective immediately upon its resignation and the assignment of Liens in favor of the successor Collateral Agent or otherwise for the benefit of the Secured Parties, (i) the retiring Collateral Agent shall be discharged from its duties and obligations under the Loan Documents, (ii) the Lenders shall assume and perform all of the rights and duties of the Collateral Agent until a successor Collateral Agent shall have accepted a valid appointment hereunder, (iii) the retiring Collateral Agent and its Related Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions taken or omitted to be taken while such retiring Collateral Agent was, or because such Collateral Agent had been, validly acting as Collateral Agent under the Loan Documents and (iv) subject to its rights under Section 10.3, the retiring Collateral Agent shall take such action as may be reasonably necessary to assign to the successor Collateral Agent its rights and Liens as Collateral Agent under the Loan Documents.  Effective immediately upon its acceptance of a valid appointment as Collateral Agent and the assignment of Liens from the retiring Collateral Agent,

 

  

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a successor Collateral Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Collateral Agent under the Loan Documents.

Section 10.11  Resignation of Co-Administrative Agents.  (a)  Either Co-Administrative Agent may resign at any time by delivering notice of such resignation to the Lenders and the Borrower, effective on the date set forth in such notice or, if no such date is set forth therein, upon the date that is 30 days after such notice is given.  If a Co-Administrative Agent delivers any such notice at any time when there are two Co-Administrative Agents, the remaining Co-Administrative Agent shall serve as the sole Co-Administrative Agent thereafter.  If the Co-Administrative Agent delivers any such notice at any time when it is the sole Co-Administrative Agent, then the Required Lenders shall have the right to appoint a successor Co-Administrative Agent.  If, within 30 days after the retiring Co-Administrative Agent having given notice of resignation, no successor Co-Administrative Agent has been, if applicable, appointed by the Required Lenders that has accepted such appointment, then the retiring Co-Administrative Agent may, on behalf of the Lenders, appoint a successor Co-Administrative Agent from among the Lenders.  Each appointment under this clause (a) shall be subject to the prior written consent of the Borrower, which may not be unreasonably withheld but shall not be required during the continuance of a Default.

 

(b)  Effective immediately upon its resignation, (i) the retiring Co-Administrative Agent shall be discharged from its duties and obligations under the Loan Documents, (ii) if no Co-Administrative remains, the Lenders shall assume and perform all of the duties of the Co-Administrative Agent until a successor Co-Administrative Agent shall have accepted a valid appointment hereunder, (iii) the retiring Co-Administrative Agent and its Related Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions taken or omitted to be taken while such retiring Co-Administrative Agent was, or because such Co-Administrative Agent had been, validly acting as Co-Administrative Agent under the Loan Documents and (iv) subject to its rights under Section 10.3, and if applicable under clause (a) above, the retiring Co-Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Co-Administrative Agent its rights as Co-Administrative Agent under the Loan Documents.  Effective immediately upon its acceptance of a valid appointment as Co-Administrative Agent, a successor Co-Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Co-Administrative Agent under the Loan Documents.

 

Section 10.12  Release of Collateral or Guarantors.  Each Lender hereby consents to the release and hereby directs the Collateral Agent to release (or, in the case of clause (b)(ii) below, release or subordinate) the following:

 

(a)  any Subsidiary of the Borrower from its guaranty of any Obligation of any Loan Party if all of the Securities of such Subsidiary owned by any Group Member are Sold in a Sale permitted under the Loan Documents (including pursuant to a waiver or consent), to the extent that, after giving effect to such Sale, such Subsidiary would not be required to guaranty any Obligations pursuant to Section 7.10; and

 

(b)  any Lien held by the Collateral Agent for the benefit of the Secured Parties against (i) any Collateral that is Sold by a Loan Party in a Sale permitted by the Loan 

 

  

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Documents (including pursuant to a valid waiver or consent), to the extent all Liens required to be granted in such Collateral pursuant to Section 7.10 after giving effect to such Sale have been granted, (ii) any property subject to a Lien permitted hereunder in reliance upon Section 8.2(d) or (e) and (iii) all of the Collateral and all Loan Parties, upon (A) payment and satisfaction in full of all Term Loans and all other Obligations that the Paying Agent has been notified in writing are then due and payable, (B) deposit of cash collateral with respect to all contingent Obligations (including Secured Hedging Obligations), in amounts and on terms and conditions and with parties satisfactory to the Paying Agent and each Indemnitee that is owed such Obligations and (C) to the extent requested by the Paying Agent, receipt by the Secured Parties of liability releases from the Loan Parties each in form and substance acceptable to the Paying Agent.

 

For the avoidance of doubt, that application of funds from the Collection Account in accordance with Section 7.11 and, upon consent of the Paying Agent and the Co-Administrative Agents, use of the Debt Service Reserve Account to make payments of principal and interest do not constitute a release of Collateral and no Lender consent shall be required therefor.

 

Each Lender hereby directs the Paying Agent and the Collateral Agent, and each such Agent hereby agrees, upon receipt of reasonable advance notice from the Borrower, to execute and deliver or file such documents and to perform other actions reasonably necessary to release the guaranties and Liens when and as directed in this Section 10.12.

 

Section 10.13  Additional Secured Parties.  The benefit of the provisions of the Loan Documents directly relating to the Collateral or any Lien granted thereunder shall extend to and be available to any Secured Party that is not a Lender as long as, by accepting such benefits, such Secured Party agrees, as among the Collateral Agent and all other Secured Parties, that such Secured Party is bound by (and, if requested by the Collateral Agent, shall confirm such agreement in a writing in form and substance acceptable to the Collateral Agent) this Article X, Section 11.8, Section 11.9 and Section 11.20 and the decisions and actions of the Collateral Agent and the Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion of the Lenders) to the same extent a Lender is bound; provided, however, that, notwithstanding the foregoing, (a) such Secured Party shall be bound by Section 10.8 only to the extent of Liabilities, costs and expenses with respect to or otherwise relating to the Collateral held for the benefit of such Secured Party, in which case the obligations of such Secured Party thereunder shall not be limited by any concept of Pro Rata Share or similar concept and (b) except as set forth herein specifically for such Secured Party, (i) each of the Collateral Agent and the Lenders shall be entitled to act at its sole discretion, without regard to the interest of such Secured Party, regardless of whether any Obligation to such Secured Party thereafter remains outstanding, is deprived of the benefit of the Collateral, becomes unsecured or is otherwise affected or put in jeopardy thereby, and without any duty or liability to such Secured Party or any such Obligation and (ii) such Secured Party shall not have any right to be notified of, consent to, direct, require or be heard with respect to, any action taken or omitted in respect of the Collateral or under any Loan Document

 

Section 10.14  Removal of Agents.  Anything herein to the contrary notwithstanding, if at any time the Required Lenders determine that a Person serving as an Agent is (without taking into account any provision in the definition of "Defaulting Lender" or "Potential Defaulting Lender" requiring notice from the Paying Agent or any other party) a Defaulting Lender, the

 

  

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Required Lenders (determined after giving effect to Section 11.1(c)) may by notice to the Borrower and such Person remove such Person as such Agent (subject to any cure effected in accordance with Section 2.2(d)) and appoint an applicable replacement Agent hereunder.  Such removal will, to the fullest extent permitted by applicable law, be effective on the earlier of (i) the date a replacement Agent is appointed and (ii) the date 30 days after the giving of such notice by the Required Lenders (regardless of whether a replacement Agent has been appointed).  Each appointment under this Section 10.14 shall be subject to the prior written consent of the Borrower, which may not be unreasonably withheld but shall not be required during the continuance of a Default.

 

ARTICLE XI

MISCELLANEOUS

 

Section 11.1  Amendments, Waivers, Etc.  (a)  No amendment or waiver of any provision of any Loan Document (other than the Fee Letter and the Control Agreements) and no consent to any departure by any Loan Party therefrom shall be effective unless the same shall be in writing and signed (i) in the case of an amendment, consent or waiver to cure any ambiguity, omission, defect or inconsistency, by the Paying Agent, the Borrower and any other Loan Party which is a party to the Loan Document in question, (ii) in the case of granting a new Lien for the benefit of the Secured Parties or extending an existing Lien over additional property, by the Collateral Agent, the Borrower and any other Loan Party which is a party to the Loan Document in question, and (iii) in the case of any other amendment, consent or waiver by the Required Lenders (or by the Paying Agent with the consent of the Required Lenders), the Borrower and any other Loan Party which is a party to the Loan Document in question; provided, however, that no amendment, consent or waiver described in clauses (i), (ii), or (iii) above shall, unless in writing and signed by each Lender directly affected thereby (or by the Paying Agent with the consent of such Lender), in addition to any other Person the signature of which is otherwise required pursuant to any Loan Document, do any of the following:

 

(i)  waive any condition specified in Section 3.1, except any condition referring to any other provision of any Loan Document;

 

(ii)  subject such Lender to any additional obligation;

 

(iii)  reduce (including through release, forgiveness, assignment or otherwise) (A) the principal amount of, the interest rate on, or any obligation of the Borrower to repay (whether or not on a fixed date), any outstanding Term Loan owing to such Lender or (B) any fee or accrued interest payable to such Lender; provided, however, that this clause (iii) does not apply to any change to any provision increasing any interest rate or fee during the continuance of an Event of Default or to any payment of any such increase;

 

(iv)  waive or postpone any scheduled maturity date or other scheduled date fixed for the payment, in whole or in part, of principal of or interest on any Term Loan or fee owing to such Lender; provided, however, that this clause (iv) does not apply to any change to mandatory prepayments set forth in Sections 2.5(b), 2.5(c), 2.5(d) or to the application of any payment set forth in Section 2.9(b).

 

  

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(v)  except as provided in Section 10.12, release all or substantially all of the Collateral, Holdings from the Pledge Agreement or any Guarantor from its guaranty of any Obligation of the Borrower;

 

(vi)  reduce or increase the proportion of Lenders required for the Lenders (or any subset thereof) to take any action hereunder or change the definition of the terms "Required Lenders," "Pro Rata Share" or "Pro Rata Outstandings";

 

(vii)  amend Section 2.5(a), Section 2.9(c), Section 2.9(d), Section 10.12, Section 11.9 or this Section 11.1;

 

and provided, further, that (x) no amendment, waiver or consent shall affect the rights or duties under any Loan Document of, or any payment to, any Agent (or otherwise modify any provision of Article X or the application thereof) or any SPV that has been granted an option pursuant to Section 11.2(f) unless in writing and signed by such Agent or, as the case may be, such SPV in addition to any signature otherwise required and (y) the consent of the Borrower shall not be required to change any order of priority set forth in Section 2.9(c).

 

(b)  Each waiver or consent under any Loan Document shall be effective only in the specific instance and for the specific purpose for which it was given.  No notice to or demand on any Loan Party shall entitle any Loan Party to any notice or demand in the same, similar or other circumstances.  No failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right

 

(c)  Anything herein to the contrary notwithstanding, during such period as a Lender is a Defaulting Lender, to the fullest extent permitted by applicable law, such Lender will not be entitled to vote in respect of amendments, consents and waivers hereunder and the outstanding Term Loans of such Lender hereunder will not be taken into account in determining whether the Required Lenders or all of the Lenders, as required, have approved any such amendment, consent or waiver (and the definition of "Required Lenders" will automatically be deemed modified accordingly for the duration of such period); provided, that any such amendment, consent or waiver that would increase or extend the term of such Term Loans of such Defaulting Lender, extend the date fixed for the payment of principal or interest owing to such Defaulting Lender hereunder, reduce the principal amount of any obligation owing to such Defaulting Lender, reduce the amount of or the rate or amount of interest on any amount owing to such Defaulting Lender or of any fee payable to such Defaulting Lender hereunder, or alter the terms of this proviso, will require the consent of such Defaulting Lender.

 

(d)  No such amendment, waiver or consent with respect to this Agreement or any other Loan Document shall (i) alter the ratable treatment of the Secured Hedging Obligations in right of payment to principal on the Term Loans or (ii) result in the Secured Hedging Obligations becoming unsecured, in each case, in a manner adverse to such Secured Hedging Counterparty unless such amendment waiver or consent has been consented to in writing by (A) in the case of a Hedging Arrangement between the Borrower and a Secured Hedging Counterparty provided or arranged by a Lender or an Affiliate of a Lender, (1) such Lender or

 

  

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Affiliate (but only if such Lender is a "Lender" as of the date of such amendment, waiver or consent) or (2) if such Lender is not a "Lender" as of such date, the affected Secured Hedging Counterparty party thereto and (B) in the case of all other Hedging Arrangements evidencing Secured Hedging Obligations, the affected Secured Hedging Counterparty party thereto.

 

(e)  Anything herein to the contrary notwithstanding, neither Cinedigm nor any Affiliate thereof that purchases Term Loans pursuant to Section 11.2(g) below will be entitled to vote in respect of amendments, consents and waivers hereunder and Term Loans purchased by Cinedigm or such Affiliate that remain outstanding will not be taken into account in determining whether the Required Lenders or all of the Lenders, as required, have approved any such amendment, consent or waiver (and the definition of "Required Lenders" will automatically be deemed modified accordingly for so long such Term Loans remain outstanding).

 

Section 11.2  Assignments and Participations; Binding Effect.  (a)  Binding Effect.  This Agreement shall become effective when it shall have been executed by the Borrower and each Agent and when the Paying Agent shall have been notified by each Lender that such Lender has executed it.  Thereafter, it shall be binding upon and inure to the benefit of, but only to the benefit of, the Borrower (except for Article X), each Agent and each Lender and, to the extent provided in Section 10.13, each other Indemnitee and Secured Party and, in each case, their respective successors and permitted assigns.  Except as expressly provided in any Loan Document (including in Section 10.9, 10.10 and 10.11), none of the Loan Parties, the Lenders or the Agents shall have the right to assign any rights or obligations hereunder or any interest herein.

 

(b)  Right to Assign.  Each Lender may sell, transfer, negotiate or assign all or a portion of its rights and obligations hereunder (including all or a portion of its rights and obligations with respect to Term Loans) to (i) any existing Lender, (ii) any Affiliate or Approved Fund of any existing Lender or (iii) any Eligible Assignee consented to in writing by the Borrower (which consent shall not be unreasonably withheld or delayed, and the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Paying Agent within five (5) Business Days after having received notice thereof) unless an Event of Default has occurred and is continuing, in which case, no such consent is required; provided, however, that (x) such Sales must be ratable among the obligations owing to and owed by such Lender and (y) the aggregate outstanding principal amount (determined as of the effective date of the applicable Assignment) of the Term Loans subject to any such Sale shall be an integral multiple of $1,000,000, unless such Sale is made to an existing Lender or an Affiliate or Approved Fund of any existing Lender, is of the assignor's (together with its Affiliates' and Approved Funds') entire interest in the Term Loans or is made with the prior written consent of the Borrower and the Paying Agent.

 

(c)  Procedure.  The parties to each Sale made in reliance on clause (b) above (other than those described in clause (e) or (f) below) shall execute and deliver to the Paying Agent (which shall keep a copy thereof) an Assignment, together with any existing Note subject to such Sale (or any affidavit of loss therefor acceptable to the Paying Agent), any tax forms required to be delivered pursuant to Section 2.14(f) and payment by the assignee of an assignment fee in the amount of $3,500; provided, that, (i) no assignment fee shall be due and

 

  

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payable with respect to assignments between Lenders and their respective Affiliates or Approved Funds and (ii) in the case of multiple assignments occurring on the same Business Day to any permitted assignee referenced in clause (b) above and its respective Affiliates or Approved Funds, only one assignment fee shall be due and payable.  Upon receipt of all the foregoing, and conditioned upon such receipt, from and after the effective date specified in such Assignment, the Paying Agent shall record or cause to be recorded in the Register the information contained in such Assignment.

 

(d)  Effectiveness.  Effective upon the entry of such record in the Register, (i) such assignee shall become a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to such assignee pursuant to such Assignment, shall have the rights and obligations of a Lender, (ii) any applicable Note shall be transferred to such assignee through such entry and (iii) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment, relinquish its rights (except for those surviving the termination of the Term Loan Commitments and the payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment (and, in the case of an Assignment covering all or the remaining portion of an assigning Lender's rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto except that each Lender agrees to remain bound by Article X, Section 11.8 and Section 11.9 to the extent provided in Section 10.13).

 

(e)  Grant of Security Interests.  In addition to the other rights provided in this Section 11.2, each Lender may grant a security interest in, or otherwise assign as collateral, any of its rights under this Agreement, whether now owned or hereafter acquired (including rights to payments of principal or interest on the Term Loans), to (A) any federal reserve bank (pursuant to Regulation A of the Federal Reserve Board), without notice to the Paying Agent or (B) any holder of, or trustee for the benefit of the holders of, such Lender's Securities by notice to the Paying Agent; provided, however, that no such holder or trustee, whether because of such grant or assignment or any foreclosure thereon (unless such foreclosure is made through an assignment in accordance with clause (b) above), shall be entitled to any rights of such Lender hereunder and no such Lender shall be relieved of any of its obligations hereunder.

 

(f)  Participants and SPVs.  In addition to the other rights provided in this Section 11.2, each Lender may, (x) with notice to the Paying Agent, grant to an SPV the option to make all or any part of any Term Loan that such Lender would otherwise be required to make hereunder (and the exercise of such option by such SPV and the making of Term Loans pursuant thereto shall satisfy the obligation of such Lender to make such Term Loans hereunder) and such SPV may assign to such Lender the right to receive payment with respect to any Obligation and (y) without notice to or consent from the Paying Agent or the Borrower, sell participations to one or more Persons in or to all or a portion of its rights and obligations under the Loan Documents (including all its rights and obligations with respect to the Term Loans; provided, however, that, whether as a result of any term of any Loan Document or of such grant or participation, (i) no such SPV or participant shall have a commitment, or be deemed to have made an offer to commit, to make Term Loans hereunder, and, except as provided in the applicable option agreement, none shall be liable for any obligation of such Lender hereunder, (ii) such Lender's rights and obligations, and the rights and obligations of the Loan Parties and the Secured Parties

 

  

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towards such Lender, under any Loan Document shall remain unchanged and each other party hereto shall continue to deal solely with such Lender, which shall remain the holder of the Obligations in the Register, except that (A) each such participant and SPV shall be entitled to the benefit of Sections 2.12 and 2.13, but only to the extent such participant or SPV delivers the tax forms such Lender is required to collect pursuant to Section 2.14(f) and then only to the extent of any amount to which such Lender would be entitled in the absence of any such grant or participation and (B) each such SPV may receive other payments that would otherwise be made to such Lender with respect to Term Loans funded by such SPV to the extent provided in the applicable option agreement and set forth in a notice provided to the Paying Agent by such SPV and such Lender, provided, however, that in no case (including pursuant to clause (A) or (B) above) shall an SPV or participant have the right to enforce any of the terms of any Loan Document, and (iii) the consent of such SPV or participant shall not be required (either directly, as a restraint on such Lender's ability to consent hereunder or otherwise) for any amendments, waivers or consents with respect to any Loan Document or to exercise or refrain from exercising any powers or rights such Lender may have under or in respect of the Loan Documents (including the right to enforce or direct enforcement of the Obligations), except for those described in clauses (iii) and (iv) of Section 11.1(a) with respect to amounts, or dates fixed for payment of amounts, to which such participant or SPV would otherwise be entitled and, in the case of participants, except for those described in Section 11.1(a)(v) (or amendments, consents and waivers with respect to Section 10.12 to release all or substantially all of the Collateral).  No party hereto shall institute (and the Borrower shall cause each other Loan Party not to institute) against any SPV grantee of an option pursuant to this clause (f) any bankruptcy, reorganization, insolvency, liquidation or similar proceeding, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper of such SPV; provided, however, that each Lender having designated an SPV as such agrees to indemnify each Indemnitee against any Liability that may be incurred by, or asserted against, such Indemnitee as a result of failing to institute such proceeding (including a failure to get reimbursed by such SPV for any such Liability).  The agreement in the preceding sentence shall survive the payment in full of the Obligations

 

(g)  Permitted Term Loan Purchases.  Notwithstanding anything to the contrary in this Section 11.2, so long as no Default or Event of Default has occurred and is continuing or would result therefrom, Cinedigm, any Affiliate of Cinedigm (other than a Group Member), or any other holder of Stock or Stock Equivalents of Cinedigm or any Affiliate of Cinedigm which Stock constitutes (or, in the case of Stock Equivalents, would constitute if exercised) 5% or more of the Voting Stock of Cinedigm or such Affiliate (each of the foregoing, a "Related Purchaser"), may purchase outstanding Term Loans on the following basis:

 

(i)  at any time prior to the Maturity Date, any Related Purchaser may purchase all or any portion of the Term Loans of one or more Lenders pursuant to a Term Loan Purchase Assignment between such Related Purchaser and such Lender; provided that (A) after giving effect to all Term Loans previously purchased by Related Purchasers in accordance with this Section 11.2(g), Related Purchasers may not purchase in the aggregate more than 10% of the aggregate outstanding amount of the Term Loans outstanding as of any date of purchase and (B) the aggregate outstanding principal amount (determined as of the effective date of the applicable Term Loan Purchase Assignment) of the Term Loans so purchased shall be an integral multiple of $1,000,000,

 

  

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unless such purchase is of the assignor's (together with its Affiliates' and Approved Funds') entire interest in the Term Loan;

 

(ii)  reasonably promptly after such Related Purchaser has purchased any Term Loans, the Borrower shall notify the Co-Administrative Agents and the Lenders of the aggregate principal amount of the Term Loans so purchased and provide an executed copy of the Term Loan Purchase Assignment evidencing such purchase to the Co-Administrative Agents as soon as practicable upon execution thereof;

 

(iii)  with respect to all purchases made by Related Purchasers, (A) the Borrower shall pay all accrued and unpaid interest (if any) on the purchased Term Loans to the date of such purchase of such Term Loans, (B) such purchases shall not be deemed to be voluntary prepayments by the Borrower pursuant to Section 2.4 or otherwise; (C) no such purchases (or subsequent cancellations) shall change the scheduled amortization required by Section 2.3, except to reduce the amount outstanding and due and payable on the Maturity Date (and such reduction, for avoidance of doubt, shall only apply, on a non-pro rata basis, to the Term Loans purchased by Related Purchasers and deemed cancelled pursuant to clause (iv) below; and (D) except for the sole purpose of receiving interest and principal payments as set forth below in clause (iv)(B) below, no Related Purchaser shall be deemed to be a "Lender" for purposes of this Agreement or any other Loan Document;

 

(iv)  contemporaneously with a purchase by such Related Purchaser pursuant to this Section 11.2(g) and at such Related Purchaser's option, (A) any Term Loans so purchased shall be deemed cancelled for all purposes and no longer outstanding (and may not be resold or reassigned by such Related Purchaser), for all purposes of this Agreement and the other Loan Documents, including, but not limited to (1) the making of, or the application of, any payments to the Lenders under this Agreement or any other Loan Document, (2) the making of any request, demand, authorization, direction, notice, amendment, consent or waiver under this Agreement or any other Loan Document, (3) the providing of any rights to such Related Purchaser as a Lender under this Agreement or any other Loan Document, or (4) the determination of Required Lenders, or for any similar or related purpose, under this Agreement or any other Loan Document or (B) any Term Loans so purchased may remain outstanding and such Related Purchaser may receive any interest and principal payments payable on such Term Loans in accordance with the terms hereof.  Prior or contemporaneously with any purchase of Term Loans, such Related Purchaser shall notify the Co-Administrative Agents and the Paying Agent whether the Term Loans to be purchased will be cancelled or remain outstanding in accordance with clauses (A) or (B) above; and

 

(v)  effective upon the entry of such Term Loan Purchase Assignment in the Register, (A) such Related Purchaser shall have the rights and obligations of a Lender solely with respect to the receipt of principal and interest payments on the purchased Term Loans in accordance with the terms hereof and (B) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Term Loan Purchase Assignment, relinquish its rights (except for those surviving the termination of the Term Loan Commitments and the

 

  

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payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment (and, in the case of a Term Loan Purchase Assignment covering all or the remaining portion of an assigning Lender's rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto except that each Lender agrees to remain bound by Article X, Section 11.8 and Section 11.9 to the extent provided in Section 10.13).

 

Section 11.3  Costs and Expenses.  Any action taken by any Loan Party under or with respect to any Loan Document, even if required under any Loan Document or at the request of any Secured Party, shall be at the expense of such Loan Party, and no Secured Party shall be required under any Loan Document to reimburse any Loan Party or Group Member therefor except as expressly provided therein.  In addition, the Borrower agrees to pay or reimburse upon demand (a) the Agents for all reasonable out-of-pocket costs and expenses incurred by any of them or any of their Related Persons in connection with the investigation, development, preparation, negotiation, syndication, execution, interpretation or administration of, any modification of any term of or termination of, any Loan Document, any commitment or proposal letter therefor, any other document prepared in connection therewith or the consummation and administration of any transaction contemplated therein (including periodic audits in connection therewith and environmental audits and assessments), in each case including the reasonable fees, charges and disbursements of legal counsel to the Paying Agent or such Related Persons, fees, costs and expenses incurred in connection with Intralinks® or any other E-System and allocated to the Term Loans by the Paying Agent in its sole discretion, (b) the Paying Agent and Collateral Agent for all reasonable costs and expenses incurred by any of them or any of their Related Persons in connection with internal audit reviews, field examinations and Collateral examinations (which shall be reimbursed, in addition to the out-of-pocket costs and expenses of such examiners, at the per diem rate per individual charged by the Paying Agent or the Collateral Agent for its examiners) and (c) each of the Agents, their Related Persons, and each Lender for all costs and expenses incurred in connection with (i) any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a "work-out," (ii) the enforcement or preservation of any right or remedy under any Loan Document, any Obligation, with respect to the Collateral or any other related right or remedy or (iii) the commencement, defense, conduct of, intervention in, or the taking of any other action with respect to, any proceeding (including any bankruptcy or insolvency proceeding) related to any Loan Party, Loan Document or Obligation (or the response to and preparation for any subpoena or request for document production relating thereto), including fees and disbursements of counsel (including allocated costs of internal counsel).

 

Section 11.4  Indemnities.  (a)  The Borrower agrees to indemnify, hold harmless and defend each Agent, each Lender, each Person (other than the Borrower) party to a Secured Hedging Document and each of their respective Related Persons (each such Person being an "Indemnitee") from and against all Liabilities (including brokerage commissions, fees and other compensation) that may be imposed on, incurred by or asserted against any such Indemnitee in any matter relating to or arising out of, in connection with or as a result of (i) any Loan Document, any Disclosure Document, any Obligation (or the repayment thereof), the use or intended use of the proceeds of any Term Loan or any securities filing of, or with respect to, any Loan Party, (ii) any commitment letter, proposal letter or term sheet with any Person or any

 

  

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Contractual Obligation, arrangement or understanding with any broker, finder or consultant, in each case entered into by or on behalf of any Loan Party or any Affiliate of any of them in connection with any of the foregoing and any Contractual Obligation entered into in connection with any E-Systems or other Electronic Transmissions and this Agreement or the transactions contemplated hereby, (iii) any actual or prospective investigation, litigation or other proceeding relating to any of the matters described in clause (i) or (ii) of this Section 11.4, whether or not brought by any such Indemnitee or any of its Related Persons, any holders of Securities or creditors (and including reasonable attorneys' fees in any case), whether or not any such Indemnitee, Related Person, holder or creditor is a party thereto, and whether or not based on any securities or commercial law or regulation or any other Requirement of Law or theory thereof, including common law, equity, contract, tort or otherwise, or (iv) any other act, event or transaction related, contemplated in or attendant to any of the foregoing (collectively, the "Indemnified Matters"); provided, however, that the Borrower shall not have any liability under this Section 11.4 to any Indemnitee with respect to any Indemnified Matter, and no Indemnitee shall have any liability with respect to any Indemnified Matter (to the extent such Indemnitee would otherwise be liable) other than, to the extent such liability has resulted solely from the gross negligence or willful misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.  Furthermore, the Borrower waives and agrees not to assert against any Indemnitee, and shall cause each other Loan Party to waive and not assert against any Indemnitee, any right of contribution with respect to any Liabilities that may be imposed on, incurred by or asserted against any Related Person.

 

(b)  Without limiting the foregoing, "Indemnified Matters" includes all Environmental Liabilities, including those arising from, or otherwise involving, any property of any Related Person or any actual, alleged or prospective damage to property or natural resources or harm or injury alleged to have resulted from any Release of Hazardous Materials on, upon or into such property or natural resource or any property on or contiguous to any real property of any Related Person, whether or not, with respect to any such Environmental Liabilities, any Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the successor-in-interest to any Related Person or the owner, lessee or operator of any property of any Related Person through any foreclosure action, in each case except to the extent such Environmental Liabilities (i) are incurred solely following foreclosure by any Secured Party or following any Secured Party having become the successor-in-interest to any Loan Party and (ii) are attributable solely to acts of such Indemnitee.

 

Section 11.5  Survival.  Any indemnification or other protection provided to any Indemnitee pursuant to any Loan Document (including pursuant to Section 2.13, Section 2.14, Article X, Section 11.3, Section 11.4 or this Section 11.5) and all representations and warranties made in any Loan Document shall (A) survive the termination of the Term Loan Commitments and the payment in full of other Obligations and (B) inure to the benefit of any Person that at any time held a right thereunder (as an Indemnitee or otherwise) and, thereafter, its successors and permitted assigns.

 

Section 11.6  Limitation of Liability for Certain Damages.  In no event shall any Indemnitee be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).  The Borrower hereby waives, releases and agrees (and shall cause each other Loan Party to waive, release and agree)

 

  

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not to sue upon any such claim for any special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

Section 11.7  Lender-Creditor Relationship.  The relationship between the Lenders and the Agents, on the one hand, and the Loan Parties, on the other hand, is solely that of lender and creditor.  No Secured Party has any fiduciary relationship or duty to any Loan Party arising out of or in connection with, and there is no agency, tenancy or joint venture relationship between the Secured Parties and the Loan Parties by virtue of, any Loan Document or any transaction contemplated therein.

 

Section 11.8  Right of Setoff.  Each of the Paying Agent, the Collateral Agent, each Lender and each Affiliate (including each branch office thereof) of any of them is hereby authorized, without notice or demand (each of which is hereby waived by the Borrower), at any time and from time to time during the continuance of any Event of Default and to the fullest extent permitted by applicable Requirements of Law, to set off and apply any and all deposits (whether general or special, time or demand, provisional or final) at any time held and other Indebtedness, claims or other obligations at any time owing by the Paying Agent, the Collateral Agent, such Lender or any of their respective Affiliates to or for the credit or the account of the Borrower against any Obligation of any Loan Party now or hereafter existing, whether or not any demand was made under any Loan Document with respect to such Obligation and even though such Obligation may be unmatured.  Each of the Paying Agent, the Collateral Agent and each Lender agrees promptly to notify the Borrower and the Paying Agent after any such setoff and application made by such Lender or its Affiliates; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application.  The rights under this Section 11.8 are in addition to any other rights and remedies (including other rights of setoff) that the Paying Agent, the Collateral Agent and the Lenders and their Affiliates and other Secured Parties may have.

 

Section 11.9  Sharing of Payments, Etc.  If any Lender, directly or through an Affiliate or branch office thereof, obtains any payment of any Obligation of any Loan Party (whether voluntary, involuntary or through the exercise of any right of setoff or the receipt of any Collateral or "proceeds" (as defined under the applicable UCC) of Collateral) other than pursuant to Sections 2.13, 2.14 and 2.15 and such payment exceeds the amount such Lender would have been entitled to receive if all payments had gone to, and been distributed by, the Paying Agent in accordance with the provisions of the Loan Documents, such Lender shall purchase for cash from other Secured Parties such participations in their Obligations as necessary for such Lender to share such excess payment with such Secured Parties to ensure such payment is applied as though it had been received by the Paying Agent and applied in accordance with this Agreement (or, if such application would then be at the discretion of the Borrower, applied to repay the Obligations in accordance herewith); provided, however, that (a) if such payment is rescinded or otherwise recovered from such Lender in whole or in part, such purchase shall be rescinded and the purchase price therefor shall be returned to such Lender without interest and (b) such Lender shall, to the fullest extent permitted by applicable Requirements of Law, be able to exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

 

  

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Section 11.10  Marshaling; Payments Set Aside.  No Secured Party shall be under any obligation to marshal any property in favor of any Loan Party or any other party or against or in payment of any Obligation.  To the extent that any Secured Party receives a payment from the Borrower, from the proceeds of the Collateral, from the exercise of its rights of setoff, any enforcement action or otherwise, and such payment is subsequently, in whole or in part, invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not occurred.

 

Section 11.11  Notices.  (a)  Addresses.  All notices, demands, requests, directions and other communications required or expressly authorized to be made by this Agreement shall, whether or not specified to be in writing but unless otherwise expressly specified to be given by any other means, be given in writing and(i) addressed to, with respect to any party, the Persons and addresses specified under such party's name on Schedule II or on the signature page of any applicable Assignment, (ii) except as provided in Section 11.11(b), or in the case of reporting required to be delivered to Moody's hereunder (which shall be delivered electronically to the address specified in Schedule II), posted to Intralinks® (to the extent such system is available and set up by or at the direction of the Paying Agent prior to posting) in an appropriate location by uploading such notice, demand, request, direction or other communication to www.intralinks.com, faxing it to 866-545-6600 with an appropriate bar-coded fax coversheet or using such other means of posting to Intralinks® as may be available and reasonably acceptable to the Paying Agent prior to such posting, (iii) except as provided in Section 11.11(b), posted to any other E-System set up by or at the direction of the Paying Agent in an appropriate location or (iv) addressed to such other address as shall be notified in writing (A) in the case of the Borrower and the Paying Agent, to the other parties hereto and (B) in the case of all other parties, to the Borrower and the Paying Agent.  Transmission by electronic mail (including E-Fax, even if transmitted to the fax numbers set forth in clause (i) above) shall not be sufficient or effective to transmit any such notice under this clause (a) unless such transmission is an available means to post to any E-System.

