-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, UtNfWPZsHL6x4izg849zeomMoG4gxSRNn/fh7b3UTxdYAl3pCjxr2imjtCYCKzyq Gt77qVxXK381mCy38Od/Ug== 0000950150-95-000056.txt : 19950209 0000950150-95-000056.hdr.sgml : 19950209 ACCESSION NUMBER: 0000950150-95-000056 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19950208 SROS: NONE GROUP MEMBERS: CANAL S A/ GROUP MEMBERS: CINEPOLE PRODUCTIONS B.V. GROUP MEMBERS: LE STUDIO CANAL + SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CAROLCO PICTURES INC CENTRAL INDEX KEY: 0000801441 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 954046437 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-38054 FILM NUMBER: 95506390 BUSINESS ADDRESS: STREET 1: 8800 SUNSET BLVD CITY: LOS ANGELES STATE: CA ZIP: 90069 BUSINESS PHONE: 3108598800 MAIL ADDRESS: STREET 1: 8800 SUNSET BLVD CITY: LOS ANGELES STATE: CA ZIP: 90069 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CANAL S A/ CENTRAL INDEX KEY: 0000914259 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: I0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 85 89 QUAI ANDRE CITROEN CITY: PARIS STATE: I0 ZIP: 75015 BUSINESS PHONE: 01133144251234 SC 13D/A 1 AMENDMENT NO. 11 TO SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 11)* CAROLCO PICTURES INC. --------------------------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 --------------------------------------- (CUSIP Number) John A. St. Clair, Coudert Brothers 1055 W. 7th Street, Los Angeles, California 90017 (213) 688-9088 --------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 30, 1994 --------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7). Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 10 Page 1 of 259 pages 2 CUSIP No. 143763 10 0 Page 2 of 259 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Canal+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box if a Member of a Group * a. [X] b. [ ] 3 SEC Use Only 4 Source of Funds* AF; WC: see discussion in Item 3 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of Shares 0 Beneficially 8 Shared Voting Power Owned By Each 61,606,757 Reporting 9 Sole Dispositive Power Person With 0 10 Shared Dispositive Power 61,606,757 11 Aggregate Amount Beneficially Owned by Each Reporting Person 61,606,757 (excluding shares owned by other members of group) 330,276,345 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented By Amount in Row (11) 36.2% (excluding shares owned by other members of group) 91.2% (including shares owned by other members of group) 14 Type of Reporting Person* CO
*SEE INSTRUCTIONS BEFORE FILLING OUT! 3 CUSIP No. 143763 10 0 Page 3 of 259 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Cinepole Productions B.V. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box if a Member of a Group * a. [X] b. [ ] 3 SEC Use Only 4 Source of Funds* AF; WC: see discussion in Item 3 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of Shares 0 Beneficially 8 Shared Voting Power Owned By Each 61,606,757 Reporting 9 Sole Dispositive Power Person With 0 10 Shared Dispositive Power 61,606,757 11 Aggregate Amount Beneficially Owned by Each Reporting Person 61,606,757 (excluding shares owned by other members of group) 330,276,345 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* [ ] 13 Percent of Class Represented By Amount in Row (11) 36.2% (excluding shares owned by other members of group) 91.2% (including shares owned by other members of group) 14 Type of Reporting Person* CO
*SEE INSTRUCTIONS BEFORE FILLING OUT! 4 CUSIP No. 143763 10 0 Page 4 of 259 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Le Studio Canal+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. [X] b. [ ] 3 SEC Use Only 4 Source of Funds* AF; WC: see discussion in Item 3 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of Shares 0 Beneficially 8 Shared Voting Power Owned By Each 61,606,757 Reporting 9 Sole Dispositive Power Person With 0 10 Shared Dispositive Power 61,606,757 11 Aggregate Amount Beneficially Owned by Each Reporting Person 61,606,757 (excluding shares owned by other members of group) 330,276,345 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Exclude Certain Shares* [ ] 13 Percent of Class Represented By Amount in Row (11) 36.2% (excluding shares owned by other members of group) 91.2% (including shares owned by other members of group) 14 Type of Reporting Person* CO
*SEE INSTRUCTIONS BEFORE FILLING OUT! 5 Page 5 of 259 Pages This Amendment No. 11 is filed on behalf of Canal+ S.A., Le Studio Canal+ and Cinepole Productions B.V. (collectively, "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share, of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amendment No. 2 thereto dated November 11, 1991, Amendment No. 3 thereto dated January 23, 1992, Amendment No. 4 thereto dated March 24, 1992, Amendment No. 5 thereto dated June 22, 1992, Amendment No. 6 thereto dated November 10, 1992, Amendment No. 7 thereto dated April 27, 1993, Amendment No. 8 thereto dated June 25, 1993, Amendment No. 9 thereto dated September 27, 1993, and Amendment No. 10 thereto dated October 20, 1993 (collectively, "Schedule 13D"). This Amendment No. 11 is filed in order to disclose material developments in regard to the securities of Carolco as a result of the purchase on December 30, 1994 by Cinepole B.V. ("Cinepole") of $7,500,000 of the 7% Convertible Subordinated Notes Due 2006 of Carolco (the "7% Notes"). Such $7,500,000 of 7% Notes are currently convertible into an aggregate of 9,999,975 shares of Common Stock. Pursuant to Item 101 of Regulation S-T, which provides that an amendment to a paper format Schedule 13D filed with respect to a registrant that has become subject to mandated electronic filing shall be in electronic format and the first such amendment shall restate the entire text of the Schedule 13D, the initial Statement, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6, Amendment No. 7, Amendment No. 8, Amendment No. 9 and Amendment No. 10 are being filed as part of this Amendment No. 11 as Attachment 1, Attachment 2, Attachment 3, Attachment 4, Attachment 5, Attachment 6, Attachment 7, Attachment 8, Attachment 9, Attachment 10 and Attachment 11, respectively, hereto and are hereby incorporated by reference herein. Because previously filed paper exhibits to a Schedule 13D are not required to be restated electronically, exhibits to the initial Statement, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6, Amendment No. 7, Amendment No. 8, Amendment No. 9 and Amendment No. 10, respectively, are not being refiled with this Amendment No. 11. Item 3. Source and Amount of Funds or Other Consideration Item 3 is hereby amended and supplemented as follows: The information set forth in Item 4 hereof is hereby incorporated herein by reference. Item 4. Purpose of Transaction Item 4 is hereby amended and supplemented as follows: Pursuant to the Standby Purchase and Investment Agreement dated as of July 29, 1993 by and among Carolco, Cinepole, Le Studio Canal+, Pioneer LDCA, Inc., RCS Video International Services B.V. and Tele-Communications, Inc. (the "Standby Agreement"), on December 30, 1994, Cinepole purchased $7,500,000 of the 7% Notes of Carolco. Such $7,500,000 of 7% Notes are currently convertible into an aggregate of 9,999,975 shares of Common Stock of Carolco. Item 5. Interest in Securities of the Issuer Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 11, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, and Le Studio Canal+ may be deemed to own indirectly through Cinepole, the following securities of Carolco, excluding securities of Carolco owned by the Members (as defined below) other than Canal+. 6 Page 6 of 259 Pages
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 26,100,031 15.4 Common Stock(1) 22,113,641 13.0 Common Stock(2) 9,999,975 5.9 Common Stock(3) 2,643,109 1.6 Common Stock(4) 500,001 .3 Common Stock(5) 250,000 .2 ---------- ---- TOTAL 61,606,757 36.2* ---------- ----
Canal+, RCS Video International Services B.V. ("RCS"), Pioneer LDCA, Inc. ("Pioneer") and Credit Lyonnais S.A. ("CL") (collectively, with certain of their respective affiliates, the "Strategic Investors") previously formed a group for the purpose of purchasing additional voting securities of Carolco and obtaining a majority representation on the board of directors of Carolco. The Strategic Investors and New Carolco Investments B.V. ("New CIBV") formed a group for purposes of obtaining a majority representation on the board of directors of Carolco. The Strategic Investors and New CIBV are hereinafter collectively referred to as the "Members." As of the date of this Amendment No. 11, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, (which owns such shares indirectly through Cinepole) and by reason of Canal+ being one of the Members, the following securities of Carolco:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- BY CANAL+ --------- Common Stock 26,100,031 7.2 Common Stock(6) 22,113,641 6.1 Common Stock(7) 9,999,975 2.8 Common Stock(8) 2,643,109 .7 Common Stock(9) 500,001 .1 Common Stock(10) 250,000 .1 ----------- ---------- ---- SUB-TOTAL 61,606,757 17.0
__________________________________ * does not foot due to rounding. (1) These shares may be acquired upon the conversion of the Series A Preferred Stock (and include accrued but unpaid dividends as of January 1, 1995). (2) These shares may be acquired upon the conversion of $7,500,000 of the 7% Notes. (3) Represents Common Stock pledged to Canal+ by New CIBV as security for loans outstanding. (4) Represents Common Stock issuable upon exercise of a call right. (5) Represents Common Stock underlying options held by directors of Carolco who have been designated by Canal+. (6) See footnote (1). (7) See footnote (2). (8) See footnote (3). (9) See footnote (4). (10) See footnote (5). 7 Page 7 of 259 Pages BY PIONEER ---------- Common Stock 46,420,574 12.8 Common Stock(11) 70,763,653 19.5 Common Stock(12) 13,333,300 3.7 Common Stock(13) 2,643,109 .7 Common Stock(14) 500,001 .1 Common Stock(15) 402,500 .1 ----------- ----------- ---- SUB-TOTAL 134,063,137 37.0* BY RCS ------ Common Stock 15,960,316 4.4 Common Stock(16) 2,643,109 .7 Common Stock(17) 1,333,330 .4 Common Stock(18) 500,001 .1 ----------- ---------- --- SUB-TOTAL 20,436,756 5.6 BY CL ----- Common Stock(19) 53,072,740 14.7 Common Stock(20) 53,167,627 14.7 ----------- ----------- ---- SUB-TOTAL 106,240,367 29.3* BY NEW CIBV ---------- Common Stock 7,929,328 2.2 ----------- ---- TOTAL 330,276,345 91.2* =========== ====
__________________________________ * does not foot due to rounding. (11) These shares may be acquired upon the conversion of the Series A Preferred Stock (and include accrued but unpaid dividends as of January 1, 1995). (12) These shares may be acquired upon the conversion of $10,000,000 of the 7% Notes. (13) Represents Common Stock pledged to Pioneer by New CIBV as security for loans outstanding. (14) Represents Common Stock issuable upon exercise of a call right. (15) Represents Common Stock underlying options held by directors of Carolco who have been designated by Pioneer. (16) Represents Common Stock pledged to RCS by New CIBV as security for loans outstanding. (17) These shares may be acquired upon the conversion of $1,000,000 of the 7% Notes. (18) Represents Common Stock issuable upon exercise of a call right. (19) These shares may be acquired upon the conversion of the Series A Preferred Stock (and include accrued but unpaid dividends as of January 1, 1995). (20) These shares may be acquired upon the conversion of $30,000,000 principal amount of 5% Payment-In-Kind Convertible Subordinated Notes due 2002 (the "5% Notes"). While the 5% Notes may not be converted within 60 days of this Amendment No. 11, the shares are included herein in accordance with SEC Rule 13d(3)(d)(1)(i) since Canal+ believes the 5% Notes were acquired by CL in connection with, or as a participant in, a transaction that may have been for the purpose or effect of changing or influencing the control of Carolco. 8 Page 8 of 259 Pages Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. Item 6 of Schedule 13D is amended by the addition of the following: The information set forth in Items 4 and 5 hereof is hereby incorporated herein by reference. Cinepole's purchase of $7,500,000 of the 7% Notes of Carolco was made pursuant to the Standby Agreement, a copy of which is filed herewith as an Exhibit, with the Exhibit letter set opposite the description of such agreement. In connection with the purchase by Cinepole of $7,500,000 of the 7% Notes of Carolco, the remaining agreements described below have been executed by Carolco. A copy of each such agreement is filed as an Exhibit hereto, with the Exhibit letter set opposite the description of each such agreement. 99.AMM Standby Purchase and Investment Agreement, dated as of July 29, 1993 by and among Carolco, Cinepole, Le Studio Canal+, Pioneer LCDA, Inc., RCS Video International Services B.V. and Tele-Communications, Inc. 99.ANN Indenture, dated as of October 14, 1994, by and between Carolco and American Stock Transfer & Trust Company, a trust company organized and existing under the laws of New York. 99.AOO Form of Carolco 7% Convertible Subordinated Note Due June 30, 2006. Item 7. Material to be filed as Exhibits 24 Powers of Attorney 99.A Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). 99.AMM Standby Purchase and Investment Agreement, dated as of July 29, 1993 by and among Carolco, Cinepole, Le Studio Canal+, Pioneer LCDA, Inc., RCS Video International Services B.V. and Tele-Communications, Inc. 99.ANN Indenture, dated as of October 14, 1994, by and between Carolco and American Stock Transfer & Trust Company, a trust company organized and existing under the laws of New York. 99.AOO Form of Carolco 7% Convertible Subordinated Note Due June 30, 2006. 9 Page 9 of 259 Pages Signatures After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 7, 1995 CANAL+ S.A. By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 7, 1995 LE STUDIO CANAL+ By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 7, 1995 CINEPOLE PRODUCTIONS B.V. By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact 10 Page 10 of 259 Pages INDEX TO EXHIBITS
Page ---- 24 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 99.A Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) . . . . . . . . . . . . . . . . . . . . . . . 140 99.AMM Standby Purchase and Investment Agreement, dated as of July 29, 1993 by and among Carolco, Cinepole, Le Studio Canal+, Pioneer LCDA, Inc., RCS Video International Services B.V. and Tele-Communications, Inc. . . . . . . . . . . . . . . . . . . 141 99.ANN Indenture, dated as of October 14, 1994, by and between Carolco and American Stock Transfer & Trust Company, a trust company organized and existing under the laws of New York. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 99.AOO Form of Carolco 7% Convertible Subordinated Note Due June 30, 2006 . . . . . . . . . . . . . . . . . . 250
11 Page 11 of 259 Pages Schedule A Directors and Executive Officers of the Reporting Persons CANAL+ S.A. Directors
Residence or Name Business Address Principal Occupation ---- ---------------- -------------------- Pierre Lescure 85-89, Quai Andre Citroen Chairman and Chief Executive Officer F-75015 Paris, France Canal+ S.A. Andre Rousselet 4 Avenue de New York 75016 Paris, France Guy Dejouany 7 Avenue Vion Whitcomb Chairman 75016 Paris, France Compagnie Generale des Eaux 52, rue d'Anjou F-75008 Paris, France Water Distribution Paul-Louis Girardot 40 rue des Chapelles Sevres Chief Executive Officer 92 Paris, France Compagnie Generale des Eaux 52, rue d'Anjou F-75008 Paris, France Water Distribution Pierre Muron 14 Avenue Victor Hugo Financial Advisor 75016 Paris, France Groupe Pallas France 61, rue de Monceau F-75008 Paris, France Finance Pierre Dauzier 021 Quai de Bourbon Chairman, Havas SA 75004 Paris, France 120, avenue Charles-de-Gaulle F-92200 Neuilly-sur-Seine, France Advertising Philippe said Gildas Lepretre 42 rue Poussin Association des Salaries actionnaires (representing Association des Salaries 75016 Paris, France de C+ actionnaires de C+) 85-89 Quai Andre Citroen F-75015 Paris, France Jean-Paul Delacour 4 Avenue Ingres Chief Executive Officer 75016 Paris, France Geneveal, Groupe Societe Generale 29, Boulevard Haussmann F-75009 Paris, France Finance
12 Page 12 of 259 Pages Marc Ladreit de Lacharriere 7 rue Boissonade Executive Vice President (representing FI.MA.LAC S.A.) 75014 Paris, France L'Oreal 10 place de General Catroux 75017 Paris Paris No. RCS B331604983 Willy Stricker 88 avenue Niel Societe de financements et de (representing Societe de 75017 Paris, France participations dans la communication financements et de participations "PART'COM" dans la communication 5 avenue de Breteuil PART'COM) 75017 Paris, France Paris No. RCS B379400591 Nicolas Duhamel 3 rue de Traktir 75106 Paris, France
Executive Officers
Residence or Name Business Address Principal Occupation ---- ---------------- -------------------- Pierre Lescure 85-89, Quai Andre Citroen Chairman and Chief Executive Officer F-75015 Paris, France Canal+ S.A. Marc-Andre Feffer 85-89, Quai Andre Citroen Executive Vice President and General F-75015 Paris, France Counsel Canal+ S.A. Bruno Delecour 85-89, Quai Andre Citroen Executive Vice President and President F-75015 Paris, France of Sales and Marketing Canal+ S.A. Alain De Greef 85-89, Quai Andre Citroen Executive Vice President and President F-75015 Paris, France of Programming Canal+ S.A. Claude Ravilly 85-89, Quai Andre Citroen Executive Vice President and F-75015 Paris, France Chief Financial Officer Canal+ S.A. Marc Tessier 85-89, Quai Andre Citroen Executive Vice President, F-75015 Paris, France Corporate Development Canal+ S.A.
13 Page 13 of 259 Pages LE STUDIO CANAL+ Directors
Residence or Name Business Address Principal Occupation ---- ---------------- -------------------- Claude Ravilly 78 rue Olivier de Serres Executive Vice President and Chief (representing Canal+ S.A.) 75015 Paris, France Financial Officer Canal+ S.A. 3 Quai de Stalingrad 92100 Boulogne Pierre Lescure 17, rue Dumont d'Urville Chairman and Chief Executive Officer F-75116 Paris, France Canal+ S.A. Rene Bonnell 11 rue Georges Berger Director of Cinema 75017 Paris, France Canal+ S.A. Marc-Andre Feffer 66 rue Condorcet Executive Vice President and General 75009 Paris Counsel Canal+ S.A. Leopold Jeorger 8 bld Julien Potin Director, Large Companies 92200 Neuilly-sur-Seine Societe Generale 15, rue Pasquier F-75008 Paris, France Finance Alain De Greef 57 Quai de Grenelle Executive Vice President and 75015 Paris, France President of Programming Canal+ S.A. 85-89, Quai Andre Citroen F-75015 Paris, France Pierre Dauzier 021 Quai de Bourbon Chairman, Havas SA (representing Havas SA) 75004 Paris, France 120, avenue Charles-de-Gaulle F-92200 Neuilly-sur-Seine, France Advertising Jean-Louis Clavel 6 chemin des Gressets Sivalparts SA (representing Sivalparts SA) 78430 Louveciennes 50 Bld Haussmann 75009 Paris, France Louis Chodron de Courcel 4 Square Villaret de Joyeuse Executive Vice President (representing Banque Nationale 75017 Paris, France Banque Nationale de Paris SA de Paris SA) 16, bld des Italiens F-75009 Paris, France Banking Marie-Jacques, 4 bis ave de Lorraine Meaudre-Desgouttes 92380 Garches Nicolas Duhamel 3 rue de Traktir Societe Crestoise de Participations - (representing Societe Crestoise de 75116 Paris, France Societe Anonyme Participations - Societe Anonyme) 136 avenue Charles de Gaulle 92200 Neuilly-sur-Seine
14 Page 14 of 259 Pages Michel Denisot 11 avenue de l'Observatoire 75006 Paris
Executive Officers
Residence or Name Business Address Principal Occupation ---- ---------------- -------------------- Pierre Lescure 17, rue Dumont d'Urville Chairman and Chief Executive Officer F-75116 Paris, France Canal+ S.A. Brahim Chioua 17, rue Dumont d'Urville Chief Financial Officer F-75116 Paris, France Le Studio Canal+
15 Page 15 of 259 Pages CINEPOLE PRODUCTIONS B.V. Directors
Residence or Name Business Address Principal Occupation ---- ---------------- -------------------- Dominique Jeunot 17, rue Dumont d'Urville Canal+ S.A. F-75116 Paris, France 85-89, Quai Andre Citroen F-75015 Paris, France MeesPierson Trust B.V. P.O. Box 990 Rokin 55 NI-1000 AS Amsterdam The Netherlands
16 ATTACHMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ___)* Carolco Pictures Inc. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 16168 (212) 880-4420 --------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 8, 1990 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / X /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following page(s)) Page 1 of 99 Pages Index to Exhibits is on page 12 17 CUSIP No. 143763 10 0 Page 2 of 99 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 1,771,621 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 1,771,621 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,771,621 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 5.6% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 18 CUSIP No. 143763 10 0 Page 3 of 99 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. of I.R.S. Identification No. of Above Person CANAL+ PRODUCTIONS S.N.C. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 Sec Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 1,771,621 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 1,771,621 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,771,621 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 5.6% 14 Type of Reporting Person* 00 *SEE INSTRUCTIONS BEFORE FILLING OUT! 19 Page 4 of 99 Pages ITEM 1. SECURITY AND ISSUER The class of equity securities to which this statement relates is the Common Stock, par value $.01 per share, issued by Carolco Pictures Inc. (the "Common Stock"). The principal executive offices of Carolco Pictures Inc., a Delaware corporation ("Carolco"), are located at 8800 Sunset Boulevard, Los Angeles, California 90069. ITEM 2. IDENTITY AND BACKGROUND (a), (b), (c) and (f). This statement on Schedule 13D is being filed jointly by Canal+ S.A. ("Canal+") and Canal+ Productions S.N.C. ("Canal+ Productions") (collectively, the "Reporting Persons") in accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934, as amended. Canal+ is a corporation organized under the laws of the Republic of France. Its principal business is the operation of an over-the-air pay television channel in France. Its principal business address is 78, rue Olivier de Serres, 75015 Paris, France. Canal+ Productions is an entity organized under the laws of the Republic of France. Its principal business is the production, purchase and sale of audio visual properties. Its principal business address is 78, rue Olivier de Serres, 75015 Paris, France. Ninety-nine percent of the common stock of Canal+ Productions is held directly by Canal+. Schedule A to this statement, which is incorporated herein by this reference, sets forth the name, residence or business address, principal occupation or employment, and the name, principal business and address of the corporation or other organization in which such employment is conducted of each director and executive officer of the Reporting Persons. Each such director and executive officer is a citizen of the Republic of France. (d) and (e). Neither the Reporting Persons nor, to the knowledge of the Reporting Persons, any of the individuals listed on Schedule A have, during the past five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been parties to a civil proceeding of a judicial or administrative body for violations of federal or state securities laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The funds required to purchase 30,000 shares of Series B Convertible Preferred Stock, par value $1.00 per share, of Carolco ("Series B Preferred Stock"), which are convertible into 1,621,621 shares of Common Stock and the warrant referred in Item 6, being 20 Page 5 of 99 Pages a total of $30 million, were supplied from the general corporate funds of Canal+. ITEM 4. PURPOSE OF TRANSACTION The purchase of the Series B Preferred Stock, together with the warrant referred to in Item 6, is for investment purposes. (a). Canal+ Productions has the right to convert the 30,000 shares of Series B Preferred Stock into 1,621,621, shares of Common Stock and the right to exercise the warrant (referred to in Item 6) to purchase up to 150,000 shares of Common Stock. The Reporting Persons reserve the right to acquire additional Carolco securities and to dispose of Carolco securities currently owned, subject to the restrictions contained in the Preferred Stock Purchase Agreement referred to in Item 5(c). (b). None. (c) and (f). Canal+ Productions is forming directly or indirectly through an affiliate a partnership with an affiliate of Carolco to produce and distribute motion pictures submitted to the partnership by the partners in accordance with the terms of Exhibit E to the Preferred Stock Purchase Agreement, which is incorporated herein by this reference and included as Exhibit E hereto. (d). The Series B Preferred Stock is entitled to vote for and elect one director of Carolco. Canal+ Productions, as the holder of all shares of Series B Preferred Stock, is entitled to nominate such director. Pursuant to Section 6(a)(i) of the Preferred Stock Purchase Agreement, after the Series B Preferred Stock is converted into shares of Common Stock, Carolco will include among its nominees for its board of directors one designee of the holder of a majority of such shares and certain Carolco Shareholders are obligated to vote for the election of such designee as a director. (e), (g), (h), (i) and (j). None. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a). By virtue of the transaction described in Item 5(c), Canal+ may be deemed beneficially to own indirectly through Canal+ Productions the following securities of Carolco: 21 Page 6 of 99 Pages
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 1,621,621* 5.1 Common Stock 150,000** 0.5
