Furthermore, in connection with the 2011 Credit Agreement, ADCP 2 entered into a pledge agreement dated as of Octoin favor of the Collateral Agent (the “ADCP 2 Pledge Agreement”) pursuant to which ADCP 2 pledged to the Collateral Agent all of the outstanding membership interests of Holdings, and Holdings entered into a pledge agreement dated as of Octoin favor of the Collateral Agent (the “Holdings Pledge Agreement”) pursuant to which Holdings pledged to the Collateral Agent all of the outstanding membership interests of CDF 2. The rights to receive such virtual print fees and payments to the extent they are generated by the Equipment being financed were transferred to CDF 2 pursuant to the Sale and Contribution Agreement, dated as of October 18, 2011, among the Company, ADCP 2, Holdings and CDF 2 (the “Sale and Contribution Agreement”), and will be the sources of repayment of the financing provided by the 2011 Credit Agreement, the Sale and Leaseback Agreement and the Leases.Īdditionally, the 2011 Credit Agreement required Holdings to enter into a Security Agreement, dated as of October 18, 2011, among Holdings, each grantor from time to time party thereto and the Collateral Agent (the “Holdings Security Agreement”) pursuant to which Holdings granted a perfected security interest in all equipment and inventory consisting of Equipment.
The deployment will generate virtual print fees and other payments under certain digital cinema deployment agreements with major motion picture distributors. The proceeds of the term loans will be used, together with the proceeds from the Sale and Leaseback Agreement to finance part of the purchase price for digital cinema projection systems to be deployed by CDF 2 and Holdings in theatres in the United States (the “Equipment”).
The proceeds of the revolving loans under the 2011 Credit Agreement will be used to pay all costs, fees and expenses relating to the transaction and for working capital.
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