 

(b)  Effectiveness.  All communications described in clause (a) above and all other notices, demands, requests and other communications made in connection with this Agreement shall be effective and be deemed to have been received (i) if delivered by hand, upon personal delivery, (ii) if delivered by overnight courier service, one Business Day after delivery to such courier service, (iii) if delivered by mail, when deposited in the mails, (iv) if delivered by facsimile, including E-Fax (other than to post to an E-System pursuant to clause (a)(ii) or (a)(iii) above), upon sender's receipt of confirmation of proper transmission, and (iv) if delivered by posting to any E-System, on the later of the date of such posting in an appropriate location and the date access to such posting is given to the recipient thereof in accordance with the standard procedures applicable to such E-System; provided, however, that no communications to the Paying Agent pursuant to Article II or Article X shall be effective until received by the Paying Agent and no notice, demand, request, direction or other communication to any Loan Party pursuant to Section 9.1 shall be effective unless given in accordance with the methods described in clauses (i) through (iv) (other than by E-Fax) of this Section 11.11(b).

 

  

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Section 11.12  Electronic Transmissions.  (a)  Authorization.  Subject to the provisions of Section 11.11, each of the Paying Agent, the Borrower, the Lenders and each of their Related Persons is authorized (but not required) to transmit, post or otherwise make or communicate, in its sole discretion, Electronic Transmissions in connection with any Loan Document and the transactions contemplated therein.  The Borrower and each Secured Party hereby acknowledges and agrees, and the Borrower shall cause each other Group Member to acknowledge and agree, that the use of Electronic Transmissions is not necessarily secure and that there are risks associated with such use, including risks of interception, disclosure and abuse and each indicates it assumes and accepts such risks by hereby authorizing the transmission of Electronic Transmissions.

 

(b)  Signatures.  Subject to the provisions of Section 11.11, (i)(A) no posting to any E-System shall be denied legal effect merely because it is made electronically, (B) each E-Signature on any such posting shall be deemed sufficient to satisfy any requirement for a "signature" and (C) each such posting shall be deemed sufficient to satisfy any requirement for a "writing," in each case including pursuant to any Loan Document, any applicable provision of any UCC, the federal Uniform Electronic Transactions Act, the Electronic Signatures in Global and National Commerce Act and any substantive or procedural Requirement of Law governing such subject matter, (ii) each such posting that is not readily capable of bearing either a signature or a reproduction of a signature may be signed, and shall be deemed signed, by attaching to, or logically associating with such posting, an E-Signature, upon which each Secured Party and Loan Party may rely and assume the authenticity thereof, (iii) each such posting containing a signature, a reproduction of a signature or an E-Signature shall, for all intents and purposes, have the same effect and weight as a signed paper original and (iv) each party hereto or beneficiary hereto agrees not to contest the validity or enforceability of any posting on any E-System or E-Signature on any such posting under the provisions of any applicable Requirement of Law requiring certain documents to be in writing or signed; provided, however, that nothing herein shall limit such party's or beneficiary's right to contest whether any posting to any E-System or E-Signature has been altered after transmission.

 

(c)  Separate Agreements.  All uses of an E-System shall be governed by and subject to, in addition to Section 11.11 and this Section 11.12, separate terms and conditions posted or referenced in such E-System and related Contractual Obligations executed by Secured Parties and Group Members in connection with the use of such E-System.

 

(d)  LIMITATION OF LIABILITY.  ALL E-SYSTEMS AND ELECTRONIC TRANSMISSIONS SHALL BE PROVIDED "AS IS" AND "AS AVAILABLE".  NONE OF AGENTS, ANY LOAN PARTY OR ANY OF THEIR RESPECTIVE RELATED PERSONS WARRANTS THE ACCURACY, ADEQUACY OR COMPLETENESS OF ANY E-SYSTEMS OR ELECTRONIC TRANSMISSION, AND EACH DISCLAIMS ALL LIABILITY FOR ERRORS OR OMISSIONS THEREIN.  NO WARRANTY OF ANY KIND IS MADE BY THE AGENTS, ANY LOAN PARTY OR ANY OF THEIR RESPECTIVE RELATED PERSONS IN CONNECTION WITH ANY E-SYSTEMS OR ELECTRONIC COMMUNICATION, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS.  The Borrower and each Secured Party agrees (and the Borrower shall cause each other Loan Party to agree) that neither the

 

  

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Agents nor any Loan Party has any responsibility for maintaining or providing any equipment, software, services or any testing required in connection with any Electronic Transmission or otherwise required for any E-System.

 

Section 11.13  Governing Law.  This Agreement, each other Loan Document that does not expressly set forth its applicable law, and the rights and obligations of the parties hereto and thereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

Section 11.14  Jurisdiction.  (a)  Submission to Jurisdiction.  Any legal action or proceeding with respect to any Loan Document may be brought in the courts of the State of New York located in the City of New York, Borough of Manhattan, or of the United States for the Southern District of New York and, by execution and delivery of this Agreement, each party hereto hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts.  The parties hereto (and, to the extent set forth in any other Loan Document, each other Loan Party) hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.

 

(b)  Service of Process.  Each party hereto (and, to the extent set forth in any other Loan Document, each other Loan Party) hereby irrevocably waives personal service of any and all legal process, summons, notices and other documents and other service of process of any kind and consents to such service in any suit, action or proceeding brought in the United States with respect to or otherwise arising out of or in connection with any Loan Document by any means permitted by applicable Requirements of Law, including by the mailing thereof (by registered or certified mail, postage prepaid) to the address of each party hereto specified in Section 11.11 (and shall be effective when such mailing shall be effective, as provided therein).  Each party hereto (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

(c)  Non-Exclusive Jurisdiction.  Nothing contained in this Section 11.14 shall affect the right of the Agents, any Lender or any Loan Party to serve process in any other manner permitted by applicable Requirements of Law or the right of any party hereto to commence legal proceedings or otherwise proceed against any party hereto, any Loan Party or any of the Collateral in any other jurisdiction.

 

Section 11.15  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO OTHER PARTY AND NO RELATED PERSON OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD

 

  

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NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THE LOAN DOCUMENTS, AS APPLICABLE, BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.15.

 

Section 11.16  Severability.  Any provision of any Loan Document being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of any Loan Document or any part of such provision in any other jurisdiction.

 

Section 11.17  Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.  Delivery of an executed signature page of this Agreement by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

Section 11.18  Entire Agreement.  The Loan Documents embody the entire agreement of the parties and supersede all prior agreements and understandings relating to the subject matter thereof and any prior letter of interest, commitment letter, fee letter, confidentiality and similar agreements involving any Loan Party and any of the Agents or any Lender or any of their respective Affiliates relating to a financing of substantially similar form, purpose or effect.  In the event of any conflict between the terms of this Agreement and any other Loan Document, the terms of this Agreement shall govern (unless such terms of such other Loan Documents are necessary to comply with applicable Requirements of Law, in which case such terms shall govern to the extent necessary to comply therewith).

 

Section 11.19  Use of Name.  The Borrower agrees, and shall cause each other Loan Party to agree, that it shall not, and none of its Affiliates shall, issue any press release or other public disclosure (other than any document filed with any Governmental Authority relating to a public offering of the Securities of any Loan Party) using the name, logo or otherwise referring to GE Capital or SG or of any of their Affiliates, the Loan Documents or any transaction contemplated therein to which the Secured Parties are party without at least 2 Business Days' prior notice to GE Capital and SG and without the prior consent of GE Capital and SG except to the extent required to do so under applicable Requirements of Law and then, only after consulting with SG prior thereto.

 

Section 11.20  Non-Public Information; Confidentiality.  (a)  Each Lender acknowledges and agrees that it may receive material non-public information hereunder concerning the Loan Parties and their Affiliates and Securities and agrees to use such information in compliance with all relevant policies, procedures and Contractual Obligations and applicable Requirements of Laws (including United States federal and state security laws and regulations).

 

(b)  Each Lender and each Agent agrees to use all reasonable efforts to maintain, in accordance with its customary practices, the confidentiality of information obtained by it pursuant to any Loan Document and designated in writing by any Loan Party as

 

  

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confidential, except that such information may be disclosed (i) with the Borrower's prior written consent, (ii) to Related Persons of such Lender or Agent, as the case may be, that are advised of the confidential nature of such information and are instructed to keep such information confidential, (iii) to the extent such information presently is or hereafter becomes available to such Lender or Agent, as the case may be, on a non-confidential basis from a source other than any Loan Party, (iv) to the extent disclosure is required by applicable Requirements of Law or other legal process or requested or demanded by any Governmental Authority, (v) to the extent necessary or customary for inclusion in league table measurements or in any tombstone or other advertising materials (provided that disclosure in any tombstone or other advertising materials shall be limited to matters previously disclosed in any press release made by or on behalf of a Loan Party or Cinedigm or otherwise consented to in writing by the Borrower), (vi) to the National Association of Insurance Commissioners or any similar organization, any examiner or any nationally recognized rating agency or otherwise to the extent consisting of general portfolio information that does not identify the Borrower or any other Loan Party, (vii) to current or prospective assignees, SPVs grantees of any option described in Section 11.2(f) or participants, direct or contractual counterparties to any Secured Hedging Document or any Hedging Agreement permitted hereunder and to their respective Related Persons, in each case to the extent such assignees, participants, counterparties or Related Persons agree to be bound by provisions substantially similar to the provisions of this Section 11.20 and (viii) in connection with the exercise of any remedy under any Loan Document.  In the event of any conflict between the terms of this Section 11.20 and those of any other Contractual Obligation entered into with any Loan Party (whether or not a Loan Document), the terms of this Section 11.20 shall govern.

 

Section 11.21  USA Patriot Act; OFAC.  Each Lender that is subject to the Act (as hereinafter defined) and the Paying Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Borrower, each other Group Member and each shareholder of the Borrower holding 10% or more of the outstanding common shares, which information includes the name and address of the Borrower and other information that will allow such Lender or the Paying Agent, as applicable, to identify the Borrower in accordance with the Act. In addition, Borrower agrees to (a) ensure that no Person who owns a controlling interest in or otherwise controls Borrower or any Subsidiary of Borrower is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control of the United States Treasury Department ("OFAC"), the Department of the Treasury or included in any Executive Order of the President of the United States, (b) not to use or permit the use of proceeds of the Obligations to violate any of the foreign asset control regulations of the OFAC or any enabling statute or Executive Order of the President of the United States relating thereto, and (c) comply, or cause its Subsidiaries to comply, with the applicable laws.

 

[SIGNATURE PAGES FOLLOW]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

	
 CINEDIGM DIGITAL FUNDING I, LLC, as Borrower

 

 

	
By:

	
/s/ A. Dale Mayo

	
Name:

	
A. Dale Mayo

	
Title:

	
Chief Executive Officer

Signature Page to Credit Agreement

  

  

  

 

	
SOCIÉTÉ GÉNÉRALE, NEW YORK 

BRANCH, as Co-Administrative Agent, Paying 

Agent and Lender

 

 

	
By:

	
/s/ Richard O. Knowlton

	
Name:

	
Richard O. Knowlton

	
Title:

	
Managing Director

Signature Page to Credit Agreement

  

  

  

	
GENERAL ELECTRIC CAPITAL 

CORPORATION, as Co-Administrative Agent 

and Collateral Agent

 

 

	
By:

	
/s/ Carle A. Felton

	
Name:

	
Carl A. Felton

	
Title:

	
Duly Authorized Signatory

Signature Page to Credit Agreement

  

  

  

 

 

	
NATIXIS NEW YORK BRANCH, as Lender

 

 

	
By:

	
/s/ Frank Madden

	
Name:

	
Frank Madden

	
Title:

	
Managing Director

 

	
By:

	
/s/ Gerardo Canet

	
Name:

	
Gerardo Canet

	
Title:

	
Director

 

Signature Page to Credit Agreement

  

  

  

SCHEDULE I

TERM LOAN COMMITMENTS

 

	
Lender

	
Commitment Amount

	
Commitment %

	
Société Générale, New York Branch

	
$

	
141,500,000.00

	
82%

	
General Electric Capital Corporation

	
$

	
19,000,000.00

	
11%

	
Natixis NY Branch

	
$

	
12,000,000.00

	
7%

	
Total

	
$

	
172,500,000.00

	
100%

 

  

  

  

SCHEDULE II

ADDRESSES FOR NOTICES

	
Lender

 

	
Address for Notice

 

	
Natixis NY Branch

	
1251 Avenue of the Americas

New York, NY 10020

Attention: Gerry Canet

Facsimile:  347 402 3021

Telephone:  212 872 5041

 

	
Allied Irish Banks, plc

	
Goodbody Building, Block B

Ballsbridge Park, Dublin 4, Ireland

Attention: Bernie Glynn/Frances Codd

Facsimile: 011 353 1 641 6668

Telephone: 011 353 1 641 6633-6636

 

	
Société Générale, New York Branch

	
1221 Avenue of the Americas

New York, NY

Attention: Justine Dupont-Nivet

Facsimile: 212.278.6146

Telephone: 212.278.5915

 

	
General Electric Capital Corporation

	
2325 Lakeview Parkway, Suite 700

Alpharetta, Georgia 30009

Attention: Account Manager

Facsimile: 678.624.7903

Telephone: 678.624.7928

 

	
Moody's Investors Service, Inc.

	
7 WTC, 250 Greenwich Street

New York, New York 10007

ServicerReports@moodys.com

e-fax: 212-298-7139

  

  

  

SCHEDULE 4.2

GOVERNMENTAL PERMITS

None

  

  

  

SCHEDULE 4.3

OWNERSHIP OF GROUP MEMBERS AND SUBSIDIARIES

Cinedigm Digital Funding I, LLC, (the “Borrower”) is a Delaware limited liability company. Christie/AIX, Inc., a Delaware corporation is the sole member of the Borrower.  The Borrower has no subsidiaries.

  

  

  

SCHEDULE 4.13

ERISA

None

  

  

  

SCHEDULE 4.14

ENVIRONMENTAL MATTERS

None

  

  

  

SCHEDULE 4.16

REAL PROPERTY

None

  

  

  

SCHEDULE 4.19

AGREEMENTS AND OTHER DOCUMENTS

Master License Agreements

1.           Master License Agreement, dated as of April 11, 2006, by and between Christie/AIX, Inc., as licensor, and ADM Cinema Corporation, a Delaware corporation, as licensee.

 

2.           Master License Agreement, dated as of October 23, 2005, by and between Christie/AIX, Inc., as licensor, and American Cinemas Group, Inc., a California corporation, as licensee, and as amended by two amendments, both dated September 17, 2007.

 

3.           Master License Agreement, dated as of December 16, 2005, by and between Christie/AIX, Inc., as licensor, and Carmike Cinemas, Inc., a Delaware corporation, as licensee.

 

4.           Master License Agreement, dated as of October 17, 2005, by and between Christie/AIX, Inc., as licensor, and CH Canton, LLC d/b/a Emagine Canton, a Michigan limited liability company, as licensee.

 

5.           Master License Agreement, dated as of October 17, 2005, by and between Christie/AIX, Inc., as licensor, and CH Novi, LLC d/b/a Emagine Novi, a Michigan limited liability company, as licensee.

 

6.           Master License Agreement, dated as of October 17, 2005, by and between Christie/AIX, Inc., as licensor, and Cinema Hollywood, LLC, a Michigan limited liability company, as licensee.

 

7.           Master License Agreement, dated as of January 6, 2006 by and between Christie/AIX, Inc., as licensor, and Cinetopia LLC, as licensee.

 

8.           Master License Agreement, dated as of March 15, 2006, by and between Christie/AIX, Inc., as licensor, and Galaxy Theatres, LLC, a California limited liability company, as licensee, as amended July 3, 2007.

 

9.           Master License Agreement, dated as of October 23, 2005, by and between Christie/AIX, Inc., as licensor, and Movie Gems, Inc., a California corporation, as licensee, as amended September 17, 2007, April 30, 2008, and November 30, 2008.

 

10.           Master License Agreement, dated as of June 30, 2006, by and between Christie/AIX, Inc., as licensor, and Rave Reviews Cinemas, L.L.C., a Delaware limited liability company, as licensee, as amended on May 14, 2007 and September 9, 2008.

 

11.           Master License Agreement, dated as of September 18, 2006, by and between Christie/AIX, Inc., as licensor, and Cinema West, LLC, a California limited liability company, as licensee, as amended November 26, 2008.

 

  

  

  

12.           Master License Agreement, dated as of February 13, 2007, by and between Christie/AIX, Inc., as licensor, and Loeks Theaters, Inc., a Michigan corporation, as licensee, as amended July 26, 2007.

 

13.           Master License Agreement, dated as of May 1, 2007, by and between Christie/AIX, Inc., as licensor, and Neighborhood Cinema Corporation, Inc., a Michigan corporation, as licensee.

 

14.           Master License Agreement, dated as of May 9, 2007, by and between Christie/AIX, Inc., as licensor, and Marquee Cinemas, Inc., a Delaware, as licensee, as amended June 16, 2008 and May 4, 2009.

 

15.           Master License Agreement, dated as of July 19, 2007, by and between Christie/AIX, Inc., as licensor, and North Park Cinemas Inc., an Indiana corporation, as licensee.

 

16.           Master License Agreement, dated as of July 26, 2007, by and between Christie/AIX, Inc., as licensor, and Allen Theatres Inc., a New Mexico corporation, as licensee.

 

17.           Master License Agreement, dated as of August 2, 2007, by and between Christie/AIX,  Inc., as licensor, and MJR Group LLC, a Michigan limited liability company, as licensee, as amended on the same date.

 

18.           Master License Agreement, dated as of September 4, 2007, by and between Christie/AIX, Inc., as licensor, Albert Saluan, Guarantor, Atlas Cinema, Inc., an Ohio corporation, Atlas Cinemas Great Lakes Mall, Inc., an Ohio corporation, and Lake Theatre, Inc., as Ohio corporation, collectively, as licensees.

 

19.           Master License Agreement, dated as of October 3, 2007, by and between Christie/AIX, Inc., as licensor, and Metroplex Theatres, LLC, a California limited liability company, as licensee.

 

20.           Master License Agreement, dated as of July 5, 2007, by and between Christie/AIX, Inc., as licensor, and Galaxy Carson City, LLC, a Nevada limited liability company, as licensee.

 

21.           Master License Agreement, dated as of January 14, 2008, by and between Christie/AIX, Inc., as licensor, and Galaxy Gig Harbor, LLC, a Delaware limited liability company, as licensee.

 

22.           Master License Agreement, dated as of September 25, 2007, by and between Christie/AIX, Inc., as licensor, and Liberty Science Center, a New Jersey non profit corporation, as licensee.

 

Supply Agreements

1.           Digital Cinema Service Agreement, dated as of April 11, 2006, by and between ADM Cinema Corporation, a Delaware corporation, and Christie Digital Systems USA, Inc., a California corporation.

 

  

  

  

2.           Digital Cinema Service Agreement, dated as of October 21, 2005, by and between American Cinemas, Inc. and Christie Digital Systems USA, Inc., a California corporation.

 

3.           Digital Cinema Service Agreement, dated as of December 16, 2005, by and between Carmike Cinemas, Inc., a Delaware corporation and Christie Digital Systems USA, Inc., a California corporation.

 

4.           Digital Cinema Service Agreement, dated as of October 17, 2005, by and between CH Canton, LLC d/b/a Emagine Canton, a Michigan limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

5.           Digital Cinema Service Agreement, dated as of October 17, 2005, by and between CH Novi, LLC d/b/a Emagine Novi, a Michigan limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

6.           Digital Cinema Service Agreement, dated as of October 17, 2005, by and between Cinema Hollywood, LLC, a Michigan limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

7.           Digital Cinema Service Agreement, dated as of January 4, 2006, by and between Cinetopia LLC, a Washington limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

8.           Digital Cinema Service Agreement, dated as of March 15, 2006, by and between Galaxy Theatres, LLC, a California limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

9.           Digital Cinema Service Agreement, dated as of October 21, 2005, by and between Movie Gems, Inc. and Christie Digital Systems USA, Inc., a California corporation.

 

10.           Digital Cinema Service Agreement, dated as of June 30, 2006, by and between Rave Reviews Cinemas, LLC, a Delaware corporation, and Christie Digital Systems USA, Inc., a California corporation.

 

11.           Digital Cinema Service Agreement, dated as of July 26, 2007, by and between Allen Theatres, Inc., a New Mexico corporation, and Christie Digital Systems USA, Inc., a California corporation.

 

12.           Digital Cinema Service Agreement, dated as of February 13, 2007, by and between Loeks Theatres, Inc., a Michigan corporation, and Christie Digital Systems USA, Inc., a California corporation.

 

13.           Digital Cinema Service Agreement, dated as of April 16, 2007, by and between Galaxy Carson City, LLC, a Nevada limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

  

  

  

14.           Digital Cinema Service Agreement, dated as of January 14, 2008, by and between Galaxy Gig Harbor, LLC, a Delaware limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

15.           Digital Cinema Service Agreement, dated as of October 2, 2007, by and between Metroplex Theatres, LLC, a California limited liability company, and Christie Digital Systems USA, Inc., a California corporation.

 

16.           Digital Cinema Service Agreement, dated as of March 2007, by and between Marquee Cinemas Inc., a Delaware corporation, and Christie Digital Systems USA, Inc., a California corporation.

 

Distributor Deployment Agreements

1.           Digital Cinema Deployment Agreement, dated as of August 1, 2005,  by and among Buena Vista Pictures Distribution, as distributor, Christie/AIX, Inc. and Christie Digital Systems USA, Inc., as amended on February 2006, effective as of August 1, 2005, by two subsequent amendments, both dated July 6, 2006, effective as of August 1, 2005, and by an amendment dated September 24, 2007, effective as of August 1, 2005.

 

2.           Digital Cinema Agreement, dated as of November 29, 2005, by and between DreamWorks LLC, a Delaware limited liability company, as distributor, and Christie/AIX, Inc.

 

3.           Digital Cinema Access Agreement, dated as of November 21, 2005, by and between Sony Pictures Releasing Corporation, as Distributor, and Christie/AIX, Inc., as amended on July 27, 2006.

 

4.           Digital Cinema Deployment Agreement, dated as of October 12, 2005, by and between Twentieth Century Fox Film Corporation, as distributor, and Christie/AIX, Inc, as amended on June 30, 2006.

 

5.           Digital Cinema Agreement, dated as of October 25, 2005, by and between Universal City Studios LLP, a Delaware corporation, as distributor, and Christie/AIX, Inc, as amended on July 25, 2007.

 

6.           Digital Cinema Agreement, dated as of April 19, 2006, by and between Warner Bros. Entertainment Inc., a Delaware corporation, as distributor, and Christie/AIX, Inc.

 

7.           Digital Cinema Agreement, dated as of January 1, 2007, by and between Paramount Pictures Corporation, a Delaware corporation, as distributor, and Christie/AIX, Inc.

 

8.           Digital Cinema Agreement, dated as of May 7, 2008, by and between Lions Gate Films Inc., a Delaware corporation, as distributor, and Christie/AIX, Inc., as amended on May 7, 2008.

 

9.           Digital Cinema Agreement, dated as of March 24, 2009, by and between Metro-Goldwyn-Mayer Distribution Co., a division of Metro-Goldwyn-Mayer Studios Inc., a Delaware corporation, as distributor, and Christie/AIX, Inc.

 

  

  

  

10.           Digital Cinema Agreement, dated as of September 4, 2008, by and between Overture Films, LLC, a Delaware limited liability company, and Christie/AIX, Inc.

 

  

  

  

SCHEDULE 4.20

DCI SPEC COMPLIANCE

All Digital Systems are in material compliance with the Digital Cinema System Specification V1.0 issued July 20, 2005 by Digital Cinema Initiatives, LLC, as amended except as set forth below:

1.           Federal Information Processing Standards [FIPS 140-2] related to security modifications for the Digital Systems.

  

  

  

SCHEDULE 4.21

DISTRIBUTORS- MATERIAL DIGITAL CINEMA DEPLOYMENT AGREEMENTS

Distributor Deployment Agreements

1.           Digital Cinema Deployment Agreement, dated as of September 14, 2005,  by and among Buena Vista Pictures Distribution, as distributor, Christie/AIX, Inc. and Christie Digital Systems USA, Inc., as amended on August 1, 2005 and by two subsequent amendments, both dated July 6, 2006.

 

2.           Digital Cinema Access Agreement, dated as of November 21, 2005, by and between Sony Pictures Releasing Corporation, as Distributor, and Christie/AIX, Inc., as amended on July 27, 2006.

 

3.           Digital Cinema Deployment Agreement, dated as of October 12, 2005, by and between Twentieth Century Fox Film Corporation, as distributor, and Christie/AIX, Inc.

 

4.           Digital Cinema Agreement, dated as of October 25, 2005, by and between Universal City Studios LLP, a Delaware corporation, as distributor, and Christie/AIX, Inc.

 

5.           Digital Cinema Agreement, dated as of April 19, 2006, by and between Warner Bros. Entertainment Inc., a Delaware corporation, as distributor, and Christie/AIX, Inc.

 

6.           Digital Cinema Agreement, dated as of January 1, 2007, by and between Paramount Pictures Corporation, and Christie/AIX, Inc.

 

  

  

  

SCHEDULE 7.5

INSURANCE

 

(a)           Coverage.  Each Group Member shall, during the term of this Agreement, carry and maintain at least the minimum insurance coverage set forth in this Schedule 7.5.  All insurance carried pursuant to this Schedule 7.5 shall be placed with such insurers having a minimum A.M. Best rating of A:X (or as may otherwise be agreed by the Collateral Agent) and be in such form, with terms, conditions, limits and deductibles as shall be acceptable to the Collateral Agent:

 

(i)           All Risk Property Insurance.  Each Group Member shall maintain all risk property insurance covering against physical loss or damage to its assets (which for purposes of this clause (a)(i) shall not include any equipment subject to an Exhibitor Agreement, provided, that the applicable exhibitor has insured such equipment in accordance with the terms of the Exhibitor Agreement), including but not limited to fire and extended coverage, collapse, flood, earth movement and comprehensive boiler and machinery coverage (including electrical malfunction and mechanical breakdown).  Coverage shall be written on a replacement cost basis, with an agreed amount endorsement waiving any coinsurance penalty and include coverage for expediting expenses; and

 

(ii)           Business Interruption Insurance.  Each Group Member shall maintain business interruption insurance subject to an annual policy in an amount equal to the projected net profits and continuing expenses (including the debt payments hereunder) for the following 12-month period. Such insurance shall also cover service interruption and extra expenses and shall contain an agreed amount endorsement waiving any coinsurance penalty; and

 

(iii)           Comprehensive General Liability Insurance.  Each Group Member shall maintain comprehensive general liability insurance written on an occurrence basis with a limit of not less than $1,000,000.  Such coverage shall include, but not be limited to, premises/operations, broad form contractual liability, independent contractors, products/completed operations, property damage and personal injury liability; and

 

(iv)           Excess/Umbrella Liability.  Each Group Member shall maintain excess or umbrella liability insurance written on an occurrence basis in an amount not less than $15,000,000 providing coverage limits excess of the insurance limits required under clause (a)(iii).  Such insurance shall follow the form of the primary insurances and drop down in case of exhaustion of underlying limits and/or aggregates.

 

(b)           Endorsements.  Each Group Member shall use its commercially reasonable efforts to cause all insurance policies carried and maintained in accordance with this Section 7.5 to be endorsed as follows:

 

(i)           The Collateral Agent shall be additional insured and sole loss payee with respect to the property policies described in clauses (a)(i) and (a)(ii).  The

 

  

  

  

Collateral Agent, on behalf of the Lenders, shall be additional insured with respect to liability policies described in clauses (a)(iii) and (a)(iv).  It shall be understood that any obligation imposed upon any Group Member, including but not limited to the obligation to pay premiums, shall be the sole obligation of such Group Member and not that of the Collateral Agent or any Lender; and

 

(iii)           With respect to property policies described in clauses (a)(i) and (a)(ii), the interests of the Collateral Agent shall not be invalidated by any action or inaction of any Group Member or any other person, and shall insure the Collateral Agent regardless of any breach or violation by any Group Member or any other person, of any warranties, declarations or conditions of such policies; and

 

(iv)           Inasmuch as the liability policies are written to cover more than one insured, all terms conditions, insuring agreements and endorsements, with the exception of the limits of liability, shall operate in the same manner as if there were a separate policy covering each insured; and

 

(v)           The insurers thereunder shall waive all rights of subrogation against the Collateral Agent, any right of setoff or counterclaim, and any other right to deduction, whether by attachment or otherwise; and

 

(vi)           If such insurance is canceled by any Group Member for any reason whatsoever, including nonpayment of premium, or any changes are initiated by any Group Member or the carrier which affect the interests of the Collateral Agent, such cancellation or change shall not be effective as to the Collateral Agent until 30 days (10 days in the case of non-payment of premium) after receipt by the Collateral Agent of written notice sent by registered mail from such insurer.

 

  

  

  

SCHEDULE 8.1

EXISTING INDEBTEDNESS

None

  

  

  

SCHEDULE 8.2

EXISTING LIENS

None

  

  

  

SCHEDULE 8.3

EXISTING INVESTMENTS

None

  

  

  

SCHEDULE 9.1(i)

DISTRIBUTORS

·           Paramount

 

·           Warner Bros. Entertainment Inc.

 

·           Twentieth Century Fox Film Corporation

 

·           Sony Pictures Releasing Corporation

 

·           Universal City Studios LLP

 

·           Buena Vista Pictures Distribution

 

  

  

  

SCHEDULE 9.1(k)

 

INTER-COMPANY AGREEMENTS

1.           Management Services Agreement, dated May 6, 2010, by and between Cinedigm Digital Funding I, LLC and Cinedigm Digital Cinema Corp.

 

2.           Sale and Contribution Agreement, dated May 6, 2010, by and between Cinedigm Digital Funding I, LLC and Christie/AIX, Inc.

 

3.           Software License Agreement, dated May 6, 2010, by and between Cinedigm Digital Funding I, LLC and Access Digital Media, Inc.

 

4.           Termination Agreement, dated as of May 6, 2010, between Access Digital Media, Inc. and Christie/AIX, Inc. relating to that Amended and Restated Software License Agreement, dated as of July 15, 2006, by and between Access Digital Media, Inc., as licensor, and Christie/AIX, Inc., as licensee.

 

5.           Software License Agreement, dated May 6, 2010 by and between Cinedigm Digital Funding I, LLC & Hollywood  Software Inc.

 

6.           Termination Agreement, dated as of May 6, 2010 between Christie/AIX, Inc. and Cinedigm Digital Cinema Corp. (formerly known as Access Integrated Technologies, Inc.), relating to that Sublease Agreement, dated as of July 1, 2006, by and between Access Integrated Technologies, Inc., a Delaware corporation, as sublessor, and Christie/AIX, Inc., a Delaware corporation, as sublessee.

 

7.           Assignment and Assumption Agreement dated as of May 6, 2010, by and between Cinedigm Digital Funding I, LLC and Christie/AIX, Inc.

 

8.           Termination Agreement, dated as of May 6, 2010 between Christie/AIX, Inc. and Cinedigm Digital Cinema Corp. (formerly known as Access Integrated Technologies, Inc.), relating to that Servicing Agreement, dated as of July 1, 2009, by and between Cinedigm Digital Cinema Corp., a Delaware corporation and Christie/AIX, Inc., a Delaware corporation.

 

  

  

  

EXHIBIT A-1

TO

CREDIT AGREEMENT

 

FORM OF ASSIGNMENT

 

This ASSIGNMENT (this "Assignment"), dated as of the Effective Date, is entered into between the Assignor and the Assignee (each as defined below).

 

The parties hereto hereby agree as follows:

 

	
Borrower:

	
Cinedigm Digital Funding I, LLC, a Delaware limited liability company (the "Borrower")

	
Paying Agent

	
Société Générale, New York Branch, as paying agent (in such capacity and together with its successors and assigns, the "Paying Agent")

	
Credit Agreement:

	
Credit Agreement, dated as of May 6, 2010, among the Borrower, the Lenders party thereto, Société Générale, New York Branch, as paying agent and co-administrative agent, and General Electric Capital Corporation, as co-administrative agent and collateral agent for the Lenders (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"; capitalized terms used herein without definition are used as defined in the Credit Agreement)

	
[Trade Date:

	
_____, ___]1

	
Effective Date:

	
[_____, ___]2

 

  

1 Insert for informational purposes only if needed to determine other arrangements between the assignor and the assignee.

2 To be filled out by Paying Agent upon entry in the Register.

Exhibit A-1 to Credit Agreement

 

  

-1-

  

 

	
Assignor (collectively, the "Assignors")3

	
Assignee (collectively, the "Assignees")4

	
Aggregate outstanding principal amount of Term Loans for all Lenders5

	
Aggregate outstanding principal amount of Term Loans Assigned5

	
Percentage Assigned6

	
[Name of Assignor]

	
[Name of Assignee]

[Affiliate] [Approved Fund] of [Name of Lender]

	
$__________

	
$__________

	
__._________%

	
[Name of Assignor]

	
[Name of Assignee]

[Affiliate] [Approved Fund] of [Name of Lender]

	
$__________

	
$__________

	
__._________%

	
[Name of Assignor]

	
[Name of Assignee]

[Affiliate] [Approved Fund] of [Name of Lender]

	
$__________

	
$__________

	
__._________%

 

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]

 

  

3 List each Assignor, as appropriate.  

4 List each Assignee, as appropriate.  

5 Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.  The aggregate amounts are inserted for informational purposes only to help in calculating the percentages assigned which, themselves, are for informational purposes only.  

6 Set forth, to at least 9 decimals, the Assigned Interest as a percentage of the aggregate Term Loans in the Facility.  This percentage is set forth for informational purposes only and is not intended to be binding.  The assignments are based on the amounts assigned not on the percentages listed in this column.

Exhibit A-1 to Credit Agreement

  

-2-

  

Section 1.                      Assignment. Each Assignor hereby sells and assigns to the Assignee set forth above opposite such Assignor, and such Assignee hereby purchases and assumes from such Assignor, such Assignor's rights and obligations in its capacity as Lender under the Credit Agreement (including Liabilities owing to or by such Assignor thereunder) and the other Loan Documents, in each case to the extent related to the amounts identified above opposite such Assignor (such Assignor's "Assigned Interest").