(b). Canal+, through its indirect beneficial ownership of the Common Stock, and Canal+ Productions are deemed to have shared power to vote, to direct the vote, to dispose and to direct the disposition of the Common Stock. (c). Pursuant to the Preferred Stock Purchase Agreement, which is attached hereto as Exhibit B and incorporated herein by this reference, Canal+ Productions acquired 30,000 shares of Series B Preferred Stock and the warrant described in Item 6 on June 15, 1990 for $30 million in a private purchase. (d). and (e). Inapplicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Pursuant to the Preferred Stock Purchase Agreement, Canal+ Productions purchased from Carolco 30,000 shares of Series B Preferred Stock and Carolco granted Canal+ Productions a warrant to purchase up to 150,000 shares of Common Stock at a warrant price, subject to certain possible adjustments, of $18.50 per share of Common Stock. The warrant will expire five years after issuance. Also pursuant to the Preferred Stock Purchase Agreement, an affiliate of Carolco and Canal+ Productions, directly or indirectly through affiliates, are forming a partnership to produce and distribute motion pictures submitted to the partnership by the partners. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). B. Preferred Stock Purchase Agreement dated as of May 15, 1990. C. Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock (Exhibit A to Preferred Stock Purchase Agreement). - ------------ * These shares may be acquired upon the conversion of the 30,000 shares of Series B Preferred Stock. The Series B Preferred Stock may be converted at any time. ** These shares may be acquired upon the exercise of the warrant referred to in Item 6. 22 Page 7 of 99 Pages D. Registration Rights Agreement (Exhibit B to Preferred Stock Purchase Agreement). E. Terms of Co-Production Venture (Exhibit E to Preferred Stock Purchase Agreement). (Portions omitted; filed separately with the Commission on a confidential basis in accordance with Rule 24b-2.) F. Warrant Agreement (Exhibit G to Preferred Stock Purchase Agreement). 23 Page 8 of 99 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 15th, 1990 CANAL+ S.A. By /s/ Claude Ravilly ---------------------------- Name: Claude Ravilly Title: Director Financier After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 15th, 1990 CANAL+ PRODUCTIONS S.N.C. By /s/ Rene Bonnell ---------------------------- Name: Rene Bonnell Title: Garant 24 ATTACHMENT NO. 2 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1)* Carolco Pictures Inc. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 10166 (212) 880-4420 ------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 16, 1990 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1 (b)(3) or (4), check the following box / /. Check the the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following page(s)) Page 1 of 12 Pages Index to Exhibits is on page 7 25 CUSIP No. 143763 10 0 Page 2 of 12 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 Sec Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 1,869,521 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 1,869,521 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,869,521 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 5.9% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 26 CUSIP No. 143763 10 0 Page 3 of 12 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 1,869,521 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 1,869,521 11 Aggregate Amount Beneficially Owned by Each Reporting Person 1,869,521 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 5.9% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 27 Page 4 of 12 Pages This Amendment No. 1 is filed on behalf of Canal+ S.A. and Le Studio Canal+ (formerly Canal+ Productions S.N.C.) ("Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share, of Carolco Pictures Inc. ("Common Stock"). This Amendment No. 1 is filed primarily in order to disclose a partial waiver of the Common Stock standstill restrictions imposed on Canal+ in that certain Preferred Stock Purchase Agreement dated as of May 15, 1990, which was attached to the initial Statement as Exhibit B. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Item 3 of Schedule 13D is amended by the addition of the following: The total consideration, excluding brokerage commissions and other costs of execution, paid for all shares of Common Stock acquired by Canal+ subsequent to the initial Statement was $804,025; such amount, together with $6,888.98 paid for brokerage commissions and other costs of execution, was supplied from the general corporate funds of Canal+. ITEM 4. PURPOSE OF TRANSACTION Paragraph (a) of this Item is amended by the addition of the following: The Common Stock standstill restrictions imposed on Canal+ in Section 6(b)(iii)(3) of the Preferred Stock Purchase Agreement have been waived by New Carolco Investments B.V. and a majority of the board of directors of Carolco Pictures Inc. to permit Canal+ to purchase up to an aggregate of one million shares of Common Stock through March 15, 1991. See New Carolco Investments B.V. resolution dated as of November 16, 1990 and letter dated as of November 16, 1990 from Carolco Pictures Inc. to Canal+ Productions S.N.C., which are attached hereto as Exhibits G and H, respectively, and incorporated herein by this reference. As of the date of this Amendment No. 1, Canal+ has acquired 97,900 shares of Common Stock since the transaction disclosed in the initial Statement. Canal+ intends to purchase up to an additional 902,100 shares of Common Stock prior to March 15, 1991, if it finds the price attractive. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 1, Canal+ may be deemed beneficially to own indirectly through Le Studio Canal+ the following securities of Carolco: 28 Page 5 of 12 Pages TITLE OF CLASS NUMBER OF SHARES PERCENT OF CLASS -------------- ---------------- ---------------- Common Stock 1,621,621* 5.1 Common Stock 150,000** 0.5 Common Stock 97,900 0.3 Item 5(c) of Schedule 13D is amended by the addition of the following: The following open market purchases of shares of Common Stock were effected by Canal+ subsequent to the initial Statement: NO. OF SHARES DATE PURCHASED PRICE PER SHARE*** ---- ------------- ------------------ 12/26/90 3,200 $8.50 12/26/90 3,400 8.375 12/27/90 7,000 8.50 01/02/91 12,400 8.50 01/03/91 20,400 8.00 01/03/91 25,000 8.375 01/07/91 25,000 8.00 01/10/91 1,500 7.25 ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER See Item 4 of this Amendment No. 1. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). G. New Carolco Investments B.V. resolution dated as of November 16, 1990. H. Letter dated as of November 16, 1990 from Carolco Pictures Inc. to Canal+ Productions S.N.C. - ------------ * These shares may be acquired upon the conversion of the 30,000 shares of Series B Preferred Stock. The Series B Preferred Stock may be converted at any time. ** These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the initial Statement. *** Excludes brokerage commissions and other costs of execution. 29 Page 6 of 12 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 28, 1991 CANAL+ S.A. By /s/ Ravilly Claude --------------------------------- Name: Ravilly Claude Title: Directeur Financier After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. February 28, 1991 LE STUDIO CANAL+ By /s/ Granier Olivier --------------------------------- Name: Granier Olivier Title: Directeur Financier 30 Page 7 of 12 Pages INDEX TO EXHIBITS
Page ---- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) 8 G. New Carolco Investments B.V. resolution dated as of November 16, 1990 9 H. Letter dated as of November 16, 1990 from Carolco Pictures Inc. to Canal* Productions S.N.C. 11
31 ATTACHMENT NO. 3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 2)* Carolco Pictures Inc. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 ----------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 10166 --------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 1, 1991 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing informaton which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 8 Page 1 of 59 Pages 32 CUSIP No. 143763 10 0 SCHEDULE 13D Page 2 of 59 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 4,816,855 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 4,816,855 11 Aggregate Amount Beneficially Owned by Each Reporting Person 4,816,855 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 14.2% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 33 CUSIP No. 143763 10 0 SCHEDULE 13D Page 3 of 59 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 4,816,855 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 4,816,855 11 Aggregate Amount Beneficially Owned by Each Reporting Person 4,816,855 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 14.2% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 34 Page 4 of 59 Pages This Amendment No. 2 is filed on behalf of Canal+ S.A. and Le Studio Canal+ (collectively, "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share ("Common Stock"), of Carolco Pictures Inc. ("Carolco") and Amendment No. 1 thereto dated February 28, 1991 (collectively, "Schedule 13D"). This Amendment No. 2 is filed primarily in order to disclose the purchase of 300,000 shares of Series D Convertible Exchangeable Preferred Stock, par value $1.00 per share, of Carolco ("Series D Preferred Stock"), which are convertible into Common Stock. ITEM 2. IDENTITY AND BACKGROUND Item 2 of Schedule 13D is amended to substitute the following principal business address of Canal+ for the address set forth in the initial Statement: 17, rue Dumont D'Urville, 75116 Paris, France. ITEM 3. SOURCE OR AMOUNT OF FUNDS OR OTHER CONSIDERATION Item 3 of Schedule 13D is amended by the addition of the following: The funds required to purchase 300,000 shares of Series D Preferred Stock, and the option referred in Item 6, being a total of $15 million, were supplied from the general corporate funds of Canal+. ITEM 4. PURPOSE OF TRANSACTION The preamble and items (a), (b), (d) and (e) of item 4 of Schedule 13D are amended by the addition of the following: The purchase of the Series D Preferred Stock, together with the option referred to in Item 6, is for investment purposes. (a) Canal+ has the right to convert the 300,000 shares of Series D Preferred Stock into 2,499,990 shares of Common Stock and the right, under certain circumstances, to exercise the option (referred to in Item 6) to purchase up to 447,344 shares of Common Stock. Canal+ reserves the right to acquire additional Carolco securities and to dispose of Carolco securities currently owned, subject to the restrictions contained in Section 6(b) of that certain Preferred Stock Purchase Agreement dated as of May 15, 1990, which was attached to the initial Statement as Exhibit B (the "Series B Agreement"), as amended by Section 4 of the Consent and Limited Waiver Agreement, which is attached hereto as Exhibit I and incorporated herein by this reference. New Carolco Investments B.V. ("CIBV") has waived, under certain circumstances, its right under Section 6(b)(iv) of the Series B Agreement to cause Canal+ to vote its voting securities in accordance with the recommendation of CIBV. Such waiver is contained in a letter agreement dated November 1, 1991, among Le Studio Canal+, CIBV and Carolco (the "Letter Agreement"), which is attached hereto as Exhibit J. (b) Canal+ has waived any right to vote its Series D Preferred Stock on a business combination proposed to Carolco by its subsidiary LIVE Entertainment Inc. and waived and relinquished any appraisal or dissenters' rights that may arise with respect to its Series D Preferred Stock as a result of such combination, subject to certain conditions contained in the Agreement to Exchange Stock and Waiver of Any Applicable Appraisal Rights, which is attached hereto as Exhibit K and incorporated herein by this reference. (d) The Series D Preferred Stock is entitled to vote for and elect two directors of Carolco while certain dividends arrearages exist on such Stock, as described in Section 3 of the Certificate of 35 Page 5 of 59 Pages Designation, Preferences and Rights of such Stock included as an exhibit to the Preferred Stock Subscription Agreement, which is attached hereto as Exhibit G and incorporated herein by this reference. (e) Each holder of Series D Preferred Stock is entitled to cumulative quarterly dividends equal to $5.00 per share per annum, as described in Section 1 of such Certificate of Designation. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 2, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ the following securities of Carolco:
Title of Class Number of Shares Percent of Class - -------------- ---------------- ---------------- Common Stock 1,621,621(1) 4.8 Common Stock 150,000(2) 0.4 Common Stock 97,900 0.3 Common Stock 2,499,990(3) 7.4 Common Stock + 447,344(4) + 1.3 --------- ---- TOTAL 4,816,855 14.2 ========= ====
Item 5(c) of Schedule 13D is amended by the addition of the following: (c) Pursuant to the Preferred Stock Subscription Agreement, Canal+ acquired from Carolco 300,000 shares of Series D Preferred Stock for $50 per share in a private purchase on November 1, 1991. In connection therewith, pursuant to the Stock Option and Agreement for Purchase of Stock, which is attached hereto as Exhibit H and incorporated herein by this reference, Canal+ acquired from Carolco on November 1, 1991 in a private purchase for no additional monetary consideration an option to purchase 447,344 shares of Common Stock. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Pursuant to the Preferred Stock Subscription Agreement, Canal+ acquired from Carolco 300,000 shares of Series D Preferred Stock. Pursuant to the Stock Option and Agreement for Purchase of Stock, Carolco granted Canal+ an option to purchase up to 447,344 shares of Common Stock at a price of $0.01 per share. Such option is exercisable if and when Canal+, and to the extent that it, converts the Series B Convertible Preferred - ------------ (1) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Stock may be converted at any time. (2) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the initial Statement. (3) These shares may be acquired upon the conversion of the 300,000 shares of Series D Preferred Stock. The Series D Preferred Stock may be converted at any time. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of this Amendment No. 2. 36 Page 6 of 59 Pages Stock it holds into Common Stock. The Series B Convertible Preferred Stock may be converted at any time. Pursuant to the Consent and Limited Waiver Agreement, (i) Carolco, New Carolco Investments B.V. and Le Studio Canal+ agreed to reduce the purchase price for the 150,000 shares of common stock Canal+ may purchase pursuant to the warrant referred to in Item 6 of the initial Statement from $18.50 to $14.50 per share; (ii) Carolco waived certain restrictions of the standstill agreement of the Series B Agreement for certain acquisitions by Canal+ related to the Series D Preferred Stock and the Common Stock option (see Item 4(a) above); and (iii) Canal+ consented to the creation of the Series D Preferred Stock, which ranks senior to the Series B Convertible Preferred Stock, and the sale of certain convertible debentures and Common Stock to RCS Video Services Antilles N.V. and to RCS Video International Services B.V., respectively, and waived certain other rights related to its ownership of Series B Convertible Preferred Stock. Pursuant to the Agreement to Exchange Stock and Waiver of Any Applicable Appraisal Rights, Canal+ waived certain voting rights and appraisal or dissenters' rights of its Series D Preferred Stock. See Item 4(b) above. Pursuant to the Letter Agreement, CIBV has waived, under certain circumstances, its rights concerning the vote of Canal+ of voting securities of Carolco. See Item 4(a) above. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). G. Preferred Stock Subscription Agreement between Le Studio Canal+ and Carolco Pictures Inc. (including a Series D Preferred Stock Certificate of Designation, Preferences and Rights but excluding Exhibits B, C and D). H. Stock Option and Agreement for Purchase of Stock dated as of November 1, 1991, between Carolco Pictures Inc. and Le Studio Canal+. I. Consent and Limited Waiver Agreement among Carolco Pictures Inc., New Carolco Investments B.V. and Le Studio Canal+. J. Letter Agreement dated November 1, 1991, among New Carolco Investments B.V., Le Studio Canal+ and Carolco Pictures Inc. K. Agreement to Exchange Stock and Waiver of Any Applicable Appraisal Rights dated November 1, 1991 by Le Studio Canal+. 37 Page 7 of 59 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 11, 1991 CANAL+ S.A. By /s/ Joel A. Adler ------------------------------ Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 11, 1991 LE STUDIO CANAL+ By /s/ Joel A. Adler ----------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 38 Page 8 of 59 Pages INDEX TO EXHIBITS -----------------
Page ---- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) 9 G. Preferred Stock Subscription Agreement between Le Studio Canal+ 10 and Carolco Pictures Inc. (including a Series D Preferred Stock Certificate of Designation, Preferences and Rights but excluding Exhibits B, C and D). H. Stock Option and Agreement for Purchase of Stock dated as of 42 November 1, 1991, between Carolco Pictures Inc. and Le Studio Canal+. I. Consent and Limited Waiver Agreement among Carolco Pictures Inc., 49 New Carolco Investments B.V. and Le Studio Canal+. J. Letter Agreement dated November 1, 1991, among New Carolco 55 Investments B.V., Le Studio Canal+ and Carolco Pictures Inc. K. Agreement to Exchange Stock and Waiver of Any Applicable Appraisal 57 Rights dated November 1, 1991 by Le Studio Canal+.
39 ATTACHMENT NO. 4 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 3)* Carolco Pictures Inc. -------------------------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 10166 --------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 15, 1992 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing informaton which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 6 Page 1 of 9 Pages 40 CUSIP No. 143763 10 0 SCHEDULE 13D Page 2 of 9 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 4,816,855 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 4,816,855 11 Aggregate Amount Beneficially Owned by Each Reporting Person 4,816,855 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 14.2% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 41 CUSIP No. 143763 10 0 SCHEDULE 13D Page 3 of 9 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / / b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 4,816,855 Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 4,816,855 11 Aggregate Amount Beneficially Owned by Each Reporting Person 4,816,855 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 14.2% 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 42 Page 4 of 9 Pages This Amendment No. 3 is filed on behalf of Canal+ S.A. and Le Studio Canal+ (collectively, "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991 and Amendment No. 2 thereto dated November 11, 1991 (collectively, "Schedule 13D"). This Amendment No. 3 is filed primarily in order to disclose the understanding among Canal+ and certain other shareholders of Carolco concerning their influence over the affairs of Carolco. ITEM 4. PURPOSE OF TRANSACTION This item is amended by the addition of a new paragraph (f) which reads in full as follows: (f) Canal+ has agreed to cooperate with Rizzoli Corriere della Sera Group and Pioneer Electronic Corp., existing shareholders of Carolco, to offer to provide additional financing to Carolco to alleviate Carolco's strained financial condition. Canal+ intends to seek further representation on the board of directors of Carolco and, together with the shareholders mentioned above, exert increased influence over the business affairs of Carolco. Filed as Exhibit K hereto is a press release of Carolco, dated January 16, 1992, which is incorporated herein by this reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). L. Carolco Pictures Inc. press release dated January 16, 1992. 43 Page 5 of 9 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. January 23, 1992 CANAL+ S.A. By /s/ Joel A. Adler --------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. January 23, 1992 LE STUDIO CANAL+ By /s/ Joel A. Adler --------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 44 Page 6 of 9 Pages INDEX TO EXHIBITS -----------------
Page ---- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). 7 L. Carolco Pictures Inc. press release dated January 16, 1992. 8
45 ATTACHMENT NO. 5 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 4)* Carolco Pictures Inc. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 10166 ------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 24, 1992 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class. See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 12 Page 1 of 392 Pages 46 CUSIP No. 143763 10 0 SCHEDULE 13D Page 2 of 392 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / X / b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,413,742 (excluding shares owned by other members of group) 31,225,346 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 18.5 (excluding shares owned by other members of group) 61.5 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 47 CUSIP No. 143763 10 0 SCHEDULE 13D Page 3 of 392 Pages 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. / X / b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,413,742 (excluding shares owned by other members of group) 31,225,346 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 18.5 (excluding shares owned by other members of group) 61.5 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 48 Page 4 of 392 Pages This Amendment No. 4 is filed on behalf of Canal+ S.A. and Le Studio Canal+ (collectively, "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amendment No. 2 thereto dated November 11, 1991, and Amendment No. 3 thereto dated January 23, 1992 (collectively, "Schedule 13D"). This Amendment No. 4 is filed primarily in order to disclose the formation of a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), the acquisition of additional voting securities of Carolco and related transactions. ITEM 2. IDENTITY AND BACKGROUND This item is amended to set forth the current address of each of Canal+ S.A. and Le Studio Canal+, Canal+'s ownership of Le Studio Canal+ and to set forth a revised Schedule A, which is incorporated herein by this reference. The current address of Canal+ S.A. is 85-89, Quai Andre Citroen, 75015 Paris, France. The current address of Le Studio Canal+ is 17, rue Dumont d'Urville, 75116 Paris, France. Fifty-nine percent of the Common Stock of Le Studio Canal+ is owned by Canal+. ITEM 4. PURPOSE OF TRANSACTION This item is amended by the addition of a new paragraph (g) which reads in full as follows: (g) Canal+, Rizzoli Corriere della Sera Group ("RCS") and Pioneer Electronic Corp. ("Pioneer") (collectively, the "Members") have formed a group for the purpose of purchasing additional voting securities of Carolco and obtaining a majority representation on the board of directors of Carolco. The Members, which currently, in the aggregate, have four persons serving as directors of Carolco, expect to designate an additional three directors, so that the Members in the aggregate, will have designated seven of thirteen Carolco directors; the Members have agreed to purchase, in the aggregate, 12,800 shares of Carolco Series E Convertible Preferred Stock. The Members also intend to lend an aggregate of $32,200,000 to Carolco and to provide other financial accommodations to Carolco and its Chairman, Mr. Mario F. Kassar, as described in the Exhibits hereto. See Item 6. 49 Page 5 of 392 Pages ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 4, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+: Title of Class Number of Shares Percent of Class - -------------- ---------------- ---------------- Common Stock 1,621,621(1) 4.5 Common Stock 150,000(2) 0.4 Common Stock 97,900 0.3 Common Stock 2,499,990(3) 6.8 Common Stock 447,344(4) 1.2 Common Stock 1,723,720(5) 4.6 Common Stock +2,873,167(6) +7.9 --------- ---- TOTAL 9,413,742 26.0* ========= ====
- ------------ (1) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (2) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the initial Statement. (3) These shares may be acquired upon the conversion of the 300,000 shares of Series D Preferred Stock. The Series D Preferred Stock may be converted at any time. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of the 3706 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. (6) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). A copy of the pledge agreement is filed as Exhibit M hereto, which is incorporated herein by this reference. * Does not foot due to rounding. 50 Page 6 of 392 Pages As of the date of this Amendment No. 4, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, and by reason of Canal+ being one of the Members, the following securities of Carolco:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- BY CANAL+ --------- Common Stock 1,621,621(1) 3.2 Common Stock 150,000(2) 0.3 Common Stock 97,900 0.2 Common Stock 2,499,990(3) 4.9 Common Stock 447,344(4) 0.9 Common Stock 1,723,720(5) 3.4 Common Stock +2,873,167(6) +5.7 --------- ---- SUB-TOTAL 9,413,742 18.5* ========= ====
- ------------ (1) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (2) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the initial Statement. (3) These shares may be acquired upon the conversion of the 300,000 shares of Series D Preferred Stock. The Series D Preferred Stock may be converted at any time. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of the 3706 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. (6) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). A copy of the pledge agreement is filed as Exhibit M hereto, which is incorporated herein by this reference. * Does not foot due to rounding. 51 Page 7 of 392 Pages
BY PIONEER Number of Shares Percent of Class ---------- ---------------- ---------------- Common Stock 3,243,243 (7) 6.4 Common Stock 2,500,000 (8) 4.9 Common Stock 2,451,627 (9) 4.8 Common Stock 977,447(10) 1.9 Common Stock 300,000(11) 0.6 Common Stock +2,873,167(12) +5.7 ---------- ---- SUB-TOTAL 12,345,484 24.3 ========== ==== BY RCS ------ Common Stock 1,481,481 2.9 Common Stock 3,333,333(13) 6.6 Common Stock 1,778,140(14) 3.5 Common Stock +2,873,167(15) +5.7 ---------- ---- SUB-TOTAL 9,466,121 18.6* ---------- ---- TOTAL 31,225,346 61.5* ========== ====
- ---------------- (7) These shares may be acquired upon the conversion of 60,000 shares of Series C Convertible Exchangeable Preferred Stock. The Series C Convertible Exchangeable Preferred Stock may be converted at any time. (8) These shares may be acquired upon the conversion of $15,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (9) These shares may be acquired upon the conversion of 5271 shares of Series E Convertible Preferred Stock, which may be converted at any time. (10) These shares may be acquired upon the exercise of options which are exercisable in the manner described in Item 3 of Amendment No. 1 to the Schedule 13D of Pioneer dated November 11, 1991. (11) These shares may be acquired upon the exercise of a warrant which is exercisable in the manner described in Item 3 of Schedule 13D of Pioneer dated July 3, 1990. (12) See Footnote 6. (13) These shares may be acquired upon the conversion of $20,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (14) These shares may be acquired upon the conversion of the 3823 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. (15) See Footnote 6. * Does not foot due to rounding. 52 Page 8 of 392 Pages The 8,619,502 shares deemed beneficially owned, in the aggregate, by the Members pursuant to pledge agreement referred to in Footnote 6 on page 6, are to be voted, until default under the pledge agreement, by Mr. Mario F. Kassar. Until default under the pledge agreement, Mr. Kassar has the right to receive dividends from, and the proceeds from the sale of, the shares pledged pursuant to the pledge agreement, subject to, and in accordance with the terms of, the pledge agreement. Reference is also made to Item 5 of Schedule 13D of RCS dated November 12, 1991 and to Item 5 of Schedule 13D of Pioneer dated July 3, 1990 for information concerning the voting power of the respective persons named therein. Reference is also made to such Schedules for information concerning other persons, if any, having the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities shown above under "BY RCS" and "BY PIONEER", respectively. Item 5(b) is amended by adding the following paragraph: Canal+ has neither the sole or shared power to vote or to direct the vote, nor the sole or shared power to dispose or to direct the disposition, of the 21,811,605 shares of Common Stock beneficially owned by the Members other than Canal+ or of the 2,873,167 shares of Common Stock deemed beneficially owned pursuant to the pledge agreement referred to in Footnote 6 on page 6. Item 5(c) of Schedule 13D is amended by the addition of the following: (c) On March 24, 1992, in a private transaction, each of the Members purchased, subject to the fulfillment of the conditions of an Escrow Agreement, from Carolco at $1,000 per share the number of shares of Series E Convertible Preferred Stock shown in parentheses after the name of such Member: Canal+ (3706), Pioneer (5271) and RCS (3823). Item 5(d) of Schedule 13D is amended by the addition of the following: (d) Except as described in Item 5(a), no other person is known by Canal+ to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities mentioned in Item 5(a). ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Item 6 of Schedule 13D is amended by the addition of the following: In connection with the purchase of the Series E Convertible Preferred Stock referred to in Item 5(c), Canal+ entered into the pledge agreement and related instruments filed collectively as Exhibit M hereto as well as the agreements described below, all of which are filed as Exhibits hereto, with the Exhibit letter set opposite each such agreement: N. Loan Agreement among Carolco Pictures Inc., ("Carolco") Le Studio Canal+, RCS Video Services International B.V. ("RCS Video") and Pioneer LDCA, Inc. ("LDCA") dated as of March 20, 1992, providing for a loan of $32,200,000 to Carolco. O. Stock Pledge Agreement among Carolco, Le Studio Canal+, RCS Video Services Antilles N.V. ("Antilles") RCS Video, and LDCA dated as of March 20, 1992, in support of the loan described in Exhibit N. 53 Page 9 of 392 Pages P. Pioneer Stock Pledge Agreement among Carolco, LDCA, Le Studio Canal+, Antilles and RCS Video dated as of March 20, 1992, in support of the loan described in Exhibit N. Q. Secured Promissory Note executed by Carolco in favor of Le Studio Canal+ dated March 20, 1992, pursuant to the Loan Agreement described in Exhibit N. R. Intercreditor Agreement among Le Studio Canal+, LDCA, and RCS Video and acknowledged by Carolco and Carolco International N.V. ("CINV"), dated as of March 20, 1992, relating to indebtedness owed to the parties thereto by Carolco and CINV. S. Standstill Agreement among Le Studio Canal+, LDCA, RCS Video and Antilles, dated March 20, 1992, under which Pioneer has agreed to certain indulgences concerning indebtedness of Carolco and CINV. T. Deferred Payments Agreement among Carolco, CINV, Antilles, RCS Video, Le Studio Canal+, LDCA, Bankers Trust Company, Chemical Bank and Credit Lyonnais Bank Nederland N.V. dated as of March 20, 1992, providing for the deferral of certain payments due from Carolco and CINV. U. Vista Puts Contingency Loan Agreement among Carolco, Le Studio Canal+, RCS Video and LDCA, dated as of March 20, 1992, providing for a loan to Carolco upon the happening of a contingency. V. Preferred Stock Purchase Agreement between Carolco and Le Studio Canal+ dated as of March 20, 1992, relating to the purchase of the Series E Convertible Preferred Stock. W. Multiple Picture Lease Agreement between Le Studio Canal+ and Atalanta Films International B.V. ("Atalanta") relating to the acquisition by Le Studio Canal+ of certain motion picture rights from Atalanta, dated as of March 20, 1992. X. Inducement Agreement among New Carolco Investments B.V. ("New CIBV"), Clorenda Corporation A.V.V., Mr. Mario F. Kassar, LDCA, Le Studio Canal+ and RCS Video, dated as of March 23, 1992, concerning certain indulgences and forebearances with respect to indebtedness of New CIBV and other matters. Y. Suspension Agreement among Carolco, LDCA, Le Studio Canal+, New CIBV and RCS Video, dated as of March 23, 1992, pursuant to which the effectiveness of certain provisions of agreements under which Le Studio Canal+, LDCA and RCS Video acquired certain securities of Carolco is suspended. Z. Stockholders Agreement among LDCA, Le Studio Canal+, RCS Video and New CIBV, dated as of March 23, 1992, relating to corporate governance of Carolco and voting. AA. Intercreditor and Standstill Agreement among LDCA, RCS Video and Le Studio Canal+, dated as of March 20, 1992, relating to certain standstill and intercreditor provisions relating to certain indebtedness. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). 54 Page 10 of 392 Pages M. Security and Pledge Agreement between Le Studio Canal+ and New Carolco Investments B.V. ("New CIBV") dated March 23, 1992. N. Loan Agreement among Carolco Pictures Inc. ("Carolco"), Le Studio Canal+, RCS Video Services International B.V. ("RCS Video") and Pioneer LDCA, Inc. ("LDCA") dated as of March 20, 1992. O. Stock Pledge Agreement among Carolco, Le Studio Canal+, RCS Video Services Antilles N.V. ("Antilles") RCS Video, and LDCA dated as of March 20, 1992. P. Pioneer Stock Pledge Agreement among Carolco, LDCA, Le Studio Canal+, Antilles and RCS Video dated as of March 20, 1992. Q. Secured Promissory Note executed by Carolco in favor of Le Studio Canal+ dated March 20, 1992. R. Intercreditor Agreement among Le Studio Canal+, LDCA, and RCS Video and acknowledged by Carolco and Carolco International N.V. ("CINV") dated as of March 20, 1992. S. Standstill Agreement among Le Studio Canal+, Reed Properties Inc. DCA, RCS Video and Antilles, dated March 20, 1992. T. Deferred Payments Agreement among Carolco, CINV, Antilles, RCS Video, Le Studio Canal+, LDCA, Bankers Trust Company, Chemical Bank and Credit Lyonnais Bank Nederland N.V. dated as of March 20, 1992. U. Vista Puts Contingency Loan Agreement among Carolco, Le Studio Canal+, RCS Video and LDCA, dated as of March 20, 1992. V. Preferred Stock Purchase Agreement between Carolco and Le Studio Canal+ dated as of March 20, 1992. W. Multiple Picture Lease Agreement between Le Studio Canal+ and Atalanta Films International B.V. dated as of March 20, 1992. X. Inducement Agreement among New Carolco Investments B.V. ("New CIBV"), Clorenda Corporation A.V.V., Mr. Mario F. Kassar, LDCA, Le Studio Canal+ and RCS Video, dated as of March 23, 1992. Y. Suspension Agreement among Carolco, LDCA, Le Studio Canal+, New CIBV and RCS Video, dated as of March 23, 1992. Z. Stockholders Agreement among LDCA, Le Studio Canal+, RCS Video and New CIBV, dated as of March 23, 1992. AA. Intercreditor and Standstill Agreement among LDCA, RCS Video and Le Studio Canal+, dated as of March 20, 1992. 55 Page 11 of 392 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. March 30, 1992 CANAL+ S.A. By /s/ Joel A. Adler ----------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. March 30, 1992 LE STUDIO CANAL+ By /s/ Joel A. Adler ----------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 56 Page 12 of 392 Pages INDEX TO EXHIBITS -----------------
Page ---- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) ........... 17 M. Security and Pledge Agreement between Le Studio Canal+ and New Carolco Investments B.V. ("New CIBV") dated March 23, 1992 ..... 18 N. Loan Agreement among Carolco Pictures Inc. ("Carolco"), Le Studio Canal+, RCS Video Services International B.V. ("RCS Video") and Pioneer LDCA, Inc. ("LDCA") dated as of March 20, 1992 ..................................................... 56 O. Stock Pledge Agreement among Carolco, Le Studio Canal+, RCS Video Services Antilles N.V. ("Antilles") RCS Video, and LDCA dated as of March 20, 1992 ......................................... 93 P. Pioneer Stock Pledge Agreement among Carolco, LDCA, Le Studio Canal+, Antilles and RCS Video dated as of March 20, 1992 .......... 117 Q. Secured Promissory Note executed by Carolco in favor of Le Studio Canal+ dated March 20, 1992 .............................. 143 R. Intercreditor Agreement among Le Studio Canal+, LDCA, and RCS Video and acknowledged by Carolco and Carolco International N.V. ("CINV") dated as of March 20, 1992 ................................ 145 S. Standstill Agreement among Le Studio Canal+, LDCA, RCS Video and Antilles, dated March 20, 1992 ..................................... 164 T. Deferred Payments Agreement among Carolco, CINV, Antilles, RCS Video, Le Studio Canal+, LDCA, Bankers Trust Company, Chemical Bank and Credit Lyonnais Bank Nederland N.V. dated as of March 20, 1992 ............................................... 174 U. Vista Puts Contingency Loan Agreement among Carolco, Le Studio Canal+, RCS Video and LDCA, dated as of March 20, 1992 ............. 204 V. Preferred Stock Purchase Agreement between Carolco and Le Studio Canal+ dated as of March 20, 1992 ........................ 251 W. Multiple Picture Lease Agreement between Le Studio Canal+ and Atalanta Films International B.V. dated as of March 20, 1992 ....... 339 X. Inducement Agreement among New Carolco Investments B.V. ("New CIBV"), Clorenda Corporation A.V.V., Mr. Mario F. Kassar, LDCA, Le Studio Canal+ and RCS Video, dated as of March 23, 1992 ... 350 Y. Suspension Agreement among Carolco, LDCA, Le Studio Canal+, New CIBV and RCS Video, dated as of March 23, 1992 ................. 363
57 Page 12 of 392 Pages Z. Stockholders Agreement among LDCA, Le Studio Canal+, RCS Video and New CIBV, dated as of March 23, 1992 ...................... 372 AA. Intercreditor and Standstill Agreement among LDCA, RCS Video and Le Studio Canal+, dated as of March 20, 1992 .................... 382
58 ATTACHMENT NO. 6 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 5)* CAROLCO PICTURES INC. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 10166 (212) 880-4420 ------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 12, 1992 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acqusition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class. See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 13 Page 1 of 25 Pages 59 CUSIP No. 143763 10 0 Page 2 of 25 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 7,805,757 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 7,805,757 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 10,678,924 (excluding shares owned by other members of group) 32,490,528 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 28.3 (excluding shares owned by other members of group) 62.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 60 CUSIP No. 143763 10 0 Page 3 of 25 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Le Studio Canal+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 7,805,757 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 7,805,757 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 10,678,924 (excluding shares owned by other members of group) 32,490,528 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 28.3 (excluding shares owned by other members of group) 62.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 61 CUSIP No. 143763 10 0 Page 4 of 25 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Cinepole Productions B.V. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Netherlands 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 7,805,757 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 7,805,757 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 10,678,924 (excluding shares owned by other members of group) 32,490,528 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 28.3 (excluding shares owned by other members of group) 62.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 62 Page 5 of 25 Pages This Amendment No. 5 is filed on behalf of Canal+ S.A., Le Studio Canal+, and Cinepole Productions B.V. (collectively "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amendment No. 2 thereto dated November 11, 1991, Amendment No. 3 thereto dated January 23, 1992, and Amendment No. 4 thereto dated March 24, 1992 (collectively, "Schedule 13D"). This Amendment No. 5 is filed primarily in order to disclose the acquisition by Cinepole Productions B.V. from Le Studio Canal+ of voting securities of Carolco and of warrants and options for the Common Stock of Carolco, and to disclose the exercisability of options to purchase voting securities of Carolco held by Canal+. ITEM 2. IDENTITY AND BACKGROUND This item is amended to set forth the current address of Cinepole Productions B.V., to set forth Le Studio Canal+'s ownership of Cinepole Productions B.V. and to set forth a revised Schedule A, which is incorporated herein by reference. The current registered address of Cinepole Productions B.V. is Surinameweg 2, NL-2035 VA Haarlem, The Netherlands. One hundred percent of the common stock of Cinepole Productions B.V. is owned by Le Studio Canal+. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION This item is amended by the addition of a new paragraph to read in full as follows: Cinepole Productions B.V. purchased from Le Studio Canal+ 97,900 Shares of the Common Stock of Carolco, par value $0.01 per share; 30,000 Shares of the Series B Convertible Preferred Stock of Carolco; 300,000 Shares of the Series D Convertible Exchangeable Preferred Stock of Carolco, 3,706 Shares of the Series E Convertible Preferred Stock of Carolco, a warrant exercisable for 150,000 Shares of the Common Stock of Carolco and an option to purchase 447,344 Shares of the Common Stock of Carolco. The sources of funds for the transaction were a capital contribution and a loan from Cinepole Productions B.V.'s parent, Le Studio Canal+. ITEM 4. PURPOSE OF TRANSACTION This item is amended by the addition of a new paragraph (h) which reads in full as follows: (h) Cinepole Productions B.V. has purchased all the common and preferred stock of Carolco held by Le Studio Canal+, a warrant exercisable for 150,000 Shares of the Common Stock of Carolco and an option to purchase 447,344 Shares of the Common Stock of Carolco, all of the foregoing in connection with a restructuring within the Canal+ group and in order to achieve certain tax benefits. 63 Page 6 of 25 Pages ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 5, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 1,265,182(1) 3.4 Common Stock + 2,873,167(2) + 7.6 --------- ---- SUB-TOTAL 4,138,349 10.9 ========= ====
- ----------------- (1) These shares may be acquired upon the exercise of the option referred to in item 6 of this Amendment for 3,125 shares of a newly created series of Preferred Stock and upon the conversion of said shares. (2) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). * Does not foot due to rounding. 64 Page 7 of 25 Pages As of the date of this Amendment No. 5, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, and Le Studio Canal+ may be deemed to own indirectly through Cinepole Productions B.V. the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+:
Title of Class Number of Shares Percent of Class - -------------- ---------------- ---------------- Common Stock 150,000(3) 0.4 Common Stock 447,344(4) 1.2 Common Stock 1,621,621(5) 4.3 Common Stock 97,900 0.3 Common Stock 2,499,990(6) 6.6 Common Stock +1,723,720(7) +4.6 ---------- ---- SUB-TOTAL 6,540,575 17.3 ---------- ---- TOTAL 10,678,924 28.3* ========== ====
- ----------------- (3) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (6) These shares may be acquired upon the conversion of the 300,000 shares of Series D Convertible Exchangeable Preferred Stock. The Series D Convertible Exchangeable Preferred Stock may be converted at any time. (7) These shares may be acquired upon the conversion of the 3706 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. * Does not foot due to rounding. 65 Page 8 of 25 Pages Canal+, Rizzoli Corriere della Sera Group ("RCS") and Pioneer Electric Corp. (collectively, the "Members") have formed a group for the purpose of purchasing additional voting securities of Carolco and obtaining a majority representation on the board of directors of Carolco. As of the date of this Amendment No. 5, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ and by reason of Canal+ being one of the Members:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- BY CANAL+ --------- Common Stock 1,265,182(1) 2.4 Common Stock +2,873,167(2) +5.5 --------- --- SUB-TOTAL 4,138,349 7.9* ========= ===
- ------------------ (1) These shares may be acquired upon the exercise of the option referred to in item 6 of this Amendment for 3,125 shares of a newly created series of Preferred Stock and upon the conversion of said shares. (2) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). * Does not foot due to rounding. 66 Page 9 of 25 Pages As of the date of this Amendment No. 5, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ (which owns such shares indirectly through Cinepole Productions B.V.), and by reason of Canal+ being one of the Members, the following securities of Carolco:
BY CANAL+ Number of Shares Percent of Class --------- ---------------- ---------------- Common Stock 150,000(3) 0.3 Common Stock 447,344(4) 0.9 Common Stock 1,621,621(5) 3.1 Common Stock 97,900 0.2 Common Stock 2,499,990(6) 4.8 Common Stock +1,723,720(7) +3.3 --------- ---- SUB-TOTAL 6,540,575 12.5 ========= ====
- ------------------ (3) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (6) These shares may be acquired upon the conversion of the 300,000 shares of Series D Convertible Exchangeable Preferred Stock. The Series D Convertible Exchangeable Preferred Stock may be converted at any time. (7) These shares may be acquired upon the conversion of the 3706 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. * Does not foot due to rounding. 67 Page 10 of 25 Pages
BY PIONEER Number of Shares Percent of Class - ---------- ---------------- ---------------- Common Stock 3,243,243 (8) 6.2 Common Stock 2,500,000 (9) 4.8 Common Stock 2,451,627(10) 4.7 Common Stock 977,447(11) 1.9 Common Stock 300,000(12) 0.6 Common Stock +2,873,167(13) +5.5 ---------- ---- SUB-TOTAL 12,345,484 23.6* ========== ====
BY RCS Number of Shares Percent of Class - ------ ---------------- ---------------- Common Stock 1,481,481 2.8 Common Stock 3,333,333(14) 6.4 Common Stock 1,778,140(15) 3.4 Common Stock +2,873,167(16) +5.5 ---------- ---- SUB-TOTAL 9,466,121 18.1* ---------- ---- TOTAL 32,490,529 62.0* ========== ====
- ----------------- (8) These shares may be acquired upon the conversion of 60,000 shares of Series C Convertible Exchangeable Preferred Stock. The Series C Convertible Exchangeable Preferred Stock may be converted at any time. (9) These shares may be acquired upon the conversion of $15,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (10) These shares may be acquired upon the conversion of 5271 shares of Series E Convertible Preferred Stock, which may be converted at any time. (11) These shares may be acquired upon the exercise of options which are exercisable in the manner described in Item 3 of Amendment No. 1 to the Schedule 13D of Pioneer dated November 11, 1991. (12) These shares may be acquired upon the exercise of a warrant which is exercisable in the manner described in Item 3 of Schedule 13D of Pioneer dated July 3, 1990. (13) See Footnote 2 on page 8. (14) These shares may be acquired upon the conversion of $20,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (15) These shares may be acquired upon the conversion of the 3823 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. (16) See Footnote 2 on page 8. * Does not foot due to rounding. 68 Page 11 of 25 Pages Item 5(c) of Schedule 13D is amended by the addition of the following: (c) On June 12, 1992, in a private transaction, Cinepole Productions B.V. purchased from Le Studio Canal+ 97,900 Shares of the Common Stock of Carolco, par value $0.01 per share; 30,000 Shares of the Series B Convertible Preferred Stock of Carolco; 300,000 Shares of the Series D Convertible Exchangeable Preferred Stock of Carolco, 3,706 Shares of the Series E Convertible Preferred Stock of Carolco, a warrant exercisable for 150,000 Shares of the Common Stock of Carolco and an option to purchase 447,344 Shares of the Common Stock of Carolco. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Item 6 of Schedule 13D is amended by the addition of the following: Le Studio Canal+ holds options exercisable between September 1 and October 31, 1992 for the purchase of 3,125 shares of a series of Preferred Stock of Carolco which will be newly created if Le Studio Canal+ exercises its option. The newly created Preferred Stock will be substantially identical to Series E Convertible Preferred Stock of Carolco, except with a $2.47 conversion price. In connection with the purchase of Carolco Common and Preferred Stock referred to in Item 5(c), Cinepole Productions B.V. entered into a Loan Agreement with Le Studio Canal+ filed as exhibit AB hereto. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). AB. Loan Agreement between Cinepole Productions B.V. and Le Studio Canal+ dated as of June 12, 1992. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 22, 1992 CANAL+ S.A. By: /s/ Joel A. Adler --------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 69 Page 12 of 25 Pages After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 22, 1992 LE STUDIO CANAL+ By: /s/ Joel A. Adler --------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 22, 1992 CINEPOLE PRODUCTIONS B.V. By: /s/ Joel A. Adler --------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 70 ATTACHMENT NO. 7 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 6)* CAROLCO PICTURES INC. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 10166 (212) 880-4420 ------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 31, 1992 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class. See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 11 Page 1 of 17 Pages 71 CUSIP No. 143763 10 0 Page 2 of 17 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,413,742 (excluding shares owned by other members of group) 31,225,347 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 25.7 (excluding shares owned by other members of group) 61.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 72 CUSIP No. 143763 10 0 Page 3 of 17 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,413,742 (excluding shares owned by other members of group) 31,225,347 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 25.7 (excluding shares owned by other members of group) 61.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 73 CUSIP No. 143763 10 0 Page 4 of 17 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CINEPOLE PRODUCTIONS B.V. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Netherlands 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 6,540,575 (excluding shares owned by other members of group) 31,225,347 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 17.9 (excluding shares owned by other members of group) 61.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 74 Page 5 of 17 Pages This Amendment No. 6 is filed on behalf of Canal+ S.A., Le Studio Canal+, and Cinepole Productions B.V. (collectively "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amemdment No. 2 thereto dated November 11, 1991, Amendment No. 3 thereto dated January 23, 1992, and Amendment No. 4 thereto dated March 24, 1992, and Amendment No. 5 thereto dated June 22, 1992 (collectively "Schedule 13D"). This Amendment No. 6 is filed in order to disclose the October 31, 1992 expiration without exercise of options held by Le Studio Canal+ to purchase Preferred Stock of Carolco, which would have been convertible into Common Stock of Carolco. ITEM 2. IDENTITY AND BACKGROUND This item is amended to set forth a revised Schedule A, which is incorporated herein by reference. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 6, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock +2,873,167(1) +7.9 --------- --- SUB-TOTAL 2,873,167 7.9 ========= ===
- ------------ (1) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). 75 Page 6 of 17 Pages As of the date of this Amendment No. 6, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, and Le Studio Canal+ may be deemed to own indirectly through Cinepole Productions B.V. the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 150,000(2) 0.4 Common Stock 447,344(3) 1.2 Common Stock 1,621,621(4) 4.4 Common Stock 97,900 0.3 Common Stock 2,499,990(5) 6.8 Common Stock +1,723,720(6) +4.7 --------- ---- SUB-TOTAL 6,540,575 17.9 --------- ---- TOTAL 9,413,742 25.8 ========= ====
- ------------ (2) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (3) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (4) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (5) These shares may be acquired upon the conversion of the 300,000 shares of Series D Convertible Exchangeable Preferred Stock. The Series D Convertible Exchangeable Preferred Stock may be converted at any time. (6) These shares may be acquired upon the conversion of the 3706 shares of Series E Convertible Preferred Stock. The Series E Convertible Stock may be converted at any time. 76 Page 7 of 17 Pages Canal+, Rizzoli Corriere della Sera Group ("RCS") and Pioneer Electric Corp. (collectively, the "Members") have formed a group for the purpose of purchasing additional voting securities of Carolco and obtaining a majority representation on the board of directors of Carolco. As of the date of this Amendment No. 6, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ and by reason of Canal+ being one of the Members: Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- BY CANAL+ --------- Common Stock +2,873,167(1) +5.6 --------- --- SUB-TOTAL 2,873,167 5.6 ========= ===
As of the date of this Amendment No. 6, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ (which owns such shares indirectly through Cinepole Productions B.V.), and by reason of Canal+ being one of the Members, the following securities of Carolco: BY CANAL+ Number of Shares Percent of Class --------- ---------------- ---------------- Common Stock 150,000(2) 0.3 Common Stock 447,344(3) 0.9 Common Stock 1,621,621(4) 3.2 Common Stock 97,900 0.2 Common Stock 2,499,990(5) 4.9 Common Stock +1,723,720(6) +3.4 --------- ---- SUB-TOTAL 6,540,575 12.8* ========= ====
- ------------ (1) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). (2) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (3) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (4) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (5) These shares may be acquired upon the conversion of the 300,000 shares of Series D Convertible Exchangeable Preferred Stock. The Series D Convertible Exchangeable Preferred Stock may be converted at any time. (6) These shares may be acquired upon the conversion of the 3706 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. * Does not foot due to rounding. 77 Page 8 of 17 Pages
BY PIONEER Number of Shares Percent of Class - ---------- ---------------- ---------------- Common Stock 3,243,243(7) 6.3 Common Stock 2,500,000(8) 4.9 Common Stock 2,451,627(9) 4.8 Common Stock 977,447(10) 1.9 Common Stock 300,000(11) 0.6 Common Stock +2,873,167(12) +5.6 ---------- ---- SUB-TOTAL 12,345,484 24.2* ========== ====
BY RCS Number of Shares Percent of Class - ------ ---------------- ---------------- Common Stock 1,481,481 2.9 Common Stock 3,333,333(13) 6.5 Common Stock 1,778,140(14) 3.5 Common Stock +2,873,167(15) +5.6 ---------- ---- SUB-TOTAL 9,466,121 18.5 ---------- ---- 31,225,347 61.1 ========== ====
- ---------------- (7) These shares may be acquired upon the conversion of 60,000 shares of Series C Convertible Exchangeable Preferred Stock. The Series C Convertible Exchangeable Preferred Stock may be converted at any time. (8) These shares may be acquired upon the conversion of $15,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (9) These shares may be acquired upon the conversion of 5271 shares of Series E Convertible Preferred Stock, which may be converted at any time. (10) These shares may be acquired upon the exercise of options which are exercisable in the manner described in Item 3 of Amendment No. 1 to the Schedule 13D of Pioneer dated November 11, 1991. (11) These shares may be acquired upon the exercise of a warrant which is exercisable in the manner described in Item 3 of Schedule 13D of Pioneer dated July 3, 1990. (12) See Footnote 1 on page 7. (13) These shares may be acquired upon the conversion of $20,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (14) These shares may be acquired upon the conversion of the 3823 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. (15) See Footnote 1 on page 7. * Does not foot due to rounding. 78 Page 9 of 17 Pages Item 5(c) of Schedule 13D is amended by the addition of the following: (c) On October 31, 1992, the options held by Le Studio Canal+ referred to in Item 6 of Amendment No. 5 expired without exercise and without the receipt of any value from the exercise. As a result, the number of shares of Carolco Common Stock which Canal+ S.A. and Le Studio Canal+ may be deemed benefically to own decreased by 1,265,182 shares. 79 Page 10 of 17 Pages ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 10, 1992 CANAL+ S.A. By: /s/ Joel A. Adler ------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 10, 1992 LE STUDIO CANAL+ By: /s/ Joel A. Adler ------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 10, 1992 CINEPOLE PRODUCTIONS B.V. By: /s/ Joel A. Adler ------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 80 Page 11 of 17 Pages INDEX TO EXHIBITS Page ---- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) ......... 17 81 Attachment No. 8 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 7)* CAROLCO PICTURES INC. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 200 Park Avenue, New York, New York 10166 (212) 880-4420 ------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 31, 1993 ------------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [ ]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class. See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 12 Page 1 of 13 Pages 82 CUSIP No. 143763 10 0 Page 2 of 13 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,873,909 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,873,909 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,747,076 (excluding shares owned by other members of group) 32,225,349 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 26.7 (excluding shares owned by other members of group) 63.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 83 CUSIP No. 143763 10 0 Page 3 of 13 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,873,909 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,873,909 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,747,076 (excluding shares owned by other members of group) 32,225,349 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 26.7 (excluding shares owned by other members of group) 63.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 84 CUSIP No. 143763 10 0 Page 4 of 13 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CINEPOLE PRODUCTIONS B.V. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Netherlands 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 6,540,575 (excluding shares owned by other members of group) 32,225,349 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 17.9 (excluding shares owned by other members of group) 63.0 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 85 Page 5 of 13 Pages This Amendment No. 7 is filed on behalf of Canal+ S.A., Le Studio Canal+, and Cinepole Productions B.V. (collectively "Canal+") and amends the Initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amendment No. 2 thereto dated November 11, 1991, Amendment No. 3 thereto dated January 23, 1992, Amendment No. 4 thereto dated March 24, 1992, Amendment No. 5 thereto dated June 22, 1992, and Amendment No. 6 thereto dated November 10, 1992 (collectively, "Schedule 13D"). This Amendment No. 7 is filed in order to disclose the exercisability of options held by Le Studio Canal+ and other Members of the Group to purchase certain shares of Carolco Common Stock. ITEM 2. IDENTITY AND BACKGROUND This item is amended to revise Schedule A so that Rene Bonnell is deleted from the list of directors of Cinepole Productions B.V. and Dominique Jeunot is listed as a director of Cinepole Productions B.V., with a Residence or Business Address at 85-89 Quai Andre Citroen, F-75015 Paris, France, and with a Principal Occupation of Assistant Financial Director at Le Studio Canal+. Mr. Jeunot is a citizen of France. During the last five years: Mr. Jeunot has not been convicted in a criminal proceeding; Mr. Jeunot has not been party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which proceeding Mr. Jeunot was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Items 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 7, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ the following securities of Carolco, excluding the securities of Carolco owned by the Members other than Canal+.