 

Section 2.                      Representations, Warranties and Covenants of Assignors. Each Assignor severally but not jointly (a) represents and warrants to its corresponding Assignee and the Paying Agent that (i) it has full power and authority, and has taken all actions necessary for it, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and (ii) it is the legal and beneficial owner of its Assigned Interest and that such Assigned Interest is free and clear of any Lien and other adverse claims, (b) makes no other representation or warranty and assumes no responsibility, including with respect to the aggregate amount of the Term Loans, the percentage of the Term Loans represented by the amounts assigned, any statements, representations and warranties made in or in connection with any Loan Document or any other document or information furnished pursuant thereto, the execution, legality, validity, enforceability or genuineness of any Loan Document or any document or information provided in connection therewith and the existence, nature or value of any Collateral, (c) assumes no responsibility (and makes no representation or warranty) with respect to the financial condition of any Group Member or Loan Party or the performance or nonperformance by any Loan Party of any obligation under any Loan Document or any document provided in connection therewith and (d) attaches any Notes held by it evidencing at least in part the Assigned Interest of such Assignor (or, if applicable, an affidavit of loss or similar affidavit therefor) and requests that the Paying Agent exchange such Notes for new Notes in accordance with Section 2.11(e) of the Credit Agreement.

 

Section 3.                      Representations, Warranties and Covenants of Assignees. Each Assignee severally but not jointly (a) represents and warrants to its corresponding Assignor and the Paying Agent that (i) it has full power and authority, and has taken all actions necessary for such Assignee, to execute and deliver this Assignment and to consummate the transactions contemplated hereby, (ii) if and to the extent indicated above, it is an Affiliate or an Approved Fund of the Lender set forth above and (iii) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest assigned to it hereunder and either such Assignee or the Person exercising discretion in making the decision for such assignment is experienced in acquiring assets of such type, (b) appoints and authorizes each Agent to take such action on its behalf and to exercise such powers under the Loan Documents as are delegated to such Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (c) shall perform in accordance with their terms all obligations that, by the terms of the Loan Documents, are required to be performed by it as a Lender, (d) confirms it has received such documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and shall continue to make its own credit decisions in taking or not taking any action under any Loan Document independently and without reliance upon any Secured Party and based on such documents and information as it shall deem appropriate at the time, (e) acknowledges and agrees that, as a Lender, it may receive material non-public information and confidential information concerning the Loan Parties and their Affiliates and Securities and agrees to use such information only in accordance with Section

 

Exhibit A-1 to Credit Agreement

  

-3-

  

11.20 of the Credit Agreement, (f) specifies as its applicable lending offices (and addresses for notices) the offices at the addresses set forth beneath its name on the signature pages hereof, (g) shall pay to the Paying Agent an assignment fee in the amount of $3,500 to the extent such fee is required to be paid under Section 11.2(c) of the Credit Agreement and (h) to the extent required pursuant to Section 2.14(f) of the Credit Agreement, attaches two completed originals of Forms W-8ECI, W-8BEN or W-9.

 

Section 4.                      Determination of Effective Date; Register. Following the due execution and delivery of this Assignment by each Assignor, each Assignee and, to the extent required by Section 11.2(b) of the Credit Agreement, the Borrower, this Assignment (including its attachments) will be delivered to the Paying Agent for its acceptance and recording in the Register. The effective date of this Assignment (the "Effective Date") shall be the later of (i) the acceptance of this Assignment by the Paying Agent and (ii) the recording of this Assignment in the Register. The Paying Agent shall insert the Effective Date when known in the space provided therefor at the beginning of this Assignment.

 

Section 5.                      Effect. As of the Effective Date, (a) each Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment, have the rights and obligations of a Lender under the Credit Agreement and (b) each Assignor shall, to the extent provided in this Assignment, relinquish its rights (except those surviving the termination of the Term Loan Commitments and payment in full of the Obligations) and be released from its obligations under the Loan Documents other than those obligations relating to events and circumstances occurring prior to the Effective Date.

 

Section 6.                      Distribution of Payments. On and after the Effective Date, the Paying Agent shall make all payments under the Loan Documents in respect of each Assigned Interest of any Assignor (a) in the case of amounts accrued to but excluding the Effective Date, to such Assignor and (b) otherwise, to the corresponding Assignee.

 

Section 7.                      Miscellaneous. This Assignment is a Loan Document and, as such, is subject to certain provisions of the Credit Agreement, including Sections 1.5, 11.14(a) and 11.15 thereof. On and after the Effective Date, this Assignment shall be binding upon, and inure to the benefit of, the Assignors, Assignees, the Paying Agent and their Related Persons and their successors and assigns. This Assignment shall be governed by, and be construed and interpreted in accordance with, the law of the State of New York. This Assignment may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Assignment by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart of this Assignment.

 

[SIGNATURE PAGES FOLLOW]

 

Exhibit A-1 to Credit Agreement

  

-4-

  

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

	
[NAME OF ASSIGNOR], as Assignor

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

	
[NAME OF ASSIGNEE], as Assignee

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

 

	
Lending Office for Eurodollar Rate Loans:7

	
 

	
[Insert Address (including contact name, fax number and e-mail address)]

	 
	Lending Office (and address for notices) for any other purpose:
	 
	[Insert Address (including contact name, fax number and e-mail address)]

 

 

                    

                  

                  

                 

  

7 Insert for each Assignee

Exhibit A-1 to Credit Agreement

  

-5-

  

[ACCEPTED and AGREED

this ___ day of _____ _____:]8

[SOCIÉTÉ GÉNÉRALE, NEW YORK BRANCH,

as Paying Agent]

 

	
By:

	  
	
Name:

	  
	
Title:

	  

[CINEDIGM DIGITAL FUNDING I, LLC]

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

  

8 To the extent required pursuant to the Credit Agreement.

Exhibit A-1 to Credit Agreement

  

-6-

  

EXHIBIT A-2

TO

CREDIT AGREEMENT

 

FORM OF TERM LOAN PURCHASE ASSIGNMENT

 

This TERM LOAN PURCHASE ASSIGNMENT (this "Assignment"), dated as of the Effective Date, is entered into between the Assignor and the Assignee (each as defined below).

 

The parties hereto hereby agree as follows:

 

	
Borrower:

	
Cinedigm Digital Funding I, LLC, a Delaware limited liability company (the "Borrower")

	
Paying Agent

	
Société Générale, New York Branch, as paying agent (in such capacity and together with its successors, the "Paying Agent")

	
Co-Administrative Agents

	
Société Générale, New York Branch and General Electric Capital Corporation, each in their capacity as co-administrative agents (the "Co-Administrative Agents")

	
Credit Agreement:

	
Credit Agreement, dated as of May 6, 2010, among the Borrower, the Lenders party thereto, Société Générale, New York Branch, as paying agent and co-administrative agent, and General Electric Capital Corporation, as co-administrative agent and collateral agent for the Lenders (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"; capitalized terms used herein without definition are used as defined in the Credit Agreement)

	
Assigned Interest:1

	
[$__________]

	
[Trade Date:

	
[_____, ___]

	
Effective Date:

	
[_____, ___]2

 

  
1 Aggregate outstanding principal amount of Term Loans assigned hereunder on the Effective Date. 

2 To be filled out by Paying Agent upon entry in the Register.

Exhibit A-2 to Credit Agreement

  

-7-

  

 

	
Assignor3

	
Assignee4

	
Aggregate outstanding principal amount of Term Loans for all Lenders5

	
Assigned Interest

	
Aggregate outstanding principal amount of Term Loans Assigned to all Related Purchasers (after giving effect to the Assigned Interest)6

	
Percentages Assigned7

	
[Name of Assignor]

	
[Related Purchaser]

	
$__________

	
$__________

	
$__________

	
(a)  ______%

 

(b)  ______%

 

 

 

[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]

 

  
3 List Assignor. 

4 List Assignee, which must be a Related Purchaser. 

5 Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.  The aggregate amounts are inserted for informational purposes only to help in calculating the percentages assigned which, themselves, are for informational purposes only.  Shall be an integral of $1,000,000, unless the Assignor's entire interest in the Term Loans is assigned. 

6 Should equal Assigned Interest plus all other "Assigned Interests" purchased by any Related Purchaser on or prior to the Effective Date. 

7 Sets forth, to at least 9 decimals, (a) the Assigned Interest as a percentage of the aggregate outstanding Term Loans in the Facility and (b) the Assigned Interest together with all other "Assigned Interests" to all Related Purchasers as a percentage of the aggregate outstanding Term Loans in the Facility.  The percentages are set forth for informational purposes only and are not intended to be binding.  The assignments are based on the amounts assigned not on the percentages listed in this column.  The percentage in clause (b) may not be more than 10% after giving effect to all Term Loans previously purchased by all Related Purchasers.

Exhibit A-2 to Credit Agreement

  

  

  

Section 8.                      Assignment. The Assignor hereby sells and assigns to the Assignee set forth above opposite the Assignor, and the Assignee hereby purchases and assumes from the Assignor pursuant to the terms and conditions set forth in Sections 11.2(g) of the Credit Agreement, the Assignor's portion of the Term Loans under the Credit Agreement in the amounts identified above as the "Assigned Interest".

 

Section 9.                      Representations, Warranties and Covenants of Assignor. The Assignor severally but not jointly (a) represents and warrants to the Assignee and the Paying Agent that (i) it has full power and authority, and has taken all actions necessary for it, to execute and deliver this Assignment and to consummate the transactions contemplated hereby in accordance with Section 11.2(g) of the Credit Agreement and (ii) it is the legal and beneficial owner of its Assigned Interest and that such Assigned Interest is free and clear of any Lien and other adverse claims, (b) makes no other representation or warranty and assumes no responsibility, including with respect to the aggregate amount of the Term Loans, the percentage of the Term Loans represented by the amounts assigned, any statements, representations and warranties made in or in connection with any Loan Document or any other document or information furnished pursuant thereto, the execution, legality, validity, enforceability or genuineness of any Loan Document or any document or information provided in connection therewith and the existence, nature or value of any Collateral, (c) assumes no responsibility (and makes no representation or warranty) with respect to the financial condition of any Group Member or Loan Party or the performance or nonperformance by any Loan Party of any obligation under any Loan Document or any document provided in connection therewith and (d) attaches any Notes held by it evidencing at least in part the Assigned Interest of such Assignor (or, if applicable, an affidavit of loss or similar affidavit therefor) and requests that the Paying Agent exchange such Notes for new Notes in accordance with Section 2.11(e) of the Credit Agreement.

 

Section 10.                      Representations, Warranties and Covenants of Assignee. The Assignee (a) represents and warrants to the Assignor and the Paying Agent that (i) it has full power and authority, and has taken all actions necessary for the Assignee, to execute and deliver this Assignment and to consummate the transactions contemplated hereby, (ii) it is a "Related Purchaser", as that term is defined in Section 11.2(g) of the Credit Agreement, (iii) it has satisfied the requirements, if any, specified in the Credit Agreement, including, without limitation, Section 11.2(g), that are required to be satisfied in order to make a purchase of the Assigned Interest, (b) shall pay to the Paying Agent an assignment fee in the amount of $3,500 and (c) shall reasonably promptly after the execution hereof, provide an executed copy of this Assignment to the Co-Administrative Agents.

 

Section 11.                      Determination of Effective Date; Register. Following the due execution and delivery of this Assignment by the Assignor and the Assignee, this Assignment (including its attachments) will be delivered to the Paying Agent for its acceptance and recording in the Register. The effective date of this Assignment (the "Effective Date") shall be the later of (i) the acceptance of this Assignment by the Paying Agent and (ii) the recording of this Assignment in the Register by the Paying Agent. The Paying Agent shall insert the Effective Date when known in the space provided therefor at the beginning of this Assignment.

 

Section 12.                      Effect. As of the Effective Date, (a) [the Assigned Interest shall be deemed cancelled for all purposes and no longer outstanding for all purposes of the Credit Agreement

 

Exhibit A-2 to Credit Agreement

  

  

  

and the other Loan Documents (and may not be resold or reassigned by the Assignee)][(i) the Assigned Interest will remain outstanding and (ii) except for the sole purpose of receiving interest and principal payments on the Assigned Interest pursuant to the terms of the Credit Agreement, the Assignee shall not be deemed to be a "Lender" for purposes of the Credit Agreement or any other Loan Document including, without limitation, for purposes of (A) the making of any request, demand, authorization, direction, notice, amendment, consent or waiver under the Credit Agreement or any other Loan Document or (B) the determination of Required Lenders]8 and (b) each Assignor shall, to the extent provided in this Assignment, relinquish its rights (except those surviving the termination of the Term Loan Commitments and payment in full of the Obligations) and be released from its obligations under the Loan Documents other than those obligations relating to events and circumstances occurring prior to the Effective Date.  In no event will the Assignee be deemed to be a Lender under the Credit Agreement or, except to the extent provided for hereunder, have any rights or obligations of a Lender under the Credit Agreement.

 

Section 13.                      Distribution of Payments. On and after the Effective Date, the Paying Agent shall make all payments under the Loan Documents in respect of the Assigned Interest to the Assignor for amounts accrued to but excluding the Effective Date. [No payments in respect of such Assigned Interest (which shall be deemed to have been cancelled as of the Effective Date) shall be due to the Assignee from and after the Effective Date.][On and after the Effective Date, the Paying Agent shall only make payments to the Assignee of interest and principal payments payable on such Assigned Interest in the amounts accrued on and after the Effective Date.]9

 

Section 14.                      Miscellaneous. This Assignment is a Loan Document and, as such, is subject to certain provisions of the Credit Agreement, including Sections 1.5, 11.14(a) and 11.15 thereof. On and after the Effective Date, this Assignment shall be binding upon, and inure to the benefit of, the Assignors, Assignees, the Paying Agent and their Related Persons and their successors and assigns. This Assignment shall be governed by, and be construed and interpreted in accordance with, the law of the State of New York. This Assignment may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Assignment by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart of this Assignment.

 

[SIGNATURE PAGES FOLLOW]

 

  
8 Assignee to choose whether the Assigned Interest will be cancelled or remain outstanding. 

9 Include first bracketed sentence if Assigned Interest is cancelled.  Include second bracketed sentence if Assigned Interest remains outstanding.

 

Exhibit A-2 to Credit Agreement

  

  

  

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

                 

	
[NAME OF ASSIGNOR], as Assignor

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

	
[NAME OF ASSIGNEE], as Assignee

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

Exhibit A-2 to Credit Agreement

  

  

  

EXHIBIT B

TO

CREDIT AGREEMENT

 

FORM OF NOTE

 

	
Lender: [_____]

	
New York, New York

	
Principal Amount: $[_____]

	
[_____, ___]

FOR VALUE RECEIVED, the undersigned, Cinedigm Digital Funding I, LLC, a Delaware limited liability company (the "Borrower"), hereby promises to pay to the order of the lender set forth above (the "Lender") the Principal Amount set forth above, or, if less, the aggregate unpaid principal amount of the Term Loans of the Lender to the Borrower, payable at such times and in such amounts as are specified in the Credit Agreement (as hereinafter defined).

 

The Borrower promises to pay interest on the unpaid principal amount of the Term Loans from the date made until such principal amount is paid in full, payable at such times and at such interest rates as are specified in the Credit Agreement. Demand, diligence, presentment, protest and notice of non-payment and protest are hereby waived by the Borrower.

 

Both principal and interest are payable in Dollars to Société Générale, New York Branch, as Paying Agent in immediately available funds in accordance with the Credit Agreement.

 

This Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement, dated as of May 6, 2010 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lenders party thereto, Société Générale, New York Branch, as paying agent and co-administrative agent for the Lenders, and General Electric Capital Corporation, as co-administrative agent and collateral agent for the Lenders. Capitalized terms used herein without definition are used as defined in the Credit Agreement.

 

The Credit Agreement, among other things, (a) provides for the making of Term Loans by the Lender to the Borrower in an aggregate amount not to exceed at any time outstanding the Principal Amount set forth above, the indebtedness of the Borrower resulting from such Term Loans being evidenced by this Note and (b) contains provisions for acceleration of the maturity of the unpaid principal amount of this Note upon the happening of certain stated events and also for prepayments on account of the principal hereof prior to the maturity hereof upon the terms and conditions specified therein.

 

This Note is a Loan Document, is entitled to the benefits of the Loan Documents, and is subject to certain provisions of the Credit Agreement, including Sections 1.5, 11.14(a) and 11.15 thereof.

 

This Note is a registered obligation, transferable only upon notation in the Register, and no assignment hereof shall be effective until recorded therein.

 

This Note shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

Exhibit B to Credit Agreement

  

-1-

  

[SIGNATURE PAGE FOLLOWS]

 

Exhibit B to Credit Agreement

  

-2-

  

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and delivered by its duly authorized officer as of the day and year and at the place set forth above.

                   

	
CINEDIGM DIGITAL FUNDING I, LLC

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

Exhibit B to Credit Agreement

 

  

-3-

  

EXHIBIT C

TO

CREDIT AGREEMENT

 

FORM OF NOTICE OF BORROWING

 

SOCIÉTÉ GÉNÉRALE, NEW YORK BRANCH,

as paying agent under the Credit Agreement referred to below

 

[_____ ___, ____]

 

Attention: [_____]

 

 

	
  

	
Re:

	
CINEDIGM DIGITAL FUNDING I, LLC (the "Borrower")

 

Reference is made to the Credit Agreement, dated as of May 6, 2010 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lenders party thereto, General Electric Capital Corporation, as co-administrative agent and collateral agent for such Lenders, and Société Générale, New York Branch, as paying agent and co-administrative agent for such Lenders. Capitalized terms used herein without definition are used as defined in the Credit Agreement.

 

The Borrower hereby gives you irrevocable notice, pursuant to Section 2.2 of the Credit Agreement of its request of a Borrowing (the "Proposed Borrowing") under the Credit Agreement and, in that connection, sets forth the following information:

 

A.           The date of the Proposed Borrowing is [_____, ___] (the "Funding Date").

 

B.           The aggregate principal amount of the Term Loans constituting the Proposed Borrowing is $[_____], of which $[_____] consists of Base Rate Loans and $[_____] consists of Eurodollar Rate Loans having an initial Interest Period of [_____] months.

                  

	
CINEDIGM DIGITAL FUNDING I, LLC

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

 

Exhibit C to Credit Agreement

 

  

-1-

  

EXHIBIT D

TO

CREDIT AGREEMENT

 

FORM OF NOTICE OF CONVERSION OR CONTINUATION

 

SOCIÉTÉ GÉNÉRALE, NEW YORK BRANCH,

as paying agent under the Credit Agreement referred to below

 

[_____ ___, ____]

Attention: [_____]

 

 

	
  

	
Re:

	
CINEDIGM DIGITAL FUNDING I, LLC (the "Borrower")

 

Reference is made to the Credit Agreement, dated as of May 6, 2010 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, the Lenders party thereto, General Electric Capital Corporation, as co-administrative agent and collateral agent for the Lenders, and Société Générale, New York Branch, as paying agent and co-administrative agent for the Lenders. Capitalized terms used herein and not otherwise defined herein are used as defined in the Credit Agreement.

 

The Borrower hereby gives you irrevocable notice, pursuant to Section 2.7 of the Credit Agreement of its request for the following:

 

(i)           a continuation, on [_____, ___]1, as Eurodollar Rate Loans having an Interest Period of [_____]2 months of Term Loans in an aggregate outstanding principal amount of $[_____] having an Interest Period ending on the proposed date for such continuation;

 

(ii)           a conversion, on [_____, ___]1, to Eurodollar Rate Loans having an Interest Period of [_____]2 months of Term Loans in an aggregate outstanding principal amount of $[_____]; and

 

(iii)           a conversion, on [_____, ___]1, to Base Rate Loans, of Term Loans in an aggregate outstanding principal amount of $[_____].

 

In connection herewith, the undersigned hereby certifies that (i) no Event of Default has occurred and is continuing on the date hereof, both before and after giving effect to any Term Loan to be made on or before any date for any proposed conversion or continuation set forth above and (ii) there is no suspension in effect under Section 2.12 of the Credit Agreement.

 

  
1 Must be a Business Day. 

2 Must be 1, 2 or 3 months.

 

 

 

[Signature Page Follows.]

 

Exhibit D to Credit Agreement

  

-1-

  

                 

	
CINEDIGM DIGITAL FUNDING I, LLC

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

Exhibit C to Credit Agreement

 

  

-2-

  

EXHIBIT E

TO

CREDIT AGREEMENT

 

FORM OF COMPLIANCE CERTIFICATE

 

[_____, ___]1

 

This COMPLIANCE CERTIFICATE (this "Compliance Certificate") is delivered pursuant to Section 6.1(d) of the Credit Agreement, dated as of May 6, 2010 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), among Cinedigm Digital Funding I, LLC (the "Borrower"), the Lenders party thereto, General Electric Capital Corporation, as co-administrative agent and collateral agent for the Lenders, and Société Générale, New York Branch, as paying agent (the "Paying Agent") and co-administrative agent for the Lenders. Capitalized terms used herein and not otherwise defined herein are used herein as defined in the Credit Agreement.

 

The undersigned, a duly authorized Responsible Officer of the Borrower having the name and title set forth below under his signature, hereby certifies, on behalf of the Borrower for the benefit of the Secured Parties and pursuant to Section 6.1 of the Credit Agreement that such Responsible Officer of the Borrower is familiar with the Credit Agreement and that, in accordance with each of the following sections of the Credit Agreement, each of the following is true on the date hereof, both before and after giving effect to any Term Loan to be made on or before the date hereof:

 

(a)           In accordance with Section 6.1[(b)/(c)] of the Credit Agreement, attached hereto as Annex A are the Financial Statements for the [Fiscal Quarter/Fiscal Year] ended [_____, ___] required to be delivered pursuant to Section 6.1[(b)/(c)] of the Credit Agreement. Such Financial Statements fairly present in all material respects the Consolidated and consolidating financial position, results of operations and cash flow of the Group Members as at the dates indicated therein and for the periods indicated therein in accordance with GAAP [(subject to the absence of footnote disclosure and normal year-end audit adjustments)]2 [without qualification as to the scope of the audit or as to going concern and without any other similar qualification, together with the certificate from the Group Members' Accountants with respect to such Consolidated Financial Statements required to be delivered pursuant to Section 6.1(c) of the Credit Agreement.]3

 

(b)           In accordance with Section 6.1(d) of the Credit Agreement, attached hereto as Annex B are the calculations used to determine the Consolidated Leverage Ratio, the Consolidated Fixed Charge Coverage Ratio and any other calculations, if any, used to determine compliance with each financial covenant contained in Article V of the Credit Agreement.

 

  
1 Insert date of delivery of certificate. 

2 Insert language in brackets only for quarterly reports. 

3 Insert language in brackets only for annual certifications.

Exhibit E to Credit Agreement

  

-1-

  

(c)           In accordance with Section 6.1(d) of the Credit Agreement, attached hereto as Annex C are (i) the calculations used to determine the amount of Capital Expenditures as of the end of the applicable fiscal period for purposes of determining compliance with Section 8.16 of the Credit Agreement and (ii) the amounts paid by Cinedigm, as administrative servicer, for Capital Expenditures.

 

(d)           In accordance with Section 6.1(d) of the Credit Agreement, attached hereto as Annex D is a list of all Installed Digital Systems and the location of the same as of the date hereof.

 

(e)           In accordance with Section 6.1(d) of the Credit Agreement, no Default has occurred and is continuing as of the date hereof[, except as provided for on Annex E attached hereto, with respect to each of which the Borrower proposes to take the actions set forth on Annex E].

 

(f)           In accordance with Section 6.1(e) of the Credit Agreement, (i) the [Corporate Chart attached hereto as Annex F[-1] [last Corporate Chart delivered pursuant to such Section)], is correct and complete as of the date hereof, (ii) all documents (including updated schedules as to locations of Collateral and acquisition of Intellectual Property or real property) required to be delivered pursuant to the Loan Documents by any Loan Party on or prior to the date of delivery of this Compliance Certificate have been delivered thereunder (or such delivery requirement was otherwise duly waived or extended) and (iii) complete and correct copies of all documents modifying any term of any Constituent Document of any Loan Party or joint venture thereof on or prior to the date hereof have been delivered to the Paying Agent [or are attached hereto as Annex F[-2]].

 

(g)           In accordance with Section 6.1(g) of the Credit Agreement, attached hereto as Annex G is a discussion and analysis of the financial condition and results of operations of the Group Members for the portion of the Fiscal Year elapsed on or prior to the date hereof discussing the reasons for any significant variations from the Projections for such period and the figures for the corresponding period in the previous Fiscal Year.

 

(h)           [In accordance with Sections 6.1(h) and (i) of the Credit Agreement, attached hereto as Annexes H and I are complete and correct (i) copies of each management letter, audit report or similar letter or report received by any Group Member from any independent registered certified public accountant (including the Group Members' Accountants) in connection with such Financial Statements or any audit thereof and (ii) (A) a certification from each insurer or by an authorized representative of each insurer identifying the underwriters, the type of insurance, the limits, deductibles, and the term thereof and specifying the specific provisions delineated in clause (b) of Schedule 7.5 and (B) a statement from an independent insurance broker, reasonably acceptable to the Paying Agent, stating that (1) all premiums then due have been paid and

 

Exhibit E to Credit Agreement

  

-2-

  

 

(2) in the opinion of such broker, the insurance maintained by the Borrower is in accordance with clause (b) of Schedule 7.5].4

 

IN WITNESS WHEREOF, the undersigned has executed this certificate on the date first written above.                   

 

 

	
CINEDIGM DIGITAL FUNDING I, LLC

 

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

  
4 Insert bracketed language only for annual reports.

Exhibit E to Credit Agreement

  

-3-

  

ANNEX A

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

FINANCIAL STATEMENTS

Exhibit E to Credit Agreement

  

-4-

  

ANNEX B

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

FINANCIAL CALCULATIONS

Exhibit E to Credit Agreement

  

-5-

  

ANNEX C

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

CAPITAL EXPENDITURES

Exhibit E to Credit Agreement

  

-6-

  

ANNEX D

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

INSTALLED DIGITAL SYSTEMS

Exhibit E to Credit Agreement

  

-7-

  

[ANNEX E

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

CONTINUING DEFAULTS]5

  
5 Delete if not used in the text of the certificate.

Exhibit E to Credit Agreement

  

-8-

  

ANNEX F[-1]

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

CORPORATE CHART

Exhibit E to Credit Agreement

  

-9-

  

ANNEX F[-2]

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

MODIFICATIONS TO CONSTITUENT DOCUMENTS

Exhibit E to Credit Agreement

  

-10-

  

ANNEX G

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

MANAGEMENT DISCUSSION AND ANALYSIS

Exhibit E to Credit Agreement

  

-11-

  

ANNEX H

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

MANAGEMENT LETTER

Exhibit E to Credit Agreement

  

-12-

  

ANNEX I

TO

COMPLIANCE CERTIFICATE OF CINEDIGM DIGITAL FUNDING I, LLC

DATED [_____, ___]

 

SUMMARY OF MATERIAL INSURANCE COVERAGE

Exhibit E to Credit Agreement

  

-13-

  

EXHIBIT F

TO

CREDIT AGREEMENT

 

FORM OF GUARANTY AND SECURITY AGREEMENT

(See attached.)

Exhibit F to Credit Agreement

  

-1-

  

EXHIBIT G

TO

CREDIT AGREEMENT

 

FORM OF EXHIBITOR AGREEMENT

(See attached.)

Exhibit G to Credit Agreement

  

-1-

  

MASTER LICENSE AGREEMENT

 

THIS MASTER LICENSE AGREEMENT (this "Agreement"), including all Schedules and Exhibits attached hereto, is made and entered into as of the ___ day of _____, 20___ by and between CINEDIGM DIGITAL FUNDING I, LLC, a Delaware limited liability company ("Licensor"), and _____, a _____ ("Licensee").

 

WHEREAS, Licensor has the right to deploy and license the use of certain Equipment (as defined below); and

 

WHEREAS Licensee desires to obtain from Licensor, and Licensor is willing to grant to Licensee, a license to use the Equipment on the terms and conditions set forth in this Agreement, including all Schedules and Exhibits attached hereto.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other valuable consideration received, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follow:

 

1.           DEFINITIONS. As used in this Agreement, the following terms have the meanings set forth below.

 

"ADM" means Access Digital Media, Inc., a Delaware corporation.

 

"Affiliate" means, with respect to a party, any corporation, limited liability company, partnership or other entity which controls, is controlled by or is under common control with such party, where such control is by ownership of more than fifty percent (50%) of the outstanding voting securities or other voting interests.

 

"Agreement" has the meaning specified in the preamble.

 

"Applicable Commencement Date" means, as to the Equipment designated on any Equipment Schedule, the date on which the License Term for such Equipment commences, as specified in the applicable Certificate of Acceptance.

 

"Applicable Termination Date" means, as to the Equipment designated on any Equipment Schedule, the date on which this Agreement expires or is terminated.

 

"Central Server" means, collectively, a central library server, with TCC Software installed, together with a storage array, computer rack, uninterrupted power source (UPS), main switch and patch panel.

 

"Certificate of Acceptance" means a certificate executed by Licensee in substantially the form of Exhibit 1 to Exhibit A attached hereto.

 

"Christie" means Christie Digital Systems USA, Inc., a California corporation.

 

Exhibit G to Credit Agreement

  

-2-

  

"Christie Software" means any Christie proprietary software installed in any of the Equipment at the time of delivery of such Equipment to Licensee, as updated by any update made available from time to time by Christie without charge for use on the Equipment.

 

"Cineplex" means a theater complex with one or more cinema auditoriums.

 

"Confidential Information" has the meaning specified in Section 38.

 

"DCI" means Digital Cinema Initiatives, LLC, a limited liability company established by Disney, Fox, MGM, Paramount, Sony Pictures Entertainment, Universal and Warner Bros. Studios to, among other things, establish and document technical specifications for an open architecture for digital cinema to ensure a uniform and high level of technical performance reliability and quality control.

 

"DCI Specification" means the Digital Cinema System Specification V1.0 issued July 20, 2005 by DCI.

 

"Digital Cinema Projection System" means a digital cinema projection system consisting of a DLP CinemaTM 2k projector, capable of both 2-D and 3-D display, and a digital cinema server for each theatre screen. Each Digital Cinema Projection System will be a part of a Digital System.

 

"Digital System" means one or more Digital Cinema Projection Systems and an associated Central Server.

 

"Digital Title" means a commercial movie which is released in digital format suitable for showing on Digital Systems.

 

"Distributor" means a motion picture distributor.

 

"Distributor Agreement" means an agreement between Licensor and a Distributor pursuant to which such Distributor agrees to pay Participant Virtual Print Fees to Licensor for a specified period.

 

"DLP CinemaTM Promotional Guidelines" means the guidelines set forth on Exhibit B attached hereto.

 

"Dollars" or "$" means United States dollars.

 

"Equipment" means each Digital System described on an Equipment Schedule executed pursuant to this Agreement, together with all parts, accessories and other items added to or made a part of such Digital System after the Applicable Commencement Date for such Digital System.

 

"Equipment Schedule" means a schedule in the form of Exhibit A attached hereto, executed pursuant to this Agreement from time to time.

 

"Event of Default" has the meaning specified in Section 27.

 

Exhibit G to Credit Agreement

  

-3-

  

"Financing Documents" has the meaning specified in Section 23.

 

"Financing Parties" has the meaning specified in Section 23.

 

"License Term" means, with respect to any particular Equipment, a period that commences on the Applicable Commencement Date for such Equipment and ends on the Applicable Termination Date for such Equipment.

 

"Licensee" has the meaning specified in the preamble.

 

"Licensor" has the meaning specified in the preamble.

 

"Non-Participant Virtual Print Fee" means the applicable fee announced from time to time by Licensor as the virtual print fee payable by a Non-Participating Distributor with respect to the exhibition of Traditional Motion Picture Content on Digital Systems licensed by Licensor, which fee shall not exceed _____ percent (___%) of the lowest base virtual print fee (before discounts) payable by any Distributor under a Distributor Agreement.

 

"Non-Participating Distributor" means a Distributor which has not signed a Distributor Agreement with Licensor.

 

"Non-Traditional Content" means all content other than Traditional Motion Picture Content. Non-Traditional Content includes, but is not limited to, television programs, sporting events, stage productions, religious services, concerts, educational classes or presentations, live events, speeches, meetings, teleconferencing, and video gaming. Non-Traditional Content shall not include motion picture premieres and other promotional, testing and publicity activities involving screenings of motion pictures.

 

"Participant Virtual Print Fee" means the virtual print fee payable to Licensor by a Participating Distributor as provided for in the applicable Distributor Agreement.

 

"Participating Distributor" means a Distributor which has signed a Distributor Agreement with Licensor. A list of Participating Distributors as of the date hereof is set forth on Exhibit D attached hereto, and shall be updated by Licensor from time to time as provided therein.

 

"Satellite Dish" has the meaning specified in Section 7(b).

 

"Service Contract" means a service contract between Licensee and Christie in substantially the form of the attached Exhibit E.

 

"Software" means, collectively, the Christie Software, the Standard Software, the TCC Software and the Third Party Software.

 

"Standard Software" means the operating system and system applications software which are standard for general operation of computer servers having the general capabilities of the servers included in the Equipment, as updated by any update made available from time to time by the owner of such operating system or systems application software.

 

Exhibit G to Credit Agreement

  

-4-

  

"Taxes" means any foreign, federal, state, county or local income, estimated, alternative minimum, add-on minimum, sales, use, excise, franchise, real property, personal property, transfer, registration, value added, stamp, premium, profit, windfall profit, customs duties, gross receipts, capital stock, production, business and occupation, social security, disability, employment, unemployment, payroll, severance, license, gift recapture or withholding tax or charge imposed by any governmental entity, and any interest and penalties (civil or criminal) related thereto or to the nonpayment thereof.

 

"TCC Software" means ADM's proprietary Theatre Command Center software as licensed by ADM to Christie and installed in any Central Server at the time of delivery of such Central Server to Licensee, as updated by any update made available from time to time without charge for use on the Equipment.

 

"Third Party Software" means any software, other than Christie Software, Standard Software and TCC Software, installed to any of the Equipment at the time of delivery of such Equipment to Licensee, including database software, as updated by any update made available from time to time by the owner of such software.

 

"Traditional Motion Picture Content" means (i) all feature length (defined as over 40 minutes) motion pictures intended for initial exhibition in a commercial motion picture theater for paid admission; (ii) motion picture trailers; and (iii) on screen advertising.

 

2.           EQUIPMENT LICENSE.

 

Subject to the terms and conditions set forth herein, Licensor hereby grants to Licensee the limited right and license to use the Equipment described on each Equipment Schedule executed pursuant to this Agreement, at the Licensee's designated facility set forth in each such Equipment Schedule, for the License Term of such Equipment. Licensor and Licensee will execute a separate Equipment Schedule for each delivery of Equipment to Licensee pursuant to this Agreement, listing all of the Equipment included in such delivery. Each such Equipment Schedule shall constitute a separate and independent license and contractual obligation of Licensee and Licensor, governed by the terms and conditions set forth in this Agreement. Notwithstanding the foregoing, except for the limited license granted above, all right, title and interest to the Equipment shall be, and shall continue to be, the property of Licensor and/or its Affiliates, and, except for the limited license granted above, nothing in this Agreement shall be construed as transferring to Licensee any right, title or interest in the Equipment, or as conferring any other license or other right, by implication, estoppel or otherwise, under any patent, patent application, trade secret, trademark or copyright. Except as otherwise expressly provided for in this Agreement, Licensee is not granted any right to, and Licensee expressly agrees not to, distribute, market, sell, modify or adapt the Equipment or any part thereof. Licensee shall not remove from the Equipment, Licensor's name, trademark, logo and other identification, or any markings which identify Licensor and/or its Affiliates as the owners of the Equipment.

 

3.           SOFTWARE; CENTRAL SERVER FEE; LANDING FEE.

 

(a)           Subject to Licensee's payment to Licensor of the fees provided for in Section 3(b), Licensor, as an authorized licensee of ADM, hereby grants to Licensee the non-exclusive, non

 

Exhibit G to Credit Agreement

  

-5-

  

transferable right and license, to use the TCC Software in connection with Licensee's use of the Equipment. Licensee shall not modify the TCC Software, make any copies of the TCC Software (other than a reasonable number of copies for back up purposes), seek to reverse engineer or decompile any of the TCC Software or transfer the TCC Software or any copies thereof other than in connection with a transfer of a Central Server provided that the transfer of such Central Server is permitted under this Agreement.

 

(b)           For each Central Server licensed and delivered by Licensor to Licensee under this Agreement and installed at a Cineplex, a Central Server fee in the amount of $_____ per screen will be payable for each screen at such Cineplex for which a Digital Cinema Projection System licensed and delivered by Licensor to Licensee under this Agreement is installed. The Server Screen Fee shall be payable in arrears in quarterly installments (without interest) over a period of ten (10) years, and payments shall commence at the end of the first quarter following the date a Certificate of Acceptance is delivered with respect to a Digital Cinema Projection System installed for such screen.

 

(c)           Licensor, as an authorized licensee of ADM, hereby grants to Licensee the non-exclusive, non-transferable, royalty-free right and license, without right to sublicense, to use the Christie Software in connection with Licensee's use of the Equipment. Licensee shall not modify the Christie Software, make any copies of the Christie Software (other than a reasonable number of copies for back up purposes), seek to reverse engineer or decompile any of the Christie Software, or transfer the Christie Software or any copies thereof other than in connection with a transfer of Equipment provided that the transfer of such Equipment is permitted under this Agreement.

 

(d)           Licensor represents and warrants to Licensee that, upon the delivery of Equipment by Licensor to Licensee under this Agreement, Licensee will have the royalty-free right to use, in connection with the use of such Equipment and subject to the terms of the end user license agreements attached hereto as Exhibit H, the Standard Software and the Third Party Software installed on such Equipment at the time of delivery.

 

(e)           In the event that Access Integrated Technologies, Inc. ("AccessIT") delivers to Licensee any Digital Title or Non-Traditional Content for Exhibition on the Equipment, Licensee will pay to AccessIT a landing fee, equivalent to the amount Licensee pays for the delivery of a film print from the local warehouse and back, for the delivery of each such item.

 

4.           TERM.

 

(a)           This Agreement shall commence on the date hereof (it being understood that obligations of Licensee relating to the use of Equipment will only be effective when the Equipment is installed) and, unless earlier terminated by Licensor in accordance with Section 28, shall continue in effect until _____, ___ (the "Initial Term"); provided, however, that Licensee may renew this Agreement for successive one (1) year periods (each such successive one year period, a "Renewal Term") for up to _____ (___) Renewal Terms by giving written notice to Licensor no later than ninety (90) days prior to the end of the Initial Term or any Renewal Term.

 

Exhibit G to Credit Agreement

  

-6-

  

(b)           Upon the expiration of the Initial Term or a Renewal Term, as applicable, or the earlier termination of this Agreement, Licensor shall, unless Licensee exercises its purchase option under Section 47, have the right, at its sole cost and expense, to retake possession of any or all of the Equipment, and for such purpose Licensor shall have the right to enter upon any premises where any or all of the Equipment is located, at times reasonably acceptable to Licensee, and remove same. Such removal must be performed under supervision of Licensee. Licensor shall repair all damage to the Cineplex caused by Licensor's removal of such Equipment. If Licensor fails to remove the Equipment within ninety (90) days of the expiration or earlier termination of this Agreement, such Equipment will be deemed abandoned by Licensor, and Licensee may dispose of the same in whatever manner Licensee may elect without liability to Licensor. Alternatively, in the event such Equipment is deemed abandoned as provided above, Licensee may, at its election by giving written notice to Licensor, succeed to ownership of the Equipment on as "as is, where is" basis, in which case Licensor will have no obligation to Licensee in respect of any expenses relating to removal or disposition. This Section 4(b) shall survive the expiration or earlier termination of this Agreement

 

5.           DEPLOYMENT.

 

(a)           Licensor shall license to Licensee, and deliver to Licensee for installation by Christie under the Service Contract, a minimum of _____ up to _____ Digital Cinema Projection Systems, with associated Central Servers. Delivery of Digital Systems shall be in accordance with a delivery schedule, specifying delivery dates for all relevant delivery locations, mutually agreed upon between Licensor and Licensee.

 

(b)           Digital Systems will be deployed to any given theater location for the minimum number of screens required to enable more than 50% of the screens at such theater location, and, Licensor will be permitted to deploy Digital Systems such that by _____ 100% of the screens will be enabled at any theater location where a Digital System has been deployed.

 

(c)           Except for Equipment (i) deployed under this Agreement, (ii) acquired by Licensee by virtue of acquisition of a Cineplex from a third party or (iii) installed pursuant to Licensee's existing agreements (or any replacement thereof) for any on-screen advertising with _____ provided that such Equipment shall be used only for on-screen advertising and not for the exhibition of motion picture, motion picture trailers and Non-Traditional Content, Licensee shall not install, or permit to be installed, any digital cinema equipment, including digital cinema projection equipment, screen servers or central servers, at any theater location where a Digital System has been deployed under this Agreement.

 

(d)           Licensor shall, for each Cineplex location to which Digital Systems are delivered under this Agreement, provide user documentation for the operation, operator level maintenance and trouble-shooting of Digital Systems.

 

6.           EOUIPMENT SPECIFICATIONS. Initially, Licensor will deploy Digital Systems which comply substantially with the DCI Specification except to the extent that technology necessary for compliance with the DCI Specification is not commercially available. When the technology necessary to make Digital Systems compliant with the DCI Specification becomes commercially available, Licensor, at no cost to Licensee, will (a) thereafter deploy

 

Exhibit G to Credit Agreement

  

-7-

  

Digital Systems which are compliant with the DCI Specification and (b) within four (4) months after such availability upgrade Digital Systems previously deployed in order to bring such Digital Systems into compliance with the DCI Specification.

 

7.           DELIVERY AND INSTALLATION; SATELLITE DISH.

 

(a)           Following the execution by Licensor and Licensee of each Equipment Schedule, Licensor shall, at Licensor's expense, deliver the Equipment described in such Equipment Schedule to the Cineplex location designated in such Equipment Schedule. Licensor shall bear the risk of loss for the Equipment while it is in transit to Licensee sites at which the Equipment will be installed. Licensee shall, at its own expense, prepare such sites for installation of the Equipment in accordance with the site requirements set forth in Exhibit G attached hereto and/or such other site requirements as may be mutually agreed between Christie and Licensee. All Equipment will be installed by Christie pursuant to the Service Contract, and Licensee will permit Christie service engineers access to the installation sites, at times mutually agreed upon by Christie and Licensee, in order to install the Equipment. Upon completion of the installation of any Equipment and testing to ensure the operability of the Equipment, Licensee will deliver a Certificate of Acceptance for such Equipment to Licensor or to Christie for delivery to Licensor. Licensee hereby authorizes Licensor to complete each executed Equipment Schedule with the identification number set out in the Certificate of Acceptance delivered by Licensee for the Equipment covered by such Equipment Schedule. Licensor shall provide Licensee with copies of filly completed and executed copies of each Equipment Schedule and Certificate of Acceptance.

 

(b)           In the event Licensee currently has the right to grant to Licensor for the Initial Term or any Renewal Term of this Agreement the right to install and maintain satellite transmitting and receiving equipment (a "Satellite Dish") on the roof of any Cineplex site designated in an Equipment Schedule, Licensee hereby grants to Licensor or its Affiliate, without charge or cost to Licensor, the right, during the Initial Term or any Renewal Term of this Agreement, to install and maintain, or to have installed and maintained, a Satellite Dish on the roof of such Cineplex site for the sole purpose of delivering content to Licensee. In the event Licensee does not currently have the right to install and maintain a Satellite Dish on the roof of any Cineplex site designated in an Equipment Schedule, Licensee shall, at the request of Licensor, use reasonable commercial efforts to procure for Licensor, as promptly as reasonably possible after request by Licensor, without cost to Licensor, the right, during the Initial Term or any Renewal Term of this Agreement, to install and maintain, or to have installed and maintained, a Satellite Dish on the roof of such Cineplex site. In addition, Licensee shall, at Licensor's sole cost and expense, obtain any permits necessary for the installation or maintenance of any such Satellite Dish. The cost of installation and maintenance of any Satellite Dish will be the sole responsibility of Licensor or its Affiliates. All right, title and interest in and to any Satellite Dish installed hereunder will be the sole property of Licensor or its Affiliates. Satellite Dishes are not included in the Equipment licensed by Licensor to Licensee under this Agreement, and Licensee shall not redirect, alter, move or otherwise in any way interfere with the operation of any Satellite Dish without the prior written consent of Licensor, which consent shall not be withheld unreasonably. If Licensee is unable to procure the right to install a Satellite Dish on the roof of a Cineplex site, then Licensee shall grant Licensor or its Affiliate access and the right to deliver to Licensee content by hard drive, by other physical means or by use of fiber optic cables. This Section 7(b) shall survive the expiration or any termination of this Agreement.

 

Exhibit G to Credit Agreement

  

-8-

  

8.           LOCATION. Without the prior written consent of Licensor, which consent shall not be unreasonably withheld, Licensee shall not move any Equipment (except in cases of emergency to protect the Equipment) from the site and cinema auditorium location designated in the Equipment Schedule for such Equipment. The moving of any Equipment other than in accordance with this Section 8 shall constitute a material breach of this Agreement and the applicable Equipment Schedule.

 

9.           SCOPE OF LICENSE. Licensee shall be permitted to use Equipment for the following purposes, and for no other purpose:

 

(a)           exhibition of Traditional Motion Picture Content distributed by Participating Distributors;

 

(b)           exhibition of pre-feature on-screen advertising;

 

(c)           exhibition of Traditional Motion Picture Content distributed by Non-Participating Distributors provided that Licensor has notified Licensee that the Non-Participating Distributor has paid to Licensor or made arrangements with Licensor for payment to Licensor of all applicable Non-Participant Virtual Print Fees in connection with such exhibition; and

 

(d)           subject to the requirements of Section 11, exhibition of Non-Traditional Content.

 

10.           NON-PARTICIPATING DISTRIBUTORS. Licensee shall not use Equipment to exhibit Traditional Motion Picture Content distributed by Non-Participating Distributors unless in each instance Licensor has notified Licensee that the Non-Participating Distributor has paid to Licensor or made arrangements with Licensor for payment to Licensor of all applicable Non-Participant Virtual Print Fees in connection with such exhibition.

 

11.           NON-TRADITIONAL CONTENT.

 

(a)           Licensee hereby designates Access Integrated Technologies, Inc. ("AccessIT") as its preferred content delivery service for Non-Traditional Content and Licensee agrees to use its commercially reasonable best efforts to play content available from customers using AccessIT's content delivery service. Licensee agrees that it will not enter into any other agreement with a third party that would prohibit AccessIT from showing on the Equipment Non-Traditional Content that Licensee, in its sole discretion, may choose to book or prohibit AccessIT from delivering digital content to Licensee's theatres. In the event Licensee chooses to exhibit Non-Traditional Content from customers not using AccessIT's content delivery service, Licensee shall first use its commercially reasonable best efforts to assist AccessIT in becoming the delivery service for such content. If, despite Licensee's commercially reasonable best efforts, the Non-Traditional Content is delivered by a delivery service other than AccessIT on that delivery service's delivery software and equipment, Licensee shall impose a Virtual Print Fee of not less than $_____ for each show of a Digital Title upon the provider of the content payable to Licensor for use of the Digital System.

 

(b)           If AccessIT is the content delivery service for the Non-Traditional Content, Licensee shall pay Licensor:

 

Exhibit G to Credit Agreement

  

-9-

  

$_____ per show for the first show, and

 

$_____ per show for each additional show of same content up to a maximum of $_____ total.

 

12.           REPORTING AND EQUIPMENT LOGS.

 

(a)           In order to facilitate accurate billing of virtual print fees payable to Licensor with respect to the exhibition of Digital Titles on the Equipment, Licensor and its representatives shall be entitled to access, review and obtain copies, in such manner as Licensor may determine from time to time, of all Log Files, as defined below. Licensee shall also be entitled to access to the Log Files. Licensor and Licensee agree not to interfere with the use of the Equipment for showing Digital Titles or the availability of access to the Log Files. Log Files are electronic files created by the Equipment, including but not limited to files containing information and records on the actual usage history of each component of the Equipment and the specific title and time of play for each usage.

 

(b)           Licensor agrees to use the Log Files solely to monitor, assist and verify the billing of virtual print fees and measuring Equipment performance. Licensor shall not be permitted to access any financial records of Licensee.

 

13.           EXHIBITION COMMITMENT. Provided that more than fifty percent (50%) of the screens in any Cineplex are equipped with Digital Cinema Projection Systems licensed under this Agreement, then, if a motion picture which Licensee desires to license is available from a Participating Distributor (or, subject to the requirements of Section 10, a Non-Participating Distributor) in both a Digital Title version and a film print version, Licensee is hereby required to license and exhibit on a Digital System the Digital Title version rather than the film print version provided that there is a screen equipped with a Digital Cinema Projection System that is open to be booked with a movie commencing on the opening date of that movie. Subject to the foregoing requirement, Licensee shall have full and complete discretion over the choice of content at all of its screens.

 

14.           PROMOTION OF DLP CINEMATM. To the extent that Licensee is not required to incur any additional advertising or other costs beyond its ordinary marketing and advertising costs for its own business, Licensee shall use its commercially reasonable best efforts to:

 

(a)           promote DLP CinemaTM technology for the exhibition of Digital Titles in accordance with the DLP CinemaTM Promotional Guidelines.

 

(b)           include the DLP CinemaTM logo in all advertisements in all media, including, but not limited to, print, newspaper and internet, issued by or under the control of Licensee with respect to Digital Titles to be exhibited by means of the Equipment, and insure that all such advertising is in accordance with the DLP CinemaTM Promotional Guidelines.

 

(c)           display the "DLP CinemaTM" trailer on screen immediately preceding the distributor's logo credit and at the beginning of each exhibition of Non-Traditional Content.

 

Exhibit G to Credit Agreement

  

-10-

  

Licensor shall obtain any approval(s) necessary for performing the acts set forth in items (a) through (c) above, including, but not limited to, any necessary approval of each Participating Distributor, Non-Participating Distributor or provider of Non-Traditional Content, as applicable; and secure all necessary royalty-free trademark licenses from Texas Instruments Incorporated with regard to items (a) and (b) above.

 

15.           MAINTENANCE AND TRAINING. Concurrently with the execution of this Agreement, Licensee shall enter into the Service Contract with Christie. During the Initial Term of this Agreement, Licensee shall maintain in effect the Service Contract with Christie or a comparable service contract with another service provider acceptable to Licensor. The Service Contract provides for training of Licensee personnel, and Licensee will in any event maintain an adequate theater staff properly trained in the use of Digital Systems. Licensee will not do anything which would render Digital Systems non-compliant with, or prevent Digital Systems from being non-compliant with, the DCI Specification during the term of this Agreement. Any replacement parts substituted for any parts or components of Equipment shall become the property of Licensor covered by the relevant Equipment Schedule for such Equipment.

 

16.           ADDITIONS AND ALTERATIONS.

 

(a)           With the consent of Licensee, Licensor may from time to time at Licensor's expense and by Licensor's designated representatives or contractors, make alterations to, or add components, accessories, enhancements, features or functionalities to, Equipment, and all of the foregoing shall, at the time of such alteration or addition, become the property of Licensor covered by the relevant Equipment Schedule for such Equipment.

 

(b)           Except in accordance with paragraph (a) above or with the prior written consent of Licensor, Licensee shall not make, or permit to be made, alterations to, or additions of components, accessories, enhancements, features or functionalities to, Equipment, provided that nothing contained in this Section 16 shall prevent or be construed to prevent Christie from replacing parts and components in connection with the maintenance services to be provided by Christie under the Service Contract.

 

(c)           With the prior written consent of Licensor, Licensee shall be permitted to add components, accessories, enhancements, features or functionalities to the Equipment and any such alterations or additions shall remain the property of Licensee. Notwithstanding the foregoing, Licensee shall not make any alterations or changes to or in relation to Equipment which would impair or prevent the use of the Equipment for showing Digital Titles.

 

17.           TAXES. The costs and fees set forth herein and in all Schedules and Exhibits attached hereto and made a part hereof do not include any applicable federal, state or local taxes, and any such taxes or governmental charges upon the Equipment and any Software covered hereby, including sales or use taxes or any other tax however designated arising from the subject matter of this Agreement, shall be paid by Licensor.

 

18.           DAMAGE AND LOSS.

 

(a)           After Installation Licensee shall bear all risk of damage to or loss or destruction of the Equipment by reason of any cause whatsoever, including without limitation fire, flood,

 

Exhibit G to Credit Agreement

  

-11-

  

earthquake, natural disaster, casualty, accident or theft. Licensee shall advise Licensor of any such damage, loss or destruction in writing within five (5) days after any such damage, loss or destruction occurs.

 

(b)           In the event of any damage, loss or destruction which materially impairs the performance of any Equipment or renders the Equipment inoperable and which is capable of repair on a cost effective basis, then Licensee will, at its expense, have Christie repair the Equipment under the Service Contract.

 

(c)           In the event of any damage, loss or destruction which materially impairs the performance of any Equipment or renders the Equipment inoperable and which is not capable of repair on a cost effective basis, or in the event of any complete loss or destruction of any Equipment, then Licensor, in its sole discretion, may, at Licensee's expense, replace the Equipment with comparable or better Equipment and Licensee shall do all things and execute all documents as may be necessary in the judgment of Licensor to cause title to the replacement Equipment to vest in Licensor and to subject the replacement Equipment to all of the terms and conditions of this Agreement.

 

(d)           In the event Licensee fails to promptly perform its obligations under paragraph (b) or (c), then Licensor may, but is not obligated to, cause the Equipment to be repaired or replaced and invoice Licensee for all costs of such repair or replacement, which invoice shall be due and payable within ten (10) days of the date of invoice.

 

In no event will any damage to or loss or destruction of any Equipment entitle Licensee to any refund of or credit for any amounts paid or remitted by Licensee to Licensor under this Agreement, or excuse Licensee from payment of any amounts otherwise payable by Licensee to Licensor under this Agreement.

 

19.           INSURANCE. Licensee, at its expense, will maintain throughout the term of this Agreement a policy of insurance issued by a reputable insurer reasonably acceptable to licensor, insuring the Equipment against "all risks," including extended coverage insurance, for a coverage amount at least equal to the full replacement cost (at market value) of the Equipment. Licensor shall be named as an additional loss payee under such policy, and such policy shall provide that it may not be canceled except upon at least thirty (30) days prior written notice to Licensor (or at least ten (10) days prior written notice for failure to pay a premium). Upon Licensor's request, Licensee shall furnish to Licensor insurance certificates or other satisfactory evidence of such insurance. If Licensee fails to maintain insurance as required hereunder, Licensor may, but shall not be obligated to, purchase such insurance and invoice Licensee for all costs with respect thereto, which invoice shall be due and payable within (10) days of the date of invoice.

 

20.           AUDIT, INSPECTION AND ACCESS RIGHTS.

 

(a)           Licensor shall have the right, through its designated representatives (including Christie), at Licensor's expense, upon reasonable prior notice and during regular business hours, to (a) examine Licensee's usage records relating solely to the Equipment and (b) inspect the Equipment for purposes of verifying (i) Licensee's compliance with all of its obligations under

 

Exhibit G to Credit Agreement

  

-12-

  

this Agreement; (ii) the condition of the Equipment; and (iii) compliance of the Equipment with the DCI Specification.

 

(b)           Licensee shall maintain all books and records subject to audit hereunder for a period of not less than three (3) years after the expiration or any termination of this Agreement, and during such three (3) year period, Licensor shall retain all audit and inspection rights set forth in this Section 20. Licensee shall provide all necessary access to the Equipment and the relevant site location for purposes of such inspection and verification.

 

(c)           Licensee will permit representatives of Distributors reasonable access, upon reasonable prior notice and at times convenient to Licensee, to Cineplex locations where the Equipment is located to (i) verify the operating condition of the Equipment and, after the DCI Specification has been finalized and issued, to verify that the Equipment is compliant with the DCI Specification or to verify the upgrading of Equipment to meet the DCI Specification as contemplated by this Agreement, and (ii) at no cost to Licensee install such distribution equipment as may be necessary for Distributors to deliver content files to such premises.

 

21.           NEGATIVE PLEDGE. During the term of this Agreement, Licensee shall not sell, convey, assign, transfer or otherwise dispose of any Equipment or any interest therein, and shall keep such Equipment and its rights and interests under this Agreement free and clear of all liens, security interests, encumbrances, charges or adverse claims. Licensee shall promptly notify Licensor of any liens, security interests, encumbrances, charges or adverse claims which any third party files or seeks to enforce against the Equipment or any of Licensee's rights and interest under this Agreement.

 

22.           PERSONAL PROPERTY. It is the intention of Licensor and Licensee that the Equipment at all times shall be and remain personal property, and shall not be or become a fixture upon or affixed to any real property. The Equipment shall not be affixed to realty so as to change the character of the equipment from personal property to fixtures.

 

23.           ASSIGNMENT AND SUBLEASE.

 

(a)           Licensee shall not assign this Agreement or any Equipment Schedule, or lease or sublicense the use of any of the Equipment, without the prior written consent of Licensor in each instance, which consent shall not be unreasonably withheld by Licensor; provided, however, Licensee may assign this Agreement or any Equipment Schedule without Licensor's prior written consent (i) to any direct or indirect subsidiary of Licensee, (ii) to any person or entity resulting from a reorganization of Licensee, (iii) to any person or entity with which Licensee is merged or consolidated, (iv) to any person or entity that acquires all or substantially all of Licensee's assets or equity securities of whatever type, (v) to Licensee's existing lenders or any other lenders(s) pursuant to loan documents evidencing debt obligations of Licensee (provided such lender(s) shall have all rights of cure available to Licensee hereunder) or (vi) to any person or entity that controls, is controlled by or is under common control with Licensee.

 

(b)           Licensor shall have the right to freely assign this Agreement and any or all of the Equipment Schedules. In order to facilitate the financing of the Equipment, Licensor may enter into agreements with one or more parties pursuant to which, inter alia, Licensor may assign its

 

Exhibit G to Credit Agreement

  

-13-

  

right, title and interest in this Agreement to such parties (referred to herein individually as a "Financing Party" and collectively, as "Financing Parties"). Licensee irrevocably consents to the transfer and assignment of Licensor's right, title and interest in this Agreement to any and all Financing Parties and hereby acknowledges and agrees for the benefit of each such Financing Party that upon receipt by Licensor of written notice from a Financing Party that an event of default has occurred and is continuing under any financing arrangements between such Financing Party and Licensor with respect to the Equipment (such documents referred to herein as the "Financing Documents"), and a statement to the effect that such Financing Party has elected to exercise its remedies pursuant to the Financing Documents and this Agreement as a consequence of such default, the Financing Party shall have the rights of Licensor hereunder, and Licensee shall deal exclusively and directly with the Financing Party or its designee(s) or assignee(s), as the case may be, and not Licensor.

 

24.           WARRANTY DISCLAIMER.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR MAKES NO WARRANTIES TO LICENSEE, WRITTEN OR ORAL, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE OR PURPOSE OR NON-INFRINGEMENT, ALL OF WHICH IMPLIED WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

25.           THIRD PARTY WARRANTIES. At the request of Licensee, Licensor shall, at Licensee's option, (a) enforce for the benefit of Licensee any rights or remedies which Licensor may have against any manufacturer or licensor in respect of any of the Equipment or Software, including, but not limited to, rights or remedies, if any, under any product warranty or any indemnification against infringement, or (b) make a fill or partial assignment to Licensee of any such rights or remedies.

 

26.           NON-PETITION COVENANT. During the period from the commencement of this Agreement and ending on the date on which either party hereto ceases to have any continuing obligations to the other under this agreement, neither party shall commence or join in any involuntary bankruptcy proceeding against the other party under any federal or state bankruptcy law, or commence or join in any proceeding for the appointment of a receiver or trustee for any or all of the assets of the other party or for the liquidation or dissolution of such other party.

 

27.           EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an "Event of Default" under this Agreement:

 

(a)           failure by Licensee to make or remit any payments required to be made or remitted by Licensee hereunder or under any Equipment Schedule as and when the same become due and payable and such failure continues uncured for a period of ten (10) days after written notice to Licensee;

 

(b)           the material breach by Licensee or any of its officers, employees or authorized agents of any of its obligations hereunder or under any Equipment Schedule (other than obligations referred to in paragraph (a) above), which breach continues uncured for a period of thirty (30) days after written notice to Licensee provided, however, that to the extent such breach

 

Exhibit G to Credit Agreement

  

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is susceptible of cure and Licensee has commenced a cure within such period, such period shall continue for as long as Licensee diligently pursues a cure;

 

(c)           the termination by Licensee of the business of operating as an exhibitor of commercial films;

 

(d)           the making of an assignment by Licensee for the benefit of its creditors or the admission by Licensee in writing of its inability to pay its debts as they become due, or the filing by or against Licensee of any petition under any bankruptcy or insolvency laws, which petition is not dismissed within ninety (90) days, or the appointment of a receiver, liquidator or trustee for any or all of the assets of Licensee, which appointment is not vacated within ninety (90) days;

 

(e)           the material breach by Licensor or any of its officers, employees or authorized agents of any of its obligations hereunder or under any Equipment Schedule which breach continues uncured for a period of thirty (30) days after written notice to Licensor provided, however, that to the extent such breach is susceptible of cure and Licensor has commenced a cure within such period, such period shall continue for as long as Licensor diligently pursues a cure;

 

(f)           the substantial failure of a material quantity of the Equipment installed under this Agreement to properly perform the functions for which said Equipment was designed and installed during any consecutive six (6) month period, which failure continues uncured for a period of thirty (30) days after written notice to Licensor provided, however, that to the extent such failure is susceptible of cure and Licensor has commenced a cure within such period, such period shall continue for as long as Licensor diligently pursues a cure; or

 

(g)           the making of an assignment by Licensor for the benefit of its creditors or the admission by Licensor in writing of its inability to pay its debts as they become due, or the filing by or against Licensor of any petition under any bankruptcy or insolvency laws, which petition is not dismissed within ninety (90) days, or the appointment of a receiver, liquidator or trustee for any or all of the assets of Licensor, which appointment is not vacated within ninety (90) days.

 

28.           REMEDIES. Upon the occurrence and during the continuance of any Event of Default, beyond applicable cure periods, the non-defaulting party shall have, in addition to any other rights and remedies available at law or in equity all of the following rights and remedies:

 

(a)           the right to terminate this Agreement and any or all of the Equipment Schedules;

 

(b)           Upon the occurrence and during the continuance of any Event of Default by Licensee beyond applicable cure periods, Licensor shall have the right to retake possession of any or all of the Equipment, and for such purpose Licensor shall have the right to enter upon any premises where any or all of the Equipment is located and remove same;

 

(c)           In the event of Default by Licensee, Licensor shall have the right to recover any and all damages, including loss of virtual print fees, cost and expenses, including reasonable attorneys' fees and costs, resulting from such Event of Default or the enforcement of Licensor's remedies hereunder; and

 

Exhibit G to Credit Agreement

  

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(d)           In the event of Default by Licensor, Licensee shall have the right to recover any and all damages, cost and expenses, including reasonable attorneys' fees and costs, resulting from such Event of Default or the enforcement of Licensee's remedies hereunder.

 

All rights and remedies are cumulative, and the exercise of any one right or remedy shall not preclude the exercise of any other right or remedy.

 

29.           LIMITATION ON DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, EVEN IF SAID PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

30.           INDEMNIFICATION.

 

Licensee shall indemnify and hold Licensor, its successors and assigns, and their members, managers, partners, affiliates, officers, directors, employees, agents, advisors and attorneys harmless from and against any and all claims, costs, expenses, damages and liabilities, including attorneys' fees and costs, arising out of the use, operation or possession of the Equipment or otherwise related to this Agreement or any Equipment Schedule. The indemnification rights hereunder shall survive the expiration or any termination of this Agreement.

 

Licensor shall indemnify and hold Licensee, its successors and assigns, and their members, managers, partners, affiliates, officers, directors, employees, agents, advisors and attorneys harmless from and against any and all claims, costs, expenses, damages and liabilities, including attorneys' fees and costs, arising out of the use, operation or possession of the Equipment or otherwise related to this Agreement or any Equipment Schedule. The indemnification rights hereunder shall survive the expiration or any termination of this Agreement.

 

31.           REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE. Licensee hereby represents, warrants and covenants to Licensor that (a) the execution, delivery and performance of this Agreement by Licensee have been, and each Equipment Schedule hereafter executed by Licensee will be, duly authorized by all necessary corporate action on the part of Licensee; (b) the individual(s) executing this Agreement on behalf of Licensee have the requisite authority to do so, and the individual(s) executing any Equipment Schedule will have the requisite authority to do so; (c) this Agreement does, and each Equipment Schedule will, constitute the legal, valid and binding agreement of Licensee enforceable in accordance with their respective terms; (d) Licensee is in good standing in the jurisdiction of its incorporation or organization and in any jurisdiction in which any Equipment is located; (e) Licensee shall comply with any and all applicable laws and regulations relating to the use of the Equipment and Licensee's performance under this Agreement and each Equipment Schedule; (h) there are no actions, suits or proceedings pending, or to the knowledge of Licensee, threatened, before any court or administrative agency, arbitrator or governmental body that would materially adversely affect its ability to make payments or perform its obligations under this Agreement or any Equipment Schedule; (i) Licensee is not party to, and during the term of this Agreement will not enter into, any exclusive arrangement other than with Licensor for the showing or delivery of

 

Exhibit G to Credit Agreement

  

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Traditional Motion Picture Content or other alternative digital content other than for advertisements, or pursuant to Licensee's existing agreements with _____ or replacements and/or extensions thereof.

 

32.           REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSOR. Licensor hereby represents, warrants and covenants to Licensee that (a) the execution, delivery and performance of this Agreement have been, and each Equipment Schedule hereafter executed by Licensor will be, duly authorized by all necessary corporate action on the part of Licensor; (b) the individual(s) executing this Agreement on behalf of Licensee have the requisite authority to do so, and the individual(s) executing any Equipment Schedule will have the requisite authority to do so; (c) this Agreement does, and each Equipment Schedule will, constitute the legal, valid and binding agreement of Licensor enforceable in accordance with its terms; (d) Licensor is in good standing in the jurisdiction of its organization and in each jurisdiction where the ownership or operation of its property and assets or the conduct of its business requires such qualification; (e) Licensor shall comply with any and all applicable laws and regulations relating to Licensor's performance under this Agreement and each Equipment Schedule; (f) there are no actions, suits or proceedings pending, or to the knowledge of Licensor, threatened, before any court or administrative agency, arbitrator or governmental body which would materially adversely affect its ability to perform under this Agreement; (g) to Licensor's knowledge, no part or component of the Equipment or Licensee's use thereof, including without limitation, the Software, infringes or violates any patent, copyright, trade secret, mask work right, trademark license or other intellectual property right of any third party; (h) Licensor has the right to grant the rights and licenses granted to Licensee under this Agreement, (i) the Distributor Agreements executed as of the date hereof are valid, binding and of fill force and effect and none of the parties thereto are in default thereunder and (j) Licensee's right and license hereunder to use the Equipment in accordance with the terms hereof includes the royalty-free right to use the DLP CinemaTM technology incorporated in the Equipment.

 

33.           ENTIRE AGREEMENT. Licensor and Licensee acknowledge that there are no agreements or understandings, written or oral, between Licensor and licensee with respect to the Equipment, other than as set forth herein and in each Equipment Schedule, that this Agreement and the Equipment Schedules contain the entire agreement between Licensor and Licensee with respect to the subject matter hereof and thereof, and that no covenant, condition, or other term or provision may be waived or modified orally.

 

34.           APPLICABLE LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to its conflicts of laws principles.

 

35.           SEVERABILITY AND VALIDITY. If any provision of this Agreement or any Equipment Schedule is prohibited by, or is unlawful or unenforceable under, any applicable law of any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such prohibition, without invalidating the remaining provisions thereof; provided, however, that any such prohibition in any jurisdiction shall not invalidate such provision in any other applicable jurisdiction.