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 2,873,167(1) 7.9 Common Stock + 333,334(2) +0.9 ---------- ---- SUB-TOTAL 3,206,501 8.8 ========== ====
- ---------------- (1) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). (2) These shares may be acquired upon the exercise of the option referred to in Item 6 of this Amendment No. 7. 86 Page 6 of 13 Pages As of the date of this Amendment No. 7, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, and Le Studio Canal+ may be deemed to own indirectly through Cinepole Productions B.V. the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 150,000(3) 0.4 Common Stock 447,344(4) 1.2 Common Stock 1,621,621(5) 4.4 Common Stock 97,900 0.3 Common Stock 2,499,990(6) 6.8 Common Stock +1,723,720(7) + 4.7 ---------- ----- SUB-TOTAL 6,540,575 17.9 ---------- ----- TOTAL 9,747,076 26.7 ========== =====
- ------------ (3) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (6) These shares may be acquired upon the conversion of the 300,000 shares of Series D Convertible Exchangeable Preferred Stock. The Series D Convertible Exchangeable Preferred Stock may be converted at any time. (7) These shares may be acquired upon the conversion of the 3,706 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. 87 Page 7 of 13 Pages Canal+, Rizzoli Corriere della Sera Group ("RCS") and Pioneer Electric Corp. (collectively, the "Members") have formed a group for the purpose of purchasing additional voting securities of Carolco and obtaining a majority representation on the board of directors of Carolco. As of the date of this Amendment No. 7, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ and by reason of Canal+ being one of the Members:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- BY CANAL+ --------- Common Stock 2,873,167(1) 5.6 Common Stock +333,334(2) +0.7 --------- --- SUB-TOTAL 3,206,501 6.3 ========= ===
- ------------ (1) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). (2) These shares may be acquired upon the exercise of the option referred to in Item 6 of this Amendment No. 7. 88 Page 8 of 13 Pages As of the date of this Amendment No. 7, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ (which owns such shares indirectly through Cinepole Productions B.V.), and by reason of Canal+ being one of the Members, the following securities of Carolco:
BY CANAL+ Number of Shares Percent of Class --------- ---------------- ---------------- Common Stock 150,000(3) 0.3 Common Stock 447,344(4) 0.9 Common Stock 1,621,621(5) 3.2 Common Stock 97,900 0.2 Common Stock 2,499,990(6) 4.9 Common Stock 1,723,720(7) 3.4 --------- ---- SUB-TOTAL 6,540,575 12.8* ========= ====
- ------------ (3) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of 30,000 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock may be converted at any time. (6) These shares may be acquired upon the conversion of the 300,000 shares of Series D Convertible Exchangeable Preferred Stock. The Series D Convertible Exchangeable Preferred Stock may be converted at any time. (7) These shares may be acquired upon the conversion of the 3706 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. * Does not foot due to rounding. 89 Page 9 of 13 Pages
BY PIONEER Number of Shares Percent of Class ---------- ---------------- ---------------- Common Stock 3,243,243(8) 6.3 Common Stock 2,500,000(9) 4.9 Common Stock 2,451,627(10) 4.8 Common Stock 977,447(11) 1.9 Common Stock 300,000(12) 0.6 Common Stock 2,873,167(13) 5.6 Common Stock +333,334(14) +0.7 ---------- ---- SUB-TOTAL 12,678,818 24.8 ========== ====
- ------------ (8) These shares may be acquired upon the conversion of 60,000 shares of Series C Convertible Exchangeable Preferred Stock. The Series C Convertible Exchangeable Preferred Stock may be converted at any time. (9) These shares may be acquired upon the conversion of $15,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (10) These shares may be acquired upon the conversion of 5271 shares of Series E Convertible Preferred Stock, which may be converted at any time. (11) These shares may be acquired upon the exercise of options which are exercisable in the manner described in Item 3 of Amendment No. 1 to the Schedule 13D of Pioneer dated November 11, 1991. (12) These shares may be acquired upon the exercise of a warrant which is exercisable in the manner described in Item 3 of Schedule 13D of Pioneer dated July 3, 1990. (13) See Footnote 1 on page 7. (14) See Footnote 2 on page 7. 90 Page 10 of 13 Pages
BY RCS Number of Shares Percent of Class ------ ---------------- ---------------- Common Stock 1,481,481 2.9 Common Stock 3,333,333(15) 6.5 Common Stock 1,778,140(16) 3.5 Common Stock 2,873,167(17) 5.6 Common Stock +333,334(18) +0.7 ---------- ---- SUB-TOTAL 9,799,455 19.2 ---------- ---- TOTAL 32,225,349 63.0 ========== ====
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Item 6 of Schedule 13D is amended by the addition of the following: A Note Purchase Agreement, entered into as of March 23, 1992, between Le Studio Canal+ and Valdina Corporation N.V. ("Valdina"), grants to Le Studio Canal+ an option to purchase 333,334 Shares of the Common Stock of Carolco from Valdina between April 1, 1993 and March 31, 1994 at an exercise price of $5.50 per share. A copy of said Note Purchase Agreement was attached to Amendment No. 4 as part of Exhibit M thereto and is incorporated herein by this reference. - ------------ (15) These shares may be acquired upon the conversion of $20,000,000 principal amount of 10% Convertible Subordinated Debentures, which are convertible at any time. (16) These shares may be acquired upon the conversion of the 3823 shares of Series E Convertible Preferred Stock. The Series E Convertible Preferred Stock may be converted at any time. (17) See Footnote 1 on page 7. (18) See Footnote 2 on page 7. 91 Page 11 of 13 Pages ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 27, 1993 CANAL+ S.A. By: /s/ Joel A. Adler --------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 27, 1993 LE STUDIO CANAL+ By: /s/ Joel A. Adler -------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 27, 1993 CINEPOLE PRODUCTIONS B.V. By: /s/ Joel A. Adler -------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 92 Page 12 of 13 Pages INDEX TO EXHIBITS ----------------- Page ---- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) ........ 13 93 ATTACHMENT NO. 9 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 8)* CAROLCO PICTURES INC. --------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 -------------------- (CUSIP Number) Joel A. Adler, Coudert Brothers 1114 Avenue of the Americas, New York, New York 10036-7794 (212) 626-4420 -------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 1, 1993 ---------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box /__/. Check the following box if a fee is being paid with the statement /__/. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class. See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 21 Page 1 of 238 Pages 94 CUSIP No. 143763 10 0 Page 2 of 238 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,873,909 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,873,909 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,517,018 (excluding shares owned by other members of group) 31,535,175 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 27.2 (excluding shares owned by other members of group) 63.5 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 95 CUSIP No. 143763 10 0 Page 3 of 238 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,873,909 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,873,909 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,517,018 (excluding shares owned by other members of group) 31,535,175 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 27.2 (excluding shares owned by other members of group) 63.5 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 96 CUSIP No. 143763 10 0 Page 4 of 238 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CINEPOLE PRODUCTIONS B.V. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Netherlands 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 6,540,575 (excluding shares owned by other members of group) 31,535,175 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 18.7 (excluding shares owned by other members of group) 63.5 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 97 Page 5 of 238 Pages This Amendment No. 8 is filed on behalf of Canal+ S.A., Le Studio Canal+, and Cinepole Productions B.V. (collectively "Canal+") and amends the Initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amendment No. 2 thereto dated November 11, 1991, Amendment No. 3 thereto dated January 23, 1992, Amendment No. 4 thereto dated March 24, 1992, Amendment No. 5 thereto dated June 22, 1992, Amendment No. 6 thereto dated November 10, 1992, and Amendment No. 7 thereto dated April 27, 1993 (collectively, "Schedule 13D"). This Amendment No. 8 is filed in order to disclose the execution on June 1, 1993 of a Securities Purchase Agreement and a Contribution and Exchange Agreement, which bind Canal+ and other parties to make purchases of certain securities of Carolco and/or exchange or contribute certain outstanding securities of Carolco in connection with the proposed restructuring of Carolco as set forth in Amendment No. 1 to Form S-1 (Registration No. 33-56380) filed by Carolco with the Securities and Exchange Commission on May 7, 1993, and to disclose the release of a pledge in favor of Canal+ on certain shares of the Common Stock of Carolco. The Securities Purchase Agreement and the Contribution and Exchange Agreement are contingent upon the occurrence of the restructuring as contemplated. ITEM 4. PURPOSE OF TRANSACTION This item is amended by the addition of new paragraphs to read in full as follows: (a) & (e) On May 7, 1993, Carolco filed with the Securities and Exchange Commission Amendment No. 1 to Form S-1 (Registration No. 33-56380) which details Carolco's proposed restructuring (the "Restructuring"). If the Restructuring proceeds as contemplated, Canal+, Rizzoli Corriere della Sera Group ("RCS") and Pioneer Electronic Corp. ("Pioneer") (the foregoing collectively, with their respective affiliates, the "Strategic Investors") will receive Common Stock of Carolco and certain shares of the Common Stock of LIVE Entertainment Inc. held by Carolco ("LIVE Common Stock") in exchange for certain existing securities of Carolco and a forgiveness of certain amounts owed by Carolco to the Strategic Investors. In addition, if the Restructuring proceeds as contemplated, Canal+ will receive 12,500 shares of Series A Convertible Preferred Stock, $1.00 par value per share, of Carolco ("New Preferred"), Pioneer will receive 40,000 shares of New Preferred and Credit Lyonnais S.A. (or any of its affiliates) ("CL") will receive 30,000 shares of New Preferred and $30,000,000 in principal amount of 5% Payment-in-Kind Convertible Subordinated Notes due 2002 of Carolco ("5% Notes"), in return for the payment of $12,500,000, $40,000,000 and $60,000,000, respectively, in cash to Carolco. As a result of the execution of (1) a Securities Purchase Agreement dated as of May 25, 1993 by and among the Strategic Investors and CL and (2) a Contribution and Exchange Agreement dated as of the same date by and among the same parties, Canal+ believes that CL has become a member of the group consisting of the Strategic Investors described in Item 5 hereof. A description of the transactions contemplated and the holdings of Carolco securities by each of the Strategic Investors and CL after giving effect to the Restructuring appears in the table below. 98 Page 6 of 238 Pages
In Exchange For: Canal+ will Receive: ---------------- -------------------- $2,848,705 of principal amount and accrued but unpaid interest ($34,994 as of April 15, 1993) owed to Canal+ ............................................... 1,180,030 shares of LIVE Common Stock currently held by Carolco, a portion of which is pledged as collateral to the Strategic Investors 9,424 shares of Series B Convertible Preferred Stock ("Series B Preferred") 94,240 shares of Series D Convertible Exchangeable 22,950,471 shares of Carolco Common Stock Preferred Stock ("Series D Preferred") 1,164 shares of Series E Convertible Preferred Stock ("Series E Preferred") The remaining $3,577,646 of principal amount and accrued but unpaid interest ($43,820 at April 15, 1993) owed to Canal+ ................................. An estimated 4,457,188 shares of Carolco Common Stock $12,500,000 in cash .................................... 12,500 shares of New Preferred 20,576 shares of Series B Preferred 205,760 shares of Series D Preferred 2,542 shares of Series E Preferred Option and a warrant to purchase an aggregate of 597,344 shares of Carolco Common Stock at a Such securities and accrued amounts to be weighted average exercise price of $3.65 per share relinquished to Carolco as a capital contribution Accrued but unpaid dividends on its Series B, D & E Preferred (approximately $4,517,000 as of April 15, 1993) Canal+ Total: 12,500 shares of New Preferred, 1,180,030 shares of LIVE Common Stock, and an estimated 27,407,659 shares of Carolco Common Stock
99 Page 7 of 238 Pages
In Exchange For: Pioneer will Receive: ---------------- --------------------- $9,379,296 of principal amount and accrued but unpaid interest ($115,217 as of April 15, 1993) owed to Pioneer .............................................. 3,885,223 shares of LIVE Common Stock currently held by Carolco, a portion of which is pledged as collateral to the Strategic Investors 18,848 shares of Series C Convertible Exchangeable Preferred Stock ("Series C Preferred") 1,656 shares of Series E Preferred 37,824,031 shares of Carolco Common Stock $4,712,042 in 10% Convertible Subordinated Debentures due 2006 (the "Existing 10% Debentures") The remaining $10,159,884 of principal amount and accrued but unpaid interest ($124,440 at April 15, 1993) owed to Pioneer ................................ An estimated 12,657,629 shares of Carolco Common Stock $40,000,000 in cash .................................... 40,000 shares of New Preferred $10,287,958 in Existing 10% Debentures 41,152 shares of Series C Preferred 3,615 shares of Series E Preferred Options and a warrant to purchase an aggregate of 1,277,447 shares of Carolco Common Stock at a Such securities and accrued amounts to be weighted average exercise price of $4.35 per share relinquished to Carolco as a capital contribution Accrued but unpaid dividends and interest on its Existing 10% Debentures and Series C & E Preferred (approximately $6,806,000 as of April 15, 1993) Pioneer Total: 40,000 shares of New Preferred, 3,885,223 shares of LIVE Common Stock, and an estimated 50,481,660 shares of Carolco Common Stock
100 Page 8 of 238 Pages
In Exchange For: RCS will Receive: ---------------- ----------------- $2,848,705 of principal amount and all accrued but unpaid interest ($34,994 as of April 15, 1993) owed to RCS ............................................... 1,180,030 shares of LIVE Common Stock currently held by Carolco, a portion of which pledged as collateral to the Strategic Investors 1,201 shares of Series E Preferred $6,282,723 in Existing 10% Debentures 11,225,498 shares of Common Stock The remaining $3,789,557 of principal amount and accrued but unpaid interest ($46,436 at April 15, 1993) owed to RCS .................................... An estimated 4,743,376 shares of Carolco Common Stock $13,717,277 in Existing 10% Debentures 2,622 shares of Series E Preferred Accrued but unpaid dividends on its Existing 10% Such securities and accrued amounts to be Debentures, Series E Preferred and other amounts relinquished to Carolco as a capital contribution owed to RCS (approximately $3,715,000 as of April 15, 1993) RCS Total: 1,180,030 shares of LIVE Common Stock, and an estimated 15,968,874 shares of Carolco Common Stock CL $30,000,000 in cash .................................... 30,000 shares of New Preferred $30,000,000 in cash .................................... 30,000,000 in principal amount of 5% Notes
101 Page 9 of 238 Pages In addition to the transactions described in the above table, the Restructuring contemplates the conclusion of a standby note purchase agreement among Carolco and the Strategic Investors. Pursuant to such an agreement, it is contemplated that the Strategic Investors would commit to purchase from Carolco on December 30, 1994 up to $20,000,000 in principal value (in aggregate) of new 7% Convertible Subordinated Notes of Carolco due 2006. Such a commitment would be contingent upon the financial position of Carolco as of December 31, 1994, and the amount of Canal+'s commitment may be adjusted due to sales of Carolco equity securities by Carolco or due to Canal+'s contributions to a fund to be used by Carolco for the production of motion pictures. In addition, it is anticipated that Canal+ and CL will enter into a put and call agreement pursuant to which CL will be entitled to exercise a put option, and Canal+ will be entitled to exercise a call option, with respect to certain shares of Carolco Common Stock upon the occurrence of certain future events. See also paragraph (d) below with respect to management arrangements affecting dividend policy, among other things. See also paragraph (g) below with respect to solicitation of shareholder approval to increase the number of authorized shares of Carolco Common Stock. (b) It is anticipated, that in connection with the Restructuring, the Strategic Investors and CL will enter into a subordination agreement, pursuant to which the Strategic Investors will agree that, in the event of a liquidation of Carolco, payment in liquidation in respect of shares of Carolco Common Stock held by the Strategic Investors or by CL pursuant to a conversion of New Preferred and/or 5% Notes will be made in an amount equal to the liquidation preference and/or face value (as appropriate) of such New Preferred and/or 5% Notes (immediately prior to such conversion) before any payment in liquidation is made with respect to shares of Carolco Common Stock held by the Strategic Investors as of, or received by the Strategic Investors in connection with, the Restructuring. (d) Pursuant to the terms of the Series B Preferred, the Series C Preferred, the agreements between Carolco and the Strategic Investors pursuant to which each of the Strategic Investors purchased its Series E Preferred, and a stockholders' agreement between the Strategic Investors and New Carolco Investments B.V. ("New CIBV"), certain individuals have been nominated and elected to the Board of Directors. In addition, as part of a restructuring in 1992, certain amendments were made to Carolco's bylaws and certain arrangements were made with respect to the composition of Carolco's Executive Committee of its Board of Directors. Of the twelve current members of the Board of Directors, three are nominees of Pioneer, two are nominees of Canal+, one is a nominee of RCS and one has been selected by RCS for inclusion as one of the nominees of Carolco's management for election to the Board of Directors. If the Restructuring proceeds as contemplated, it is expected that Carolco's Board of Directors will be reconstituted. It is anticipated that upon consummation of the Restructuring, the foregoing arrangements will be terminated and the Strategic Investors will have no further rights pursuant to such arrangements to nominate or elect directors to Carolco's Board of Directors. In addition, it is anticipated that New CIBV, the Strategic Investors and CL will enter into a stockholders' agreement to become effective upon consummation of the Restructuring, including an agreement to vote in the election of directors for a slate of directors composed of four Pioneer nominees, three CL nominees, three Canal+ nominees, one RCS nominee, two independent nominees and two nominees of the Chairman of the Board 102 Page 10 of 238 Pages of Carolco, and an agreement with respect to the composition of the Supervisory Committee of the Board of Directors, with one director nominated by each of the Strategic Investors and CL plus Mario F. Kassar and one independent director. It is expected that the Supervisory Committee will exercise all powers of the Board of Directors (except those powers specifically reserved by Delaware law to the full Board of Directors); however, (i) a quorum of the Supervisory Committee will require Mr. Kassar and all nominees of the Strategic Investors and CL, and (ii) the Supervisory Committee will be able to act only with the affirmative vote of all nominees of the Strategic Investors and CL. If the stockholders' agreement is concluded as anticipated, nominees of the Strategic Investors and CL, if considered together, will constitute in excess of a majority of the members (approximately 73%) of the Board of Directors. The anticipated stockholders' agreement also includes an agreement by each party to direct its director designees to vote in favor of the adoption of certain board resolutions which would provide that certain actions will not be taken unless approved by at least 85% of the Board of Directors and the director designees of at least three of the parties to the agreement other than New CIBV. These certain actions are (1) certain amendments to Carolco's Certificate of Incorporation or Bylaws, (2) any merger, consolidation, liquidation, dissolution or winding up of Carolco or any material subsidiary, (3) any disposition of assets in excess of $10,000,000, other than in the ordinary course of business, (4) any acquisition by Carolco or any material subsidiary of assets or property for consideration in excess of $10,000,000, other than certain motion picture rights or assets acquired in the ordinary course of business and with certain other exceptions, (5) any creation, incurrence, assumption or guaranty of any indebtedness in excess of $10,000,000, with certain exceptions, (6) any creation, incurrence or assumption of any lien or other encumbrance in excess of $10,000,000, with certain exceptions, (7) any declaration or payment of dividends on Carolco Common Stock or any other capital stock junior to the New Preferred, (8) termination or material amendment of the employment agreement and related agreements with Mr. Kassar and (9) investments in excess of $3,000,000, with certain exceptions. Each of the Strategic Investors, CL and New CIBV (each a "Major Shareholder" and, collectively, the "Major Shareholders") is also expected to agree not to exercise its voting rights in favor of, or cause a special meeting to be called with respect to, such certain actions without the agreement of (1) Major Shareholders entitled to cast at least 85% of the vote and (2) at least three Major Shareholders (other than New CIBV). The agreement would further provide certain Major Shareholders with certain co-sale rights with respect to sales of Carolco's securities by other Major Shareholders. (g) In addition, as part of the proposed Restructuring, Carolco will seek shareholder approval to amend its Certificate of Incorporation to delete the provisions of Paragraph B of Article Fifth thereof which provide for a Board of Directors with three classes with staggered terms. Carolco will also seek the approval of shareholders to delete Article Seventh of its Certificate of Incorporation which restricts the ability of Carolco to engage in certain transactions with its interested stockholders unless certain Board of Directors or shareholder approvals are obtained. Carolco will also seek shareholders' approval for increasing the authorized number of shares of Common Stock from 100,000,000 to 500,000,000. Since the Restructuring contemplates that no shares of Carolco's existing preferred stock will be outstanding after the Restructuring, Carolco will also seek shareholder approval to remove the Certificates of Designation, Preferences and Rights of such existing preferred stock from the Certificate of Incorporation of Carolco. 103 Page 11 of 238 Pages ITEM 5. INTEREST IN SECURITIES OF THE ISSSUER Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 8, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ the following securities of Carolco, excluding the securities of Carolco owned by the Members (defined below) other than Canal+.
Title of Class Number of Shares Percent of Class - -------------- ---------------- ---------------- Common Stock 2,643,109(1) 7.5 Common Stock + 333,334(2) +1.0 --------- --- SUB-TOTAL 2,976,443 8.5 ========= ===
- ------------ (1) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). (2) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 7. 104 Page 12 of 238 Pages As of the date of this Amendment No. 8, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, and Le Studio Canal+ may be deemed to own indirectly through Cinepole Productions B.V. the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 150,000(3) 0.4 Common Stock 447,344(4) 1.3 Common Stock 1,621,621(5) 4.6 Common Stock 97,900 0.3 Common Stock 2,499,990(6) 7.1 Common Stock +1,723,720(7) + 4.9 --------- ----- SUB-TOTAL 6,540,575 18.7* --------- ----- TOTAL 9,517,018 27.2 ========= ====
- ------------ (3) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of 30,000 shares of Series B Preferred. The Series B Preferred may be converted at any time. (6) These shares may be acquired upon the conversion of the 300,000 shares of Series D Preferred. The Series D Preferred may be converted at any time. (7) These shares may be acquired upon the conversion of the 3706 shares of Series E Preferred. The Series E Preferred may be converted at any time. * Does not foot due to rounding. 105 Page 13 of 238 Pages Canal+, RCS and Pioneer (collectively, the "Members") have formed a group for the purpose of purchasing additional voting securities of Carolco and obtaining a majority representation on the board of directors of Carolco. The Members and CL have formed a group for purposes of obtaining a majority representation on the board of directors of Carolco upon consummation of the Restructuring. As of the date of this Amendement No. 8, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ and by reason of Canal+ being one of the Members:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- BY CANAL+ --------- Common Stock 2,643,109(1) 5.3 Common Stock + 333,334(2) +0.7 --------- ---- SUB-TOTAL 2,976,443 6.0 ========= ====
- ------------ (1) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). (2) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 7. 106 Page 14 of 238 Pages As of the date of this Amendment No. 8, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ (which owns such shares indirectly through Cinepole Productions B.V.), and by reason of Canal+ being one of the Members, the following securities of Carolco:
BY CANAL+ Number of Shares Percent of Class --------- ---------------- ---------------- Common Stock 150,000(3) 0.3 Common Stock 447,344(4) 0.9 Common Stock 1,621,621(5) 3.3 Common Stock 97,900 0.2 Common Stock 2,499,990(6) 5.0 Common Stock 1,723,720(7) 3.5 --------- ---- SUB-TOTAL 6,540,575 13.2 ========= ====
- ------------ (3) These shares may be acquired upon the exercise of the warrant referred to in Item 6 of the Initial Statement. (4) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 2. (5) These shares may be acquired upon the conversion of 30,000 shares of Series B Preferred. The Series B Preferred may be converted at any time. (6) These shares may be acquired upon the conversion of the 300,000 shares of Series D Preferred. The Series D Preferred may be converted at any time. (7) These shares may be acquired upon the conversion of the 3706 shares of Series E Preferred. The Series E Preferred may be converted at any time. 107 Page 15 of 238 Pages
BY PIONEER Number of Shares Percent of Class ---------- ---------------- ---------------- Common Stock 3,243,243(8) 6.5 Common Stock 2,500,000(9) 5.0 Common Stock 2,451,627(10) 4.9 Common Stock 977,447(11) 2.0 Common Stock 300,000(12) 0.6 Common Stock 2,643,109(13) 5.3 Common Stock + 333,334(14) +0.7 ---------- ---- SUB-TOTAL 12,448,760 25.1* ========== ====
- ------------ (8) These shares may be acquired upon the conversion of 60,000 shares of Series C Preferred. The Series C Preferred may be converted at any time. (9) These shares may be acquired upon the conversion of $15,000,000 principal amount of Existing 10% Debentures, which are convertible at any time. (10) These shares may be acquired upon the conversion of 5271 shares of Series E Convertible Preferred Stock, which may be converted at any time. (11) These shares may be acquired upon the exercise of options which are exercisable in the manner described in Item 3 of Amendment No. 1 to the Schedule 13D of Pioneer dated November 11, 1991. (12) These shares may be acquired upon the exercise of a warrant which is exercisable in the manner described in Item 3 of Schedule 13D of Pioneer dated July 3, 1990. (13) See Footnote 1 on page 13. (14) See Footnote 2 on page 13. * Does not foot due to rounding. 108 Page 16 of 238 Pages BY RCS Number of Shares Percent of Class ------ ---------------- ---------------- Common Stock 1,481,481 3.0 Common Stock 3,333,333(15) 6.7 Common Stock 1,778,140(16) 3.6 Common Stock 2,643,109(17) 5.3 Common Stock + 333,334(18) +0.7 ---------- ---- SUB-TOTAL 9,569,397 19.3 ---------- ---- TOTAL 31,535,175 63.5* ========== ====