 

Exhibit G to Credit Agreement

  

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36.           NOTICES. All notices hereunder shall be in writing, shall be effective upon actual receipt shall be hand delivered, sent by overnight courier (such as FedEx), or sent by registered or certified mail or delivered personally in accordance with the following, or to such other address as either party may specify to the other in writing:

 

	
LICENSOR:

	
Cinedigm Digital Funding I, LLC

c/o Access Integrated Technologies, Inc.

55 Madison Avenue, Suite 300

Morristown, New Jersey 07960

Attention: Gary S. Loffredo, Esq., Senior VP and General Counsel

 

	
With a copy to:

	
Kelley Drye & Warren LLP

101 Park Avenue

New York, New York 10178

Attention: Jonathan Cooperman, Esq.

 

	
LICENSEE:

	  
	  	  
	  	  
	  	  
	  	  
	
With a copy to:

	  
	  	  
	  	  
	  	  

37.           MODIFICATION AND WAIVER. No modification or waiver of any provision of this agreement or any equipment schedule shall be effective unless the same is in writing and signed by both parties, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given. Licensor and Licensee may, from time to time, mutually agree on additional terms and conditions with respect to an Equipment Schedule which may be set forth thereon or attached thereto as an "Addendum" which shall be applicable to and constitute a part thereof.

 

38.           CONFIDENTIALITY. Licensee acknowledges that the Equipment and Software contain proprietary information and their configuration and operation constitute trade secrets of Licensor or the respective owners thereof. In addition to the foregoing, each party acknowledges that its officers, employees, agents or representatives during the term of this Agreement will have access to and come into contact with, confidential proprietary information of the other party, including, but not limited to, information concerning the Equipment and/or the Software and/or other trade secrets of Licensor ("Confidential Information"). Licensor and Licensee agree not to disclose to any third party any Confidential Information that it learns during the term of this Agreement without the prior written consent of the other party. This obligation shall survive the cancellation or other termination of this Agreement. The parties hereby agree to use their best efforts to maintain the confidentiality of the Confidential Information and to treat such Confidential Information with the same degree of care and security as they treat their own most

 

Exhibit G to Credit Agreement

  

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confidential information. Notwithstanding the foregoing, the parties' obligations with respect to the Confidential Information shall not extend to information that: (a) is in the public domain at the time of its disclosure; (b) becomes part of the public domain through a source other than Licensee; or (c) is required to be disclosed pursuant to a court order or governmental authority, whereupon Licensee shall provide Licensor with notice prior to such disclosure unless otherwise forbidden by law. The parties shall be required to advise each of their employees, agents and representatives who have access to Confidential Information that they are required to keep Confidential Information in the strictest confidence, but in all cases, Licensor and Licensee shall retain responsibility for any breach by an employee, agent and/or a representative of the confidentiality obligations set forth in this Section 38. It is understood that in case of a breach of this Section 38, damages may not be an adequate remedy and the Licensor may be entitled to injunctive relief to restrain any breach, whether threatened or actual, of this Section 38.

 

39.           PRECEDENCE. In the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of any properly executed Equipment Schedule, the terms and conditions of such Equipment Schedule shall prevail.

 

40.           NO WAIVER. The failure by either party to exercise any right or remedy provided for in this Agreement will not be deemed to be a waver of any right or remedy hereunder.

 

41.           SECTION HEADINGS. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the parties.

 

42.           COUNTERPARTS; EXECUTION BY FACSIMILE. This Agreement and each Equipment Schedule may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document. This Agreement and each Equipment Schedule may be executed and delivered by facsimile transmission.

 

43.           NO JOINT VENTURE OR PARTNERSHIP. The parties are entering into this Agreement as Licensor and Licensee, and nothing herein shall be deemed to create or constitute a joint venture or partnership between the parties or a principal-agent relationship. Neither party has the authority to bind or contract on behalf of the other party.

 

44.           ANNOUNCEMENTS. No public announcement, circular, advertisement or other publicity in connection with this Agreement shall be made or issued by or on behalf of either party to this Agreement, except as may be required by law, judicial order or applicable regulation, except by mutual agreement of the parties as evidenced by the prior written consent of the other party. Both parties shall mutually agree upon the content of any public statement announcing the existence of this Agreement.

 

45.           THEATER CLOSURES. If at any time during the term of this Agreement, Licensee discontinues operations at any theater with respect to which it has executed an Equipment Schedule and a Certificate of Acceptance; this Agreement and the Equipment Schedule for such theater shall terminate as of the end of the last day of business operations at such theater. Licensor shall have the option to (a) utilize the Equipment located at such theater in

 

Exhibit G to Credit Agreement

  

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any other theater operated by Licensee or its Affiliates which does not have Equipment or (ii) have such Equipment picked up by Licensor or its designated representatives. If Licensor elects to use the Equipment in accordance with (i) above, Licensee and Licensor shall execute a new Equipment Schedule and Certificate of Acceptance for the theater in which the Equipment is installed in accordance with the terms of this Agreement.

 

46.           THEATER SALES AND ACQUISITIONS. If during the term of this Agreement, Licensee or its Affiliates sell, transfer, convey or assign to a third party their respective interest in any theater with respect to which Licensee has executed an Equipment Schedule and Certificate of Acceptance, Licensee or its Affiliates may, with the prior consent of Licensor, which will not unreasonably be withheld, transfer the Equipment in such transaction so long as such acquirer or transferee executes and delivers to Licensor an Master License Agreement in the same form as this Agreement and an Equipment Schedule in the form attached as Exhibit A. Upon such transfer, Licensee shall have no further obligation under this Agreement or the Equipment Schedule for such theatre, If during the term of this Agreement, Licensee or its Affiliates shall acquire a Cineplex, Licensee shall have the right to designate such Cineplex(s) for inclusion hereunder and Licensee shall be entitled to either relocate existing Equipment to such Cineplex, or if the initial _____ screens have not been enabled with Digital Systems then Licensee may notify Licensor that said Cineplex(s) be Digitally enabled thereafter.

 

47.           LICENSEE'S OPTION TO PURCHASE; EOUIPMENT RETURN.

 

(a)           At any time following the expiration of the Initial Term, Licensee shall have the option to purchase all or any portion of the Equipment. The purchase option for any Equipment may be exercised by Licensee by providing Licensor with at least 60 days written notice (the "Purchase Notice") specifying the Equipment Licensee is electing to purchase. The purchase price (the "Purchase Price") for such Equipment shall be equal to the fair market value of the Equipment to be purchased as of the date the Purchase Notice is given to Licensor. The fair market value of the Equipment shall be determined by an independent third party appraiser selected by Licensee and approved by Licensor, which approval may not be unreasonably withheld.

 

(b)           Upon the exercise of the purchase option in Section 47(a) above which is not rescinded, title to such Equipment shall pass from Licensor to Licensee upon the payment of the Purchase Price on an "AS IS, WHERE IS" basis, without warranty of any kind, express or implied, other than Licensor's warranty of good title and warranty that such equipment is transferred free of all liens, security interests, claims or encumbrances of any kind or nature. Licensor shall comply with the DCI Specification requirements regarding the Digital Systems that are contained in the Distributor Agreements, as may be amended from time to time throughout the term of the Distributor Agreements. Licensor shall deliver to Licensee a duly executed and appropriate bill of sale in form and substance reasonably acceptable to Licensee, evidencing transfer of title of the Equipment purchased. Upon payment of the Purchase Price, this Agreement shall terminate with respect to such Equipment and the Equipment Schedule(s) relating to the Equipment so purchased shall be appropriately amended or terminated, as applicable.

 

Exhibit G to Credit Agreement

  

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(c)           In the event the Licensee does not exercise its purchase option, the removal of the Equipment shall be subject to the terms and conditions of this Agreement.

 

48.           MFN. In the event that during the Roll-Out Period Licensor offers to deploy Digital System to a third party on terms and conditions which are comparable to the terms and conditions of this Agreement but on financial terms which in the aggregate are more favorable than the financial terms of this Agreement, then Licensor shall promptly offer the more favorable financial terms to Licensee.

 

IN WITNESS WHEREOF, the duly authorized representatives of the parties hereto have executed this Agreement as of the date and year first above written.

 

	
LICENSOR

 

 

 

	  	
LICENSEE

 

 

 

	
By:

	  	  	
By:

	  
	
Name:

	  	  	
Name:

	  
	
Title:

	  	  	
Title:

	  

 

Exhibit G to Credit Agreement

  

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LIST OF EXHIBITS

 

	
EXHIBIT A

	
-

	
Form of Equipment Schedule/Certificate of Acceptance

	
EXHIBIT B

	
-

	
DLP CinemaTM Promotional Guidelines

	
EXHIBIT C

	
-

	
Operating Standards

	
EXHIBIT D

	
-

	
Participating Distributors

	
EXHIBIT E

	
-

	
Form of Service Contract

	
EXHIBIT F

	
-

	
Intentionally Omitted

	
EXHIBIT G

	
-

	
Site Requirements

	
EXHIBIT H

	
-

	
End User License Agreements

	
EXHIBIT I

	
-

	
Form of Monthly Report

 

Exhibit G to Credit Agreement

  

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EXHIBIT A

 

EQUIPMENT SCHEDULE NO. ___

DATED AS OF _____

TO MASTER LICENSE AGREEMENT DATED AS OF _____

 

1.           EQUIPMENT.

 

	
Qty

	
Item Description

	
Serial Number

	
Auditorium Location Identifier

	  	  	  	  

 

2.           LOCATION, SCREENS AND REQUESTED DATE FOR INSTALLATION.

 

Theater Name:

 

Theater Address:

 

Number of Screens:

 

Requested date of installation:

 

3.           SPECIAL TERMS (IF ANY).

 

Licensor and Licensee _____ have _____ have not agreed on any special terms for the license by Licensor to Licensee of the Equipment specified in this Equipment Schedule. In the event Licensor and Licensee have agreed on any such special terms, such special terms are as set forth on a separate schedule attached hereto and made a part hereof.

 

This Equipment Schedule is executed pursuant to the Master License Agreement dated as of the date indicated above between Licensor and Licensee (the "Agreement"). All of the terms and conditions of the Agreement are incorporated herein by this reference and made a part hereof as if such terms and conditions were set forth in full in this Equipment Schedule. By executing this Equipment Schedule, Licensor and Licensee hereby reaffirm all of the terms and conditions of the Agreement except as expressly modified hereby.

 

	
LICENSOR

 

 

 

	  	
LICENSEE

 

 

 

	
By:

	  	  	
By:

	  
	
Name:

	  	  	
Name:

	  
	
Title:

	  	  	
Title:

	  

 

Exhibit G to Credit Agreement

  

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EXHIBIT 1 TO EXHIBIT A

 

CERTIFICATE OF ACCEPTANCE

 

THIS CERTIFICATE OF ACCEPTANCE is executed as of _____, 20___ with respect to the Equipment itemized in Equipment Schedule No. ___ dated as of _____, 20___ (the "Equipment Schedule") executed pursuant to that certain Master License Agreement dated as of _____, 20___ (the "Agreement") between Cinedigm Digital Funding I, LLC ("Licensor") and the undersigned ("Licensee").

 

1.           Certification.

 

Licensee hereby certifies that the items of Equipment described in the Equipment Schedule have been installed at the location specified in the Equipment Schedule, have been inspected by Licensee, have been found by Licensee to be in good working condition and have been accepted by Licensee as Equipment whose use is licensed by Licensor under the Agreement and the Equipment Schedule.

 

2.           Commencement Date.

 

The commencement date of the license term under the Agreement and the Equipment Schedule for the Equipment accepted hereunder is _____ (the "Commencement Date").

 

3.           Representations of Licensee.

 

Licensee hereby represents and warrants to Licensor that on the Commencement Date:

 

(a)           The representations and warranties of Licensee set forth in the Agreement are true and correct in all material respects as though made on and as of the Commencement Date; and

 

(b)           Licensee is in compliance with all of its obligations under the Agreement, and no Event of Default (or event which with notice or the passage of time or both would become an Event of Default) has occurred and is continuing.

 

IN WITNESS WHEREOF, Licensee has executed this Certificate of Acceptance as of the date first above written.

            

	
"LICENSEE"

 

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

Exhibit G to Credit Agreement

  

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EXHIBIT B

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

DLP CINEMATM PROMOTIONAL GUIDELINES

 

Exhibit G to Credit Agreement

  

-25-

  

EXHIBIT C

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

OPERATING STANDARDS

 

Exhibit G to Credit Agreement

  

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EXHIBIT D

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

PARTICPATING DISTRIBUTORS

 

The Participating Distributors as of _____, ___ are as set forth below. In the event of any additions to the Participating Distributors after such date, Licensor shall promptly so notify Licensee in writing and this Exhibit D shall be deemed updated to include any Participating Distributor specified in any such notice.

 

Exhibit G to Credit Agreement

  

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EXHIBIT E

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

FORM OF SERVICE CONTRACT

 

Exhibit G to Credit Agreement

  

-28-

  

EXHIBIT F

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

INTENTIONALLY OMITTED

 

Exhibit G to Credit Agreement

  

-29-

  

EXHIBIT G

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

SITE REQUIREMENTS

 

Exhibit G to Credit Agreement

  

-30-

  

EXHIBIT H

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

END USER LICENSE AGREEMENTS

 

Exhibit G to Credit Agreement

  

-31-

  

EXHIBIT I

TO MASTER LICENSE AGREEMENT 

DATED AS OF _____

 

FORM OF MONTHLY REPORT

	
 

Participating Exhibitor Name:

	  
	
 

Theater Name and Address:

	  
	  	  
	  	  
	  	  
	  	  
	  	  
	
Screen:

	  
	  	  
	
Projector Serial Number:

	  
	  	  
	
Participating Distributor Motion Pictures Exhibited:

	  
	  	  
	  	  
	  	  
	
Non-Participating Distributor Motion Pictures Exhibited; Non-Participant Virtual Print Fees Owing:

	  
	  	  
	  	  
	  	  
	  	  
	
Motion Picture Trailers Exhibited:

	  
	  	  
	  	  
	  	  
	  	  
	
Non-Traditional Content Exhibited; Usage Fees Owing; Hours of Exhibition:

	  
	  	  
	  	  
	  	  
	  	  
	
Any Other Content (including advertising) Exhibited:

	  
	  	  
	  	  
	  	  
	  	  
	
Dates and Reasons for Out-of-Service

	  
	  	  
	  	  
	  	  

 

Exhibit G to Credit Agreement

  

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EXHIBIT H

TO

CREDIT AGREEMENT

 

FORM OF SERVICE AGREEMENT

 

(See attached.)

 

Exhibit H to Credit Agreement

  

-1-

  

DIGITAL CINEMA SERVICE AGREEMENT

 

THIS DIGITAL CINEMA SERVICE AGREEMENT (this "Agreement") is made and entered into as of _____, 20___ (the "Effective Date") by and between _____ a _____ corporation ("Customer"), and CHRISTIE DIGITAL SYSTEMS USA, INC., a California corporation ("Christie").

 

RECITALS

 

A.           Concurrently with the execution of this Agreement, Customer and Cinedigm Digital Funding I, LLC, a Delaware limited liability company ("Licensor"), have entered into an Master License Agreement of even date herewith (the "Master License Agreement"), pursuant to which Licensor will deliver Digital Systems (as defined in the Master License Agreement) to Customer cineplex sites and license such Digital Systems to Customer for use in accordance with the Master License Agreement.

 

B.           As required under the Master License Agreement Customer and Christie have entered into this Agreement to provide for installation, maintenance and other services with respect to Digital Systems licensed by Licensor to Customer under the Master License Agreement, as well as maintenance services with respect to certain of Customer's 35mm Systems (as hereinafter defined).

 

NOW, THEREFORE, for and in consideration of the mutual covenants set forth below, and for other valuable consideration received, the receipt and sufficiency of which are hereby acknowledged, the parties hereby mutually agree as follows:

 

1.           Engagement. On the terms and conditions of this Agreement, Customer hereby engages Christie, and Christie hereby accepts such engagement, to provide the services described below.

 

2.           Service Sites. "Service Sites" means each of the cineplex sites at which Digital Systems licensed by Licensor to Customer under the Master License Agreement are installed. Any Service Site which is more than a _____ hour drive from a location at which Christie maintains one or more customer service engineers is sometimes referred to below as a "Non-Local Site," and any Service Site which is within a _____ hour drive from a location at which Christie maintains one or more customer service engineers is sometimes referred to below as a "Local Site."

 

3.           Project Services.

 

3.1.           Project Management. Christie will serve as project manager for the installation of Digital Systems licensed by Customer from Licensor under the Master License Agreement. Christie's service as project manager will include the performance of site surveys at each of the Service Sites in preparation for installation of Digital Systems, coordination with Customer on site readiness matters, working with Customer on the development of an installation schedule, installation of Digital Systems in accordance with the installation schedule agreed upon between Christie and Customer, provision of all network cabling and other parts and services (other than necessary HVAC, electrical

 

Exhibit H to Credit Agreement

  

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or Audio Upgrades (collectively "Customer Items")) required in connection with the installation of Digital Systems and demonstration of the operability of installed Digital Systems upon completion of installation. An "Audio Upgrade" shall consist of equipment required to bring the existing audio system in an auditorium up to six (6) track capability. Based on the premise, as hereby agreed between the parties, that Digital Systems will replace and be substituted for 35mm projection systems currently in use (except in the case of new construction), Christie acknowledges that Customer's site readiness obligations for the installation of Digital Systems will be limited to the Customer Items, and Christie agrees to be responsible for all other preparations required for installation of Digital Systems except as may relate to satellite or other content delivery systems and except for the connection contemplated by Section 4.5(b). Christie agrees that Digital Systems will have channel digital and analog audio output, and Customer agrees that Customer will be responsible for providing, at its expense, any device (e.g. a down converter from channel to channel or channel to mono) required for Customer to use such output in its auditoriums.

 

3.2.           Training Services. In connection with the installation of a Digital System at any Service Site, Christie will provide up to ____ hour training sessions at each Service Site to train Customer's employees in the use of the Digital System. Christie will from time to time, at Customer's request, provide additional training to Customer's employees in the use of Digital Systems, such training to be provided on no more than ______ occasions in any calendar year at such times as are mutually agreed between Christie and Customer.

 

3.3.           User Manuals. Christie will provide to Customer reasonable quantities of user manuals for Digital Systems.

 

4.           Maintenance and Other Support Services.

 

4.1.           Helpdesk Services. Christie will, from 5:00 a.m. Pacific Time to 2:00 a.m. Pacific Time the following day, seven days a week, provide troubleshooting and technical assistance by telephone, generally within thirty (30) minutes after Customer's request for such assistance.

 

4.2.           Scheduled Maintenance Services. Christie will, at times scheduled in advance by Christie and Customer, on a twice yearly basis at approximately six (6) month intervals, perform the following on-site maintenance services for Digital Systems:

 

(a)           Change each projector lamp and filter, to be completed as determined by Christie within Christie recommended lamp life (if Customer chooses not to purchase replacement lamps from Christie, an appropriate number of spare lamps and filters per Cineplex must be made reasonably available to Christie for use in making lamp and filter changes and replenished by Customer after use).

 

(b)           Align and color balance the image, to be completed at lamp change or as required by component replacement.

 

Exhibit H to Credit Agreement

  

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(c)           Ripple adjustment.

 

(d)           Install hardware, software or firmware upgrades or releases made commercially available by Licensor or Christie without charge.

 

(e)           Replace any malfunctioning part or component (refurbished parts or components may be used for such replacement).

 

(f)           Miscellaneous minor repairs identified by Customer and not requiring replacement of a malfunctioning part or component.

 

4.3.           Emergency Services. Christie will provide on-site emergency service for Digital Systems, generally within _____ (___) hours after Customer's request for emergency service at any Local Site, and as promptly as reasonably possible, and in any event within 24 hours, after Customer's request for emergency service at any Non-Local Site. Emergency services include any service necessary to restore full operation to any Digital System, or component thereof, which becomes inoperable by reason of system defects or problems.

 

4.4.           Parts.

 

(a)           During the initial _____ year period of this Agreement, Christie will, at its expense, provide all parts (other than lamps and filters) required in connection with the performance of maintenance services and emergency services under Sections 4.2 and 4.3, except that where any such items are required by reason of casualty, natural disaster, accident, misuse, use of improper power sources or repair other than by Christie service personnel or other service personnel authorized by Christie, then Christie will invoice Customer for such items at such prices as may be agreed to between Christie and Customer from time to time. At Customer's request, Christie will sell and supply lamp and filter packs to Customer at such prices as may be agreed to between Christie and Customer from time to time.

 

(b)           Customer may, at its option and upon payment of additional service fees as agreed between Customer and Christie, extend the provisions of Section 4.4(a) for one or more extension periods provided that, prior to the expiration of the initial _____ year period and each subsequent extension period, as applicable, Customer and Christie have agreed in writing on the duration of the extension period and the additional service fees to be paid by Customer in respect of such extension period. In the event the provisions of Section 4.4(a) are not so extended at the expiration of the initial _____ year period or any subsequent extension period, then Christie will thereafter invoice Customer, at such prices as may be agreed to between Christie and Customer from time to time, for all parts required in connection with the performance of maintenance services and emergency services under Sections 4.2 and 4.3.

 

(c)           Payment terms for all items invoiced to Customer under this Section 4.4 are net _____ days from the date of invoice.

 

Exhibit H to Credit Agreement

  

-4-

  

4.5.           Remote Monitoring Services.

 

(a)           Subject to paragraph (b), Christie, through its Network Operations Center ("NOC"), will provide the following remote monitoring services:

 

(i)           monitoring of Digital System operation;

 

(ii)           error and status data collection for Digital System operation; and

 

(iii)           alerting Customer and Christie service engineers of Digital System problems requiring attention.

 

(b)           Customer must, at its sole cost and expense, maintain a suitable connection between the NOC and each Digital System.

 

4.6.           Upgrade Services. In the event Licensor makes available any upgrades for installed Digital Systems, Christie will install such upgrades, except that Christie will not be required under this Section 4.6 to install audio system equipment.

 

4.7.           Servicing of Non-Digital 35MM Protectors. During Service Site visits to perform scheduled maintenance services for Digital Systems, Christie will perform maintenance service as described on Schedule 4.6 attached hereto on all 35mm projectors then in service at such Service Site, provided that Customer will be responsible for either furnishing needed service parts required for such maintenance or purchasing same at such prices as may be agreed to between Christie and Customer from time to time for any such parts supplied by Christie. In the event such service parts are not available during the Service Site visit, Customer will pay Christie the reasonable costs of a second visit. In addition, Christie will provide non-exclusive on-site emergency service on an as called, as needed basis for 35mm projectors in service at any Service Site where Christie provides maintenance services for Digital Systems under this Agreement, generally within ____ hours after Customer's request for emergency service at any Local Site, and as promptly as reasonably possible, and in any event within 24 hours, after Customer's request for emergency service at any Non-Local Site. The cost of such emergency service shall be as agreed between the parties.

 

4.8.           Limited Audio Service. Christie will provide reasonable routine maintenance of "in-the-booth" components of audio systems at Service Sites where Christie performs maintenance services under this Agreement, provided that Customer will be responsible for either furnishing needed service parts required for such maintenance or purchasing same at such prices as may be agreed to between Christie and Customer from time to time for any such parts supplied by Christie. In the event such service parts are not available during the Service Site visit, Customer will pay Christie the reasonable costs of a second visit to install such parts. Christie will have no responsibility for speaker or screen components of any audio system.

 

5.           Service Hours. Regular maintenance services, emergency services and special equipment upgrade services will be performed during the hours of 8:00 am to 1:00 am, local

 

Exhibit H to Credit Agreement

  

-5-

  

time, seven days a week, for the relevant Service Site. Any request for emergency services received after 11:00 pm local time will be treated as a request for maintenance services the following morning.

 

6.           Other Services. Christie will perform for Customer such services not otherwise provided for in this Agreement as may be agreed to between Christie and Customer from time to time. Rates or charges for providing any such other services will be as agreed to between Christie and Customer in each instance.

 

7.           Excluded Services. For clarity, services to be provided under this Agreement do not include any service with respect to satellite dishes, satellite receivers, cache servers or any other system components of any satellite delivery system, or, except as otherwise provided in Section 4.7, with respect to any audio system or audio system components. Customer may make separate arrangements with Christie under Section 6 for services relating to audio systems or audio system components.

 

8.           Annual Service Fee.

 

8.1.           Annual Service Fee. Subject to Section 8.2, Customer will pay to Christie an annual service fee in the amount of $_____ per annum per screen for each screen served by a Digital System, under this Agreement. The annual service fee includes all services and parts set forth in Sections 3 and 4 (except as otherwise set forth therein) and travel related charges for visits to Local Sites. The annual service fee does not include travel related charges for visits to Non-Local Sites, and all such reasonable excess travel related charges will be billed to Customer at Christie's cost.

 

8.2.           CPI Adjustment. Commencing in 20__, the annual service fee provided for in Section 8.1 will be subject to annual adjustment to reflect any increase of the Consumer Price Index-All Urban Consumers-All Items as published by the Bureau of Labor Statistics ("CPI") over the CPI for calendar year 20__ ("CPI Base Year"). In 20__ and each calendar year thereafter, Christie will, after the CPI for the prior year has become available, compare the CPI for the prior year against the CPI for the CPI Base Year and adjust the amount of the annual service fee provided for in Section 8.1 upward to correspond to the percentage increase (if any) of the CPI for the prior year over the CPI for the CPI Base Year; provided however, that for any calendar year the annual service fee may not be increased by more than _____ percent (___%) over the annual service fee in effect for the immediately preceding calendar year. In the event the Bureau of Labor Statistics ceases to publish the CPI, then the parties shall use any similar index which is reasonably comparable to the CPI, applied in such manner as shall reasonably accomplish the purpose of this Section 8.2.

 

8.3.           Payment. Christie will invoice Customer for the annual service fee, and payment shall be made quarterly, with the first payment due _____ (___) days from the date of invoice. For Digital Systems which are installed and operational at the commencement of any calendar year, Christie will invoice the annual service in advance for such year. Where screens are enabled with Digital Systems during any calendar year, Christie will invoice Customer for a pro rata portion of the annual service fee which is

 

Exhibit H to Credit Agreement

  

-6-

  

proportionate to the number of full calendar months remaining in such calendar year at the time the screen is enabled.

 

8.4.           Taxes. The annual service fee provided for in this Agreement is exclusive of any applicable sales, use, excise or other similar taxes, all of which shall be payable by Customer.

 

9.           Deinstalled Equipment.

 

9.1.           35mm System. As used in this Agreement, "35mm System" means a 35 mm projection system consisting of not less than a 35mm projector, a xenon lamp house, a platter and all associated lenses.

 

9.2.           Transfer of Deinstalled Equipment. Subject to and in accordance with the provisions of this Section 9, Customer shall sell and transfer to Christie, and Christie shall purchase and remove from the relevant Service Sites, up to 1000 35mm Systems which on or before ________, 20__ are deinstalled and replaced by Digital Systems installed by Christie under this Agreement. The purchase price for all 35mm Systems purchased and sold pursuant to this Section 9.2 shall be $_.00 for each 35mm System.

 

9.3.           Excluded Equipment.

 

(a)           Customer and Christie shall not have any obligation under Section 9.2 with respect to any 35mm System which, if sold by Customer to Christie for a purchase price of $___.00, would result in a loss to Customer for accounting purposes based upon Customer's then existing book value for such system.

 

(b)           Customer shall have the right to retain _____ (___) deinstalled 35mm Systems at each Service Site. Customer shall, to the extent reasonably possible, select for such purposes only 35mm Systems which, if sold by Customer to Christie for a purchase price of $___.00, would result in a loss to Customer for accounting purposes, and which at the time of deinstallation have a book value in excess of $_____.

 

9.4.           Option to Purchase Certain Excluded Equipment. When any 35mm System is deinstalled and replaced by a Digital System installed by Christie under this Agreement, and at the time of deinstallation such 35mm System is excluded by application of Section 9.3(a) but the book value of such 35mm System is $_____ or less, and Customer does not select such 35mm System for retention under Section 9.3(b), then Customer shall offer to sell such 35mm System to Christie for book value. Christie shall be free to accept or reject such offer, at its discretion. In the event Christie does not accept any such offer within _____ (___) days after such offer is made, such offer shall lapse and be of no further effect and Customer shall retain said system.

 

9.5.           Notification. Upon the deinstallation of each 35mm System at any Service Site, Christie shall identify the deinstalled 35mm Systems to Customer in writing, and within _____ (___) business days after receiving such notification from Christie,

 

Exhibit H to Credit Agreement

  

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Customer shall identify which of such deinstalled 35mm Systems are excluded under Section 9.3(a), which are to be retained under Section 9.3(b), which are eligible to be sold to Christie pursuant to Section 9.4, and which are to be sold to Christie pursuant to Section 9.2.

 

9.6.           Inclusion of Previously Excluded Equipment. When any 35mm System is deinstalled and replaced by a Digital System installed by Christie under this Agreement, and at the time of deinstallation such 35mm System is excluded by application of Section 9.3(a), but prior to _____, 20___ Section 9.3(a) ceases to apply to such 35mm System, and Customer does not select such 35mm System for retention under Section 9.3(b), and Christie has not purchased such 35mm System under Section 9.4, then Customer shall so notify Christie and sell such 35mm System to Christie pursuant to and in accordance with Section 9.2.

 

9.7.           Terms of Sale. All 35mm Systems transferred or sold by Customer to Christie under this Section 9 shall be transferred and sold free and clear of all security interests, liens, encumbrances and adverse claims, shall be in operational condition, and otherwise shall be transferred or sold "AS IS, WHERE IS," without any representations or warranties. Christie shall be responsible for all transportation, freight or insurance charges incurred in connection with removing such 35mm Systems from their then location at the time of title transfer, and shall be responsible for any sales taxes, use taxes or other similar taxes, if any, applicable to any such transfer or sale. At Christie's request, Customer shall provide to Christie a suitable bill of sale evidencing the transfer of title of any 35mm System pursuant to this Section 9.

 

10.           Performance Standard. Christie will perform services under this Agreement in a competent and professional manner, consistent with the highest quality standards prevailing in the industry. In the event Christie fails to meet the performance standard set forth in this Section 10, and does not cure such failure within _____ days after written notice of such failure is given by Customer to Christie, with a copy to Licensor, Customer's sole remedy shall be to transition services to be provided under this Agreement in respect of Digital Systems to another service provider reasonably acceptable to Licensor and to Licensor's lenders, and, upon completion of such transition, to terminate this Agreement.

 

11.           Relationship of Parties. The relationship of the parties to this Agreement is that of independent contractors, and neither party is or shall be deemed to be a partner, joint venture partner, agent or employee of the other. No agency relationship is created by this Agreement, and neither party shall have the right by reason of this Agreement to act for or bind the other in any manner whatsoever.

 

12.           Warranty Disclaimer. In connection with the services to be provided by Christie to Customer under this Agreement, CHRISTIE MAKES NO WARRANTIES, WRITTEN OR ORAL, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED.

 

Exhibit H to Credit Agreement

  

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13.           Limitation of Liability. NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION ANY LIABILITY FOR LOST PROFITS OR LOST DATA, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED THAT SUCH DAMAGES MAY OCCUR. CHRISTIE'S MAXIMUM LIABILITY HEREUNDER WILL BE FOR THE AMOUNT OF SERVICE FEES PAID BY CUSTOMER TO CHRISTIE IN RESPECT OF ANY SERVICE WHICH IS THE SUBJECT OF ANY PARTICULAR CLAIM.

 

14.           Term. Unless earlier terminated under Section 10, the term of this Agreement shall commence from the Effective Date and continue until the expiration of the initial term of the Master License Agreement; provided however, that this Agreement shall terminate upon any termination of the Master License Agreement.

 

15.           Entire Agreement. This Agreement is the entire agreement of the parties with respect to the subject matter hereof. This Agreement supersedes all prior agreements, if any, between the parties with respect to such subject matter. This Agreement may not be amended except by a written amendment executed by both parties.

 

16.           Attorneys' Fees. In the event any action, suit or proceeding is commenced with respect to any matter relating to this Agreement, the prevailing party shall be entitled to have and recover from the other party its costs of suit, including reasonable attorneys' fees.

 

17.           Assignment. Neither party may assign any of its rights or delegate any of its duties under this Agreement without the prior written consent of the other party; provided, however, that either party may assign its rights or delegate its duties to the surviving entity in the case of a merger or business combination or the purchasing entity in the case of a sale of all of its assets; and provided further that in the event the Master License Agreement is assigned by Licensor to any Financing Party (as defined in the Master License Agreement), Christie may assign this Agreement, in whole or in part, to such other qualified service provider as such Financing Party may designate, and, upon any such assignment by Christie and the assumption of this Agreement by such other qualified service provider, Christie shall have no further obligations under this Agreement and Customer shall look solely to such other qualified service provider for performance under this Agreement. Also, Customer shall be entitled to collaterally assign its rights and interests hereunder to its existing lenders and replacements thereof without the necessity of Christie's consent.

 

18.           Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without regard to principles of conflicts of law.

 

19.           Binding Effect. This Agreement is binding on and inures to the benefit of the parties hereto, and their respective successors and permitted assigns:

 

20.           Capitalized Terms. All capitalized terms which are not defined herein shall be defined as set forth in the Master License Agreement.

 

Exhibit H to Credit Agreement

  

-9-

  

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

                  

	
CHRISTIE DIGITAL SYSTEMS USA, INC. ("Christie")

 

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

                 

	
_____ ("Customer")

 

 

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

Exhibit H to Credit Agreement

  

-10-ex10-2_1413570.htm

EXHIBIT 10.2

 

AMENDMENT AND RESTATEMENT AGREEMENT

 

AMENDMENT AND RESTATEMENT AGREEMENT, dated as of May 6, 2010 (this “Agreement”), between CINEDIGM DIGITAL CINEMA CORP. (f/k/a ACCESS INTEGRATED TECHNOLOGIES, INC. (the “Company”) and SAGEVIEW CAPITAL MASTER, L.P. (the “Holder”).

 

W I T N E S S E T H:

 

WHEREAS, reference is made to the Senior Secured Note, dated August 11, 2009 in the principal amount of $75,000,000 (the “Original Note”), issued by the Company payable to the order of the Holder;

 

WHEREAS, the Company desires to amend and restate the Original Note on the terms set forth herein;

 

WHEREAS, Section 11 of the Original Note provides that the Company and the Majority Holders may amend the Original Note;

 

WHEREAS, the Holder is the sole holder of Notes;

 

NOW, THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

 

SECTION  1. Defined Terms:  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Original Note.

 

SECTION  2. Restatement Date:  The “Restatement Date” shall be the date that all conditions set out in Section 4 hereof shall have been satisfied.

 

SECTION  3. Amendment and Restatement of the Original Note:  (a)  Effective on the Restatement Date, the Original Note (excluding Schedule I thereto, which shall remain in effect after the Restatement Date) is hereby amended and restated to read in its entirety as set forth in Exhibit A hereto (the “Restated Note”).

 

(b) The amendment and restatement of the Original Note as contemplated hereby shall not be construed to discharge or otherwise affect any obligations of the Company accrued or otherwise owing under the Original Note that have not been paid, it being understood that such obligations will constitute obligations under the Restated Note.

 

(c) Except as expressly set forth herein, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Holder under the Original Note (such rights and remedies being now covered under the Restated Note) or any other Transaction Document.

 

(d) Each of the Company and each Subsidiary Note Party reaffirms its obligations under the Transaction Documents to which it is party and the validity of the Liens granted by it pursuant to the Guarantee and Collateral Agreement.  Each of the Company and the Subsidiary Note Parties hereby consents to this Agreement and confirms that all obligations of such entity under the Transaction Documents to which such entity is a party shall continue to apply to the Restated Note.

 

  

  

  

 

(e) This Amendment shall constitute a Transaction Document for purposes of the Restated Note and from and after the Restatement Date, all references to the Note in any Transaction Document shall refer to the Restated Note.

 

SECTION  4. Conditions.  The consummation of the amendment and restatement set forth in Section 3 of this Agreement shall be subject to the satisfaction of the following conditions precedent:

 

(a) The Holder shall have received from the Company (i) this Agreement duly executed by the Company and each Subsidiary Note Party and (ii) the Restated Note duly executed on behalf of the Company and registered in the name of the Holder.

 

(b) The Holder shall have received an amendment in the form of Exhibit B hereto to the Side Letter, dated as of August 11, 2009, among Christie/AIX and the Holder, duly executed by each Phase I Subsidiary, and Christie Sub shall have become a party to such side letter (as amended).

 

(c) The Company shall have provided to the Holder an accurate and complete copy of the Management Services Agreement, which Management Services Agreement shall be in form and substance reasonably acceptable to the Holder.

 

(d) The Company shall have deposited $3,873,045 into the Satellite Financing Account (as defined in the Restated Note).

 

(e) The Holder shall have received the Satellite Financing Control Agreement (as defined in the Restated Note), duly executed on behalf of the Company, the Collateral Agent and UBS Financial Services Inc.

 

(f) The Holder shall have received a favorable written opinion (addressed to the Holder and dated the Restatement Date) of Kelley Drye & Warren LLP, counsel for the Company, covering such matters relating to the Company and the Restated Note as the Holder shall reasonably request.  The Company hereby requests such counsel to deliver such opinion.

 

(g) The Holder shall have received a certificate evidencing the incorporation or certificate of formation, as the case may be, and good standing of the Company and Christie Sub in such entity’s state or other jurisdiction of incorporation or organization issued by the Secretary of State (or other applicable authority) of such state of incorporation or organization as of a date within fifteen (15) days of the Restatement Date.

 

(h) The Holder shall have received a secretary’s certificate, dated as of the Restatement Date, certifying as to (i) the organizational documents of Christie Sub, certified as of a date within five (5) days of the Closing Date by the applicable governmental authority of the applicable jurisdiction and (ii) the by-laws, limited partnership agreement or limited liability company agreement, as applicable, of Christie Sub.

 

(i) The Holder shall have received all fees and other amounts due and payable in connection with this Agreement and the Original Note on or prior to the Restatement Date.

 

  

-2-

  

SECTION  5. Representations and Warranties.  The Company hereby represents and warrants as of the Restatement Date as follows:

 

(i) the Company and each Subsidiary Note Party has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and under the Restated Note, as applicable;

 

(ii) the execution and delivery of this Agreement by the Company and each Subsidiary Note Party and the execution and delivery of the Restated Note by the Company has been duly authorized by all necessary action on the part of the Company and each Subsidiary Note Party and no further action is required by the Company, the Subsidiary Note Parties or the board of directors or stockholders of any thereof in connection therewith;

 

(iii) each of this Agreement and the Restated Note has been duly executed by the Company and the Subsidiary Note Parties, as applicable, and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company and the Subsidiary Note Parties, as applicable, enforceable against the Company and the Subsidiary Note Parties, as applicable, in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and

 

(iv) as of the Restatement Date, no Default has occurred and is continuing.

 

SECTION  6. Applicable Law.  This Agreement shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of New York, including Section 5-1401 of the New York General Obligations Law.

 

SECTION  7. Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which, when taken together, shall constitute but one instrument.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or by other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

[SIGNATURES ON FOLLOWING PAGE]

 

  

-3-

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

 

 

	
CINEDIGM DIGITAL CINEMA CORP.,

 

	  	

By:   /s/ A. Dale Mayo                                             

	  	
      Name:  A. Dale Mayo

	  	
      Title:  Chief Executive Officer

 

 

	
HOLLYWOOD SOFTWARE, INC.,

 

	  	

By:   /s/ A. Dale Mayo                                             

	  	
      Name:  A. Dale Mayo

	  	
      Title:  Chief Executive Officer

 

	
CORE TECHNOLOGY SERVICES, INC.,

 

	  	

By:   /s/ A. Dale Mayo                                             

	  	
      Name:  A. Dale Mayo

	  	
      Title:  Chief Executive Officer

 

	
FIBERSAT GLOBAL SERVICES, INC.,

 

	  	

By:   /s/ A. Dale Mayo                                             

	  	
      Name:  A. Dale Mayo

	  	
      Title:  Chief Executive Officer

 

 

	
ADM CINEMA CORPORATION,

 

	  	

By:   /s/ A. Dale Mayo                                             

	  	
      Name:  A. Dale Mayo

	  	
      Title:  Chief Executive Officer

 

 

	
UNIQUESCREEN MEDIA, INC.,

 

	  	

By:   /s/ A. Dale Mayo                                             

	  	
      Name:  A. Dale Mayo

	  	
      Title:  Chief Executive Officer

 

  

  

  

 

	
VISTACHIARA PRODUCTIONS, INC.,

 

	  	
By:   /s/ A. Dale Mayo                                             

	  	
      Name:  A. Dale Mayo

	  	
      Title:  Chief Executive Officer

 

 

 

 

 

  

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SAGEVIEW CAPITAL MASTER, L.P.,

 

By: Sageview Capital GenPar, Ltd., its general partner

 

	  	
By:   /s/ Edward A. Gilhuly                                             

	  	
      Name:  Edward A. Gilhuly

	  	
      Title:  Director

 

 

  

-6-

  

 

 

 

 

 

 

 

 

EXHIBIT A

 

 

 

 

 

 

 

  

  

  

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  YOU MAY CONTACT GARY S. LOFFREDO, THE GENERAL COUNSEL OF THE COMPANY, AT 55 MADISON AVENUE, SUITE 300, MORRISTOWN, NJ 07960, (973) 290-0080, WHO WILL PROVIDE YOU WITH ANY REQUIRED INFORMATION REGARDING THE ORIGINAL ISSUE DISCOUNT.

SENIOR SECURED AMENDED AND RESTATED NOTE

	 	 	 
	May [_], 2010 	 	 $75,000,000

                                                               

FOR VALUE RECEIVED, CINEDIGM DIGITAL CINEMA CORP., a Delaware corporation (the “Company”), hereby promises to pay to the order of Sageview Capital Master, L.P. or registered assigns (the “Holder”) the principal amount of SEVENTY-FIVE MILLION United States Dollars ($75,000,000) (the “Original Principal Amount”) on the Maturity Date (as defined in Section 3(a)) or the Extended Maturity Date (as defined in Section 4(a)), if applicable, or upon acceleration, redemption or as otherwise required herein, and to pay interest (“Interest”) on the unpaid principal balance hereof on each Interest Payment Date (as defined in Section 3), at the interest rates and in the manner set forth in this Senior Secured Note (this “Note”).  Interest shall accrue from the Issuance Date (as defined in Section 3) and shall be computed on the basis of a 360-day year of twelve (12) 30-day months.

 

 

1.           Securities Purchase Agreement; Other Notes.  This Note is issued pursuant to the Securities Purchase Agreement, dated as of August 11, 2009 (as the same may be amended, supplemented or otherwise modified from time to time, the “Securities Purchase Agreement”) between the Company and the purchasers referred to therein.  This Note amends and restates in its entirety the Senior Secured Note, dated August 11, 2009  (the “Original Note”), in the principal amount of $75,000,000 by the Company payable to the order of the Holder, which Original Note has been cancelled as of the Restatement Date and is void and without further effect.  This Note and all Other Notes (as defined in Section 3) are collectively referred to in this Note as the “Notes”.

 

 

2.           Payments.

 

(a)           Payment Location.  All payments of principal of, and interest and premiums on, this Note, except to the extent any such interest is payable through the increase in Principal pursuant to Section 6(b), shall be made in lawful money of the United States of America by wire transfer of immediately available funds to such account as the Holder may from time to time designate by written notice in accordance with the provisions of this Note.  Whenever any amount expressed to be due by the 

 

  

  

  

 

terms of this Note is due on any day that is not a Trading Day (as defined in Section 3), the same shall instead be due on the next succeeding day that is a Trading Day.

 

(b)           Optional Prepayment.  From the Restatement Date through February 11, 2011, the Company may, in its sole and absolute discretion, any time and from time to time, upon at least three (3) Trading Days prior written notice to the Holder certifying that the Company and the Subsidiary Note Parties shall have unrestricted cash and Permitted Investments of not less than $10,000,000 (or such lesser amount as the Majority Holders shall reasonably agree) in the aggregate after giving effect to the contemplated prepayment, prepay (any date on which a prepayment is made, a “Prepayment Date”) up to an aggregate of 20% of the Original Principal Amount under this Note and the Other Notes in cash at a price equal to 100% of such Principal plus an amount equal to the Interest Amount with respect to such prepaid Principal that is due through and including the Prepayment Date.  Subject to Sections 5 and 9, the Company may not otherwise prepay all or any portion of the Principal due under this Note (or principal under any Other Notes) prior to August 11, 2011.  On or after August 11, 2011, the Company may, at any time and from time to time, upon twenty (20) Trading Days prior written notice to Holder, prepay all or any portion of the Principal outstanding under this Note in cash at a price equal to the sum of (i) an amount equal to (x) 107.5% of such Principal if the Prepayment Date occurs on or after August 11, 2011 but prior to August 11, 2012, (y) 103.75% of such Principal if the Prepayment Date occurs on or after August 11, 2012 but prior to August 11, 2013, or (z) 100% of such Principal if the Prepayment Date occurs on or after August 11, 2013 plus (ii) an amount equal to the Interest Amount with respect to such prepaid Principal through and including the Prepayment Date.  Any optional prepayment of this Note shall be accompanied by an optional prepayment of each Other Note then outstanding on a pro rata basis in accordance with the respective unpaid principal amounts thereof at the time of such prepayment.

 

(c)           Mandatory Prepayments.  (i) Within one business day after each Quarterly Application Date, the Company shall prepay this Note and the Other Notes, without premium or penalty, in an aggregate amount equal to 100% of Excess Cash Flow on such Quarterly Application Date.

 

(ii)           Within one business day after each Quarterly Application Date, the Company shall prepay this Note and the Other Notes, without premium or penalty, in an aggregate amount equal to the excess of (A) the aggregate amount of Servicing Fees received by the Company during the Fiscal Quarter ended most recently prior to such Quarterly Application Date over (B) the Company Servicing Fee with respect to such Quarterly Application Date.

(iii)           On June 30, 2011, the Company shall prepay this Note and the Other Notes, without premium or penalty, in an aggregate amount equal to the amount on deposit in the Satellite Financing Account as of such date (including, for the avoidance of doubt, any interest that has accrued on amounts in the Satellite Financing Account that remain on deposit through such date).

(iv)           In the case of each partial prepayment of the Notes under this Section 2(c), the aggregate principal amount of this Note and the Other Notes to be prepaid shall be allocated by the Company among this Note and the Other Notes then outstanding on a pro rata basis in accordance with the respective unpaid principal amounts thereof at the time of such prepayment.

 

3.           Certain Defined Terms.

 

(a)           Each capitalized term used herein, and not otherwise defined herein, shall have the meaning ascribed thereto in the Securities Purchase Agreement.  For purposes of this Note, the following terms shall have the following meanings:

 

  

2

  

“Access DM” means Access Digital Media, Inc.

 

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with such specified Person.  Notwithstanding the foregoing, (i) the Company, its Subsidiaries and its other controlled Affiliates shall not be considered Affiliates of the Holder and (ii) neither the Holder nor its Affiliates shall be considered Affiliates of any portfolio company in which the Holder or any of its Affiliates have made a debt or equity investment.

 

“Approved Stock Plan” means any employee benefit or other plan existing on the Issuance Date and identified in Schedule 3.1(ll) of the Securities Purchase Agreement or that is approved by the board of directors and stockholders of the Company, pursuant to which the Company’s securities may be issued to any employee, officer or director for services provided to the Company.

 

“Breakeven LTM EBITDA” means, for any Fiscal Quarter, the number set forth on Schedule I opposite such Fiscal Quarter.

 

“Breakeven Servicing Fee” means, for any Quarterly Application Date, (i) Consolidated EBITDA (as defined in the Phase I Credit Agreement) for the four-Fiscal Quarter period ended most recently prior to such Quarterly Application Date plus (ii) the aggregate amount of Servicing Fees received by the Company during the four-Fiscal Quarter period ended most recently prior to such Quarterly Application Date minus (iii) the aggregate amount of Servicing Fees received by the Company during the applicable Three FQ Period minus (iv) Breakeven LTM EBITDA for the Fiscal Quarter ended most recently prior to such Quarterly Application Date; provided that in no event shall the Breakeven Servicing Fee be less than zero.

 

“Capital Lease Obligation” means, as to any Person, any obligation that is required to be classified and accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP and the amount of such obligation shall be the capitalized amount thereof, determined in accordance with GAAP.

 

“Cash Collateral Control Agreement” means that certain Account Control Agreement, dated as of August 11, 2009, among the Company, the Collateral Agent and UBS Financial Services Inc., as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Cash Interest Rate” means a per annum interest rate equal to 7.0% through the Maturity Date and, if applicable, a per annum interest rate of 9.5% beginning on the day after the Maturity Date and ending on the Extended Maturity Date, payable as set forth in Section 6 of this Note. 

 

“Change of Control” means (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company (including, for the avoidance of doubt, the sale of all or substantially all of the assets and/or the capital stock of the Company’s Subsidiaries in the aggregate) to any Person or group (as defined in Section 13(d) of the Exchange Act) (other than Sageview Capital LP and/or any of its Affiliates), (ii) the approval by the holders of the Company’s capital stock of any plan or proposal to effect the liquidation, dissolution or winding up of the Company, (iii) any Person or group (as defined in Section 13(d)(3) of the Exchange Act) (other than Sageview Capital LP and/or any of its Affiliates) shall become the beneficial owner (as defined in Rule 13(d)(3) under the Exchange Act) of the voting securities representing more than 35% of the aggregate voting power of all classes of the voting securities of the Company, (iv) the consolidation, merger or other business combination of the Company with or into another Person (other than as 

 

  

3

  

permitted by Section 8(p)(i)), (v) as a direct result of any proxy contest or solicitation opposed by the Company, individuals who, at the commencement of that proxy contest or solicitation (the “Incumbent Directors”) cease to constitute at least a majority of the Company's board of directors at the conclusion thereof, provided that any person becoming a director in connection with that proxy contest or solicitation whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall be an Incumbent Director or (vi) if the Purchaser Director Entitlement or the Purchaser Observer Entitlement under the Securities Purchase Agreement entitles the Holders of the Notes to at least one Director or one Observer, for 10 consecutive Trading Days the Common Stock is neither listed for trading on a U.S. national securities exchange nor quoted on an established U.S. automated interdealer quotation system and no American Depositary Shares or similar instruments for such common stock are so listed or approved for listing in the United States.

 

“Christie/AIX” means Christie/AIX, Inc., a company organized under the laws of Delaware.

 

“Christie Note” means the note issued by Christie/AIX payable to Christie Digital Systems USA, Inc., dated August 9, 2007, in the principal amount of $9,600,000, as amended, supplemented or otherwise modified from time to time.

 

“Christie Sub” means Cinedigm Digital Funding I, LLC, a direct wholly-owned Subsidiary of Christie/AIX.

 

“Class B Common Stock” means (i) the Company’s Class B Common Stock, $0.001 par value per share, and (ii) any capital stock resulting from a reclassification of such common stock.

 

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

“Collateral Agent” has the meaning assigned thereto in the Guarantee and Collateral Agreement.

 

“Common Stock” means (A) the Company’s Class A Common Stock, $0.001 par value per share, and (B) any capital stock resulting from a reclassification of such common stock.

 

“Company Servicing Fee” means, as of any Quarterly Application Date, the lesser of (i) the aggregate amount of Servicing Fees received by the Company during the Fiscal Quarter ended most recently prior to such Quarterly Application Date and (ii) the Breakeven Servicing Fee for such Quarterly Application Date.

 

“Contingent Obligation” means, as to any Person, any direct or indirect financial liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other financial obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

“control” (including the terms “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a 

 

  

4

  

Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

 

“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exchangeable or exercisable for Shares.

 

“Default” means any event or circumstance that is, or with the giving of notice or lapse of time or both, would be an Event of Default.

 

“Disposition” means, with respect to any property, any sale, lease, sale and leaseback, assignment, conveyance, transfer or other disposition thereof.  The term “Dispose” shall have a correlative meaning.

 

“Disqualified Stock” means, with respect to any Person, any capital stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable, in whole or in part, in each case prior to the date that is ninety-one (91) days after the Extended Maturity Date; provided that any capital stock held by any future, present or former employee, officer or director of the Company or any of its Subsidiaries pursuant to an Approved Stock Plan shall not constitute Disqualified Stock solely because it may be required or permitted to be repurchased by the Company in connection with the termination of employment by, or service with, the Company and its Subsidiaries.

 

“Dollars” or “$” means United States Dollars.

 

“Environmental Law” shall mean any law or any regulatory policy statement or similar guidance of any kind relating to pollution or protection of the indoor or outdoor environment (including protection of human health and safety, other than in respect of occupational health and safety), including (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1984, (ii) the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, (iii) the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, (d) the Toxic Substances Control Act of 1976, (iv) the Emergency Planning and Community Right-To-Know Act of 1986, (v) the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, (vi) the National Environmental Policy Act of 1970, (h) the Endangered Species Act of 1973, (vii) the Safe Drinking Water Act of 1974 and (viii) the Atomic Energy Act of 1954.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.

 

“Excess Cash Flow” means, as of any Quarterly Application Date, the aggregate amount of Restricted Payments (as defined in the Phase I Credit Agreement) permitted to be made to Christie/AIX on such date pursuant to Section 7.11(e)(vii) of the Phase I Credit Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, or any similar successor statute.

 

“Excluded Taxes” means, with respect to the Holder, or any other recipient of payment to be made by or on account of any obligations of the Company or any of its Subsidiaries under the Notes, (A) income or franchise taxes imposed on (or measured by) its net income by the United States of America or any other jurisdiction under the laws of which such recipient is organized, its principal 

 

  

5

  

offices are located, it is resident for tax purposes or to which it has a connection giving rise to such taxes other than by reason of the transactions contemplated by the Notes, the Securities Purchase Agreement or any other Transaction Document, including the holding of the Notes, and enforcing its rights thereunder, (B) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which such Holder or recipient is treated as doing business, (C) any Taxes imposed by reason of such Holder or recipient failing to provide forms or certifications it is legally able to provide that would reduce or eliminate such Taxes and that are reasonably requested by the Company and (D) any withholding taxes payable on behalf of a Holder at the time it becomes a Holder, except to the extent that such Holder’s transferor, if any, was entitled, at the time of the transfer to obtain additional amounts from the Company in respect of such Taxes pursuant to Section 21 herein.

 

“Fiscal Quarter” has the meaning assigned thereto in the Phase I Credit Agreement.

 

“Foreign Subsidiary” has the meaning assigned thereto in the Guarantee and Collateral Agreement.

 

“GAAP” means United States generally accepted accounting principles applied on a consistent basis.

 

“GE Credit Facility” means that certain Credit Agreement, dated as of August 1, 2006, by and among Christie/AIX, the lenders party thereto and General Electric Capital Corporation, as administrative agent and collateral agent, as amended, supplemented or otherwise modified from time to time.

 

“Governmental Authority” means the government of any nation, state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

“Guarantee and Collateral Agreement” means that certain Guarantee and Collateral Agreement, dated as of August 11, 2009, among the Company, the Subsidiary Note Parties and Sageview Capital Master, L.P., as collateral agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Holders” means, collectively, the Holder and the other holders of the Notes.

 

“Immaterial Subsidiary” means any Subsidiary listed on Schedule 1 of the Original Note as of the Issuance Date, provided that the aggregate assets or revenues of all Immaterial Subsidiaries, determined in accordance with GAAP, may not exceed 1.0% of consolidated total assets or consolidated revenues, respectively, of the Company and its Subsidiaries, collectively, at any time.

 

“Indebtedness” of any Person means, without duplication, (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than unsecured account trade payables that are (i) entered into or incurred in the ordinary course of such Person’s business, (ii) on terms that require full payment within ninety (90) days and (iii) not unpaid in excess of ninety (90) days beyond the date such invoice is due to be paid or are being contested in good faith and as to which such reserve as is required by GAAP has been made), (C) all reimbursement or payment obligations, contingent or otherwise, with respect to commercial letters of credit, banker’s acceptances, surety bonds and other similar instruments (including the face amount of all letters of credit), (D) all obligations evidenced by notes, bonds, debentures, redeemable capital stock 

 

  

6

  

or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all Capital Lease Obligations, (G) obligations in respect of Disqualified Stock, (H) all indebtedness referred to in clauses (A) through (G) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person that owns such assets or property has not assumed or become liable for the payment of such indebtedness and (I) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (H) above.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Interest Amount” means, with respect to any Principal, all accrued and unpaid Interest (including any Default Interest as defined in Section 6(c) but not including any interest added to the Principal pursuant to Section 6(b)) on such Principal through and including such date of determination.

 

“Interest Payment Date” means (i) September 30, December 31, March 31 and June 30 of each year (or if such date is not a Trading Day, the immediately succeeding Trading Day), beginning with September 30, 2009, (ii) the Maturity Date or Extended Maturity Date, as applicable, and (iii) each other date on which any Principal of this Note is paid in accordance with the terms of this Note.

 

“Interest Reserve Account” has the meaning assigned thereto in the Guarantee and Collateral Agreement.

 

“Issuance Date” means August 11, 2009.

 

“Liens” means, with respect to any asset, any mortgage, lien, pledge, hypothecation, charge, security interest, encumbrance or adverse claim of any kind and any restrictive covenant, condition, restriction or exception of any kind that has the practical effect of creating a mortgage, lien, pledge, hypothecation, charge, security interest, encumbrance or adverse claim of any kind (including any of the foregoing created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor with respect to a Capital Lease Obligation, or any financing lease having substantially the same economic effect as any of the foregoing).

 

“Majority Holders” means, at any time, Holders of the majority of the principal amount of Notes then outstanding.

 

“Managed Services Businesses” means the information technology consulting services and managed network monitoring services of Core Technology Services, Inc.

 

“Management Services Agreement” means that certain Management Services Agreement dated as of May 6, 2010 between the Company, as administrative servicer, and Christie Sub under which the Company has agreed to provide certain management services and accounting, technical, 

 

  

7

  

operational, general and administrative services for Christie Sub and its Subsidiaries, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Material Adverse Effect” means a material adverse effect on (i) the legality, validity or enforceability of any Transaction Document, (ii) the results of operations, assets, liabilities, business, prospects or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or (iii) the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document.

 

“Maturity Date” means August 11, 2014.

 

“NEC Notes” means, collectively (i) the promissory note, dated as of May 28, 2008, issued by Access DM to NEC Financial Services, LLC, (ii) the promissory note, dated as of October 22, 2008, issued by Access DM to NEC Financial Services, LLC and (iii) the promissory note, dated as of October 29, 2008, issued by Access DM to NEC Financial Services, LLC.

 

“Obligations” has the meaning assigned thereto in the Guarantee and Collateral Agreement.

 

“Options” means any rights, warrants or options to subscribe for or purchase Shares or Convertible Securities.

 

“Other Notes” means (i) all of the notes issued pursuant to the Securities Purchase Agreement, other than this Note and the Original Note, and (ii) all notes issued in exchange therefor or replacement thereof.

 

“Permitted Lien” means (i) Liens existing on the Issuance Date not otherwise described in this definition and set forth on Schedule 3.1(jj) to the Securities Purchase Agreement, (ii) Liens for taxes, assessments or governmental charges not at the time due or delinquent or the validity of which is being contested in good faith by appropriate proceedings diligently prosecuted, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto, and in each case for which adequate reserves in accordance with GAAP are being maintained, (iii) statutory liens of landlords and Liens arising by operation of law in the ordinary course of business in favor of carriers and materialmen, or other similar Liens imposed by law, which are not more than 30 days overdue and remain payable without penalty or which are being contested in good faith by appropriate proceedings diligently prosecuted, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto, and in each case for which adequate reserves in accordance with GAAP are being maintained, (iv) Liens arising in the ordinary course of business in connection with workers’ compensation, unemployment compensation, unemployment insurance and other types of social security (excluding Liens arising under ERISA) which are not yet due or delinquent or the validity of which is being contested in good faith by appropriate proceedings diligently prosecuted, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto, and in each case for which adequate reserves in accordance with GAAP are being maintained, (v) attachments, appeal bonds (and cash collateral securing such bonds), judgments and other similar Liens, for sums not exceeding $500,000 in the aggregate for the Company and its Subsidiaries at any one time outstanding, arising in connection with court proceedings, provided that the execution or other enforcement of such Liens is effectively stayed, (vi) easements, rights of way, restrictions and other similar Liens arising in the ordinary course of business and not materially detracting from the value of the property subject thereto and not impairing or interfering in any material respect with the operation of the business of the Company or any Subsidiary, (vii) Liens securing Indebtedness permitted under Section 8(c)(ii), provided that, (a) to the extent such Indebtedness is used (or intended to be used) for the purchase or acquisition of Satellite Equipment, such 

 

  

8

  

Liens attach at all times only to such assets financed (or to be financed) by such Indebtedness and (b) to the extent any amounts on deposit in the Satellite Financing Account are used for the purchase or acquisition of Satellite Equipment, no Liens may attach to such Satellite Equipment other than Liens in favor of the Holders, (viii) Liens on the assets of, and equity interests in, Subsequent Phase Subsidiaries securing Permitted Phase II Indebtedness and (ix) Liens on the assets of, and equity interests in, Phase I Subsidiaries securing Indebtedness permitted under Section 8(c)(iv).

 

“Permitted Phase II Indebtedness” means any Indebtedness of a Subsequent Phase Subsidiary (i) as to which neither the Company nor any of its Subsidiaries (other than (A) the Subsequent Phase Subsidiaries and (B) the immediate parent of any Subsequent Phase Subsidiary, to the extent limited to the pledge of capital stock of such Subsequent Phase Subsidiary) provides any Contingent Obligation or credit support of any kind or is directly or indirectly liable (as a guarantor or otherwise) and (ii) which does not provide any recourse against any of the assets of the Company or any of its Subsidiaries (other than the Subsequent Phase Subsidiaries).

 

“Person” means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

“Phase I Consolidated Net Income” means, for any period, the consolidated net income (or loss) of the Phase I Subsidiaries as determined in accordance with GAAP as in effect on the Issuance Date,  excluding (a) the income (or deficit) of any Person accrued prior to the date it becomes a Phase I Subsidiary or is merged into or consolidated with any Phase I Subsidiary, (b) the income (or deficit) of any Person (other than a Phase I Subsidiary) in which any Phase I Subsidiary has an ownership interest, except to the extent that any such income is actually received by a Phase I Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of any Phase I Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted, by law, contract or otherwise.

 

“Phase I Credit Agreement” means that certain Credit Agreement, dated as of May 6, 2010, by and among Christie Sub, the lenders party thereto, Société Générale, New York Branch, as co-administrative agent and paying agent, and General Electric Capital Corporation, as co-administrative agent and collateral agent, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Phase I Digital Deployment Agreement” means a digital deployment agreement executed by a Phase I Subsidiary with a Person in the business of distributing theatrical feature films or other traditional or non-traditional motion picture content.

 

“Phase II Digital Deployment Agreement” means a digital deployment agreement executed by a Subsequent Phase Subsidiary with a Person in the business of distributing theatrical feature films or other traditional or non-traditional motion picture content.

 

“Phase I EBITDA” means, for any period, Phase I Consolidated Net Income for such period plus, without duplication and to the extent reflected as a charge in the statement of Phase I Consolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Notes), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and non-recurring organization costs, (e) any extraordinary charges or losses determined in accordance with GAAP as in

 

  

9

  

effect on the Issuance Date, and (f) any other non-cash charges, non-cash expenses or non-cash losses for such period (excluding any such charge, expense or loss incurred in the ordinary course of business that constitutes an accrual of or a reserve for cash charges for any future period), provided, however, that cash payments in respect of such non-cash charges, expenses or losses (excluding any such charge, expense or loss incurred in the ordinary course of business that constitutes an accrual of or a reserve for cash charges for any future period) shall be subtracted from Phase I Consolidated Net Income in calculating Phase I EBITDA in the period when such payments are made, and minus, to the extent included in the statement of such Phase I Consolidated Net Income for such period, the sum of (i) interest income, (ii) any extraordinary income or gains determined in accordance with GAAP as in effect on the Issuance Date and (iii) any other non-cash income (excluding any items that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period that are described in the parenthetical to clause (f) above), all as determined on a consolidated basis.

 

“Phase I Master License Agreement” means a license agreement executed by a Phase I Subsidiary with a Person in the business of owning or operating one or more cineplexes used for the exhibition of traditional or non-traditional motion picture content.

 

“Phase II Master License Agreement” means a license agreement executed by a Subsequent Phase Subsidiary with a Person in the business of owning or operating one or more cineplexes used for the exhibition of traditional or non-traditional motion picture content.

 

“Phase I Subsidiaries” means Christie/AIX, Christie Sub and any of their Subsidiaries primarily engaged in the financing or deployment of digital cinema equipment.

 

“Preferred Stock” means (A) the Company’s preferred stock, $0.001 par value, including the Series A 10% Non-Voting Cumulative Preferred Stock, $0.001 par value, and (B) any capital stock resulting from a reclassification of such preferred stock.

 

“Principal” means the outstanding principal amount of this Note as of any date of determination (including any Interest added to the outstanding principal amount of this Note pursuant to Section 6(b)).

 

“Principal Market” means, with respect to the Common Stock, the Nasdaq Global Market or such other primary exchange on which the Common Stock subsequently becomes traded, and with respect to any other security, the principal securities exchange or trading market for such other security.

 

“Quarterly Application Date” has the meaning assigned thereto in the Phase I Credit Agreement.

 

“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of August 11, 2009, between the Company and the Purchasers, as the same may be amended, supplemented or otherwise modified from time to time.

 

“Restatement Date” means May 6, 2010.

 

“Satellite Financing Account” means the “Account” as such term is defined in the Satellite Financing Control Agreement.

 

  

10

  

“Satellite Financing Amount” means the aggregate principal amount of money deposited by the Company into the Satellite Financing Account on the Restatement Date, which amount shall be $3,873,045.

 

“Satellite Financing Control Agreement” means the Account Control Agreement, dated as of May 6, 2010, among the Company, the Collateral Agent and UBS.

 

“SEC” means the United States Securities and Exchange Commission, or any successor thereto.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute.

 

“Servicing Fee” has the meaning assigned thereto in the Management Services Agreement.

 

“Shares” means the shares of Common Stock.

 

“Subsequent Phase Subsidiaries” means (i) Access Digital Cinema Phase 2, Corp. and any of its Subsidiaries and (ii) any Subsidiary formed after the Issuance Date, in each case provided such Subsidiary is primarily engaged in the financing or deployment of digital cinema equipment as contemplated by the Phase II Digital Deployment Agreements as in effect on the Issuance Date.

 

“Subsidiary” means any entity in which the Company or any one or more of its Subsidiaries owns, directly or indirectly, a majority of the outstanding capital stock, equity or similar interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such entity.

 

“Subsidiary Note Parties” means all Subsidiaries of the Company other than (i) the Phase I Subsidiaries (so long as the Phase I Credit Agreement is outstanding), (ii) Access DM (so long as any of the NEC Notes are outstanding), (iii) the Subsequent Phase Subsidiaries and (iv) the Immaterial Subsidiaries.

 

“Swap Agreement” means 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.

 

“Taxes” means any federal, state, provincial, county, local, foreign and other taxes (including, without limitation, income, profits, windfall profits, alternative, minimum, accumulated earnings, personal holding company, capital stock, premium, estimated, excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital levy, production, transfer, withholding, employment, unemployment compensation, payroll and property taxes, import duties and other governmental charges and assessments), whether or not measured in whole or in part by net income, and including deficiencies, interest, additions to tax or interest, and penalties with respect thereto.

 

“The Pavilion Theatre” means the nine-screen digital movie theater and showcase, located in Brooklyn, New York, operated by the Company and equipped to demonstrate the Company’s integrated digital cinema solutions.

 

  

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“Three FQ Period” means, for any Quarterly Application Date, the first three Fiscal Quarters of the four-Fiscal Quarter period ended most recently prior to such Quarterly Application Date.

 

“Trading Day” means any day on which the Common Stock is traded on its Principal Market; provided that “Trading Day” shall not include any day on which the Principal Market is open for trading for fewer than 4.5 hours.

 

“Transaction Documents” means this Note, the Other Notes, the Securities Purchase Agreement, the Warrant, the Registration Rights Agreement, the Guarantee and Collateral Agreement, the Cash Collateral Control Agreement and each of the other agreements to which the Company is a party or by which it is bound and which is entered into by the parties to the Securities Purchase Agreement in connection with the transactions contemplated thereby.