Item 5(c) is amended by adding the following paragraph: On May 21, 1993, the Strategic Investors released an aggregate of 690,174 shares of Carolco Common Stock (a release of 230,058 shares of Carolco Common Stock each by Canal+, Pioneer and RCS) from a pledge which had been created in their favor pursuant to the Security and Pledge Agreements dated as of April 23, 1992 between New CIBV and each of the Strategic Investors. A copy of said Security and Pledge Agreement between Canal+ and New CIBV was filed as part of Exhibit M to Amendment No. 4. A copy of the Amended and Restated Security and Pledge Agreement between New CIBV and Le Studio Canal+ is filed as Exhibit AJ hereto and is incorporated herein by reference. - ------------ (15) These shares may be acquired upon the conversion of $20,000,000 principal amount of Existing 10% Debentures, which are convertible at any time. (16) These shares may be acquired upon the conversion of the 3823 shares of Series E Preferred. The Series E Preferred may be converted at any time. (17) See Footnote 1 on page 13. (18) See Footnote 2 on page 13. * Does not foot due to rounding. 109 Page 17 of 238 Pages ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Item 6 of Schedule 13D is amended by the addition of the following: In connection with the Restructuring, the agreements described below have been or are expected to be concluded by Canal+. A form of each such agreement is filed as an Exhibit hereto, with the Exhibit letter set opposite the description of each such agreement. AC Securities Purchase Agreement dated as of May 25, 1993 among Carolco Pictures Inc., Pioneer LDCA, Inc., Cinepole Productions B.V. and MGM Holdings Corporation; provides for the purchase from Carolco of (1) New Preferred by Pioneer, Cinepole Productions B.V. and MGM Holdings Corporation and (2) 5% Notes by MGM Holdings Corporation. AD Contribution and Exchange Agreement dated as of May 25, 1993 among Carolco Pictures Inc., Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., RCS Video Services Antilles N.V. and RCS Video International Communications N.V.; provides for the contributions to capital and the exchanges described in Item 4 of this Amendment No. 8. AE Form of Registration Rights Agreement among Carolco Pictures Inc. and Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V. and MGM Holdings Corporation; provides for the registration by Carolco of Carolco Common Stock received by MGM or the Strategic Investors upon the conversion of New Preferred and/or 5% Notes purchased pursuant to the Securities Purchase Agreement or received in exchange under the Contribution and Exchange Agreement. AF Form of Stockholders' Agreement among Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., MGM Holdings Corporation and New Carolco Investments B.V.; controls certain areas of the corporate governance of Carolco, as described more fully in Item 4 of this Amendment No. 8. AG Term Sheet for the Standby Note Purchase Agreement among Carolco Pictures Inc., Pioneer LDCA, Inc., Cinepole Productions B.V. and RCS Video International Services B.V.; provides contemplated terms for the purchase on December 30, 1994 of up to $20,000,000 in face value of 7% Notes by the Strategic Investors. Such a commitment would be contingent upon the financial condition of Carolco as of December 30, 1994, and upon the amount of contributions made by Canal+ to a fund to be used for financing the production of motion pictures by Carolco. AH Form of Subordination Agreement among Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., RCS International Communications N.V. and MGM Holdings Corporation; provides that, in the event of a liquidation of Carolco, MGM and the Strategic Investors will receive payments in respect of their Carolco Common Shares held as a result of the conversion of New Preferred and/or 5% Notes purchased pursuant to the Securities Purchase Agreement prior to the Strategic Investors' receiving any liquidation payments in respect of Carolco Common Stock held by them as of the date of the Restructuring or received in connection with the Restructuring. 110 Page 18 of 238 Pages AI First Amendment to Inducement Agreement dated as of April 30, 1993, among New Carolco Investments B.V., Clorenda Corporation A.V.V., Mario F. Kassar, Pioneer LDCA, Inc., Le Studio Canal+ and RCS Video International Services B.V.; amends certain provisions of an Inducement Agreement dated as of March 23, 1992 (which Inducement Agreement was attached as Exhibit X to Amendment No. 4). AJ Amended and Restated Security and Pledge Agreement between New Carolco Investments B.V. and Le Studio Canal+ dated as of April 30, 1993; amends and restates the Security and Pledge Agreement between New Carolco Investments B.V. and Le Studio Canal+ dated as of March 23, 1992, which Security and Pledge Agreement was filed as Exhibit M to Amendment No. 4. AK Statement of release of Collateral Shares by Pioneer LDCA, Inc. (acting as collateral agent for Le Studio Canal+ and RCS Video International Services B.V.) dated as of May 20, 1993; states that Pioneer will release as of May 21, 1993, an aggregate of 690,174 shares of Carolco Common Stock which had been pledged to the Strategic Investors. AL Form of a Put and Call Agreement among MGM Holdings Corporation, Credit Lyonnais S.A. and Cinepole Productions B.V.; provides that MGM Holdings Corporation will have the right to sell to Cinepole Productions B.V., and Cinepole Productions B.V. will have the right to buy from MGM Holdings Corporation, certain amounts of Carolco Common Stock, with such rights contingent upon the happening of certain events. 111 Page 19 of 238 Pages Item 7. Material to be filed as Exhibits - ------- -------------------------------- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). AC. Securities Purchase Agreement among Carolco Pictures Inc. and Pioneer LDCA, Inc., Cinepole Productions B.V. and MGM Holdings Corporation (excluding Schedule 6(d) and Exhibits A, C, D, E, F, G, H, I, J, K, and L). AD. Contribution and Exchange Agreement among Carolco Pictures Inc. and Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., RCS Video Services Antilles N.V. and RCS Video International Communications N.V. (excluding Schedule 8(d) and Exhibits A and B). AE. Form of Registration Rights Agreement among Carolco Pictures Inc. and Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V. and MGM Holdings Corporation (Exhibit H to the Securities Purchase Agreement and Exhibit A to the Contribution and Exchange Agreement). AF. Form of Stockholders' Agreement among Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., MGM Holdings Corporation and New Carolco Investments B.V. (Exhibit I to the Securities Purchase Agreement and Exhibit B to the Contribution and Exchange Agreement). AG. Term Sheet for Standby Note Purchase Agreement among Carolco Pictures Inc., Pioneer LDCA, Inc., Cinepole Productions B.V. and RCS Video International Services B.V. (Exhibit J to the Securities Purchase Agreement). AH. Form of Subordination Agreement among Carolco Pictures Inc., Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., RCS Video International Services B.V. and MGM Holdings Corporation (Exhibit L to the Securities Purchase Agreement). AI. First Amendment to Inducement Agreement dated as of April 30, 1993, among New Carolco Investments B.V., Clorenda Corporation A.V.V., Mario F. Kassar, Pioneer LDCA, Inc., Le Studio Canal+ and RCS Video International Services B.V. AJ. Amended and Restated Security and Pledge Agreement between New Carolco Investments B.V. and Le Studio Canal+ dated as of April 30, 1993. AK. Statement of release of Collateral Shares by Pioneer LDCA, Inc. (acting as collateral agent for Le Studio Canal+ S.A. and RCS Video Services International B.V.) dated as of May 20, 1993. AL. Form of Put and Call Agreement among MGM Holdings Corporation, Credit Lyonnais S.A. and Cinepole Productions B.V. (Exhibit K to the Securities Purchase Agreement). 112 Page 20 of 238 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 25, 1993 CANAL+ S.A. By: /s/ Joel A. Adler -------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 25, 1993 LE STUDIO CANAL+ By: /s/ Joel A. Adler -------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 25, 1993 CINEPOLE PRODUCTIONS B.V. By: /s/ Joel A. Adler -------------------------------- Name: Joel A. Adler Title: Attorney-in-Fact 113 Page 21 of 238 Pages INDEX TO EXHIBITS ----------------- Page ---- A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) .......... 13 AC. Securities Purchase Agreement among Carolco Pictures Inc. and Pioneer LDCA, Inc., Cinepole Productions B.V. and MGM Holdings Corporation........................................... 23 AD. Contribution and Exchange Agreement among Carolco Pictures Inc. and Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., RCS Video Services Antilles N.V. and RCS Video International Communications N.V................ 82 AE. Form of Registration Rights Agreement among Carolco Pictures Inc. and Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V. and MGM Holdings Corporation........... 126 AF. Form of Stockholders' Agreement among Pioneer LDCA, Inc., Cinepole Productions B.V., RCS Video International Services B.V., MGM Holdings Corporation and New Carolco Investments B.V. ............. 163 AG. Term Sheet for the Standby Note Purchase Agreement among Carolco Pictures Inc., Pioneer LDCA, Inc., Cinepole Productions B.V. and RCS Video International Services B.V. ............................. 185 AH. Form of Subordination Agreement among Carolco Pictures Inc., Pioneer LDCA, Inc., Cinepole Production B.V., RCS Video International Services B.V., RCS Video International Services B.V. and MGM Holdings Corporation.................................. 192 AI. First Amendment to Inducement Agreement dated as of April 30, 1993, among New Carolco Investments B.V., Clorenda Corporation A.V.V., Mario F. Kassar, Pioneer LDCA, Inc., Le Studio Canal+ and RCS Video International Services B.V. ......................... 201 AJ. Amended and Restated Security and Pledge Agreement between New Carolco Investments B.V. and Le Studio Canal+ dated as of April 30, 1993..................................................... 212 AK. Statement of release of Collateral Shares by Pioneer LDCA, Inc. (acting as collateral agent for Le Studio Canal+ S.A. and RCS Video Services International B.V.) dated as of May 20, 1993........ 225 AL. Form of Put and Call Agreement among MGM Holdings Corporation, Credit Lyonnais S.A. and Cinepole Productions B.V. ................ 227 114 ATTACHMENT NO. 10 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 9)* CAROLCO PICTURES INC. ----------------------------------------- (Name of Issuer) Common Stock, par value $0.01 per share ----------------------------------------- (Title of Class of Securities) 143763 10 0 ----------------------------------------- (CUSIP Number) Joel A. Adler, Sutherland, Asbill & Brennan 1270 Avenue of the Americas, (212) 332-3080 New York, New York 10020-1700 ------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 27, 1993 -------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing informaton which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 11 Page 1 of 187 Pages 115 CUSIP No. 143763 10 0 Page 2 of 187 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,873,909 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,873,909 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,517,018 (excluding shares owned by other members of group) 31,535,175 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 27.2% (excluding shares owned by other members of group) 63.5% (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 116 CUSIP No. 143763 10 0 Page 3 of 187 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person LE STUDIO CANAL+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,873,909 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,873,909 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 9,517,018 (excluding shares owned by other members of group) 31,535,175 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 27.2% (excluding shares owned by other members of group) 63.5% (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 117 CUSIP No. 143763 10 0 Page 4 of 187 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Cinepole Productions B.V. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 6,540,575 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 6,540,575 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 6,540,575 (excluding shares owned by other members of group) 31,535,175 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 18.7 (excluding shares owned by other members of group) 63.5 (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 118 Page 5 of 187 Pages This Amendment No. 9 is filed on behalf of Canal+ S.A., Le Studio Canal+ and Cinepole Productions B.V. (collectively, "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share, of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amendment No. 2 dated November 11, 1991, Amendment No. 3 thereto dated January 23, 1992, Amendment No. 4 thereto dated March 24, 1992, Amendment No. 5 thereto dated June 22, 1992, Amendment No. 6 thereto dated November 10, 1992, Amendment No. 7 thereto dated April 27, 1993 and Amendment No. 8 thereto dated June 25, 1993 (collectively, "Schedule 13D"). This Amendment No. 9 is filed in order to disclose the inclusion of New Carolco Investments B.V. ("New CIBV") as a member of the previously reported group, to update Items 4, 5 and 6 of Schedule 13D and to disclose the effectiveness of the previously reported registration statement filed by Carolco. ITEM 4. PURPOSE OF TRANSACTION This item is amended by the addition of new text to read in full as follows: (a) & (e) Carolco's registration statement became effective on August 27, 1993. An understanding has been reached among Canal+, Pioneer LDCA, Inc. ("Pioneer"), RCS Video International Services B.V. ("RCS"), Credit Lyonnais S.A. ("CL") and New CIBV (or any of their respective affiliates and collectively referred to herein as the "Principal Stockholders") to enter into a stockholders agreement upon the consummation of Carolco's financial restructuring. See paragraph (d) below for a description of the stockholders agreement. As a result of the foregoing, Canal+ believes that New CIBV has become a member of the group consisting of Canal+, Pioneer, RCS and CL. A description of the transactions contemplated and the holdings of Carolco securities by each of the Principal Stockholders after giving effect to Carolco's financial restructuring appear in the table below. 119 Page 6 of 187 Pages
IN EXCHANGE FOR: CANAL+ WILL RECEIVE ---------------- ------------------- $2,714,069 of principal amount and accrued 1,180,030 shares of LIVE Common Stock but unpaid interest ($68,800 as of August 10, currently held by Carolco, a portion of which 1993) owed to Canal . . . . . . . . . . . . . is pledged as collateral to Canal+, Pioneer and RCS 9,424 shares of Series B Convertible Preferred Stock ("Series B Preferred") 94,240 shares of Series D Convertible 22,950,471 shares of Carolco Common Stock Exchangeable Preferred Stock ("Series D Preferred") 1,164 shares of Series E Convertible Preferred Stock ("Series E Preferred") The remaining $3,879,292 of principal amount An estimated 5,172,389 shares of Carolco and accrued but unpaid interest ($98,337 as of Common Stock August 10, 1993) owed to Canal+. . . . . . . . $12,500,000 in cash. . . . . . . . . . . . . . 12,500 shares of Carolco Series A Convertible Preferred Stock ("New Preferred") 20,576 shares of Series B Preferred 205,760 shares of Series D Preferred 2,542 shares of Series E Preferred Option and a warrant to purchase an aggregate Such securities and accrued amounts to be of 597,344 shares of Carolco Common Stock at relinquished to Carolco as a capital contribution a weighted average exercise price of $3.65 per share Accrued but unpaid dividends on its Series B, D & E Preferred (approximately $5,644,855 as of August 10, 1993) CANAL+ TOTAL: 12,500 shares of New Preferred, 1,180,030 shares of LIVE Common Stock, and an estimated 28,122,860 shares of Carolco Common Stock
120 Page 7 of 187 Pages
IN EXCHANGE FOR: PIONEER WILL RECEIVE: ---------------- --------------------- $8,936,012 principal amount and accrued 3,885,223 shares of LIVE Common Stock currently but unpaid interest ($226,522 as of August held by Carolco, a portion of which is pledged as 10, 1993) owed to Pioneer ................. collateral to Canal+, Pioneer and RCS 18,848 shares of Series C Convertible Exchangeable Preferred Stock ("Series C Preferred") 1,656 shares of Series E Preferred 37,824,031 shares of Carolco Common Stock $4,712,042 in 10% Convertible Subordinated Debentures due 2006 (the "Existing 10% Debentures") The remaining $11,110,983 of principal An estimated 14,814,644 shares of Carolco amount and accrued but unpaid interest Common Stock ($281,655) as of August 10, 1993) owed to Pioneer.................................... $40,000,000 in cash 40,000 shares of New Preferred $10,287,958 in Existing 10% Debentures 41,152 shares of Series C Preferred 3,615 shares of Series E Preferred Such securities and accrued amounts to be relinquished to Carolco as a capital contribution Options and a warrant to purchase an aggregate of 1,277,447 shares of Carolco Common Stock at a weighted average exercise price of $4.35 per share Accrued but unpaid dividends and interest on its Existing 10% Debentures and Series C & E Preferred (approximately $8,489,384 as of August 10, 1993) PIONEER TOTAL: 40,000 shares of New Preferred 3,885,223 shares of LIVE Common Stock, and an estimated 52,638,675 shares of Carolco Common Stock
121 Page 8 of 187 Pages
IN EXCHANGE FOR: RCS WILL RECEIVE: ---------------- ----------------- $2,714,069 of principal amount and all accrued but unpaid interest ($68,800 as of August 10, 1993) owed to RCS .................................. 1,180,030 shares of LIVE Common Stock currently held by Carolco, a portion of which is pledged as collateral to Canal+, Prioneer and RCS 1,201 shares of Series E Preferred 11,225,498 shares of Common Stock $6,282,723 in Existing 10% Debentures The remaining $4,096,727 of principal amount of and accrued but unpaid interest ($103,849 as of August 10, 1993) owed to RCS ...................... An estimated 5,462,302 shares of Carolco Common Stock $13,717,277 in Existing 10% Debentures 2,622 shares of Series E Preferred Such securities and accrued amounts to be relinquished to Carolco as a capital contribution Acrrued but unpaid dividends on its Existing 10% Debentures, Series E Preferred and other amounts owed to RCS (approximately $4,599,854 as of August 10, 1993) RCS TOTAL: 1,180,030 shares of LIVE Common Stock, and an estimated 16,687,800 shares of Carolco Common Stock CL WILL RECEIVE: ---------------- $30,000,000 in cash .................................. 30,000 shares of New Preferred $30,000,000 in cash .................................. $30,000,000 in principal amount of Carolco 5% Payment-in-Kind Convertible Subordinated Notes due 2002
New CIBV owns, and after Carolco's financial restructuring will continue to own, 7,929,328 shares of Carolco Common Stock substantially all of which shares are pledged to Canal+, Pioneer and RCS as security for outstanding loans. The commitment of Canal+, Pioneer and RCS to purchase New 7% Convertible Subordinated Notes of Carolco due 2006 has been increased from the previously reported amount of $20,000,000 to $27,500,000 subject to reduction under certain circumstances. (g) The increase in the number of authorized shares of Carolco Common Stock has been increased from the previously reported 500,000,000 to 650,000,000. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5 of the Schedule 13D is amended by the addition of the following paragraph: New CIBV owns, as of the date of this Amendment No. 9, 7,929,328 shares, representing 2.8% of the outstanding shares, of Carolco Common Stock of which an aggregate of 7,929,327 shares have been pledged in equal amounts to each of Canal+, Pioneer and RCS as shown in the tablets set forth in this Item 5(a). 122 Page 9 of 187 Pages ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item 6 of Schedule 13D is amended as follows: ACC First Amendment to Securities Purchase Agreement entered into as of July 29, 1993, among Carolco Pictures Inc. ("Carolco"), Cinepole Productions B.V. ("Cinepole"), MGM Holdings Corporation ("MGM") and Pioneer LDCA, Inc. ("Pioneer"); amends Securities Purchase Agreement dated as of May 25, 1993. ADD First Amendment to Contribution and Exchange Agreement entered into as of July 29, 1993, among Carolco, Cinepole, Pioneer, RCS Video International Services B.V. ("Video"), RCS Video Services Antilles N.V. and RCS International Communications N.V.; amends Contribution and Exchange Agreement dated as of May 25, 1993. AGG Standby Purchase and Investment Agreement entered into as of July 29, 1993, among Carolco, Cinepole, Le Studio Canal+, Pioneer, Video and Tele-Communications, Inc.; provides for the purchase under certain conditions of Carolco's 7% Convertible Subordinated Notes due 2006. ACCC Second Amendment to Securities Purchase Agreement entered into as of August 17, 1993, among Carolco, Cinepole, MGM and Pioneer; further amends Securities Purchase Agreement dated as of May 25, 1993, as amended as of July 29, 1993. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A. Joint Filing Agreement pursuant to Rule 13d-1(f)(i)(iii). ACC First Amendment to Securities Purchase Agreement entered into as of July 29, 1993, among Carolco Pictures Inc. ("Carolco"), Cinepole Productions B.V. ("Cinepole"), MGM Holdings Corporation ("MGM") and Pioneer LDCA, Inc. ("Pioneer"). (Excludes Annex 2 which is filed herewith as Exhibit AGG.) ADD First Amendment to Contribution and Exchange Agreement entered into as of July 29, 1993, among Carolco, Cinepole, Pioneer, RCS Video International Services B.V. ("Video"), RCS Video Services Antilles N.V. and RCS International Communications N.V. AGG Standby Purchase and Investment Agreement entered into as of July 29, 1993, among Carolco, Cinepole, Le Studio Canal+, Pioneer, Video and Tele-Communications, Inc. ACCC Second Amendment to Securities Purchase Agreement entered into as of August 17, 1993, among Carolco, Cinepole, MGM and Pioneer. 123 Page 10 of 187 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. September 27, 1993 CANAL+ S.A. By: /s/ John A. St. Clair ------------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. September 27, 1993 LE STUDIO CANAL+ By: /s/ John A. St. Clair ------------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. September 27, 1993 CINEPOLE PRODUCTIONS B.V. By: /s/ John A. St. Clair ------------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact 124 Page 11 of 187 Pages INDEX TO EXHIBITS PAGE A. Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) 12 ACC First Amendment to Securities Purchase Agreement entered into as of July 29, 1993, among Carolco Pictures Inc. ("Carolco"), Cinepole Productions B.V. ("Cinepole"), MGM Holdings Corporation ("MGM") and Pioneer LDCA, Inc. ("Pioneer") 13 ADD First Amendment to Contribution and Exchange Agreement entered into as of July 29, 1993 among Carolco, Cinepole, Pioneer, RCS Video International Services B.V. ("Video"), RCS Video Services Antilles N.V. and RCS International Communications N.V. 51 AGG Standby Purchase and Investment Agreement entered into as of July 29, 1993, among Carolco, Cinepole, Le Studio Canal+, Pioneer, Video and Tele-Communications, Inc. 59 ACCC Second Amendment to Securities Purchase Agreement entered into as of August 17, 1993, among Carolco, Cinepole, MGM and Pioneer. 183 125 ATTACHMENT NO. 11 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 10)* CAROLCO PICTURES INC. --------------------------------------- (Name of Issuer) Common Stock, par value $0.01 per share --------------------------------------- (Title of Class of Securities) 143763 10 0 --------------------------------------- (CUSIP Number) John A. St. Clair, Coudert Brothers 1055 W. 7th Street, Los Angeles, California 90017 (213) 688-9088 ---------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 20, 1993 ------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7). Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosure provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Exhibit Index: Page 12 Page 1 of 106 pages 126 CUSIP No. 143763 10 0 Page 2 of 106 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person CANAL+ S.A. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF; OO 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 47,266,698 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 47,266,698 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 49,909,807 (excluding shares owned by other members of group) 284,910,260 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 31.4% (excluding shares owned by other members of group) 87.3% (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 127 CUSIP No. 143763 10 0 Page 3 of 106 Pages SCHEDULE 13D 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Cinepole Productions B.V. (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box if a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* AF; OO 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of Shares Beneficially 8 Shared Voting Power Owned By 46,933,364 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 46,933,364 (see Items 4 and 5) 11 Aggregate Amount Benefically Owned by Each Reporting Person 46,933,364 (excluding shares owned by other members of group) 281,933,817 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 29.5% (excluding shares owned by other members of group) 86.4% (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 128 CUSIP No. 143763 10 0 Page 4 of 106 Pages SCHEDULE 13D [S] [C] 1 Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person Le Studio Canal+ (has no S.S. or I.R.S. Identification No.) 2 Check the Appropriate Box If a Member of a Group* a. /X/ b. / / 3 SEC Use Only 4 Source of Funds* WC; 00 5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) / / 6 Citizenship or Place of Organization Republic of France 7 Sole Voting Power Number of 0 Shares Beneficially 8 Shared Voting Power Owned By 47,266,698 (see Items 4 and 5) Each Reporting 9 Sole Dispositive Power Person 0 With 10 Shared Dispositive Power 47,266,968 (see Items 4 and 5) 11 Aggregate Amount Beneficially Owned by Each Reporting Person 49,909,807 (excluding shares owned by other members of group) 284,910,260 (including shares owned by other members of group) 12 Check Box If the Aggregate Amount in Row (11) Exclude Certain Shares* / / 13 Percent of Class Represented By Amount in Row (11) 31.4% (excluding shares owned by other members of group) 87.3% (including shares owned by other members of group) 14 Type of Reporting Person* CO *SEE INSTRUCTIONS BEFORE FILLING OUT! 129 Page 5 of 106 Pages This Amendment No. 10 is filed on behalf of Canal+ S.A., Le Studio Canal+ and Cinepole Productions B.V. (collectively, "Canal+") and amends the initial Statement dated June 15, 1990 filed by Canal+ with respect to Common Stock, par value $0.01 per share, of Carolco Pictures Inc. ("Carolco"), Amendment No. 1 thereto dated February 28, 1991, Amendment No. 2 thereto dated November 11, 1991, Amendment No. 3 thereto dated January 23, 1992, Amendment No. 4 thereto dated March 24, 1992, Amendment No. 5 thereto dated June 22, 1992, Amendment No. 6 thereto dated November 10, 1992, Amendment No. 7 thereto dated April 27, 1993, Amendment No. 8 thereto dated June 25, 1993, and Amendment No. 9 thereto dated September 27, 1993 (collectively, "Schedule 13D"). This Amendment No. 10 is filed in order to disclose transactions in the securities of Carolco as a result of the previously disclosed financial restructuring of Carolco, and related matters. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION This item is amended by the addition of the following paragraphs. Upon the consummation of the financial restructuring of Carolco, Canal+ acquired: (a) 22,950,471 shares of Carolco Common Stock in exchange for 9,424 shares of Carolco Series B Convertible Preferred Stock ($9,424,000 aggregate liquidation preference), 94,240 shares of Carolco Series D Preferred Stock ($4,712,000 aggregate liquidation preference) and 1,164 shares of Carolco Series E Preferred Stock ($1,164,000 aggregate liquidation preference); (b) 3,051,660 shares of Carolco Common Stock in exchange for $3,318,681 of principal amount and accrued but unpaid interest owed to Canal+ under a loan made by Canal+ to Carolco; and (c) 12,500 shares of Carolco Series A Convertible Preferred Stock ("New Preferred") (convertible into 20,833,333 shares of Carolco Common Stock) in exchange for a cash payment of $12,500,000. ITEM 4. PURPOSE OF TRANSACTION This item is amended by the addition of new text to read in full as follows: (a), (d), (e), (g) and (h). The financial restructuring of Carolco was consummated on October 20, 1993. 130 Page 6 of 106 Pages ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Item 5(a) of Schedule 13D is amended to read in full as follows: (a) As of the date of this Amendment No. 10, Canal+ S.A. may be deemed benefically to own indirectly through Le Studio Canal+ the following securities of Carolco, excluding the securities of Carolco owned by the Members (defined below) other than Canal+.
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 2,643,109(1) 1.9 Common Stock + 333,334(2) 0.2 --------- --- SUB-TOTAL 2,976,443 2.2* ========= ===
As of the date of this Amendment No. 10, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, and Le Studio Canal+ may be deemed to own indirectly through Cinepole Porudctions B.V., the following securities of Carolco, excluding securities of Carolco owned by the Members other than Canal+.