 

“Transfer Restriction Termination Event” means, following the Issuance Date, the earliest to occur of (i) the second anniversary of the Issuance Date, (ii) consummation of a Change of Control or (iii) an Event of Default.

 

“UBS” means UBS Financial Services Inc.

 

“Warrants” means those certain Warrants issued on the Issuance Date pursuant to the Securities Purchase Agreement.

 

(b)           Terms Defined Elsewhere in this Note.  The following terms are defined elsewhere in this Note as follows:

 

	
“Acceleration Amount”

	
Section 9(b)

	
“Alternative Satellite Indebtedness”

	
Section 8(bb)

	
“Bankruptcy Law”

	
Section 9(a)

	
“Cash Interest Election”

	
Section 6(b)

	
“Company”

	
Preamble

	
“Company Process Agent”

	
Section 23

	
“Custodian”

	
Section 9(a)

	
“Default Interest”

	
Section 6

	
“Event of Default”

	
Section 9(a)

	
“Extended Maturity Date”

	
Section 4

	
“Holder”

	
Preamble

	
“Holding Company”

	
Section 8(y)

	
“Incumbent Directors”

	
Section 2

	
“Interest”

	
Preamble

	
“Investments”

	
Section 8(f)

	
“Moody’s”

	
Section 8(f)

	
“Note”

	
Section 1

	
“Notice of Change of Control”

	
Section 5(c)(i)

	
“Notice of Redemption Upon Change of Control”

	
Section 5(c)(i)

	
“Notes”

	
Section 1

	“Original Note”	Section 1

 

  

12

  

 

	
“Original Principal Amount”

	
Preamble

	
“Permitted Investments”

	
Section 8(f)

	
“Prepayment Date”

	
Section 2(b)

	
“Redemption Price”

	
Section 5(a)

	
“Registrar”

	
Section 17

	
“S&P”

	
Section 8(f)

	
“Satellite Equipment”

	
Section 8(bb)

	
“Securities Purchase Agreement”

	
Section 1

	
“Tax Refund”

	
Section 21(a)

	
“Void Acceleration Notice”

	
Section 9(c)

	
“Void Optional Redemption Notice”

	
Section 5(f)

 

4.           Extended Maturity Date.

 

(a)           The Company shall have the right, in its sole discretion, to extend irrevocably the Maturity Date until August 11, 2015 (as applicable, the “Extended Maturity Date”), provided, that (i) Phase I EBITDA in respect of the twelve (12) month period ending on June 30, 2014 is not less than $40,000,000, (ii) the aggregate outstanding principal amount of Indebtedness of the Phase I Subsidiaries as of the Maturity Date is less than $10,000,000, (iii) the aggregate principal amount of Indebtedness of the Company, the Subsidiary Note Parties and the Phase I Subsidiaries that is due and payable on or before November 11, 2015 does not exceed $10,000,000, (iv) no Default or Event of Default has occurred and is continuing at such time, (v) neither the Company nor any Subsidiary Note Party has made (or will make) any Investment in any Subsequent Phase Subsidiary during the period from August 11, 2013 to the Extended Maturity Date and (vi) the Company has provided Holder with an irrevocable written notice of such election, via electronic delivery or by overnight courier, at any time at least ten (10) Trading Days prior to the Maturity Date certifying that the foregoing conditions shall be satisfied as of the Maturity Date and including a calculation of the Phase I EBITDA required by the foregoing clause (i).

 

(b)           Notwithstanding anything contained herein or in any of the other Transaction Documents to the contrary, if the Notes shall remain outstanding after the fifth (5th) anniversary of the initial issuance thereof and the aggregate amount that would be includible in the gross income of the Holders with respect to the Notes (within the meaning of the Code section 163(i)) for all periods ending on or before any Interest Payment Date that occurs after that fifth (5th) anniversary (the “Aggregate Accrual”) would otherwise exceed an amount equal to the sum of (i) the aggregate amount of interest to be paid (within the meaning of Code section 163(i)) under the Notes on or before such Interest Payment Date and (ii) the product of (A) the issue price (as defined in Code section 1273(b)) of the Notes and (B) the yield to maturity (interpreted in accordance with Code section 163(i)) of the Notes (such sum, the “Maximum Accrual”), then the Company shall prepay to the Holders in cash on each Interest Payment Date occurring after such fifth (5th) anniversary that minimum portion of the Principal and/or Interest Amount necessary to prevent the Notes from constituting “applicable high yield discount obligations” within the meaning of Code section 163(i), up to an amount equal to the excess, if any, of the Aggregate Accrual over the Maximum Accrual, and the amount of such payment shall be treated for U.S. federal income tax purposes as an amount of interest to be paid (within the meaning of Code section 163(i)(2)(B)(1)) under the Notes.  This provision is intended to prevent the Notes from being classified as “applicable high yield discount obligations”, as defined in Code section 163(i), and shall be interpreted consistently therewith.

 

  

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5.           Redemption at Option of the Holder.

 

(a)           Redemption Option Upon a Change of Control.  In addition to all other rights of the Holder contained herein, after a Change of Control, the Holder shall have the right, at the Holder’s option, exercised by written notice to the Company given within thirty (30) days of such Change of Control, to require the Company to redeem all or a portion of the Principal at a price (the “Redemption Price”) equal to the sum of (i) 101% of such Principal plus (ii) cash in an amount equal to the Interest Amount with respect to such Principal through and including the date of redemption pursuant to this Section 5.

 

(b)           Intentionally deleted.

 

(c)           Mechanics of Redemption Upon Notice of Change of Control and Payment Upon a Change of Control.

 

(i)             No sooner than thirty (30) nor later than fifteen (15) Trading Days prior to the consummation of a Change of Control, but in any event not prior to the public announcement of such Change of Control, the Company shall deliver written notice thereof via electronic delivery and overnight courier (a “Notice of Change of Control”) to the Holder and each holder of the Other Notes.  At any time during the period beginning after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered at least twenty (20) days prior to a Change of Control, at any time on or after the date which is twenty (20) days prior to a Change of Control) and ending on the date that is five (5) Trading Days prior to the consummation of such Change of Control, the Holder may require the Company to redeem all or a portion of the Principal pursuant to Section 5(a) by delivering written notice thereof via electronic delivery and overnight courier (a “Notice of Redemption Upon Change of Control”) to the Company, which Notice of Redemption Upon Change of Control shall indicate (I) the amount of Principal that the Holder is submitting for redemption and (II) the applicable Redemption Price, as calculated pursuant to Section 5(a).

 

(ii)             The Company shall pay and/or deliver the Redemption Price simultaneously with the consummation of the Change of Control; provided that, if required by Section 5(g), this Note shall have been so delivered to the Company.  The Company shall not enter into any binding agreement or other arrangement with respect to a Change of Control unless the Company provides that the payments provided for in this Section 5(c) shall have priority to payments to stockholders in connection with such Change of Control and the Company complies with such provision.

 

(d)           Intentionally deleted.

 

(e)           Intentionally deleted.

 

(f)           Intentionally deleted.

 

(g)           Book-Entry.  Notwithstanding anything to the contrary set forth herein, upon redemption of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless all of the Principal is being redeemed.  The Holder and the Company shall each maintain records showing the Principal redeemed and the dates of such redemptions or shall use such other method, reasonably satisfactory to the other, so as not to require physical surrender of this Note upon each such redemption.  In the event of any dispute or discrepancy, such records of the Company establishing the Principal to which the Holder is entitled shall be controlling and determinative in the absence of demonstrable error.  Notwithstanding the foregoing, if this Note is redeemed in part as aforesaid, the Holder may not transfer this Note unless the Holder first physically 

 

  

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surrenders this Note to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder may request, representing in the aggregate the remaining Principal represented by this Note.  The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following prepayment or redemption of any portion of this Note, the Principal of this Note may be less than the principal amount stated on the face hereof.

 

(h)           Disputes; Miscellaneous.  In the event of a bona fide dispute as to the determination of the arithmetic calculation of the Redemption Price, the Company shall transmit an explanation of the disputed arithmetic calculations to the Holder via electronic delivery within two (2) Trading Days of receipt of Notice of Redemption Upon Change of Control.  If the Holder and the Company are unable to agree upon the arithmetic calculation of the Redemption Price within one (1) Trading Day of such disputed arithmetic calculation being transmitted to the Holder, then the Company shall promptly (and in any event within two (2) Trading Days) submit via electronic delivery the disputed arithmetic calculation of the Redemption Price to the Company’s independent, outside accountants.  The Company shall direct the accountants to perform the calculations and notify the Company and the Holder of the results no later than two (2) Trading Days from the time it receives the disputed calculations.  Such accountant’s calculation shall be binding upon all parties absent demonstrable error.  The costs and expenses of the accountant engaged pursuant to this Section 5(h) shall be borne equally by the Company and the Holder.  In the event of a redemption pursuant to this Section 5 of less than all of the Principal, the Company shall promptly cause to be issued and delivered to the Holder a replacement note representing the remaining Principal that has not been redeemed, if required pursuant to Section 5(g).

 

 

6.           Interest.

 

(a)           Cash Portion.  Interest shall be payable at the Cash Interest Rate on each Interest Payment Date, including the Maturity Date or the Extended Maturity Date, as applicable, to the record Holder of this Note on such Interest Payment Date in cash.  On each Interest Payment Date, funds on deposit in the Interest Reserve Account shall be withdrawn by the Collateral Agent and applied to pay Interest payable pursuant to this Section 6(a) in accordance with the Guarantee and Collateral Agreement; provided that, to the extent funds on deposit in the Interest Reserve Account at such time are insufficient to pay such Interest in full or the Cash Collateral Control Agreement is no longer in effect, the Company shall pay the balance of such Interest directly on such Interest Payment Date.

 

(b)           PIK Portion.  Additional Interest shall be payable at a rate per annum equal to 8.0% on each Interest Payment Date to the Holder of this Note on such Interest Payment Date by increasing the principal amount of this Note and each Other Note, provided that (i) any such Interest payable on the Maturity Date or the Extended Maturity Date, as applicable, shall be payable in cash and (ii) at the Company’s election, all or any portion of the Interest payable under this Section 6(b) may be paid in cash (such an election, the “Cash Interest Election”).  Any Interest added to the principal amount of this Note pursuant to this Section 6(b) shall thereafter bear Interest at the interest rates as provided in this Section 6.  If any Cash Interest Election is made in respect of this Note on any Interest Payment Date, the Company shall make a Cash Interest Election under each Other Note in an equal portion relative to the respective unpaid principal amounts outstanding under this Note and the Other Notes at such time.

 

(c)           Default Interest.  Any accrued and unpaid Interest which is not paid in accordance with Section 6(a) within five (5) Trading Days of the applicable Interest Payment Date or any unpaid Principal which is not paid when due shall bear interest at a rate equal to the lesser of 1.0% per month (prorated for partial months) or the highest lawful rate per annum from such Interest Payment Date or such due date, as applicable, until the same is paid in full (the “Default Interest”).

 

  

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7.           Collateral Agent.  The Holder, by accepting this Note, hereby agrees to the appointment of the Collateral Agent and the provisions of Section 8 of the Guarantee and Collateral Agreement.

 

8.           Covenants. The Company shall observe each of the following covenants, unless the Majority Holders otherwise consent in writing:

 

(a)           Corporate Existence.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall, and shall cause each of its Subsidiaries to (i) conduct its operations in the ordinary course of business consistent with past practice, (ii) maintain its corporate existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business (except as otherwise permitted under Section 8(p)), and (iii) maintain and protect the validity and enforceability of all material Intellectual Property Rights used in the business of the Company and its Subsidiaries, including by pursuing each registration and application for material Intellectual Property Rights and conducting all commercially reasonable actions necessary to enforce its material Intellectual Property Rights against any misappropriation, violation or infringement.

 

(b)           Intentionally Deleted.

 

(c)           Limitations on Indebtedness.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, issue, incur, assume, maintain, suffer to exist or extend the term of any Indebtedness, except for:

 

(i)              Indebtedness under the Notes and all Indebtedness existing on the Issuance Date and set forth on Schedule 3.1(jj) to the Securities Purchase Agreement;

 

(ii)             other Indebtedness of the Company and the Subsidiary Note Parties, in an aggregate principal amount not to exceed, together with amounts withdrawn from the Satellite Financing Account in accordance with Section 8(bb), $10,000,000 at any time; provided, however, that (I) the proceeds of such Indebtedness are used (or required by the terms of such Indebtedness to be used) (A) for the purchase, acquisition or installation of Satellite Equipment or (B) to fund working capital requirements of the Company and its Subsidiaries; (II) the yield with respect to such Indebtedness shall not exceed a rate equal to 12% per annum; and (III) the aggregate number of shares of Common Stock, Preferred Stock and Convertible Securities, if any, that are issued in connection with the incurrence of such Indebtedness shall not exceed 1% of the total Common Stock, Preferred Stock and Convertible Securities outstanding, on a fully diluted basis, immediately prior to the incurrence of such Indebtedness and the issuance of such Common Stock, Preferred Stock and/or Convertible Securities;

 

(iii)             Indebtedness of (A) the Company owing to any Subsidiary or (B) any Subsidiary owing to the Company or any other Subsidiary to the extent permitted by Section 8(f);

 

(iv)             Indebtedness incurred by the Phase I Subsidiaries under the Phase I Credit Agreement in an aggregate principal amount not to exceed $172,500,000; and

 

(v)             Permitted Phase II Indebtedness.

 

(d)           Limitation on Liens.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, assume or suffer to exist any Lien on any asset now owned or hereafter acquired by the Company or any of the Subsidiaries other than a Permitted Lien.

 

  

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(e)           Limitation on Prepayment of Debt. From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to redeem, retire, defease or otherwise repay or prepay in cash any principal of any Indebtedness listed on Schedule 3.1(jj) to the Securities Purchase Agreement other than (i) the 2007 Notes, (ii) the prepayment in full of the GE Credit Facility and the Christie Note with the proceeds of Indebtedness under the Phase I Credit Agreement, (iii) as required by the terms of such Indebtedness in effect on the Issuance Date, (iv) Indebtedness of any Subsequent Phase Subsidiary, or (v) in the case of Indebtedness (other than Indebtedness of the Subsequent Phase Subsidiaries), from the proceeds of an offering of equity securities of the Company.

 

(f)           Restriction on Loans; Investments.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to (except for (A) Investments (as defined below) existing as of the Issuance Date and set forth on Schedule 3.1(jj) of the Securities Purchase Agreement, (B) Permitted Investments (as defined below), (C) Investments in the Subsequent Phase Subsidiaries in an aggregate amount not to exceed $2,000,000; provided that, in no event, shall any such Investment be made after the Maturity Date, and (D) Investments on the Issuance Date in an aggregate amount not to exceed $5,000,000 in Phase I Subsidiaries in order to pay down the GE Credit Facility, as contemplated by the GECC Amendment Agreement (as defined in the Securities Purchase Agreement)) make any loans to, or investments in, any other Person, including through lending money, deferring the purchase price of property or services, purchasing any note, bond, debenture or similar instrument, providing any letter of credit, guaranteeing (or taking any action that has the effect of guaranteeing) any obligations of any other Person, or acquiring any equity securities of, or other ownership interest in, or making any capital contribution to any other Person (“Investments”); provided, however, that the Company and the Subsidiary Note Parties may make Investments in each other and the Subsidiaries that are not Subsidiary Note Parties may make Investments in the Company or any Subsidiary.  “Permitted Investments” means (a) marketable direct obligations issued by, or unconditionally guaranteed or insured by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within two years from the date of acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank deposits having maturities of one year or less (provided that if such certificates of deposit, time deposits, Eurodollar time deposits or overnight bank deposits are in an aggregate amount of $250,000 or less, having maturities of two years or less) from the date of acquisition issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investors Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within nine months from the date of acquisition; (d) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this definition, having a remaining term of not more than 30 days, with respect to securities issued or unconditionally guaranteed or insured by the United States or issued by any agency thereof and backed by the full faith and credit of the United States; (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least AA by S&P or Aa by Moody’s; (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (b) of this definition; (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition or money market funds that (A) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended, (B) are rated AAA by S&P and Aaa by Moody’s and (C) have portfolio assets of at least 

 

  

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$5,000,000,000; or (h) other Investments in an amount not to exceed $1,000,000 in the aggregate at any one time outstanding, provided that, in no event, shall any Investment be made under this clause (h) in any Subsequent Phase Subsidiary after the Maturity Date.

 

(g)           Restrictions on Subsidiary Equity.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to issue, transfer or pledge any capital stock or equity interest in any Subsidiary to any Person other than (i) any transfer or issuance to the Company or any Subsidiary Note Party and the issuance of 100% of the equity of Christie Sub to Christie/AIX, (ii) pursuant to the Guarantee and Collateral Agreement, (iii) the pledge of capital stock of the Phase I Subsidiaries pursuant to (A) prior to the Restatement Date, the GE Credit Facility and (B) on and after the Restatement Date, the Phase I Credit Agreement, (iv) the issuance of capital stock or equity interests of a Subsequent Phase Subsidiary to the Company, a Subsidiary Note Party or another Subsequent Phase Subsidiary or (v) the pledge of capital stock or equity interests of any Subsequent Phase Subsidiary to secure Permitted Phase II Indebtedness.

 

(h)           Restriction on Purchases or Payments.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, (i) declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or set any record date with respect to any of the foregoing, except as may be required by the NOL Rights Agreement (as defined in the Securities Purchase Agreement); provided that beginning September 30, 2010, the Company may pay dividends in accordance with the terms of the Preferred Stock outstanding as of the Issuance Date; and provided, further, that any Subsidiary may declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any of its capital stock that is held solely by the Company or by another Subsidiary, or (ii) purchase, redeem or otherwise acquire, directly or indirectly, any shares of the Company’s capital stock or the capital stock of any of its Subsidiaries; provided, however, that so long no Event of Default has occurred and is continuing the Company may repurchase shares of its securities from its employees and directors pursuant to an Approved Stock Plan in an amount not to exceed $250,000 in any fiscal year, or (iii) permit any of its Subsidiaries to enter into any agreement which would limit or restrict the Company’s or any of its Subsidiaries’ ability to perform under, or take any other voluntary action to avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it under, this Note, the Securities Purchase Agreement, or any other Transaction Document.

 

(i)           Restriction on Asset Dispositions.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, Dispose of any of its property, whether now owned or hereafter acquired, except:

 

(i)             the Disposition of obsolete or worn out property in the ordinary course of business;

 

(ii)              the sale of inventory in the ordinary course of business;

 

(iii)             any Disposition permitted by Section 8(g) or 8(p);

 

(iv)             the Disposition by any Subsidiary of any or all of its assets to the Company or any Subsidiary Note Party;

 

  

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(v)             the Disposition of The Pavilion Theatre and/or the Managed Services Business at fair market value; provided that 100% of the consideration thereof is payable in cash or Permitted Investments;

 

(vi)             the Disposition of the capital stock of any Subsequent Phase Subsidiary; provided that the Company continues to act as the “Servicer” to such Subsequent Phase Subsidiary on terms (including economics) no less favorable to the Company than set forth in the Phase II Digital Deployment Agreements as in effect on the Issuance Date; provided, further, that 100% of the consideration thereof is payable in cash or Permitted Investments;

 

(vii)             the Disposition of property not referred to in clauses (i)-(vi), (viii) and (ix) of this Section 8(i) having a fair market value not to exceed $500,000 in the aggregate; provided that 100% of the consideration thereof is payable in cash or Permitted Investments;

 

(viii)             the Disposition by Christie/AIX of all of its assets and liabilities to Christie Sub; and

 

(ix)              the Disposition by a Subsequent Phase Subsidiary of property or assets to another Subsequent Phase Subsidiary.

Notwithstanding anything to the contrary, any earn-out payments payable to the Company or any Subsidiary and services credited pursuant to any agreement entered into in connection with a Disposition shall be deemed cash consideration for purposes of this Section 8(i).

(j)           Restriction on Swap Agreements.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Company or any Subsidiary has actual exposure (other than those in respect of capital stock) and not for speculative purposes and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Company or any Subsidiary.

 

(k)           Clauses Restricting Subsidiary Distributions.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to (i) make, declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock of such Subsidiary held by, or pay any Indebtedness owed to, the Company or any other Subsidiary, (ii) make loans or advances to, or other Investments in, the Company or any other Subsidiary or (iii) transfer any of its assets to the Company or any other Subsidiary, except for such encumbrances or restrictions existing under (A) the GE Credit Facility as of the Issuance Date, (B) the Phase I Credit Agreement as of the Restatement Date or (C) any Permitted Phase II Indebtedness.

 

(l)           Restrictions on Changes in Lines of Business.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not enter into any business, either directly or through any Subsidiary, except for those businesses in which the Company and its Subsidiaries are engaged on the Issuance Date or that are reasonably related thereto.

 

(m)           Restriction on Amendments to Material Documents.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not 

 

  

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permit any of its Subsidiaries to, amend, supplement or otherwise modify (pursuant to a waiver or otherwise) in a manner adverse to the interests of the Holders in any material respect, including for the avoidance of doubt, any amendment that would be less favorable to the Phase I Subsidiaries in any material respect, the certificate of incorporation, by-laws, operating, management or partnership agreement or other organizational documents of the Company or any Subsidiary Note Party (including any certificate of designation with respect to any Preferred Stock), except as permitted by Section 4.28 of the Securities Purchase Agreement or as required to (i) change the Company’s name to Cinedigm Digital Cinema Corp., (ii) effect a reverse stock split, (iii) disable the anti-takeover provisions of Section 203 of the Delaware General Corporation Law or (iv) implement the provisions of Section 4.29 of the Securities Purchase Agreement.

 

(n)           Restriction on Amendments to Phase I Material Agreements.  (i) From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not permit any Phase I Subsidiary to (A) amend, supplement or otherwise modify (pursuant to a waiver or otherwise) in a manner adverse to the Holders or the Company in any material respect the certificate of incorporation, by-laws, operating, management or partnership agreement or other organizational documents of any Phase I Subsidiary (including, without limitation, the Management Services Agreement), (B) amend, supplement or otherwise modify (pursuant to a waiver or otherwise) in a manner adverse to the interests of the Holders or the Company in any material respect, including for the avoidance of doubt, any amendment that would be less favorable to the Phase I Subsidiaries in any material respect, any Phase I Master License Agreement or any Phase I Digital Deployment Agreement or (C) enter into any new Phase I Master License Agreement or Phase I Digital Deployment Agreement, which has terms that differ from the Phase I Master License Agreements or any Phase I Digital Deployment Agreements, as applicable, as of the Issuance Date, and which change in terms is adverse to the interests of the Holders or the Company in any material respect.

 

(ii)              From the Restatement Date and for so long as any of the Obligations are outstanding, the Company shall not permit any Phase I Subsidiary to amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the Phase I Credit Agreement without the prior written consent of the Majority Holders (such consent not to be unreasonably withheld or delayed).

(o)           Restriction on Amendments to Phase II Material Agreements. From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to (i) amend, supplement or otherwise modify (pursuant to a waiver or otherwise) in a manner adverse to the Holders or the Company in any material respect (A) any agreement relating to any Permitted Phase II Indebtedness, (B) the certificate of incorporation, by-laws, operating, management or partnership agreement or other organizational documents of any Subsequent Phase Subsidiary or (C) any Phase II Master License Agreement or any Phase II Digital Deployment Agreement or (ii) enter into any new Phase II Master License Agreement or Phase II Digital Deployment Agreement, which has terms that differ in any material respect from the Phase II Master License Agreements or any Phase II Digital Deployment Agreements, as applicable, as of the Issuance Date, and which change in terms is adverse to the Holders or the Company in any material respect.

 

(p)           Restriction on Fundamental Changes.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), except:

 

(i)             the Company may consummate (A) a merger, consolidation or business combination in which holders of voting securities of the Company immediately prior to the transaction continue after the transaction to hold, directly or indirectly, a majority of the aggregate voting 

 

  

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power of all classes of voting securities of the surviving Person entitled to vote generally for the election of the members of the board of directors (or their equivalent if other than a corporation) of such Person, or (B) a migratory merger solely for the purpose of changing the jurisdiction of incorporation of the Company; provided that the surviving Person (if other than the Company) (I) be organized under the laws of the Untied States or any state thereof, (II) agree to assume this Note and the Company’s obligations hereunder and the Guarantee and Collateral Agreement and the Company’s obligations thereunder and (III) deliver to the Holder an opinion of counsel to the Company confirming the continuing enforceability of this Note, the Guarantee and Collateral Agreement and the perfection and priority of the Liens created thereunder;

 

(ii)             that any Subsidiary may be merged with or into the Company (provided that the Company shall be the continuing or surviving corporation) or any Subsidiary Note Party (provided that the Subsidiary Note Party shall be the continuing or surviving corporation); and

 

(iii)             the Company and the Subsidiaries may distribute all of the capital stock of any or all of the Subsequent Phase Subsidiaries so long as the Company continues to act as the “Servicer” to such Subsequent Phase Subsidiary on terms (including economics) no less favorable to the Company than set forth in the Phase II Digital Deployment Agreements as in effect on the Issuance Date.

 

(q)           Restriction on Affiliate Transactions.  From Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not, and shall not permit any of its Subsidiaries to, enter into or be a party to any agreement or transaction with any Affiliate (other than a Subsidiary Note Party), including transfer of any assets to any such Affiliate, except in the ordinary course of the Company’s or such Subsidiary’s business and upon fair and reasonable terms that are no less favorable to the Company or such Subsidiary, as the case may be, than such Person would obtain in a comparable arms’-length transaction with a Person not an Affiliate of the Company or such Subsidiary, and on terms consistent with the business relationship of the Company or such Subsidiary and such Affiliate prior to the Issuance Date, if any, except that Christie/AIX may Dispose of all of its assets to Christie Sub in accordance with Section 8(i)(viii) and a Subsequent Phase Subsidiary may Dispose of its assets or property to another Subsequent Phase Subsidiary in accordance with Section 8(i)(ix).

 

(r)           SEC Filings.  From the Issuance Date and for so long as any of the Obligations are outstanding, (i) the Company shall timely file with the SEC, within the time periods specified in the SEC’s rules and regulations, all annual financial information required to be filed with the SEC on Form 10-K or Form 10-KSB, as applicable, all current reports required to be filed with the SEC on Form 8-K and any other information required to be filed with the SEC; (ii) the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination and (iii) the Company shall deliver (A) copies of all such filings with the SEC to each holder of Notes then outstanding within one (1) day after the filing thereof with the SEC, unless the foregoing are filed with the SEC through EDGAR or a similar retrieval system maintained by the SEC and are immediately available to the public through EDGAR or such system and (B) electronic copies of all press releases issued by the Company or any of its Subsidiaries on the same day as the release thereof, except to the extent any such release is available through Bloomberg Financial Markets (or any successor thereto) contemporaneously with such issuance.

 

(s)           Additional Deliverables.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall furnish to the Holder (i) within thirty (30) days prior to the commencement of each fiscal year of the Company, an annual budget (it being understood that the initial budget shall be in a form and with such information and other data as is reasonably 

 

  

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satisfactory to the Majority Holders on the Issuance Date and each budget thereafter shall be prepared in a similar form with corresponding information), which budget shall be certified by the chief financial officer of the Company as having been prepared in good faith based upon assumptions believed by the Company to be reasonable at the time made, (ii) within 10 days after the end of each Fiscal Quarter, a compliance certificate demonstrating compliance with the covenants set forth in this Note and stating that no Default or Event of Default has occurred (or if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto), (iii) concurrently with the delivery to the holders of any Indebtedness of the Company or any Subsidiary having an aggregate principal amount (or commitments to lend) in excess of $5,000,000 or any representative of such holders, any financial information, certificates, reports, notices or other material information furnished to any such Person, (iv) within one (1) Trading Day after receipt thereof, a copy of any material notice or other material written communication from any holder of any Indebtedness of the Company or any Subsidiary having an aggregate principal amount (or commitments to lend) in excess of $5,000,000 and (v) within 5 days after the end of each Fiscal Quarter, a certificate setting forth the detailed calculations of (x) the Breakeven Servicing Fee, (y) the Company Servicing Fee and (z) amounts (if any) due under Section 2(c)(ii).

 

(t)           Compliance with Laws.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company will comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, ordinances, rules, regulations and requirements of Governmental Authorities (including ERISA and the rules and regulations thereunder and all Environmental Laws).

 

(u)           Maintenance of Assets; Insurance.  From the Issuance Date and for so long as any of the Obligations are outstanding the Company will:

 

(i)             keep, and will cause each Subsidiary to keep, all assets necessary in its business in good working order and condition, ordinary wear and tear excepted;

 

(ii)             maintain, and cause each Subsidiary to maintain (either in the name of the Company or in such Subsidiary’s own name), with financially sound and reputable insurance companies, insurance on all their assets in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business, which insurance, in the case of the Company and each Subsidiary Note Party, shall (A) name the Collateral Agent as insured party or loss payee and (B) be reasonably satisfactory in all other respects to the Collateral Agent, and the Company and each Subsidiary Note Party shall endeavor to provide that the issuing insurer shall endeavor to mail thirty (30) days written notice to the Collateral Agent of any cancellation in coverage thereof;

 

(iii)             furnish to the Holder, upon reasonable written request, full information as to the insurance carried; and

 

(iii)             within thirty (30) days after the end of each fiscal year of the Company, furnish to the Collateral Agent and the Holder a report of a reputable insurance broker with respect to the insurance carried.

 

(v)           Payment of Taxes.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company will, and will cause each of Subsidiary to, pay and discharge, before the same shall become delinquent, all income and all other material Taxes, assessments and other governmental charges or levies, imposed upon them or any of their properties or assets or in respect of their businesses or incomes except for those being contested in good faith by proper proceedings 

 

  

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diligently conducted and against which adequate reserves, in accordance with GAAP, have been established.

 

(w)           Senior Indebtedness.  Payments of principal and other payments due under this Note shall not be subordinated to any obligations of the Company or any Subsidiary Note Party and shall rank senior to all other Indebtedness (other than payments of trade accounts payable of the Company and the Subsidiary Note Parties).

 

(x)           Phase I Prepayments and Other Obligations.  From the Restatement Date and for so long as any of the Obligations are outstanding, the Company shall (i) cause the Phase I Subsidiaries to, within one business day after each Quarterly Application Date, distribute 100% of Excess Cash Flow to the Company, (ii) cause the Christie Sub on each Monthly Application Date (as defined in the Phase I Credit Agreement) to pay the Servicing Fee earned during such month to the Company to the extent permitted by the Phase I Credit Agreement and (iii) apply any optional prepayment first to the scheduled installment of term loans under the Phase I Credit Agreement due on the maturity date thereof until such amount is zero.

 

(y)           Holding Company Pledge.  From the Issuance Date and for so long as any of the Obligations are outstanding, the Company shall not enter into any transactions pursuant to which all of the capital stock of the Company would be owned by a corporation, limited liability company, partnership or other entity (the “Holding Company”), unless such Holding Company agrees to pledge all of the capital stock of the Company for the benefit of the Holders.

 

(z)           Collateral Agreements.

 

(i)             At such time as the Phase I Credit Agreement has been paid in full, the Company shall cause each Phase I Subsidiary to (A) become a Subsidiary Note Party and execute and deliver a joinder to the Guarantee and Collateral Agreement in the form attached thereto as Annex I, (B) take such actions necessary or advisable to grant to the Collateral Agent for the benefit of the Holders a perfected first priority (subject to Liens to the extent permitted by the Guarantee and Collateral Agreement) security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such Phase I 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 Collateral Agent and (C) if requested by the Collateral Agent, deliver to the Collateral Agent, for the benefit of the Holders legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Collateral Agent.

 

(ii)             At such time as the NEC Notes have been paid in full, the Company shall cause Access DM to (A) become a Subsidiary Note Party and execute and deliver a joinder to the Guarantee and Collateral Agreement in the form attached thereto as Annex I, (B) take such actions necessary or advisable to grant to the Collateral Agent for the benefit of the Holders a perfected first priority (subject to Liens to the extent permitted by the Guarantee and Collateral Agreement) security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to Access DM, 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 Collateral Agent and (C) if requested by the Collateral Agent, deliver to the Collateral Agent, for the benefit of the Holders legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Collateral Agent; provided that Access DM shall not pledge the capital stock of Christie/AIX prior to the date that the Phase I Subsidiaries become Subsidiary Note Parties pursuant to Section 8(z)(i).

 

  

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(iii)             Upon (A) the formation or acquisition of any new direct or indirect Subsidiary (other than a Foreign Subsidiary, a Subsequent Phase Subsidiary or Christie Sub) by the Company or any Subsidiary, or (B) any Subsidiary ceasing to be an Immaterial Subsidiary, the Company shall, within 15 days (which may be extended by up to additional 15 days by the Majority Holders) after such formation or acquisition or such Subsidiary ceasing to be an Immaterial Subsidiary, cause such Subsidiary to (1) become a Subsidiary Note Party and execute and deliver a joinder to the Guarantee and Collateral Agreement in the form attached thereto as Annex I, (2) take such actions necessary or advisable to grant to the Collateral Agent for the benefit of the Holders a perfected first priority (subject to Liens to the extent permitted by the Guarantee and Collateral Agreement) security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such 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 Collateral Agent and (3) if requested by the Collateral Agent, deliver to the Collateral Agent, for the benefit of the Holders legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Collateral Agent.

 

(iv)             From after the date which is thirty (30) days after the Issuance Date, the Company shall, and shall cause each Subsidiary Note Party to, maintain at all times all of its cash and Permitted Investments in excess of $250,000 in deposit accounts or securities accounts with respect to which the Collateral Agent has entered into an agreement providing the Collateral Agent “control” over such accounts within the meaning of the Uniform Commercial Code (as defined in the Guarantee and Collateral Agreement), in form and substance reasonably satisfactory to the Collateral Agent.

 

(aa)           Interest Reserve Account.  From the Restatement Date and for so long as any of the Obligations are outstanding, the Company shall deposit $125,000 into the Interest Reserve Account on the last business day of each March, June, September and December of each year.