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- Common Stock 26,100,031 16.4 Common Stock 20,833,333(3) 13.1 ---------- ---- SUB-TOTAL 46,933,364 29.5 ---------- ---- TOTAL 49,909,807 31.4* ========== ====
- ------------ (1) These shares are subject to a pledge agreement which does not satisfy the conditions set forth in SEC Rule 13d-3(d)(3). (2) These shares may be acquired upon the exercise of the option referred to in Item 6 of Amendment No. 7. (3) These shares may be acquired upon the conversion of 12,500 shares of New Preferred. The New Preferred may be converted at any time. * Does not foot due to rounding. 131 Page 7 of 106 Pages Canal+, RCS Video International Services B.V. ("RCS"), Pioneer LDCA, Inc. ("Pioneer") and Credit Lyonnais S.A. ("CL") (collectively, with certain of their respective affiliates, the "Purchasers") have formed a group for the purpose of purchasing additional voting securities of Carolco and obtaining a majority representation on the board of directors of Carolco. The Purchasers and New Carolco Investments B.V. ("New CIBV") have formed a group for purposes of obtaining a majority representation on the board of directors of Carolco. The Purchasers and New CIBV are hereinafter collectively referred to as the "Members." As of the date of this Amendment No. 10, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+ and by reason of Canal+ being one of the Members:
Title of Class Number of Shares Percent of Class -------------- ---------------- ---------------- BY CANAL+ Common Stock 2,643,109(4) 0.8 Common Stock + 333,334(5) 0.1 --------- --- SUB-TOTAL 2,976,443 0.9 ========= ===
As of the date of this Amendment No. 10, Canal+ S.A. may be deemed beneficially to own indirectly through Le Studio Canal+, (which owns such shares indirectly through Cinepole Productions B.V.) and by reason of Canal+ being one of the Members, the following securities of Carolco:
BY CANAL+ Number of Shares Percent of Class ---------- ---------------- ---------------- Common Stock 26,100,031 7.9 Common Stock 20,833,333(6) 6.4 ---------- ---- SUB-TOTAL 46,933,364 14.3 ========== ====
BY PIONEER Number of Shares Percent of Class ---------- ---------------- ---------------- Common Stock 46,420,574 14.2 Common Stock 66,666,666(7) 20.4 Common Stock 2,643,109(8) 0.8 Common Stock + 333,334(9) 0.1 ----------- ---- SUB-TOTAL 116,063,683 35.6* =========== ====
______________ (4) See Footnote 1 on Page 6. (5) See Footnote 2 on page 6. (6) These shares may be acquired upon the conversion of 12,500 shares of New Preferred. The New Preferred may be converted at any time. (7) These shares may be acquired upon the conversion of 40,000 shares of New Preferred. The New Preferred may be converted at any time. (8) See Footnote 1 on page 6. (9) See Footnote 2 on page 6. * Does not foot due to rounding. 132 Page 8 of 106 Pages
BY RCS Number of Shares Percent of Class - ------ ---------------- ---------------- Common Stock 15,960,316 4.9 Common Stock 2,643,109(10) 0.8 Common Stock + 333,334(11) 0.1 ---------- --- SUB-TOTAL 18,936,759 5.7* ========== ===
BY CL Number of Shares Percent of Class - ----- ---------------- ---------------- Common Stock 50,000,000(12) 15.3 Common Stock 50,000,010(13) 15.3 ----------- ---- SUB-TOTAL 100,000,010 30.6 =========== ====
BY NEW CIBV Number of Shares Percent of Class - ----------- ---------------- ---------------- Common Stock 7,929,328(14) 2.4(14) ----------- ---- TOTAL 284,910,260 87.3 =========== ====
- ---------- (10) See Footnote 1 on page 6. (11) See Footnote 2 on page 6. (12) These shares may be acquired upon the conversion of 30,000 shares of New Preferred. The New Preferred may be converted at any time. (13) These shares may be acquired upon the conversion of $30,000,000 principal amount of 5% Payment-In-Kind Convertible Subordinated Notes due 2002 (the "5% Notes"). While the 5% Notes may not be converted within 60 days of this Amendment No. 10, the shares are included herein in accordance with SEC Rule 13d-(1)(i) since Canal+ believes the 5% Notes were acquired by CL in connection with, or as a participant in, a transaction having the purpose or effect of changing or influencing the control of Carolco. (14) Since all but 1 of these shares have been pledged to Canal+, Pioneer and RCS and the beneficial ownership by each of them is shown separately above (see Footnotes 1, 8 and 10), only 1 share has been included in the total number, and the percent of class represented has been excluded from the total, so as to avoid double counting. * Does not foot due to rounding. 133 Page 9 of 106 Pages ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item 6 of Schedule 13D is amended by the addition of the following: In connection with the consummation of Carolco's financial restructuring, the agreements described below have been concluded by Canal+. A copy of each such agreement is filed as an Exhibit hereto, with the Exhibit letter set opposite the description of each such agreement. AEE Registration Rights Agreement dated as of October 20, 1993, among Carolco Pictures, Inc. and Pioneer LDCA, Inc. ("Pioneer"), Cinepole Productions B.V. ("Cinepole"), RCS Video International Services B.V. ("RCS") and MGM Holdings Corporation ("MGM"); provides for the registration by Carolco of Carolco Common Stock received by MGM, Cinepole, Pioneer or RCS upon the conversion of New Preferred and/or 5% Notes purchased pursuant to the Securities Purchase Agreement, as amended, or received in exchange under the Contribution and Exchange Agreement, as amended. AFF Stockholders' Agreement dated as of October 20, 1993, among Pioneer, Cinepole, RCS, MGM and New Carolco Investments B.V.; controls certain areas of corporate governance of Carolco, as described more fully in Item 4 of Amendment No. 8. AHH Subordination Agreement dated as of October 20, 1993, among Pioneer, Cinepole, RCS, RCS International Communications N.V. and MGM; provides that, in the event of a liquidation of Carolco, MGM and the other parties previously named in this sentence will receive payments in respect of their Carolco Common Stock held as a result of the conversion of New Preferred and/or 5% Notes purchased pursuant to the Securities Purchase Agreement, as amended, prior to such other parties' receiving any liquidation payments in respect of Carolco Common Stock held by them as of the date of Carolco's financial restructuring or received in connection with Carolco's financial restructuring. ALL Put and Call Agreement dated as of October 20, 1993, among MGM, Credit Lyonnais S.A. and Cinepole; provides that MGM will have the right to sell to Cinepole, and Cinepole will have the right to buy from MGM, certain amounts of Carolco Common Stock, with such rights contingent upon the happening of certain events. 134 Page 10 of 106 Pages ITEM 7. MATERIAL TO BE FILED AS EXHIBITS A Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii). AEE Registration Rights Agreement dated as of October 20, 1993, among Carolco Pictures Inc. ("Carolco") and Pioneer LDCA, Inc. ("Pioneer"), Cinepole Productions B.V. ("Cinepole"), RCS Video International Services B.V. ("RCS") and MGM Holdings Corporation ("MGM"). AFF Stockholders' Agreement dated as of October 20, 1993, among Pioneer, Cinepole, RCS, MGM and New Carolco Investments B.V. AHH Subordination Agreement dated as of October 20, 1993, among Pioneer, Cinepole, RCS, RCS International Communications N.V. and MGM. ALL Put and Call Agreement dated as of October 20, 1993, among MGM, Credit Lyonnais S.A. and Cinepole. B Powers of Attorney. 135 Page 11 of 106 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 11, 1993 CANAL+ S.A. By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 11, 1993 LE STUDIO CANAL+ By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. November 11, 1993 CINEPOLE PRODUCTIONS B.V. By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact 136 Page 12 of 106 Pages INDEX TO EXHIBITS
Page ---- A Joint Filing Agreement pursuant to Rule 13d-1(f)(1)(iii) .................................................... 13 AEE Registration Rights Agreement dated as of October 20, 1993, among Carolco Pictures Inc. ("Carolco") and Pioneer LDCA, Inc. ("Pioneer"), Cinepole Productions B.V. ("Cinepole"), RCS Video International Services B.V. ("RCS") and MGM Holdings Corporation ("MGM")........................... 14 AFF Stockholders' Agreement dated as of October 20, 1993, among Pioneer, Cinepole, RCS, MGM and New Carolco Investments B.V. ............................................................................................ 54 AHH Subordination Agreement dated as of October 20, 1993, among Pioneer, Cinepole, RCS, RCS International Communications N.V. and MGM.................................................................................. 82 ALL Put and Call Agreement dated as of October 20, 1993, among MGM, Credit Lyonnais S.A. and Cinepole............ 95 B Powers of Attorney........................................................................................... 104
EX-24 2 POWERS OF ATTORNEY 1 EXHIBIT 24 POWER OF ATTORNEY The undersigned, Pierre Lescure, Chief Executive Officer of Canal+ S.A., hereby appoints Ronald Buckly, John St. Clair and Robert Jesuele of the law firm of Coudert Brothers, each acting individually, as my attorney-in-fact, to execute, deliver and file on my behalf and on behalf of Canal+ S.A. any and all forms, including Schedule 13D and amendments thereto and Forms 3, 4 and 5 and amendments thereto, required by the Securities and Exchange Commission of the United States of America in connection with securities issued by Carolco Pictures Inc. On July 25, 1993 /s/ PIERRE LESCURE - -------------------------- Pierre Lescure 2 POWER OF ATTORNEY The undersigned, Brahim Chioua, Chief Financial Officer, Le Studio Canal+ S.A., hereby appoints Ronald Buckly, John St. Clair and Robert Jesuele of the law firm of Coudert Brothers, each acting individually, as my attorney-in-fact, to execute, deliver and file on my behalf and on behalf of Le Studio Canal+ S.A. any and all forms, including Schedule 13D and amendments thereto and Forms 3, 4 and 5 and amendments thereto, required by the Securities and Exchange Commission of the United States of America in connection with securities issued by Carolco Pictures Inc. On February 6, 1995 /s/ BRAHIM CHIOUA - -------------------- Brahim Chioua 3 POWER OF ATTORNEY The undersigned, Dominique Jeunot and Pierson Trust B.V., Managing Directors of Cinepole Productions B.V., hereby appoint Ronald Buckly, John St. Clair and Robert Jesuele of the law firm of Coudert Brothers, each acting individually, as my attorney-in-fact, to execute, deliver and file on my behalf and on behalf of Cinepole Productions B.V. any and all forms, including Schedule 13D and amendments thereto and Forms 3, 4 and 5 and amendments thereto, required by the Securities and Exchange Commission of the United States of America in connection with securities issued by Carolco Pictures Inc. On July 28, 1993 /s/ DOMINIQUE JEUNOT /s/ MEESPIERSON TRUST B.V. - ---------------------- -------------------------------- Dominique Jeunot MeesPierson Trust B.V. EX-99.A 3 JOINT FILING AGREEMENT PURSUANT TO RULE 13D-1 1 EXHIBIT 99.A JOINT FILING AGREEMENT PURSUANT TO RULE 13d-1(f)(1)(iii) The undersigned hereby agree that this statement shall be filed on behalf of each of them. CANAL+ S.A. By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact LE STUDIO CANAL+ By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact CINEPOLE PRODUCTIONS B.V. By: /s/ John A. St. Clair -------------------------------- Name: John A. St. Clair Title: Attorney-in-Fact EX-99.AMM 4 STANDBY PURCHASE AND INVESTMENT AGREEMENT 7-29-93 1 EXIBIT 99.AMM ______________________________ STANDBY PURCHASE AND INVESTMENT AGREEMENT ______________________________ Dated as of July 29, 1993 by and among CAROLCO PICTURES INC., CINEPOLE PRODUCTIONS B.V., LE STUDIO CANAL+, PIONEER LDCA, INC., RCS VIDEO INTERNATIONAL SERVICES B.V. and TELE-COMMUNICATIONS, INC. 2 TABLE OF CONTENTS
PAGE ---- 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (a) Purchase of 7% Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (b) Co-Production Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (c) Adjustments in Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (a) Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . 9 (b) Representations and Warranties of the Purchasers and Investors . . . . . . . . . . . 11 5. Deliveries on the Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (a) Deliveries by the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 (b) Deliveries by Each of the Purchasers. . . . . . . . . . . . . . . . . . . . . . . . . 13 6. Conditions to Funding Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (a) Conditions to Obligations of Each of the Purchasers and the Company. . . . . . . . 14 (b) Conditions to Obligations of Each of the Purchasers. . . . . . . . . . . . . . . . 14 (c) Conditions to the Company's Obligations. . . . . . . . . . . . . . . . . . . . . . 15 7. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (a) Execution of Co-Production Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 15 (b) Hart-Scott-Rodino Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 (c) Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 (d) Offer to Negotiate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 (e) Obligations Absolute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (f) Drawing Under Co-Production Agreement. . . . . . . . . . . . . . . . . . . . . . . . 17 8. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (a) Consent to Assumption and Consent to Prepackaged Plan. . . . . . . . . . . . . . . . 17 (b) Consent to Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 (c) Survival of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . 18 (d) Specific Performance; Severability. . . . . . . . . . . . . . . . . . . . . . . . . 18 (e) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 (f) No Third Party Beneficiaries; Assignment. . . . . . . . . . . . . . . . . . . . . . 18 (g) Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (h) Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (i) Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (j) Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
i 3
PAGE ---- (k) Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (l) Delays or Omissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (m) Jurisdiction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (n) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EXHIBITS Exhibit A - Form of 7% Note Indenture Exhibit B - Co-Production Term Sheet ii 4 STANDBY PURCHASE AND INVESTMENT AGREEMENT This Standby Purchase and Investment Agreement is entered into as of the 29th day of July, 1993 by and among CAROLCO PICTURES INC., a Delaware corporation (the "Company"), CINEPOLE PRODUCTIONS B.V., a Netherlands corporation ("Cinepole"), LE STUDIO CANAL+, a French corporation ("Le Studio"), PIONEER LDCA, INC., a Delaware corporation ("Pioneer"), RCS VIDEO INTERNATIONAL SERVICES B.V., a Netherlands corporation ("RCS"), and TELE-COMMUNICATIONS, INC., a Delaware corporation ("TCI"). WHEREAS, the Company intends to engage in a financial restructuring as more fully described in the Registration Statement (as defined below); WHEREAS, in conjunction with such financial restructuring, each Purchaser (as defined below) desires to commit to purchase from the Company and the Company desires to commit to issue and sell to each such Purchaser an amount of 7% Convertible Subordinated Notes due June 30, 2006 up to the amount set forth opposite such Purchaser's name in Paragraph 2 below, subject to adjustment as provided therein, all on the terms and conditions set forth below. WHEREAS, in conjunction with such financial restructuring, each Investor (as defined below) desires to commit to invest in co-productions up to the amount set forth opposite such Investor's name in Paragraph 2 below, subject to adjustment as provided therein, all on the terms and conditions set forth below. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties and conditions set forth in this Agreement, the parties to this Agreement agree as follows: 1. Definitions As used in this Agreement, unless the context requires a different meaning, the following terms have the meanings indicated: "7% Notes" shall mean the Company's 7% Convertible Subordinated Notes due June 30, 2006 issued pursuant to the 7% Indenture. "7% Indenture" shall mean the Trust Indenture between the Company and American Stock Transfer & Trust Company, as trustee, in substantially the form attached hereto as Exhibit A. "Additional Funding" shall mean any equity investment in a motion picture of the Company but excluding investments obtained (i) from LIVE or its Affiliates (other than the Strategic Investors) and (ii) pursuant to this Agreement, the Co-Production Agreement, the Restructuring, the Confirmation Order, agreements with financial 1 5 institutions (including, without limitation, the Loan Agreement), the MGM Distribution Agreement, the TCI Pay-Per-View Agreement, the TCI Stock Purchase Agreement or any agreement involving pre-sales of distribution rights. "Affiliate" shall have the meaning given to such term in Rule 12b-2 under the Exchange Act. "Agreement" shall mean this Standby Purchase and Investment Agreement dated as of July 29, 1993 by and among the Company, Cinepole, Le Studio, Pioneer, RCS and TCI, as such Agreement may from time to time be amended, modified or otherwise supplemented. "Amendment" shall mean the amendment to the Company's Restated Certificate of Incorporation effectuating, among other things, the Authorized Capital Stock Proposal and, if approved at the Special Meeting or pursuant to the Confirmation Order, the proposal to delete Article Seventh of such Restated Certificate and the proposal to delete Paragraph B of Article Fifth of such Restated Certificate. "Applicable Laws" shall mean all applicable laws, statutes, ordinances, rulings, regulations, codes, decrees, orders, judgments, conditions, restrictions and requirements of any domestic or foreign governmental authority or entity. "Authorized Capital Stock Proposal" shall mean the proposal to amend the Company's Restated Certificate of Incorporation to increase the authorized number of shares of Common Stock to 650,000,000. "Bankruptcy Code" shall mean Title 11 of the United States Code. "Business Day" shall mean any day other than Saturday, Sunday or any other day on which commercial banks in Los Angeles, California are authorized by law to be closed for business. "Cinepole" shall have the meaning set forth in the introduction to this Agreement. "Common Stock" shall mean the Common Stock, par value $.01 per share, of the Company. "Company" shall have the meaning specified in the introduction to this Agreement and shall additionally, in the event that a case is commenced under the Bankruptcy Code with respect to the Company, refer to the debtor and the debtor-in-possession in such case. "Confirmation Order" shall mean the order or judgment of the United States Bankruptcy Court confirming the Prepackaged Plan pursuant to Section 1129 of the Bankruptcy Code. 2 6 "Consent" shall have the meaning set forth in Paragraph 4(a)(v) of this Agreement. "Conversion Stock" shall mean shares of Common Stock issuable upon conversion of any 7% Notes. "Co-Production Agreement" shall mean the Co-Production Agreement to be entered into by and among the Company and the Investors having substantially the same terms as set forth in Exhibit B hereto. "Co-Production Commitment" shall have the meaning specified in Paragraph 2 of this Agreement. "Effective Date" shall mean the date upon which the Securities Purchase Closing shall have occurred. "Equity Security" shall mean, with respect to any Person, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock of such Person or any securities of such Person convertible into or exchangeable for any of the foregoing. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "Funding" shall mean the delivery of the 7% Notes to each Purchaser by the Company and the payment of the Note Commitment by each Purchaser to the Company pursuant to Paragraph 3 of this Agreement. "Funding Date" shall mean the later to occur of (i) December 30, 1994, and (ii) the second Business Day after the date upon which the conditions to Funding set forth in Paragraphs 6(a)(iii), 6(a)(iv) and 6(b)(i) are satisfied; provided, however, that if, on such date, the conditions to Funding set forth in Paragraph 6(b)(i) are not satisfied, the Company shall have 60 days from the date upon which a case described in Paragraph 6(b)(i) was instituted to obtain a dismissal of such action in such event the Funding Date shall occur shall be the second Business Day following such dismissal. "Group" shall have the meaning given to such term in Section 13(d)(3) of the Exchange Act. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder. "Investors" shall mean TCI and Le Studio. "Le Studio" shall have the meaning specified in the introduction to this Agreement. 3 7 "LIVE" shall mean LIVE Entertainment Inc., a Delaware corporation. "Loan Agreement" shall mean the agreement or agreements to be entered into by and between the Company and one or more financial institutions (the "Lenders") pursuant to which the Lenders agree, through separate arrangements or acting as a group, to provide to the Company a credit facility having substantially the same terms as the credit facility described in the Prospectus and Proxy Statement. "MGM Distribution Agreement" shall mean the term sheet by and between the Company and Metro-Goldwyn-Mayer, Inc. attached as Exhibit E to the Securities Purchase Agreement and the long form distribution agreement or agreements contemplated thereby. "MGM Holdings" shall mean MGM Holdings Corporation, a Delaware corporation. "Note Commitment" shall have the meaning specified in Paragraph 2 of this Agreement. "Person" shall mean and include any individual, partnership, Group, joint venture, corporation, trust, unincorporated organization or government, or any department or agency thereof. "Pioneer" shall have the meaning set forth in the introduction to this Agreement. "Prepackaged Plan" shall mean the prepackaged plan of reorganization of the Company under Chapter 11 of the Bankruptcy Code, or any other plan of reorganization filed by the Company, attached as an appendix to the Prospectus and Proxy Statement, as it may from time to time be amended or supplemented or any other plan of reorganization similar in all material respects. "Pro Rata Share of Co-Production Commitments" shall mean, with respect to each Investor, a percentage equal to such Investor's Co-Production Commitment divided by the Total Co-Production Commitments. "Pro Rata Share of Note Commitments" shall mean, with respect to each Purchaser, a percentage equal to such Purchaser's Note Commitment divided by the Total Note Commitments. "Prospectus and Proxy Statement" shall mean the Prospectus, Offer to Purchase, Consent Statement, Proxy Statement and Solicitation of Acceptances of Prepackaged Plan of Reorganization contained in the Registration Statement, as amended or supplemented through the date hereof and as the same may hereafter from time to time be amended or otherwise supplemented. "Purchasers" shall mean Cinepole, Pioneer, and RCS. "RCS" shall have the meaning set forth in the introduction to this Agreement. 4 8 "Registration Statement" shall mean the Company's Registration Statement on Form S-1 originally filed with the SEC on December 24, 1992 relating to the Restructuring, including the Prospectus and Proxy Statement, Part II and any documents incorporated by reference therein, all financial statements included therewith and all exhibits thereto, as amended or supplemented to date and as the same may hereafter from time to time be amended or otherwise supplemented. "Restructuring" shall have the meaning set forth in the Registration Statement. "SEC" shall mean the United States Securities and Exchange Commission or any successor organization. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "Securities Purchase Agreement" shall mean that certain Securities Purchase Agreement dated as of May 25, 1993 by and among the Company and Cinepole, MGM Holdings and Pioneer, as it may from time to time be amended, modified or otherwise supplemented. "Securities Purchase Closing" shall mean the delivery of an aggregate of 82,500 shares of Series A Convertible Preferred Stock, par value $1.00 per share, of the Company to Cinepole, MGM Holdings and Pioneer and the delivery of the $30,000,000 aggregate principal amount of 5% Payment-in-Kind Convertible Subordinated Notes due 2002 to MGM Holdings and the payment of the purchase price for such securities to the Company in accordance with the Securities Purchase Agreement. "Special Meeting" shall mean the special meeting of stockholders of the Company described in the Prospectus and Proxy Statement. "Strategic Investors" shall mean Le Studio, Cinepole, Pioneer, RCS and their respective Affiliates (other than LIVE, the Company and their respective Subsidiaries). "Subsequent Co-Production Funding" shall mean (x) a direct cash investment in an identified motion picture of the Company for use in the production of such motion picture after the date of this Agreement and before December 10, 1994, and/or (y) a binding commitment after the date of this Agreement and before December 10, 1994 for a direct cash investment in an identified motion picture of the Company which will commence principal photography prior to December 31, 1995 for use in the production of such motion picture, other than in the case of each of clause (x) and clause (y), investments or commitments made pursuant to this Agreement, the Co-Production Agreement, the TCI Pay-Per-View Agreement, the TCI Stock Purchase Agreement, the Restructuring, the Confirmation Order or investments or commitments by Canal+ for production of the motion picture currently entitled "Spiderman" which reduce RCS' ownership interest or equity percentage in Spiderman Productions Ltd. 5 9 "Subsidiary" shall mean, with respect to any Person, any corporation more than 50% of the total combined voting power of all classes of the voting securities of which shall be, at the time as of which any determination is being made, owned by such Person either directly or indirectly through Subsidiaries. "TCI" shall have the meaning set forth in the introduction to this Agreement. "TCI Pay-Per-View Agreement" shall mean the letter of intent by and between the Company and TCI attached as Exhibit F to the Securities Purchase Agreement and the long-form pay-per-view agreement contemplated thereby. "TCI Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement to be entered into by and between the Company and TCI with respect to the purchase of Common Stock by TCI. "Termination Date" shall mean December 31, 1997. "Third Party Sale" shall mean the issuance and sale by the Company or any Subsidiary of the Company of Equity Securities to any Person in exchange for cash in a public or private offering other than (i) pursuant to this Agreement, the TCI Stock Purchase Agreement, the TCI Pay-Per-View Agreement, the Co-Production Agreement, the Restructuring or the Confirmation Order, (ii) the conversion or exchange of Equity Securities, whether now existing or hereafter issued, for other Equity Securities, (iii) the issuance or exercise of stock options, whether now existing or hereafter issued pursuant to employee stock option or incentive plans or employment agreements, (iv) the sale of Equity Securities to employees or consultants of the Company or its Subsidiaries, (v) the issuance or exercise of rights to purchase Equity Securities which have been granted to all holders of a class of Equity Securities, (vi) the issuance and sale of Equity Securities to the Purchasers, the Investors or their respective Affiliates, and (vii) the issuance and sale of Equity Securities in a transaction involving solely the Company and its Subsidiaries or the Company's Subsidiaries. "Total Co-Production Commitments" shall mean the aggregate Co-Production Commitments of all Investors. "Total Note Commitments" shall mean the aggregate Note Commitments of all Purchasers. References to a "Paragraph" are, unless otherwise specified, to one of the paragraphs of this Agreement and references to an "Exhibit" are, unless otherwise specified, to one of the exhibits attached to this Agreement. 6 10 2. Commitments to Purchase 7% Notes and Invest in Co-Productions. (a) Purchase of 7% Notes. Subject to satisfaction or waiver of the conditions set forth in Paragraph 6, on the Funding Date, each Purchaser hereby severally agrees to purchase from the Company and the Company agrees to issue and sell to each Purchaser 7% Notes in the aggregate principal amount set forth opposite such Purchaser's name below at a purchase price of $1,000 per $1,000 principal amount of 7% Notes; provided, however, that the amounts set forth below are subject to adjustment as set forth in Paragraph 2(c) (as so adjusted, each such Purchaser's "Note Commitment"). Cinepole - $ 7,500,000 Pioneer - $10,000,000 RCS - $ 2,500,000 ----------- Total - $20,000,000
(b) Co-Production Investments. Commencing on the Funding Date or, if the Total Note Commitments (as adjusted pursuant to Paragraph 2(c)(i)(E)) equal $0, on December 30, 1994 and continuing until the Termination Date, each Investor hereby severally agrees to make investments in motion pictures of the Company from time to time on the terms and subject to the conditions set forth in the Co-Production Agreement in an aggregate amount at any one time outstanding not to exceed the amount set forth opposite such Investor's name below; provided, however, that the amounts set forth below are subject to adjustment as set forth in Paragraph 2(c) (as so adjusted, each such Investor's "Co-Production Commitment"). Le Studio - $17,500,000 TCI - $10,000,000 ----------- Total - $27,500,000
(c) Adjustments in Commitments. The Co-Production Commitments and Note Commitments shall be subject to adjustment as follows: (i) Events Occurring Prior to Funding Date. (A) Le Studio Adjustment. Le Studio will have the right to reduce its Co-Production Commitment by up to $7,500,000 by adding such amount to Cinepole's Note Commitment in the manner described in Paragraph 2(c)(i)(E) (the "Le Studio Adjustment") without the consent of the other Purchasers or the other Investor. (B) Subsequent Co-Production Investments by TCI. Any Subsequent Co-Production Funding received by the Company or any of its Subsidiaries from TCI or its Affiliates (other than the Company and its Subsidiaries) shall be applied to reduce TCI's Co-Production Commitment on a dollar-for-dollar basis until its Co-Production Commitment is extinguished. 7 11 (C) Subsequent Co-Production Investments by Le Studio. Any Subsequent Co-Production Funding received by the Company or any of its Subsidiaries from Le Studio or its Affiliates (other than the Company and its Subsidiaries) shall be applied as follows: (1) In the event that the Le Studio Adjustment has not occurred, then up to the first $7,500,000 of such funding shall be applied to reduce Le Studio's Co-Production Commitment on a dollar-for-dollar basis until its Co-Production Commitment is extinguished. In the event that the Le Studio Adjustment has occurred, then up to the first $7,500,000 of such funding shall be applied to reduce Cinepole's Note Commitment on a dollar-for-dollar basis and, if and when Cinepole's Note Commitment has been extinguished, then the unapplied balance of the first $7,500,000 of such funding shall be applied to reduce Le Studio's Co-Production Commitment on a dollar-for-dollar basis until its Co-Production Commitment has been extinguished. (2) Up to the second $7,500,000 of such funding shall be applied to reduce Cinepole's Note Commitment on a dollar-for-dollar basis and, if and when Cinepole's Note Commitment has been extinguished, then the unapplied balance of the second $7,500,000 of such funding shall be applied to reduce Le Studio's Co-Production Commitment on a dollar-for-dollar basis until its Co-Production Commitment has been extinguished. (3) Any additional funding shall be applied to reduce Le Studio's Co-Production Commitment on a dollar-for-dollar basis until its Co-Production Commitment is extinguished. (D) Sale of Equity Securities. In the event that a Third Party Sale occurs after the date of this Agreement and before December 10, 1994, an amount equal to the purchase price received by the Company or its Subsidiary from such Third Party Sale shall be allocated first to reduce each Purchaser's Note Commitment proportionately in an amount equal to such Purchaser's Pro Rata Share of Note Commitments until the Note Commitments are extinguished and, once the Total Note Commitments are extinguished, shall be allocated next to reduce each Investor's Co-Production Commitment proportionately in an amount equal to such Investor's Pro Rata Share of Co-Production Commitments until the Co-Production Commitments are extinguished. (E) Manner of Adjustment. The adjustments to the Co-Production Commitments and Note Commitments set forth in this Paragraph 2(c)(i) shall be made as follows. On December 12, 1994, the Company shall provide written notice to each Purchaser and each Investor specifying (x) whether any Third Party Sale occurred after the date of this Agreement and before December 10, 1994 and, if so, the aggregate purchase price received from any such Third Party Sales and (y) whether any Subsequent Co-Production Funding was made available after the date of this Agreement and before December 10, 1994, the aggregate dollar amount of such financing received and the source of such financing. On or before December 19, 1994, Le Studio and Cinepole shall provide 8 12 written notice to the Company, the other Purchasers and the other Investor of their election, if any, to exercise the Le Studio Adjustment and containing Cinepole's consent to the increase in its Note Commitment. On or before December 23, 1994, the Company shall provide written notice to each Purchaser of its Note Commitment and to each Investor of its Co-Production Commitment, giving effect to the adjustments set forth in this Paragraph 2(c)(i). (ii) TCI Adjustment. In the event that one or more "Closings" (as such term is defined in the TCI Stock Purchase Agreement) have occurred on or prior to the first date upon which the Company draws on the Co-Production Commitment (the "First Funding"), then TCI's Co-Production Commitment shall be reduced automatically and without further action on the date of (and effective for) the First Funding by an amount equal to the aggregate of the "Additional Investment Amounts" (as defined in the TCI Stock Purchase Agreement) actually paid as of the date of the First Funding. (iii) Failure of Subsequent Co-Production Funding. In the event that the Company makes an adjustment to the Co-Production Commitments pursuant to Paragraph 2(c)(i)(B) as a result of obtaining binding commitments referred to in clause (y) of the definition of Subsequent Co-Production Funding and, for any reason, has not received the direct cash investments contemplated thereby on or prior to December 31, 1995 (a "Failed Commitment"), then the Co-Production Commitment of the Investor or Investors making such Failed Commitment shall be increased by the dollar amount of such Failed Commitment automatically and without further action commencing on January 1, 1996, but in no event shall such Investor's Co-Production Commitment as increased pursuant to this sentence exceed the amount set forth opposite such Investor's name in Paragraph 2(b). 3. Funding. The Funding shall take place at 9:00 a.m. Pacific Time on the Funding Date at the offices of Gipson Hoffman & Pancione, P.C., 1901 Avenue of the Stars, Suite 1100, Los Angeles, California. Subject to the terms and conditions of this Agreement, on the Funding Date, the Company shall deliver certificates evidencing the 7% Notes to each Purchaser registered in such Purchaser's name against payment of an amount equal to such Purchaser's Note Commitment on such date in immediately available funds by wire transfer as the Company may direct. 4. Representations and Warranties. (a) Representations and Warranties of the Company. The Company represents and warrants to each of the Purchasers and Investors as of the date hereof and as of the Effective Date as follows: (i) Organization and Powers. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate power and corporate authority to own and operate its property, to carry on its business as now being conducted, to execute and deliver this Agreement and the Co-Production Agreement, to issue and sell the 7% Notes 9 13 and to carry out the transactions contemplated hereby and thereby (or will have such power and authority pursuant to the Confirmation Order). The Company is duly qualified as a foreign corporation or registered to do business and is in good standing in every jurisdiction in which the character or location of the properties owned or leased by the Company, or the nature of the business or operations conducted by the Company, makes such qualification or registration necessary, except where the failure to be so qualified or registered would not have a material adverse effect on the properties, financial (or other) condition, prospects or business operations of the Company and its Subsidiaries, taken as a whole. (ii) Corporate Action. The Company has taken all necessary corporate action to authorize the execution and delivery of this Agreement and the representatives of the Company executing this Agreement are duly authorized to do so. Upon execution of the Co-Production Agreement, the Company will have taken all necessary corporate action to authorize the execution and delivery of the Co-Production Agreement and the representatives of the Company executing the Co-Production Agreement will be duly authorized to do so. (iii) Enforceability. Assuming due execution and delivery of this Agreement and the Co-Production Agreement by the Purchasers and Investors party thereto, this Agreement is, and the Co-Production Agreement, upon execution and delivery will be, the legal, valid and binding obligations of the Company enforceable in accordance with their respective terms except (a) as its obligations may be affected by bankruptcy, insolvency, reorganization, moratorium or similar laws, or by equitable principles relating to or limiting creditors' rights generally and (b) that the remedies of specific performance, injunction and other forms of equitable relief are subject to certain tests of equity jurisdiction, equitable defenses and the discretion of the court before which any proceeding therefor may be brought. (iv) No Conflict. The execution and delivery of this Agreement and the Co-Production Agreement are not, and, assuming that the Restructuring or the Prepackaged Plan is consummated and the Loan Agreement is effective, the fulfillment of or compliance with the terms and provisions of this Agreement and the Co-Production Agreement will not be, in contravention of or in conflict with (a) the Restated Certificate of Incorporation, as amended by the Amendment, or the Restated By-Laws of the Company, (b) any Applicable Laws binding on the Company, or (c) any agreement, license, indenture or undertaking to which the Company is a party or by which the Company or any of its property may be bound or affected, which contravention or conflict, if any, would have a material adverse effect on the properties, financial (or other) condition, prospects or business operations of the Company and its Subsidiaries, taken as a whole. (v) Consents and Approvals. No consent, approval, permit, license, authorization, filing, registration, notice or other action, with, or by any governmental authority (each a "Consent") is required in connection with the Company's execution and delivery of this Agreement or the Co-Production Agreement and no Consent will be required for the performance of this Agreement or the Co-Production 10 14 Agreement other than (a) the filing with the Secretary of State of the State of Delaware of the Amendment, (b) Consents already received, (c) filings, approvals or notices required by any applicable federal or state securities law, (d) termination or expiration of any applicable waiting period with respect to filings under the HSR Act, (e) filings of financing statements under the Uniform Commercial Code and filings with the United States Copyright Office, all pursuant to the Co-Production Agreement, and (f) issuance of the Confirmation Order and any other necessary accompanying orders or preceding orders if a case is commenced under Chapter 11 of the Bankruptcy Code. (vi) Capitalization. Upon consummation of the Restructuring or the Prepackaged Plan, the authorized capital stock of the Company will be as set forth in the Registration Statement. (b) Representations and Warranties of the Purchasers and Investors. Each of the Purchasers and Investors represents and warrants to the Company as of the date hereof and as of the Effective Date for itself individually, and in each case not with respect to any of the other Purchasers and Investors, as follows: (i) Organization and Powers. Such Purchaser or Investor is a corporation duly organized, validly existing and in good standing or validly established and existing, as applicable, under the laws of the jurisdiction of its incorporation and has all the requisite corporate power and corporate authority to own and operate its property, to carry on its business as now being conducted, to execute and deliver this Agreement and the Co-Production Agreement, as applicable, and to carry out the transactions contemplated hereby and thereby. (ii) Corporate Action. Such Purchaser or Investor has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and its representatives executing this Agreement are duly authorized to do so. Upon execution of the Co-Production Agreement, such Investor will have taken all necessary corporate action to authorize the execution, delivery and performance of the Co-Production Agreement and the representatives of such Investor executing the Co-Production Agreement will be duly authorized to do so. (iii) Enforceability. Assuming due execution and delivery of this Agreement and the Co-Production Agreement by the Company and each of the parties thereto other than such Purchaser or Investor, this Agreement is, and the Co-Production Agreement, as applicable, upon execution and delivery will be, the legal, valid and binding obligations of such Purchaser or Investor enforceable in accordance with its terms except (a) as its obligations may be affected by bankruptcy, insolvency, reorganization, moratorium or similar laws, or by equitable principles relating to or limiting creditors' rights generally and (b) that the remedies of specific performance, injunction and other forms of equitable relief are subject to certain tests of equity jurisdiction, equitable defenses and the discretion of the court before which any proceeding therefor may be brought. 11 15 (iv) No Conflict. The execution, delivery and performance of this Agreement and the Co-Production Agreement, as applicable, and the fulfillment of or compliance with the terms and provisions of this Agreement and the Co-Production Agreement, as applicable, are not in contravention of or in conflict with (a) the Certificate of Incorporation or By-Laws or equivalent charter documents of such Purchaser or Investor, (b) any Applicable Laws binding upon such Purchaser or Investor, or (c) any agreement, license, indenture or undertaking to which such Purchaser or Investor is a party or by which such Purchaser or Investor or any or its property may be bound or affected, which contravention or conflict, if any, would have a material adverse effect upon the properties, financial (or other) condition, prospects or business operations of such Purchaser or Investor and its Subsidiaries, taken as a whole. (v) Consents and Approvals. No Consent is required in connection with such Purchaser's or Investor's execution, delivery and performance of this Agreement or the Co-Production Agreement, as applicable, other than those identified in Paragraph 4(a)(v) of this Agreement. (vi) Accredited Investor; Investor Knowledge. Each Purchaser represents that it is an "accredited investor" within the meaning of Rule 501 promulgated under the Securities Act. Each Purchaser represents that, by reason of its business and financial experience, it has such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risk of the investment contemplated by this Agreement. Each Purchaser acknowledges that it has received all the that it has requested from the Company in order to make an informed decision with respect to its acquisition of 7% Notes. (vii) Acquisition for Investment; Funding Source. Each Purchaser represents that it is specifically understood and agreed that it is acquiring the 7% Notes solely for its account and not with a view to or for sale in connection with any distribution thereof and that such Purchaser has no present intention or plan to effect any distribution of the 7% Notes or the Conversion Stock. (viii) Access to Information. Each Purchaser represents and warrants that it has received a copy of the Registration Statement and that it and its accountants, counsel, financial advisers and other representatives have been given reasonable access to all of the Company's and its subsidiaries' properties, books, contracts, commitments and records and that they have been given adequate opportunities to obtain any additional information and documents relating to the acquisition of the 7% Notes and to ask questions and receive answers about the foregoing and about the Company. (ix) Restricted Securities. Each Purchaser represents that it understands that each of the 7% Notes is, and the Conversion Stock when issued will be, a "restricted security" and that in connection with the sale of the 7% Notes to the Purchasers, the 7% Notes have not been registered under the Securities Act on the ground that the sale of the 7% Notes is exempt from registration under the Securities Act, 12 16 depending upon, among other things, the bona fide nature of the investment intent as expressed in this Agreement. (x) Restrictive Legend. Each Purchaser acknowledges that the Company has informed it that the Company has filed a stop transfer notice with respect to the 7% Notes and the Conversion Stock with the transfer agent for such securities. Each Purchaser further acknowledges that the 7% Notes and the Conversion Stock when issued will not be registered under the Securities Act, and may be sold or disposed of in the absence of such registration only pursuant to an exemption from such registration and in accordance with this Agreement. The 7% Notes and the certificates representing the Conversion Stock will bear a legend to the following effect: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold or otherwise transferred except pursuant to an effective registration statement under said Act or an applicable exemption from the registration requirements thereof." (xi) No Obligation to Register. Each Purchaser understands that the Company is under no obligation to register the sale, transfer or other disposition by such Purchaser of the 7% Notes or the Conversion Stock or to take any other action necessary in order to make compliance with an exemption from registration available except as may be specifically set forth with respect to the Conversion Stock in the Registration Rights Agreement which is attached as Exhibit H to the Securities Purchase Agreement. 5. Deliveries on the Effective Date. (a) Deliveries by the Company. On the Effective Date, the Company shall deliver the following documents to each Purchaser except to the extent waived in writing by such Purchaser: (i) A certificate dated the Effective Date and signed by a duly authorized officer of the Company to the effect that the representations and warranties of the Company herein contained are true on and as of the Effective Date with the same effect as though made at such time and the Company has performed all other obligations and complied with all covenants and conditions required by this Agreement to be performed or complied with by it at or prior to the Effective Date. (ii) A certificate dated the Effective Date and signed by a duly authorized officer of the Company to the effect that the condition precedent to Funding set forth in Paragraph 6(a)(i) has been satisfied. 13 17 (b) Deliveries by Each of the Purchasers. On the Effective Date, each of the Purchasers shall deliver the following documents to the Company except to the extent waived in writing by the Company: (i) A certificate dated the Effective Date and signed by a duly authorized officer of such party to the effect that the representations and warranties of such party herein contained are true on and as of the Effective Date with the same effect as though made at such time and such party has performed all other obligations and complied with all covenants and conditions required by this Agreement to be performed or complied with by it at or prior to the Effective Date. (ii) A certificate dated the Effective Date and signed by a duly authorized officer of such party to the effect that the condition precedent to Funding set forth in Paragraph 6(a)(i) has been satisfied. 6. Conditions to Funding Obligations. (a) Conditions to Obligations of Each of the Purchasers and the Company. The obligations of each of the Purchasers and the Company to effect the Funding shall be subject to satisfaction, on or before the Funding Date, of the following conditions except to the extent waived in writing by each of the Purchasers and the Company: (i) Effective Date. The Effective Date shall have occurred. (ii) 7% Indenture. The 7% Indenture shall have been executed and delivered by the parties thereto. (iii) HSR Act. Any applicable waiting periods with respect to filings under the HSR Act for the purchase and sale of 7% Notes shall have expired or shall have been terminated. (iv) Compliance with Securities Laws. All applicable requirements of state and federal securities laws shall have been satisfied. (b) Conditions to Obligations of Each of the Purchasers. The obligations of each of the Purchasers to effect the Funding shall be subject to satisfaction, on or before the Funding Date, of the following conditions except to the extent waived in writing by each of the Purchasers: (i) Bankruptcy Events. (A) The Company. The Company shall not be the subject of any pending case which seeks to adjudicate it a bankrupt or insolvent, or seeks liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or 14 18 composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeks the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property. (B) Certain Subsidiaries. No Subsidiary of the Company shall be the subject of any pending case which (x) seeks to adjudicate it a bankrupt or insolvent, or seeks liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeks the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and (y) would reasonably be expected to have a material adverse effect on the Company and its Subsidiaries, taken as a whole. (ii) Authorization of 7% Notes. The 7% Notes shall have been duly authorized, executed and delivered by the Company and shall constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms except (a) as its obligations may be affected by bankruptcy, insolvency, reorganization, moratorium or similar laws, or by equitable principles relating to or limiting creditors' rights generally and (b) that the remedies of specific performance, injunction and other forms of equitable relief are subject to certain tests of equity jurisdiction, equitable defenses and the discretion of the court before which any proceeding therefor may be brought, and the Company shall have delivered to each of the Purchasers a certificate dated the Effective Date and signed by a duly authorized officer of the Company to such effect. (c) Conditions to the Company's Obligations. The obligations of the Company to effect the Funding shall be subject to satisfaction, on or before the Funding Date, of the following conditions, except to the extent waived in writing by the Company: (i) Investment Letters. Each Purchaser shall have delivered a letter signed by such Purchaser acceptable to the Company and its counsel with respect to such Purchaser's investment intent in receiving the 7% Notes hereunder and the Conversion Stock and affirming the representations and warranties set forth in Paragraphs 4(b)(vi) through 4(b)(x). 7. Covenants. (a) Execution of Co-Production Agreement. Each of the Company, Le Studio and TCI hereby agree that it shall negotiate the definitive terms of the Co-Production Agreement in good faith and shall execute and deliver the Co-Production Agreement as soon as practicable after the date hereof. The parties hereto acknowledge that, upon its execution and delivery, the Co-Production Agreement shall for all purposes supersede the term sheet attached hereto as Exhibit B. 15 19 (b) Hart-Scott-Rodino Act. Each Purchaser, each Investor and the Company agree (i) to make all necessary filings under the HSR Act, if any, in connection with the purchase and sale of the 7% Notes hereunder on or prior to October 30, 1994, (ii) upon prior written notice to each Investor by the Company, to make all necessary filings under the HSR Act, if any, in connection with and prior to any funding pursuant to the Co-Production Agreement, and (iii) to use their best efforts to furnish or cause to be furnished, as promptly as practicable, all information and documents requested under the HSR Act. The parties will use their best efforts to obtain early termination of the waiting period under the HSR Act and will notify each other party hereto promptly if and when such termination is obtained. (c) Use of Proceeds. (i) Note Commitments. The proceeds of the Note Commitments hereunder shall be used only for (A) the development, acquisition, production, financing, distribution or other exploitation of any feature or non-feature motion picture of the Company, whether produced for theatrical, non-theatrical or television release or for release in any other medium, and all rights relating thereto, and (B) the acquisition on a temporary basis of cash and cash equivalents consistent with the Company's past cash management practices. (ii) Co-Production Commitments. The proceeds of the Co-Production Commitments hereunder shall be used as set forth in the Co-Production Agreement. (d) Offer to Negotiate. (i) Additional Funding. In the event that the Company intends, at any time or from time to time after the date of this Agreement and continuing until the Termination Date, to solicit Additional Funding (other than Additional Funding covered under paragraph (ii) below), then (A) the Company shall inform Cinepole, Pioneer, TCI and RCS of the negotiations to obtain such Additional Funding, (B) the Company shall negotiate in good faith with Cinepole, Pioneer, TCI and RCS on an equal basis with any Person proposing to provide such Additional Funding, and (C) Cinepole, Pioneer, TCI and RCS shall have the right to participate in the final agreement with respect to such Additional Funding. (ii) Additional Funding from Certain Persons. In the event that the Company intends, at any time or from time to time after the date of this Agreement and continuing until the Termination Date, to solicit Additional Funding from Persons engaged in the business of distribution of feature motion pictures, then (i) the Company shall inform Cinepole, Pioneer, TCI and RCS of the negotiations to obtain such Additional Funding, and (ii) the Company shall negotiate with Cinepole, Pioneer, TCI and RCS to provide Additional Funding on terms to be negotiated in good faith. 16 20 (e) Obligations Absolute. Each Purchaser and each Investor understands and agrees that except to the extent specifically set forth in Paragraph 6 of this Agreement or in the Co-Production Agreement, as applicable, its obligations to purchase the 7% Notes and to make available its Co-Production Commitment, and each of its obligations under this Agreement and the Co-Production Agreement, are absolute and unconditional and, without limiting the generality of the foregoing, shall not be conditioned upon or subject to (a) any adverse change (regardless of whether the change would be considered material) in the business, financial condition, capitalization, operations, prospects or affairs of the Company and/or any or all of its Subsidiaries, or the price or market for the Common Stock or any other class or series of capital stock of the Company occurring subsequent to the date of execution of this Agreement, or (b) any right or claim of offset, reduction or counterclaim against the Company. Notwithstanding the foregoing clause (b), nothing in this paragraph shall be construed as a waiver by any Purchaser or Investor of its right to pursue any claims or counterclaims against the Company in a separate proceeding. (f) Drawing Under Co-Production Agreement. The Company hereby covenants and agrees that in the event it receives funds from the issuance and sale of 7% Notes under this Agreement, it will use its reasonable best efforts to utilize the amounts available to it under the Co-Production Agreement. (g) Authorization of Conversion Stock. Upon the Funding Date, the Company shall use its reasonable best efforts to at all times reserve and keep available solely for issuance and delivery to the Purchasers, a sufficient number of shares of Conversion Stock to satisfy its obligations under the 7% Indenture. 8. Miscellaneous. (a) Consent to Assumption and Consent to Prepackaged Plan. Each Purchaser and each Investor acknowledges that the Company may file a Chapter 11 case under the Bankruptcy Code in conjunction with which the Company may seek confirmation of the Prepackaged Plan, that this Agreement is an integral part of the reorganization contemplated by the Prepackaged Plan and that each of the parties hereto does not intend this Agreement to be a financial accommodation within the meaning of Section 365(c)(2) of the Bankruptcy Code. Each Purchaser and each Investor consents to the assumption of this Agreement in connection with confirmation of the Prepackaged Plan pursuant to Bankruptcy Code Sections 365(a) and 1123(b)(2), and each of the Purchasers and Investors agrees not to oppose such assumption, or to assert or join in any defense or objection to said assumption on any grounds, including those set forth in Bankruptcy Code Section 365(c). (b) Consent to Amendments. Except as provided in Paragraphs 5 and 6 herein, this Agreement not may be amended, modified or waived other than pursuant to a written instrument executed by the Company and each of the Purchasers and Investors. 17 21 (c) Survival of Representations and Warranties. None of the representations and warranties contained herein or made in writing by the Company or the Purchasers or Investors in connection herewith shall survive the Effective Date. (d) Specific Performance; Severability. The parties hereto acknowledge and agree that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such damage would not be compensable in money damages and that it would be extremely difficult or impracticable to measure the resultant damages. It is accordingly agreed that any party hereto shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which it may be entitled at law or equity, and such party that is sued for breach of this Agreement expressly waives any defense that a remedy in damages would be adequate and expressly waives any requirement in an action for specific performance for the posting of a bond by the party bringing such action. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, (i) the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any Paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. (e) Further Assurances. Each party shall use its best efforts to cause all of the conditions to its and the other parties' obligations hereunder to be timely satisfied. The parties hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments or documents as any other party may reasonably request from time to time in order to carry out the intent and purposes of this Agreement and the consummation of the transactions contemplated hereby. Neither the Company nor any of the Purchasers or Investors shall voluntarily undertake any course of action inconsistent with satisfaction of any requirement applicable to it set forth in this Agreement and each shall promptly do all such acts and take all such measures as may be appropriate to enable any party to perform as early as practicable the obligations herein and therein required to be performed by it. (f) No Third Party Beneficiaries; Assignment. This Agreement creates rights and duties between the parties hereto only, and no third party shall have any rights hereunder, or any rights in or to the 7% Notes issued hereunder. Neither this Agreement, nor any of the rights, interests or obligations hereunder, may be assigned by any of the parties without the prior written consent of each of the other parties. Subject to the 18 22 preceding sentence, this Agreement shall be binding upon, and inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. (g) Notices. All communications provided for hereunder shall be sent by certified mail, return receipt requested, courier service or telecopy as follows: If to TCI: 5619 ETDC Parkway Englewood, Colorado 80111 Telecopier No.: (303) 488-3245 Attention: General Counsel With a copy to: Kenneth Ziffren, Esq. Ziffren Brittenham & Branca 2121 Avenue of the Stars, Suite 3200 Los Angeles, California 90067 Telecopier No.: (310) 553-7068 If to Le Studio: 17, rue Dumont d'Arville 75116 Paris France Attention: Olivier Granier If to Cinepole: P.O. Box 990 1000 AZ Amsterdam The Netherlands With a copy to: Jonathan Wohl, Esq. Coudert Freres 52, Avenue des Champs-Elysees 75008 Paris France Telecopier No.: (331) 43.59.66.55 19 23 If to Pioneer: Pioneer LDCA, Inc. 2265 East 220th Street Long Beach, California 90810 Attention: Mr. Tetsuro Kudo With a copy to: Pioneer LDC Arco Tower, 8-1 Shimomeguro 1-chome Meguro-ku Tokyo 153, Japan Attention: Mr. Ryuichi Noda and Gideon Cashman, Esq. Pryor, Cashman, Sherman & Flynn 410 Park Avenue New York, New York 10022 Telecopier No.: (212) 326-0806 If to RCS: Museumplein 11 1071 DJ Amsterdam Netherlands With a copy to: Avv. Enzo Pulitano Affari Legali e Societari RCS Editori SpA Corso Garibaldi 86 20121 Milan Italy Telecopier No.: 011-39-2-65-33-30 20 24 and Paul D. Downs, Esq. Werbel, McMillin & Carnelutti 711 Fifth Avenue New York, New York 10022 Telecopier No.: (212) 832-3353 If to the Company: 8800 Sunset Boulevard Los Angeles, California 90069 Telecopy number: (310) 652-1343 Attention: General Counsel Notices shall be effective upon receipt. (h) Descriptive Headings. The descriptive headings of the several Paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. (i) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. (j) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement, to produce or account for more than one such counterpart. (k) Publicity. Each of the parties hereto agrees that it will make no public statement regarding the transactions contemplated hereby except as mutually agreed, which agreement will not be unreasonably withheld, or as required by Applicable Law. Notwithstanding the foregoing, each of the parties hereto may, in documents required to be filed by it with the SEC or other regulatory bodies, make such public statements with respect to the transactions contemplated hereby as each may be advised by counsel is legally necessary. (l) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to the Purchasers, the Investors or the Company upon any breach or default under this Agreement, shall impair any such right, power or remedy of the Purchasers, the Investors or the Company nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any 21 25 waiver, permit, consent or approval of any kind or character on the part of the Purchasers, the Investors or the Company of any breach or default under this Agreement, or any waiver on the part of any holder of any provisions or conditions of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to the Purchasers, the Investors or the Company shall be cumulative and not alternative. (m) Jurisdiction. Any judicial proceeding brought against any of the parties to this Agreement on any dispute arising out of this Agreement or any matter related thereto may be brought in the courts on the State of California, or in the United States District Court for the Central District of California, and, by execution and delivery of this Agreement, each of the parties to this Agreement accepts the exclusive jurisdiction of such courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. The foregoing consents to jurisdiction shall not constitute general consents to service of process in the State of California for any purpose except as provided above and shall not be deemed to confer rights on any Person other than the respective parties to this Agreement. (n) Entire Agreement. This Agreement, including the other documents referred to herein which form a part hereof, contains the entire understanding of the parties hereto with respect to the subject matter contained herein and therein. This Agreement and such other documents supersede all prior agreements and understandings between the parties with respect to such subject matter. 22 26 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CAROLCO PICTURES INC., a Delaware corporation By: /s/ WILLIAM SHPALL ------------------------ Its: Executive Vice President CINEPOLE PRODUCTIONS B.V., a Netherlands corporation /s/ DOMINIQUE JEUNOT By: /s/ MEESPIERSON TRUST B.V. -------------------------- Its: Co-Managing Directors LE STUDIO CANAL+, a French corporation By: /s/ OLIVIER GRANIER ------------------------ Its: PIONEER LDCA, INC., a Delaware corporation By: /s/ TETSURO KUDO ------------------------ Its: President RCS VIDEO INTERNATIONAL SERVICES B.V., a Netherlands corporation By: /s/ PAOLO GLISENTI ------------------------ Its: TELE-COMMUNICATIONS, INC., a Delaware corporation By: /s/ STEPHEN BRETT ------------------------ Its: Senior Vice President EX-99.ANN 5 INDENTURE DATED AS OF 10-14-94 1 EXHIBIT 99.ANN ================================================================================ CAROLCO PICTURES INC., Issuer AND AMERICAN STOCK TRANSFER & TRUST COMPANY, Trustee ______________________________ INDENTURE Dated as of October 14, 1994 ______________________________ $50,000,000 7% Convertible Subordinated Notes Due 2006 ================================================================================ 2 CROSS REFERENCE TABLE
TIA Section Indenture Section ----------- ----------------- 310(a)(1) 9.10 (a)(2) 9.10 (a)(3) N.A. (a)(4) N.A. (b) 9.8, 9.10, 12.2 (c) N.A. 311(a) 9.11, 9.3 (b) 9.11 (c) N.A. 312(a) 2.6 (b) 12.2, 12.3 (c) 12.3 313(a) 9.6 (b)(1) N.A. (b)(2) 9.6 (c) 9.6, 12.2 (d) 9.6 314(a) 6.4, 12.2 (b) N.A. (c)(1) 12.4 (c)(2) 12.4 (c)(3) N.A. (d) N.A. (e) 12.5 315(a) 9.1(b) (b) 9.5, 12.2 (c) 9.1(a) (d) 9.1(c) (e) 8.11 316(a)(1)(A) 8.5 (a)(1)(B) 8.4 (a)(2) N.A. (b) 8.7 317(a)(1) 8.8 (a)(2) 8.9 (b) 2.5 318(a) 12.1
_______________ N.A. means not applicable. NOTE: This Cross Reference Table shall not, for any purpose, be deemed to be a part of this Indenture. 3 TABLE OF CONTENTS
PAGE ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 1.3. RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE 2 THE SECURITIES SECTION 2.1 FORM AND DATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 2.2 SECURITIES ISSUABLE IN SERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 2.3 EXECUTION, AUTHENTICATION, DELIVERY AND DENOMINATIONS . . . . . . . . . . . . . . . . . . . . 10 SECTION 2.4 REGISTRAR AND PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 2.5 PAYING AGENT TO HOLD MONEY IN TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 2.6 SECURITY HOLDER LISTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 2.7 TRANSFER, EXCHANGE AND RESTRICTIVE LEGEND . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 2.8 REPLACEMENT SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 2.9 OUTSTANDING SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 SECTION 2.10 TREASURY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 2.11 TEMPORARY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 2.12 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 2.13 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED . . . . . . . . . . . . . . . . . . . . . . . . 14 SECTION 2.14 PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE 3 REDEMPTION SECTION 3.1 OPTIONAL REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 3.2 NOTICES TO TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3.3 SELECTION OF SECURITIES TO BE REDEEMED. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3.4 NOTICE OF REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3.5 EFFECT OF NOTICE OF REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 3.6 DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 3.7 SECURITIES REDEEMED IN PART. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
i 4
Page ---- ARTICLE 4 CONVERSION SECTION 4.1 CONVERSION AT THE ELECTION OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 4.2 CONVERSION PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 4.3 CONVERSION PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 4.4 FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 4.5 TAXES ON CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 4.6 COMPANY TO PROVIDE STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 4.7 ADJUSTMENT FOR CHANGE IN CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 4.8 ADJUSTMENT FOR RIGHTS ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 4.9 ADJUSTMENT FOR CERTAIN DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 4.10 ADJUSTMENT FOR EXTRAORDINARY CASH DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 4.11 ADJUSTMENT FOR COMMON STOCK ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 4.12 CONSIDERATION RECEIVED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 4.13 WHEN ADJUSTMENT MAY BE DEFERRED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 4.14 WHEN NO ADJUSTMENT REQUIRED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 4.15 NOTICE OF ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 4.16 VOLUNTARY INCREASE OF CONVERSION RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 4.17 NOTICE OF CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 4.18 PROVISIONS IN CASE OF MERGER, CONSOLIDATION, SALE OF ASSETS OR ACQUISITION OF STOCK . . . . . . 27 SECTION 4.19 COMPANY DETERMINATION FINAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 SECTION 4.20 TRUSTEE'S ADJUSTMENT DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE 5 SUBORDINATION SECTION 5.1 SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . 28 SECTION 5.2 NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . 29 SECTION 5.3 SECURITIES SUBORDINATED TO PRIOR PAYMENTS OF ALL SENIOR INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 5.4 SECURITY HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS . . . . . . . . . 31 SECTION 5.5 RESTRICTION ON ACCELERATION, COMMENCEMENT OF SUITS AND BANKRUPTCY PROCEEDINGS . . . . . . . . . 31 SECTION 5.6 OBLIGATIONS OF THE COMPANY UNCONDITIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 5.7 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN ABSENCE OF NOTICE . . . . . . . . . . . 33 SECTION 5.8 APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 5.9 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR
ii 5
Page ---- OMISSIONS OF THE COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS . . . . . . . . . . . . . . . . . . 33 SECTION 5.10 SECURITY HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF SECURITIES . . . . . . . . . 34 SECTION 5.11 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS AND RECEIVE COMPENSATION . . . . . . . . . . . . . 34 SECTION 5.12 ARTICLE 5 NOT TO PREVENT EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 34 SECTION 5.13 NO FIDUCIARY DUTY TO HOLDERS OF SENIOR INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . 34 ARTICLE 6 COVENANTS SECTION 6.1 PAYMENT OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 6.2 MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 6.3 MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 6.4 SEC REPORTS TO SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 6.5 COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 6.6 NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 6.7 WAIVER OF STAY, EXTENSION OR USURY LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 6.8 CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.9 MAINTENANCE OF PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.10 PAYMENT OF TAXES AND OTHER CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.11 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 6.12 MAINTENANCE OF BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 6.13 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 6.14 RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 6.15 LIMITATION ON CERTAIN TRANSACTIONS BETWEEN THE COMPANY AND AFFILIATES . . . . . . . . . . . . . 40 SECTION 6.16 COMPANY OR SUBSIDIARIES MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS . . . . . . . . . . . . . 40 ARTICLE 7 SUCCESSOR CORPORATION SECTION 7.1 SUCCESSOR CORPORATION SUBSTITUTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 ARTICLE 8 DEFAULTS AND REMEDIES SECTION 8.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 8.2 ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 8.3 OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
iii 6