 

(bb)           Satellite Financing Account. From the Restatement Date and at any time on or prior to June 30, 2011, the Company may, with the written consent of the Majority Holders (it being understood that such written consent may be in the form required by the Satellite Financing Control Agreement in order to effect withdrawals from the Satellite Financing Account and which written consent shall not be withheld if the Company certifies in the officer’s certificate required by clause (i) below that the amounts being withdrawn will be used for the purchase of Satellite Equipment described on Schedule II hereto for a price of not more than 110% of the amount therefor set forth in Schedule II) and in accordance with the provisions of the Satellite Financing Control Agreement, withdraw amounts on deposit in the Satellite Financing Account, in an aggregate amount not to exceed the Satellite Financing Amount and interest accrued thereon, for the purchase, acquisition or installation of satellite dishes, equipment or infrastructure (collectively, “Satellite Equipment”); provided that (i) prior to any such withdrawals, the Company shall provide an officer’s certificate to the Holders, in form and substance reasonably satisfactory to the Holders, certifying that such amounts shall be used only for the purchase of Satellite Equipment and (ii) the amount that the Company shall be entitled to withdraw from the Satellite Financing Account shall be reduced, on a dollar-for-dollar basis, by any Indebtedness (such Indebtedness, “Alternative Satellite Indebtedness”) incurred by the Company to finance the purchase, acquisition or installation of Satellite Equipment.

 

(cc)           Alternative Satellite Indebtedness. The Company shall provide the Holders with two business days prior written notice of the incurrence of any Alternative Satellite Indebtedness, which notice shall include (i) the amount thereof and (ii) the interest rate applicable thereto.

 

 

  

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9.           Defaults and Remedies.

 

(a)           Events of Default.  An “Event of Default” is (i) default in payment of any Principal of this Note, or any Redemption Price, when and as due; (ii) default in payment of any Interest on this Note that is not included in an amount described in the immediately preceding clause (i) that is not cured within five (5) Trading Days from the date such Interest was due; (iii) any default in the observance or performance of any covenant or agreement contained in clauses (c) through (f) and (l) of Section 8; (iv) failure by the Company to comply with any other provision of this Note or any other Transaction Document in all material respects within twenty (20) days after the earlier of (x) the Company’s receipt of notice to comply with such provision or (y) the Company becoming aware of such default; (v) any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Company in this Note, the Securities Purchase Agreement, any Transaction Document or in any certificate or other document delivered pursuant hereto or thereto, shall be incorrect in any material respect when made or deemed made; (vi) any default in payment of any Indebtedness or Swap Agreement obligation in excess of $5,000,000, individually or in the aggregate, or any event or circumstances arising such that any Person is entitled, or could, with the giving of notice and/or lapse of time and/or the fulfillment of any condition and/or the making of any determination, become entitled (A) to require repayment before its stated maturity of any Indebtedness or Swap Agreement obligation in excess of $5,000,000 of the Company or any of the Subsidiary Note Parties or Phase I Subsidiaries, or (B) to take any step to enforce any security for, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness in excess of $5,000,000 by the Company or any of the Subsidiary Note Parties or Phase I Subsidiaries, in each case whether such Indebtedness or Swap Agreement now exists or shall be created hereafter; (vii) any of the Transaction Documents (including the guarantee contained in Section 2 of the Guarantee and Collateral Agreement) or any subordination provisions in any subordinated indebtedness shall cease, for any reason, to be in full force and effect, or the Company or any of the Subsidiaries shall so assert; (viii) the Company, the Subsidiary Note Parties or the Phase I Subsidiaries pursuant to or within the meaning of any Bankruptcy Law (as defined below): (A) commences a voluntary case; (B) consents to the entry of an order for relief against it in an involuntary case; (C) consents to the appointment of a Custodian (as defined below) of it or any of its Subsidiaries for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay its debts as the same become due; (ix) an involuntary case or other proceeding is commenced directly against the Company or any of the Subsidiary Note Parties or Phase I Subsidiaries seeking liquidation, reorganization or other relief with respect to it or its Indebtedness under any Bankruptcy Law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other Bankruptcy Law proceeding remains undismissed and unstayed for a period of sixty (60) days, or an order of relief is entered against the Company or any of the Subsidiary Note Parties or Phase I Subsidiaries as debtor under the Bankruptcy Laws as are now or hereafter in effect; or (x) one or more final judgments, non interlocutory orders or decrees shall be entered by a U.S. state or federal or a foreign court or administrative agency of competent jurisdiction against any the Company or any of the Subsidiary Note Parties or Phase I Subsidiaries involving in the aggregate a liability (to the extent not covered by independent third party insurance as to which the insurers has not denied coverage) as to any single or related series of transactions, incidents or conditions, of $5,000,000 or more, and the same shall remain unsatisfied, unvacated, unbonded or unstayed pending appeal for a period of ninety (90) days after the entry thereof.  The term “Bankruptcy Law” means Title 11, U.S. Code, or any similar federal, state, or foreign law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

(b)           Remedies.  If any Event of Default has occurred and is continuing, the Majority Holders may, upon written notice to the Company, except in the case of events described in 

 

  

25

  

Sections 9(a)(viii) or 9(a)(ix), in which case no notice shall be required, (i) declare all of the Principal of the Notes then outstanding (including all interest added to the Principal pursuant to Section 6(b)) together with the Interest Amount payable under the terms hereof with respect to such Principal and all other amounts, including the amounts due under Section 5(a), owing or payable hereunder and under the Other Notes (the “Acceleration Amount”) immediately due and payable, in cash, all without presentment, demand, protest or further act or notice of any kind, all of which are expressly waived by the Company and (ii) exercise any and all rights and remedies available to the holder of this Note under this Note, the Securities Purchase Agreement, or any other Transaction Document at law or in equity.  In addition to any remedy the Holder may have under this Note, the Securities Purchase Agreement or any other Transaction Document, such Acceleration Amount shall bear interest at a rate equal to the Default Rate until paid in full.  Nothing in this Section 9 shall limit any other rights the Holder may have under this Note, the Securities Purchase Agreement or any other Transaction Document, including Section 5 of this Note.

 

(c)           Void Acceleration.  In the event that the Company does not pay the Acceleration Amount within five (5) Trading Days of this Note becoming due under Section 9(b), at any time thereafter and until the Company pays such unpaid Acceleration Amount in full, the Holder shall have the option to, in lieu of redemption, require the Company to promptly return this Note (to the extent this Note has been previously delivered to the Company), in whole or any portion thereof, to the Holder, by sending written notice thereof to the Company via electronic delivery (the “Void Acceleration Notice”).  Upon the Company’s receipt of such Void Acceleration Notice, (i) the acceleration pursuant to Section 9(b) shall be null and void with respect to the portion of this Note subject to such Void Acceleration Notice and, (ii) the Company shall promptly return the portion of this Note (to the extent this Note has been previously delivered to the Company) subject to such Void Acceleration Notice.

 

10.           Notice of Certain Events.  The Company will give prompt (but in any event no later than five (5) Trading Days after the occurrence of any of the following events) written notice to the Holder of: (i) the occurrence of any Default or Event of Default, (ii) the commencement of any litigation or proceeding affecting the Company or any Subsidiary (A) in which the amount involved is $2,000,000 or more and not covered by insurance, (B) in which injunctive or similar relief is sought or (C) which relates to any Transaction Document or (iii) any development or event that has had or could reasonably be expected to have a Material Adverse Effect.

 

11.           Vote to Change the Terms of the Notes.  Except as otherwise expressly specified herein, the written consent of the Company and the Majority Holders shall be required for any change in the Guarantee and Collateral Agreement or the Notes (including this Note) other than an extension of the Maturity Date pursuant to Section 4(a) hereof; provided that the consent of all Holders adversely affected thereby shall be required for (a) reductions in the principal amount of the Notes, (b) extensions of the Maturity Date (other than an extension of the Maturity Date pursuant to Section 4(a) hereof) or the Extended Maturity Date, (c) reductions in the Cash Interest Rate, the interest rate in Section 6(b) or any premium payable pursuant to Sections 2(b) or 5(a), (d) extensions of any Interest Payment Date, the date of any prepayment pursuant to Section 2(c) or the date of any redemption pursuant to Section 5 and (e) changes to any provision of this Section 11. Upon receipt of the consent of the Majority Holders or all relevant Holders, as applicable, each Note shall be deemed amended thereby.

 

12.           Lost or Stolen Notes.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver a new Note of like tenor and date.

 

  

26

  

13.           Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including a decree of specific performance and/or other injunctive relief).  No remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit the Holder’s right to pursue actual damages for any failure by the Company to comply with the terms of this Note.  The Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein.  Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof).  The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate.  The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

14.           Specific Shall Not Limit General; Construction.  No specific provision contained in this Note shall limit or modify any more general provision contained herein.  This Note shall be deemed to be jointly drafted by the Company and all Holders pursuant to the Securities Purchase Agreement and shall not be construed against any Person as the drafter hereof.

 

15.           Failure or Indulgence Not Waiver.  No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

16.           Notice.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Note must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic delivery (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and e-mail addresses for such communications shall be:

 

	
  

	
If to the Company:

	
  

	
Cinedigm Digital Cinema Corp.

	
  

	
55 Madison Ave., Suite 300

	
  

	
Morristown, N.J. 07960

	
  

	
E-mail:  gloffredo@cinedigm.com

	
  

	
Attention:  General Counsel

	
  

	
With copy to:

	
  

	
Kelley Drye & Warren LLP

	
  

	
101 Park Avenue

	
  

	
New York, New York 10178

	
  

	
E-mail:  jcooperman@kelleydrye.com

	
  

	
Attention: Jonathan Cooperman

  

27

  

If to the Holder, to it at the address and e-mail address set forth on the signature pages to the Securities Purchase Agreement, with copies to such Holder’s representatives as set forth on such schedule, or, in the case of a Holder or any other party named above, at such other address and/or e-mail addresses and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party in accordance with this Section 16 five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated or (C) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by electronic delivery or deposit with a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

 

17.           Transfer of this Note.  The Holder may assign or transfer this Note or some or all of its rights hereunder at any time without the consent of the Company after the Transfer Restriction Termination Event, subject to compliance with Section 4.1 of the Securities Purchase Agreement.  Notwithstanding the foregoing, subject to compliance with Section 4.1 of the Securities Purchase Agreement, the Holder may assign or transfer this Note or some or all of its rights hereunder at any time without the consent of the Company to any Affiliate of the Holder or to the Company or any of its Subsidiaries.  The Company shall not assign or otherwise transfer any of its rights and obligations under this Note without the prior written consent of all Holders and any attempted assignment or transfer without such consent shall be null and void.  The Company shall maintain an office where the Notes may be presented for registration of transfer or for exchange (“Registrar”).  The Registrar shall keep a register of the Notes and of their transfer and exchange.  The Company may change the Registrar upon written notice to each holder of Notes.  Prior to due presentment for the registration of a transfer of any Note, the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes.

 

18.           Payment of Collection, Enforcement and Other Costs.  If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding; or (b) an attorney is retained to represent the Holder in any bankruptcy, reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the Holder for such collection, enforcement or action, including reasonable attorneys’ fees and disbursements.

 

19.           Cancellation.  After all Obligations have been paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

20.           Note Exchangeable for Different Denominations.  In the event of a redemption or transfer pursuant to this Note of less than all of the Principal, the Company shall promptly cause to be issued and delivered to the Holder, upon tender by the Holder of this Note, a new Note of like tenor representing the remaining Principal that has not been so redeemed.  This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes containing the same terms and conditions and representing in the aggregate the Principal, and each such new Note will represent such portion of such Principal as is designated by the Holder at the time of such surrender.  The date the Company issued this Note shall be the Issuance Date hereof regardless of the number of times a new Note shall be issued.

 

  

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21.           Taxes.

 

(a)           Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Company or any of its Subsidiaries under the Notes, the Securities Purchase Agreement or any other Transaction Document shall be made without any set-off, counterclaim or deduction and free and clear of and without deduction for any Indemnified Taxes; provided that if the Company or any of its Subsidiaries shall be required to deduct any Indemnified Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 21(a)), the Holder receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Company or such Subsidiary, as applicable, shall make such deductions and (iii) the Company or such Subsidiary shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law; provided, further, that if the Company or any of its Subsidiaries is required to make an additional payment to the Holder under this Section 21(a), and if the Holder is entitled to a cash refund or credit against cash Taxes payable which is both identifiable and quantifiable by the Holder as being attributable to the imposition of such Indemnified Taxes (a “Tax Refund”), and such Tax Refund may be obtained without increased liability or obligation to the Holder (including any obligation of the Holder to file Tax returns in jurisdictions where it would not otherwise be obligated to file Tax returns), then, upon the written request of the Company, the Holder shall apply for such Tax Refund and, to the extent such Tax Refund is received by the Holder, shall reimburse the Company or such Subsidiary for such amount as the Holder shall determine to be the proportion of the Tax Refund attributable to such additional payment as will leave the Holder after the reimbursement in the same position as it would have been if the additional payment had not been required; provided that, if any Tax Refund reimbursed by the Holder to the Company or such Subsidiary is subsequently disallowed, the Company shall repay the Holder such amount (together with interest and any applicable penalty payable to the Holder to the relevant taxing authority) promptly after the Holder notifies the Company of such disallowance.  The Company agrees to reimburse the Holder for the Holder’s reasonable out-of-pocket expenses, if any, incurred in complying with any request hereunder and agrees that all costs incurred by the Holder in respect of this Section 21(a) may be deducted from the amount of any reimbursement to the Company or any of its Subsidiaries in respect of any Tax Refund pursuant to this Section 21(a).  Nothing in this Section 21(a) shall require the Holder to disclose to the Company any of its Tax returns or any other Tax-related information that it deems to be confidential.

 

(b)           Indemnification by the Company.  The Company shall indemnify the Holder, within thirty (30) days after written demand therefor, for the full amount of any Indemnified Taxes paid by the Holder, on or with respect to any payment by or on account of any obligation of the Company or any of its Subsidiaries under the Notes, the Securities Purchase Agreement and the other Transaction Documents (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 21) arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate of the Holder as to the amount of such payment or liability (together with a calculation of such payment or liability and supporting documentation reasonably requested by the Company) under this Section 21 shall be delivered to the Company and shall be conclusive absent demonstrable error.

 

(c)           Withholding Obligations.  Subject to Sections 21(a) and (b), if the Company is subject to withholding tax obligations under applicable law with respect to any transaction under this Note, then, notwithstanding any provision to the contrary in this Note, the Company shall be entitled to withhold cash in the amount that the Company is required to withhold.

 

22.           Waiver of Notice.  To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, 

 

  

29

  

performance, default or enforcement of this Note, Securities Purchase Agreement and the other Transaction Documents.

 

23.           Governing Law; Jurisdiction.  This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note shall be governed by, the internal laws of the State of New York, including Section 5-1401 of the New York General Obligations Law.  Each party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof.  The Company hereby irrevocably and unconditionally appoints its General Counsel at the address set forth in Section 16 (the “Company Process Agent”) as agent to receive on behalf of the Company and its property service of copies of the summons and complaint and any other process which may be served in any action referred to above or any other proceeding in any New York State or Federal court.  In any action or proceeding in a New York State or Federal court sitting in The City of New York, such service may be made on the Company by delivering a copy of such process to the Company in care of the Company Process Agent at such Company Process Agent’s above address and by depositing a copy of such process in the mails by certified or registered air mail, addressed to the Company at the address for such notices to it under this Note (such service to be effective upon such receipt by the Company Process Agent and the depositing of such process in the mails as aforesaid).  The Company hereby irrevocably and unconditionally authorizes and directs such Company Process Agent to accept such service on its behalf.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

 

24.           WAIVER OF JURY TRIAL.  THE COMPANY, ON BEHALF OF ITSELF AND ITS SUBSIDIARIES, AND THE HOLDER OF THIS NOTE HEREBY IRREVOCABLY WAIVE ANY RIGHTS THEY MAY HAVE TO, AND AGREE NOT TO REQUEST, A TRIAL BY JURY IN RESPECT OF ANY ACTION BASED UPON, OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

25.           Effect of Redemption; No Prepayment.  Upon payment of the Redemption Price in accordance with the terms hereof with respect to any portion of the Principal of this Note, such portion of the Principal of this Note shall be deemed paid in full and shall no longer be deemed outstanding for any purpose.  Except as specifically set forth in this Note, the Company does not have any right, option, or obligation, to pay any portion of the Principal at any time prior to the Maturity Date or the Extended Maturity Date, as applicable.

 

26.           Purchase of Notes by the Company.  The Company shall not, and shall not permit any Subsidiary or Affiliate to, voluntarily purchase or acquire any portion of any Note, unless concurrently with such action, the Company, such Subsidiary or Affiliate makes an offer to all Holders to acquire the same portion of their Notes on the same terms.  This Section 26 may not be amended except with the written consent of the holders of two-thirds (2/3) of the aggregate principal amount of all the Notes then outstanding.

 

27.           Other Payments to Holders of Notes.  The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional 

 

  

30

  

interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes or any waiver or amendment of any of the terms and provisions hereof or thereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding that consented to such waiver or amendment.

 

28.           Payment Set Aside.  To the extent that the Company makes a payment or payments to the Holder hereunder or the Holder enforces or exercises its rights hereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, by a trustee, receiver or any other person under any law (including any bankruptcy law, U.S. state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

29.           Interpretative Matters.  Unless the context otherwise requires, (a) all references to Sections, Schedules or Exhibits are to sections, schedules or exhibits contained in or attached to this Note, (b) each accounting term not otherwise defined in this Note has the meaning assigned to it in accordance with GAAP as in effect from time to time (unless expressly provided otherwise), (c) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter and (d) the use of the word “including” in this Note shall be by way of example rather than limitation.

 

* * * * * *

  

31

  

IN WITNESS WHEREOF, the Company has caused this Note to be executed on its behalf by the undersigned as of the __ of May 2010.

 

 

	 	 	 	CINEDIGM DIGITAL CINEMA CORP.
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 By:	 	 
	 	 	 	 	
Name:

Title

	 

 

 

 

 

 

 

  

Note

  

SCHEDULE I

 

BREAKEVEN LTM EBITDA

 

  

  

  

SCHEDULE II

 

SATELLITE EQUIPMENT

 

 

 

  

  

  

EXHIBIT A

 

SUBORDINATION PROVISIONS

 

Section 1.01.  Subordination of Liabilities.  ___________________ (the “Obligor”), for itself, and its successors and assigns, covenants and agrees, that the payment of the principal of, interest on, and all other amounts owing in respect of, [__________] (the “Subordinated Indebtedness”)  is hereby expressly subordinated to the extent and in the manner hereinafter set forth, to the prior payment in full in cash, of all Senior Indebtedness (as defined in Section 1.07 below).  These Subordination Provisions shall constitute a continuing offer to all persons who, in reliance upon such provisions, become holders of, or continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders are hereby made obligees hereunder the same as if their names were written herein as such, and they and/or each of them may proceed to enforce such provisions.

 

Section 1.02.  Obligor Not to Make Payments with Respect to Subordinated Indebtedness in Certain Circumstances.  (a)  Upon the maturity of any Senior Indebtedness (including interest thereon, premium, if any, or fees or any other amounts owing in respect thereof), whether at stated maturity, by acceleration or otherwise, all Obligations (as defined in Section 1.07 below) owing in respect thereof shall first be paid in full in cash, before any payment (whether in cash, property, securities or otherwise) is made on account of the Subordinated Indebtedness.

 

(b)During any Blockage Period (as defined in Section 1.09 below), no holder of Subordinated Indebtedness shall assert or exercise any remedy in respect of any Subordinated Indebtedness or take or receive from or on behalf of the Obligor, directly or, indirectly, or by setoff or in any other manner (whether pursuant to any enforcement, collection, execution, levy or foreclosure proceeding or otherwise) any assets of the Obligor.  Without limiting the generality of the foregoing, during any Blockage Period, unless and until the Senior Indebtedness (including interest thereon, premium, if any, or fees or any other amounts owing in respect thereof) shall have been paid in full in cash, no holder of Subordinated Indebtedness shall (i) take any action of any kind, exercise any rights or initiate any proceeding of any kind (including any insolvency proceeding or Lien Enforcement Action, as defined in Section 1.09 below), whether privately or judicially, including any motion to lift an automatic stay or to obtain adequate protection, or any action to notify account debtors, seek a Lien (as defined in Section 1.09 below) upon any assets of the Obligor or commence, or join with any creditor other than holders of Senior Indebtedness in commencing, any enforcement, collection, execution, levy or foreclosure proceeding with respect to the Obligor, (ii) hinder, interfere with, object to or delay any holder of Senior Indebtedness in (A) enforcement of any of its Liens on any collateral, (B) liquidation or foreclosure thereof or (C) the manner in which a holder of Senior Indebtedness chooses to effectuate such enforcement, liquidation or foreclosure, (iii) demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisement, valuation or other similar right that may otherwise be available under applicable law or any other similar rights a junior creditor may have under applicable law, or (iv) bring any action to contest the validity, legality, enforceability, perfection, priority or avoidability of any of the Senior Indebtedness or any of the Liens of holders of Senior Indebtedness in or on any  collateral.

(c)During any Blockage Period, (i) no holder of Subordinated Indebtedness shall exercise any right of setoff or counterclaim with respect to any collateral or with respect to any proceeds thereof and all proceeds of collateral shall be paid to the Collateral Agent (as defined in Section 1.09 below) for application to the Senior Indebtedness and (ii) until the Senior Indebtedness (including interest thereon, premium, if any, or fees or any other amounts owing in respect thereof) shall have been paid in full in cash, any proceeds of collateral received by any holder of Subordinated Indebtedness and any other 

 

  

  

  

cash or other property on account of the interest of such holder of Subordinated Indebtedness in any collateral received by such holder of Subordinated Indebtedness in contravention of these Subordination Provisions shall be held for the benefit of and paid over to the Collateral Agent for the benefit of the holders of the Senior Indebtedness in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct.  In connection with the foregoing, each holder of Subordinated Indebtedness hereby:  (i) authorizes the Collateral Agent to make any such endorsements as the agent and attorney-in fact for such holder of Subordinated Indebtedness; and (ii) acknowledges and agrees that its foregoing authorization, being coupled with an interest, is irrevocable.

(d)           In the event that, notwithstanding the provisions of the preceding subsections (a), (b) and (c) of this Section 1.02, the Obligor shall make any payment on account of (or the holders of the Subordinated Indebtedness receives any payment on account of) the Subordinated Indebtedness at a time when payment is not permitted by said subsection (a), (b) or (c), such payment shall be held by the holders of the Subordinated Indebtedness, in trust for the benefit of, and shall be paid forthwith over and delivered to, the holders of Senior Indebtedness or their representative or the trustee under the indenture or other agreement pursuant to which any instruments evidencing any Senior Indebtedness may have been issued, as their respective interests may appear, for application pro rata to the payment of all Senior Indebtedness (after giving effect to the relative priorities of such Senior Indebtedness) remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in cash in accordance with the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.  Without in any way modifying these Subordination Provisions or affecting the subordination effected hereby if the hereafter referenced notice is not given, the Obligor shall give the holders of the Subordinated Indebtedness written notice of any event which would prevent payments under Section 1.02(a), (b) or (c) hereafter.

 

Section 1.03.  Subordination to Prior Payment of All Senior Indebtedness, Dissolution, Liquidation or Reorganization of Obligor.  Upon any distribution of assets of the Obligor upon dissolution, winding up, liquidation or reorganization of the Obligor (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise):

 

(a)           the holders of all Senior Indebtedness shall first be entitled to receive payment in full in cash of all Senior Indebtedness (including, without limitation, post petition interest at the rate provided in the documentation with respect to the Senior Indebtedness whether or not such post-petition interest is an allowed claim against the debtor in any bankruptcy or similar proceeding) before the holders of the Subordinated Indebtedness is entitled to receive any payment of any kind or character on account of the Subordinated Indebtedness;

 

(b)           any payment or distributions of assets of the Obligor of any kind or character, whether in cash, property or securities to which the holders of the Subordinated Indebtedness would be entitled except for these Subordination Provisions, shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the holders of Senior Indebtedness, their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness may have been issued, to the extent necessary to make payment in full in cash of all Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness; and

 

(c)           in the event that, notwithstanding the foregoing provisions of this Section 1.03, any payment or distribution of assets of the Obligor of any kind or character, whether they be cash, property or securities, shall be received by the holders of the Subordinated Indebtedness on account of Subordinated Indebtedness before all Senior Indebtedness is paid in full in cash, such payment or

 

  

  

  

distribution shall be received and held in trust for and shall forthwith be paid over to the holders of the Senior Indebtedness (after giving effect to the relative priorities of such Senior Indebtedness) remaining unpaid or unprovided for or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness may have been issued, for application to the payment of such Senior Indebtedness until all such Senior Indebtedness shall have been paid in full in cash, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.

 

Without in any way modifying these Subordination Provisions or affecting the subordination effected hereby if the hereafter referenced notice is not given, the Obligor shall give prompt written notice to the holders of the Subordinated Indebtedness of any dissolution, winding up, liquidation or reorganization of the Obligor (whether in bankruptcy, insolvency or receivership proceedings or upon assignment for the benefit of creditors or otherwise).

 

Section 1.04.  Subrogation.  Subject to the prior payment in full in cash of all Senior Indebtedness, the holders of the Subordinated Indebtedness shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Obligor applicable to the Senior Indebtedness until all amounts owing on the Subordinated Indebtedness shall be paid in full, and for the purpose of such subrogation no payments or distributions to the holders of the Senior Indebtedness by or on behalf of the Obligor or by or on behalf of the holders of the Subordinated Indebtedness by virtue of these Subordination Provisions which otherwise would have been made to the holder of the Subordinated Indebtedness shall, as between the Obligor, its creditors other than the holders of Senior Indebtedness, and the holders of the Subordinated Indebtedness, be deemed to be payment by the Obligor to or on account of the Subordinated Indebtedness, it being understood that these Subordination Provisions are and are intended solely for the purpose of defining the relative rights of the holders of the Subordinated Indebtedness, on the one hand, and the holders of the Senior Indebtedness, on the other hand.

 

Section 1.05.  Obligation of the Obligor Unconditional.  Nothing contained in these Subordination Provisions or in the Subordinated Indebtedness is intended to or shall impair, as between the Obligor and the holders of the Subordinated Indebtedness, the obligation of the Obligor, which is absolute and unconditional, to pay to the holders of the Subordinated Indebtedness the principal of and interest on the Subordinated Indebtedness as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the holders of the Subordinated Indebtedness and other creditors of the Obligor other than the holders of the Senior Indebtedness, nor, except as specifically provided herein, shall anything herein or therein prevent the holder of the Subordinated Indebtedness from exercising all remedies otherwise permitted by applicable law upon an event of default under the Subordinated Indebtedness, subject to the rights, if any, under these Subordination Provisions of the holders of Senior Indebtedness in respect of cash, property, or securities of the Obligor received upon the exercise of any such remedy.  Upon any distribution of assets of the Obligor, the holders of the Subordinated Indebtedness shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the holders of the Subordinated Indebtedness, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness, and other indebtedness of the Company (as defined in Section 1.09 below) and the Obligor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to these Subordination Provisions.

 

Section 1.06.  Subordination Rights Not Impaired by Acts or Omissions of the Obligor or Holders of Senior Indebtedness.  No right of any present or future holders of any Senior Indebtedness to 

 

  

  

  

enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Obligor or by any act or failure to act in good faith by any such holder, or by any noncompliance by the Obligor with the terms and provisions of the Subordinated Indebtedness, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of the Senior Indebtedness may, without in any way affecting the obligations of the holders of the Subordinated Indebtedness with respect hereto, at any time or from time to time and in their absolute discretion, change the manner, place or terms of payment of, change or extend the time of payment of, or renew or alter, any Senior Indebtedness or amend, modify or supplement any agreement or instrument governing or evidencing such Senior Indebtedness or any other document referred to therein, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness including, without limitation, the waiver of a Default thereunder and the release of any collateral securing such Senior Indebtedness, all without notice to or assent from the holder of the Subordinated Indebtedness.

 

Section 1.07.  Senior Indebtedness.  As used herein, the term “Senior Indebtedness” shall mean the Obligations (as defined in the Guarantee and Collateral Agreement, dated as of August 11, 2009, among the Company, the subsidiaries of the Company parties thereto and the Collateral Agent).

 

Section 1.08.  Miscellaneous.  If, at any time, all or part of any payment with respect to Senior Indebtedness theretofore made by the Obligor or any other Person is rescinded or must otherwise be returned by the holders of Senior Indebtedness for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Obligor or such other Persons), the Subordination Provisions set forth herein shall continue to be effective and be reinstated, as the case may be, all as though such payment had not been made.

 

Section 1.09.  Definitions.  When used herein, the following terms shall have the definitions set forth below:

 

 

“Blockage Notice” means, with respect to a Payment Default or a Non-Payment Default, a notice delivered by or on behalf of the Majority Holders to one or more holders of Subordinated Indebtedness that a Payment Default or Non-Payment Default, as the case may be, has occurred.

 

“Blockage Period” means  (a) with respect to a Payment Default, the period commencing on the date a Blockage Notice is delivered to a holder of Subordinated Indebtedness and terminating on the date on which such Payment Default is cured (to the extent the same is capable of being cured) or waived (if waived in accordance with the terms of the Senior Notes); and (b) with respect to a Non-Payment Default, the period commencing on the date a Blockage Notice is delivered to a holder of Subordinated Indebtedness and terminating on the date that is the earlier to occur of (i) one hundred eighty (180) days following the date of delivery of such Blockage Notice and (ii) delivery by or on behalf of the Majority Holders of a written notice expressly terminating the Blockage Period as a result of such Non-Payment Default being cured (to the extent the same is capable of being cured) or waived (if waived in accordance with the terms of the Senior Notes).  Other than with respect to a Payment Default, Blockage Periods may not in the aggregate exceed one hundred eighty (180) days during any consecutive period of three hundred sixty-five (365) days, whether pursuant to one Blockage Notice or multiple Blockage Notices.

 

“Collateral Agent” has the meaning set forth in the Senior Notes.

 

“Company” means Cinedigm Digital Cinema Corp.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or 

  

  

  

preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

“Lien Enforcement Action” means (a) any action by a creditor to foreclose, enforce, collect, take possession of, sell or otherwise realize upon, or to exercise any other right or remedy with respect to, any collateral, including any action by a creditor to foreclose on the Lien of such Person in any collateral or any action by a creditor to take possession of, sell or otherwise realize (judicially or non-judicially) upon any collateral (including by setoff or notification of account debtors); or (b) the commencement by a creditor of any legal proceedings against the Obligor with respect to any collateral to facilitate the actions described in clause (a) of this definition.

 

“Majority Holders” has the meaning set forth in the Senior Notes.

 

“Non-Payment Default” means any Event of Default as defined in the Senior Notes, other than a Payment Default.

 

“Payment Default” means any Event of Default as defined in the Senior Notes arising by virtue of (a) the failure by the Company to make any payment of principal, interest or fees when due and payable or when declared due and payable (whether as a result of maturity, acceleration or otherwise) or (b) the making by the Obligor of any payment or distribution to a holder of Subordinated Indebtedness in violation of these Subordination Provisions.

 

“Senior Notes” means the Company’s Senior Secured Amended and Restated Notes in the original aggregate principal amount of $75,000,000 issued on May 6, 2010 pursuant to the Securities Purchase Agreement dated as of August 11, 2009 among the Company and the purchasers named therein.

  

  

  

 

 

 

 

 

 

 

EXHIBIT B

 

 

 

 

 

 

 

  

  

  

CHRISTIE/AIX, INC.

c/o Cinedigm Digital Cinema Corp.

55 Madison Ave, Suite 300

Morristown, NJ  07960

 

 

May 6, 2010

 

Amendment to

Side Letter

 

Sageview Capital Master, L.P.

245 Lytton Avenue, Suite 250

Palo Alto, CA 94301

 

Attention:  Edward A. Gilhuly

 

Ladies and Gentlemen:

 

Reference is made to that certain Side Letter, dated as of August 11, 2009 (the “Side Letter”), among Christie/AIX, Inc. (“Christie/AIX”) and Sageview Capital Master, L.P.  The undersigned hereby agree to amend the Side Letter to (i) add Cinedigm Digital Funding I, LLC as a party thereto, with the same obligations as Christie/AIX thereunder, and (ii) delete the second paragraph thereof in its entirety and substitute in lieu thereof the following:

 

“In accordance with Section 8(z)(i) of the Notes, the undersigned hereby agree that upon the payment in full of the Phase I Credit Agreement, each Phase I Subsidiary shall, and shall cause any of its Subsidiaries that is a Phase I Subsidiary to, (i) become a Subsidiary Note Party and execute and deliver a joinder to the Guarantee and Collateral Agreement in the form attached thereto as Annex I, (ii) take such actions necessary or advisable to grant to the Collateral Agent for the benefit of the Holders a perfected first priority (subject to Liens to the extent permitted by the Guarantee and Collateral Agreement) security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such Phase I 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 Collateral Agent and (iii) if requested by the Collateral Agent, deliver to the Collateral Agent, for the benefit of the Holders, legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Collateral Agent.”

 

This amendment shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this letter shall be governed by, the internal laws of the State of New York, including Section 5-1401 of the New York General Obligations Law.  This amendment may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement.  Delivery of an executed signature page of this letter by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart hereof.

 

  

  

  

IN WITNESS WHEREOF, each of the undersigned has executed this amendment as of the date first written above.  

 

	 	 	 	Very truly yours,
	 	 	 	 
	 	 	 	 
	 	 	 	CHRISTIE/AIX, INC.
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 By:	 	 
	 	 	 	 	
Name:

Title

	 

 

 

 

	 	 	 	CINEDIGM DIGITAL FUNDING I, LLC
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 By:	 	 
	 	 	 	 	
Name:

Title

	 

 

 

 

Amendment to the Christie/AIX Side Letter

  

  

  

Accepted and agreed to as of

the date first above written:

SAGEVIEW CAPITAL MASTER, L.P.

By: Sageview Capital GenPar, Ltd., its

       general partner

By:____________________________

     Name:  Edward A. Gilhuly

     Title:  Director

 

 

 

 

Amendment to the Christie/AIX Side Letter

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