Page ---- SECTION 8.4 WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 8.5 CONTROL BY MAJORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 8.6 LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 8.7 RIGHTS OF HOLDERS TO RECEIVE PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 8.8 COLLECTION SUIT BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 8.9 TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 8.10 PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 8.11 UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 8.12 RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 8.13 RIGHTS AND REMEDIES CUMULATIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 8.14 DELAY OR OMISSION NOT WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 ARTICLE 9 TRUSTEE SECTION 9.1 DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 9.2 RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 9.3 INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 9.4 TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 9.5 NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 9.6 REPORTS BY TRUSTEE TO HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 9.7 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 9.8 REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 9.9 SUCCESSOR TRUSTEE BY MERGER, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 9.10 ELIGIBILITY; DISQUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 9.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 9.12 AUTHENTICATING AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 ARTICLE 10 DISCHARGE OF INDENTURE SECTION 10.1 TERMINATION OF COMPANY'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 10.2 APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 10.3 REPAYMENT TO COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 10.4 REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 ARTICLE 11 AMENDMENTS AND WAIVERS SECTION 11.1 WITHOUT CONSENT OF HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 11.2 WITH CONSENT OF HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
iv 7
Page ---- SECTION 11.3 COMPLIANCE WITH TRUST INDENTURE ACT; EFFECT OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . 58 SECTION 11.4 REVOCATION AND EFFECT OF CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 SECTION 11.5 NOTATION ON EXCHANGE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 11.6 TRUSTEE PROTECTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 ARTICLE 12 MISCELLANEOUS SECTION 12.1 TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 12.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 12.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 12.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 12.6 RULES BY TRUSTEE AND AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 12.7 NO RECOURSE AGAINST OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 12.8 DUPLICATE ORIGINALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 12.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 12.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 12.11 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 SECTION 12.12 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
v 8 INDENTURE, dated as of October 14, 1994, by and between Carolco Pictures Inc. (the "Company") and American Stock Transfer & Trust Company, a trust company organized and existing under the laws of New York (the "Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's 7% Convertible Subordinated Notes due 2006: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.1 Definitions. "Affiliate" means, when used with reference to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, that Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct or cause the direction of the management or policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent, or Conversion Agent. "Authenticate" or "authenticate" means with respect to the issuance, exchange or transfer of a Security, completion by the Trustee of all internal procedures and signature by the Trustee of the certificate of authentication on the Security. The terms "authenticated," "authenticating" and "authentication" have the appropriate correlative meanings. "Authenticating Agent" means any Person (other than the Company) authorized to authenticate and deliver a Security on behalf of the Trustee pursuant to Section 9.12. "Average Quoted Price" means the average of the Quoted Prices of the Common Stock for 30 consecutive trading days commencing 45 trading days before the Time of Determination. "Bankruptcy Law" shall have the meaning set forth in Section 8.1. "Board of Directors" means, with respect to any Person, the Board of Directors of such Person or any authorized committee of that Board. -1- 9 "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or the Assistant Secretary of such Person to have been duly adopted by the Board of Directors or a committee thereof and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means a day that is not a Legal Holiday in the states of California or New York. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock of such Person (if a corporation) or any and all equivalent ownership interests in a Person (other than a corporation) whether now outstanding or issued after the date of this Indenture. "Capitalized Lease Obligation" means, with respect to any Person, for any period, an obligation of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP and the amount of such obligation shall be the capitalized amount thereof determined in accordance with such principles. "Cash or Cash Equivalents" means, with respect to the holder of any Senior Indebtedness, cash currency or such other form of consideration acceptable to such holder. "Common Stock" means the common stock, $0.01 par value, of the Company, as presently designated, and all shares hereafter authorized of any class or classes of common stock of the Company. "Company" means the party named as such above until a successor replaces it pursuant to and in accordance with this Indenture and thereafter means the successor or any other obligor on the Securities. "Company Conversion Date" shall have the meaning set forth in Section 4.1(a). "Company Conversion Notice" shall have the meaning set forth in Section 4.1(b). "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, President or a Vice President, and by its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, and delivered to the Trustee. "Consolidated" or "consolidated," when used with reference to any amount, means such amount determined on a consolidated basis in accordance with GAAP consistently applied, after the elimination of intercompany items. -2- 10 "Consolidated Net Worth" means, with respect to any Person, the consolidated stockholders' equity of the Person, including goodwill, determined in accordance with GAAP. "Conversion Agent" shall have the meaning set forth in Section 2.3. "Conversion Rate" shall be 1,333.33, subject to adjustment from time to time in accordance with Article 4. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Indenture is located at 40 Wall Street, New York, New York 10005, Attention: Corporate Trust Administration. "Custodian" shall have the meaning set forth in Section 8.1. "Default" means any event which is, or after notice or passage of time would be, an Event of Default. "Defaulted Interest" shall have the meaning set forth in Section 2.12. "Designated Merger" shall mean any merger or consolidation of the Company with any or all of LIVE Entertainment Inc., The Vista Organization Ltd., Carolco Studios Inc. (Delaware), any Strategic Investor, Metro-Goldwyn-Mayer Inc., or any of their respective Affiliates. "Event of Default" shall have the meaning set forth in Section 8.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Extraordinary Cash Dividend" shall have the meaning set forth in Section 4.10. "GAAP" means generally accepted accounting principles as in effect in the United States as of the time and for the period as to which such accounting principles are to be applied. "Holder" or "Security Holder" means a Person in whose name a Security is registered on the Registrar's books. "Indebtedness" means, at any date, without duplication, with respect to any Person, all obligations, contingent or otherwise, including accrued and unpaid interest in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof and whether or not such Person is the borrower or is jointly liable with the borrower), or evidenced -3- 11 by bonds, notes, debentures or similar instruments, or representing the balance deferred and unpaid of the purchase price of any property or any Capitalized Lease Obligations, or reimbursement obligations in respect of letters of credit, if and to the extent any of the foregoing obligations would appear as a liability upon a balance sheet of such Person prepared on a consolidated basis in accordance with GAAP, and shall include, without limitation, (i) obligations of others secured by a Lien to which any property or asset, including leasehold interests under the Capitalized Lease Obligations and any other tangible or intangible property rights, owned or held by such Person is subject, whether or not the obligations secured thereby shall have been assumed (provided that, if the obligations have not been assumed, such obligations shall be deemed to be in an amount equal to the fair market value of the property or properties to which the Lien relates, as determined in good faith by the Board of Directors of such Person and as evidenced by a Board Resolution), and (ii) guarantees with respect to the foregoing items (regardless of whether such items would appear upon such balance sheet). "Indenture" means this Indenture as originally executed as it may be amended or restated from time to time. "Interest Payment Dates" shall have the meaning given to such term in Exhibit A hereto. "Issue Date" of any Security means the date on which such Security was originally issued or deemed issued as set forth on the face of such Security. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the States of California or New York. If a payment date is a Legal Holiday at a place of payment, payment may be made at such place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For purposes of this Indenture, a Person shall be deemed to own subject to a Lien any asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Maturity Date" means June 30, 2006. "NASDAQ" means the National Association of Securities Dealers, Inc. Automated Quotation System. "Officer" means the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, the President, any Vice President, the Chief -4- 12 Executive Officer, the Chief Financial Officer, the Treasurer, the Secretary or the Controller of the Company, as the context may require. "Officers' Certificate" means a certificate signed by two Officers or by an Officer and an Assistant Treasurer, Assistant Secretary or Assistant Controller of the Company, as the context may require. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. Such counsel may be an employee of or counsel to the Company or the Trustee. "Optional Conversion Date" shall have the meaning set forth in Section 4.3. "Paying Agent" shall have the meaning set forth in Section 2.3. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person's preferred or preference stock whether now outstanding or issued after the date of this Indenture, and includes, without limitation, all classes and series of preferred or preference stock. "Principal" of a debt security (including the Securities) means the principal of the security plus, when appropriate, the premium, if any, on such debt security. "Qualified Capital Stock" of a Person or a Subsidiary of a Person means any Capital Stock of such Person or such Subsidiary that by its terms neither is, nor is convertible into or exchangeable for any other security of the Person or any Subsidiary thereof that is, or upon the happening of an event or the passage of time would be, required to be redeemed or, at the option of the holder, repurchased, in whole or in part, by such Person or any of its Subsidiaries on or prior to the Maturity Date of the Securities nor has, or upon the happening of an event or the passage of time would have, a sinking fund payment due on or prior to the Maturity Date of the Securities. "Quoted Price" means, with respect to any security on any date, the closing sale price of such security as reported by the New York Stock Exchange, or if such security is not listed on the New York Stock Exchange but is listed on another securities exchange, the last reported sales price of such security on and as reported by such exchange for such date, which shall be for consolidated trading if applicable to such exchange, or if such security is not listed on a securities -5- 13 exchange, the last reported sales price of such security as reported by the NASDAQ National Market System or, if neither traded on such system nor is listed, the average of the last reported bid and asked prices of such security on NASDAQ or any successor quotation system for such date. In the absence of one or more such quotations specified in the definition of Quoted Price, the Company shall determine such price on the basis of such quotations as it considers appropriate. "Registrar" shall have the meaning set forth in Section 2.3. "Regular Record Date" for the interest payable on any Interest Payment Date means the 15th day of the month (whether or not a Business Day), next preceding such Interest Payment Date. "Representative" means the indenture trustee or other trustee, agent or representative for any Senior Indebtedness. "Restricted Payment" means (i) the payment by the Company of any dividend, either in cash or in property, on, or the making by the Company of any other distribution on account of or for the benefit of the holders of, its Common Stock (other than dividends and distributions payable solely in Qualified Capital Stock of the Company), (ii) the redemption, repurchase, retirement or other acquisition for value (other than such actions undertaken solely with shares of Qualified Capital Stock of the Company), by the Company or any Subsidiary of the Company, directly or indirectly, of Common Stock of the Company (or, except for payments to the Company, the Common Stock of any Subsidiary) or of any warrants, rights or options to purchase or acquire shares of such Common Stock, or (iii) the payment by the Company to holders of the Company's 5% Payment-in-Kind Convertible Subordinated Notes due 2002 of cash in respect of interest due on, or the redemption, repurchase, retirement (other than at maturity) or other acquisition of, the 5% Payment-in-Kind Convertible Subordinated Notes due 2002 of the Company. Notwithstanding the foregoing, no payment in connection with any of the transactions comprising the Restructuring shall constitute Restricted Payments. "Restructuring" means the restructuring transactions as set forth in the Company's filing with the SEC on form S-1 Registration No. 33-56380. "SEC" means the Securities and Exchange Commission. "Securities" means the 7% Convertible Subordinated Notes Due 2006 of the Company issued in one or more series under this Indenture. "Securities Act" means the Securities Act of 1933, as amended. "Security Register" shall have the meaning set forth in Section 2.5. -6- 14 "Senior Indebtedness" means the principal of, premium, if any, and interest (including, without limitation, whether or not allowed by law, interest on any Indebtedness to banks or other financial institutions accruing after the filing of a petition or other document initiating any bankruptcy or similar proceeding with respect to the Company) on, and all other amounts owing with respect to, any Indebtedness of the Company, whether outstanding on the date of this Indenture or hereafter created, incurred, assumed, guaranteed or in effect guaranteed by the Company, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or the assumption or guarantee thereof expressly provides that such Indebtedness shall not be senior in right of payment to the Securities. Senior Indebtedness shall include, without limitation, (i) indebtedness under the Revolving Credit Loan Agreement and Security Assignment dated as of June 18, 1987 among the Company, Credit Lyonnais Bank Nederland N.V. ("CLBN") and certain other parties named therein, (ii) indebtedness under any agreement entered into between the Company and CLBN and/or other financial institutions and any refinancings, replacements and extensions thereof, (iii) indebtedness evidenced by the 11.5%/10% Reducing Rate Senior Notes due 2000 of the Company, (iv) indebtedness evidenced by the 13%/12% Reducing Rate Senior Subordinated Notes due 1999 of the Company, and (v) indebtedness evidenced by the 13% Senior Subordinated Notes due December 1, 1996 of the Company. Notwithstanding anything herein to the contrary, however, Senior Indebtedness shall not include (i) in the case of each Security, the other Securities of any series, (ii) Indebtedness of the Company to a Subsidiary of the Company, (iii) Indebtedness to, or guaranteed on behalf of, any officer or director of the Company or (iv) indebtedness evidenced by the 5% Payment-in-Kind Convertible Subordinated Notes due 2002 of the Company. To the extent any payment of Senior Indebtedness whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise, is declared to be fraudulent or preferential under any bankruptcy, insolvency, receivership or similar law and, as a result thereof, such payment is recovered by, or paid over to, a trustee, receiver or other similar party or subordinated to other claims against the Company, the Senior Indebtedness or part thereof originally intended to be satisfied by such payment shall be deemed reinstated and outstanding as Senior Indebtedness as if such payment or subordination had not occurred. "Significant Subsidiary" means, at any time, any Subsidiary that at such time would be a "significant subsidiary" within the meaning of Rule 1-02 of regulation S-X under the Securities Act and the Exchange Act as in effect on the date hereof. "Special Record Date" shall have the meaning set forth in Section 2.12. "Strategic Investors" means Pioneer LDCA, Inc., Le Studio Canal+S.A. and RCS Video Services International B.V. and their respective Affiliates. -7- 15 "Subsidiary" of the Company means (i) a corporation at least a majority of whose Capital Stock with voting power, under ordinary circumstances, to elect directors is at the date of the Indenture or thereafter owned by the Company, or (ii) any other Person (other than a corporation) in which the Company, directly or indirectly, at the date of the Indenture or thereafter, has at least a majority of voting interests or, in the case of such Persons which constitute joint ventures, is entitled to more than 50% of the income or any distributions, upon liquidation or otherwise, therefrom. "Third Party Stock Price" shall have the meaning set forth in Section 4.2. "TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as provided by Section 11.3. "Time of Determination" means the time and date of the determination of shareholders entitled to receive rights, warrants or distributions, as the case may be, to which Article 4 applies. "Trustee" means the party named as such above until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor. "Trust Officer" means any officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "U.S. Government Obligations" means direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged. "Wholly Owned Subsidiary" of the Company means (i) a Subsidiary all of the Capital Stock of which is at the date of the Indenture or thereafter owned or controlled, directly or indirectly, by the Company or (ii) any other Person (other than a corporation) in which the Company, directly or indirectly, at the date of the Indenture or thereafter has 100% of the voting interest. Section 1.2 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC; "indenture securities" means the Securities; -8- 16 "indenture security holder" means a Holder or a Security Holder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein. Section 1.3. Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions; and (f) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. ARTICLE 2 THE SECURITIES Section 2.1 Form and Dating. The Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Securities shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by Article IV of this Indenture and may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Security shall be dated the date of its authentication. The terms and provisions contained in the Securities shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, -9- 17 the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Section 2.2 Securities Issuable in Series. The Securities may be issued in one or more series. The Securities of any one series shall be substantially identical to the Securities of any other series except as to rate of conversions which shall be as provided in Article IV. All Securities of any one series shall be identical in all respects. All securities issued by the Company to the Strategic Investors shall be of the same series. Section 2.3 Execution, Authentication, Delivery and Denominations. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its President or one of its Vice Presidents, under its corporate seal reproduced thereon attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at the time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, Securities in one or more series may be executed by the Company and delivered to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities as in this Indenture provided and not otherwise. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. The Trustee shall authenticate Securities for original issue in one or more series in the aggregate principal amount of up to $50,000,000 upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. The order shall specify the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities), the amount of Securities of the series to be authenticated, the date on which the original issue of Securities of the series is to be -10- 18 authenticated and the names and denominations in which the original issue of Securities of the series are to be registered. The aggregate principal amount of Securities outstanding at any time may not exceed the amount set forth in this paragraph. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. Section 2.4 Registrar and Paying Agent. The Company shall maintain an office or agency in New York, New York where Securities may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Securities may be presented for payment ("Paying Agent") and an office or agency where Securities may be presented for conversion ("Conversion Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may appoint one or more co-registrars, and one or more additional paying agents. The terms "Paying Agent" and "Conversion Agent" include any additional paying agent or conversion agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. The Company initially appoints American Stock Transfer & Trust Company as "Registrar," "Paying Agent" and "Conversion Agent." Section 2.5 Paying Agent to Hold Money in Trust. The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Security Holders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities (whether such money has been paid to it by the Company or any other obligor on the Securities), and such Paying Agent shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. While any payment default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed. Upon payment over to the Trustee, the Paying Agent shall have no further liability for the money so paid over to the Trustee. If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold as a separate trust fund all money held by it as Paying Agent. Section 2.6 Security Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the -11- 19 names and addresses of Security Holders (such list, the "Security Register"). If the Trustee is not the Registrar, the Company shall furnish to the Trustee on or before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Security Holders. Section 2.7 Transfer, Exchange and Restrictive Legend. When Securities are presented to the Registrar with a request to register a transfer or to exchange them for an equal principal amount of Securities of other denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar's request. Any transfer or exchange shall be without charge, except that the Company or the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, other than exchanges or conversions pursuant to Sections 2.11, 4.1 or 11.5. To the extent that any Securities shall have been designated as a separate series of Securities, any Securities issued upon registration of transfer or exchange shall be of the same series. The Registrar is not required to transfer or exchange any Security in respect of which a notice of conversion or notice of redemption has been given pursuant to Sections 4.1, 4.3 or 3.4. The Registrar shall not register the transfer or exchange of a Security unless the Holder and the prospective purchaser shall have complied with the transfer restrictions set forth on the face of such Security. Each Security shall bear the following legend: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold or otherwise transferred except pursuant to an effective registration statement under said Act or an applicable exemption from the registration requirements thereof." Section 2.8 Replacement Securities. If a mutilated Security is surrendered to the Trustee or if the Holder of a Security claims that such Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security of the same series if the requirements of the Trustee and the Company are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond, sufficient in the judgment of the Trustee and the Company, to protect the Company, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Security is replaced. The Company and/or the Trustee may charge for its expenses in replacing a Security mutilated, lost, destroyed or wrongfully taken. Section 2.9 Outstanding Securities. Subject to Section 2.10, Securities outstanding at any time means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: -12- 20 (a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (b) Securities, or portions thereof, for whose payment money in the necessary amount, including interest, including any Defaulted Interest, accrued to the date fixed for payment, has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust for the Holders of such Securities; (c) Securities in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands the Securities are valid obligations of the Company; and (d) Securities converted in accordance with Section 4.1 or Section 4.2. Subject to Section 2.10, a Security does not cease to be outstanding because the Company or an Affiliate thereof holds the Security. Section 2.10 Treasury Securities. In determining whether the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities shall be disregarded and deemed not to be outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded. Securities owned by the Company or any other obligor on the Securities which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities. Section 2.11 Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities in exchange for temporary Securities without charge to the Holder. Until such exchange, such temporary Securities shall be entitled to the same rights, benefits and privileges as the definitive Securities. -13- 21 Section 2.12 Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Securities surrendered for registration of transfer, exchange, payment or cancellation and shall, subject to the record retention requirements of the Exchange Act, destroy cancelled Securities at the request of the Company and furnish a certificate of such destruction to the Company unless the Company instructs the Trustee in writing to return the Securities to the Company. Subject to Section 2.8, the Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation. Section 2.13 Payment of Interest; Interest Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date or within the grace period provided in Section 8.1(a) hereof shall be paid to the Person in whose name that Security is registered at the close of business on the Regular Record Date set for such Interest Payment Date. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") or within the grace period provided in Section 8.1(a) hereof shall forthwith cease to be payable to the Person in whose name that Security was registered on the Regular Record Date for such Interest Payment Date and such Defaulted Interest shall be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest paid after the last day of the grace period provided in Section 8.1(a) (together with any interest on such Defaulted Interest payable under paragraph 1 of the Security) to the Persons in whose names the Securities are registered at the close of business on a special record date (the "Special Record Date") for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee and the Holders in writing of the amount of Defaulted Interest (together with any interest on such Defaulted Interest payable under paragraph 1 of the Security) proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest (together with any interest on such Defaulted Interest payable under paragraph 1 of the Security) or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not more than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, -14- 22 shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each holder at such Holder's address as it appears on the Security Register maintained pursuant to Section 2.6 hereof, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest (together with any interest or such Defaulted Interest payable under paragraph 1 of the Security) shall be paid to the Persons in whose names the Securities are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b). (b) The Company may make payment of any Defaulted Interest paid after the last day of the grace period provided in Section 8.1(a) (together with any interest on such Defaulted Interest payable under paragraph 1 of the Security) on the Securities in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee and the Holders of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security issued under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 2.14 Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any Agent of the Company or the Trustee shall treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 2.13) interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and neither the Company, the Trustee nor any Agent of the Company or the Trustee shall be affected by notice to the contrary. All such payments so made to any such Person, or upon such Person's order, shall be valid, and, to the extent of the sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security. ARTICLE 3 REDEMPTION Section 3.1 Optional Redemption. The Company may redeem the Securities at any time on or after January 1, 1997 in whole or from time to time in part at a redemption price equal to 100% of the principal amount of Securities outstanding, plus accrued and unpaid interest to the redemption date. If the -15- 23 redemption date is subsequent to a Regular Record Date with respect to any Interest Payment Date and on or prior to such Interest Payment Date, then such accrued interest will be paid to the Person in whose name a Security is registered at the close of business on such Regular Record Date and to no other Person. Section 3.2 Notices to Trustee. If the Company desires to redeem Securities pursuant to Section 3.1, it shall notify the Trustee in writing of the redemption date and the principal amount of the Securities to be redeemed. Pursuant to Section 3.1, the Company shall be entitled to redeem all or part of the Securities at a time or from time to time (without premium or penalty). The Company shall give the notice provided for in this Section in an Officers' Certificate delivered at least 45 days before the redemption date (unless a shorter period shall be satisfactory to the Trustee). Section 3.3 Selection of Securities to be Redeemed. If less than all of the Securities are to be redeemed, the Trustee shall select the Securities not registered in the name of the Company or its Subsidiaries to be redeemed pro rata or by such other method as the Trustee may deem fair and appropriate so long as such method is not proscribed by any securities exchange on which the Securities are then listed. The Trustee shall make the selection from Securities outstanding at least 30 days but not more than 60 days prior to the redemption date and shall give prompt notice of such selection to the Company. The Trustee may select for redemption portions of the principal of Securities that have denominations equal to or larger than $1,000. Securities and portions of them it selects shall be amounts of $1,000 or integral multiples of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. Section 3.4 Notice of Redemption. At least 30 days but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first class mail, postage pre-paid, to each Holder whose Securities are to be redeemed at the Holder's last address as it shall appear in the records of the Registrar, with a copy to the Trustee and the Registrar. The notice shall identify the Securities to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) the name and address of the Paying Agent; (4) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price plus accrued interest; -16- 24 (5) that, unless the Company defaults in making the redemption payment, interest on Securities called for redemption ceases to accrue on and after the redemption date; (6) if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the redemption date, and upon surrender of such Security, a new Security or Securities in aggregate principal amount equal to the unredeemed portion thereof will be issued; and (7) if less than all the Securities are to be redeemed, the identification of the particular Securities (or portion thereof) to be redeemed, as well as the aggregate principal amount of Securities of each series to be redeemed and the aggregate principal amount of Securities of each series estimated to be outstanding after such partial redemption. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense. Section 3.5 Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date at the redemption price plus accrued interest to the redemption date. Section 3.6 Deposit of Redemption Price. On or before the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary of the Company is the Paying Agent, the Company or such Subsidiary shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date. Section 3.7 Securities Redeemed in Part. After the redemption date, upon surrender of a Security that is redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder a new Security of the same series equal in principal amount to the unredeemed portion of the Security surrendered. ARTICLE 4 CONVERSION Section 4.1 Conversion at the Election of the Company. (a) The Company may elect to convert all (but not part) of the Securities outstanding at any time before the close of business on the Maturity Date and after the date upon which the average of the Quoted Prices of the Common Stock for any 20 days during a period of 30 consecutive trading days equals or exceeds 250% of the amount obtained by dividing 1,000 by the Conversion Rate (as defined below). The Company shall provide the Trustee and the Registrar with written notice of its -17- 25 election to convert the Securities pursuant to the foregoing sentence and of the date selected by the Company for such conversion (the "Company Conversion Date") at least five (5) Business Days prior to the Company Conversion Date (the "Company Conversion Notice"). The number of shares of Common Stock issuable on the Company Conversion Date shall (i) for each $1,000 of principal amount of a Security be equal to the Conversion Rate and (ii) for each $1,000 of accrued and unpaid interest through the Company Conversion Date be equal to the Conversion Rate. (b) The Company shall mail, or shall cause the Trustee to mail, within five (5) Business Days following its receipt of the Company Conversion Notice, a notice of conversion to each Security Holder. Such notice of conversion shall state (i) the Company Conversion Date, (ii) the Conversion Rate at such date, (iii) the name and address of the Conversion Agent, (iv) that the Securities of such Holder must be surrendered to the Conversion Agent in order to obtain the shares of Common Stock issuable upon conversion, (v) that each Holder of a Security must complete and manually sign the conversion notice on the back of the Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (vi) that each Holder of a Security must furnish appropriate endorsements and transfer documents if required by the Conversion Agent, and (vii) that, unless the Company fails to deliver a sufficient number of shares of Common Stock and sufficient cash in lieu of fractional shares to effect the conversion described in this Section 4.1, interest on the Securities shall cease to accrue on and after the Company Conversion Date. At the Company's request, the Trustee shall give such notice of conversion in the Company's name and at its expense. The failure of the Company to give notice of conversion to a Security Holder or any defect in such notice shall not affect the validity of the conversion of the Securities under this Section 4.1. (c) Once notice of conversion has been mailed and sufficient shares of Common Stock and sufficient cash in lieu of fractional shares of Common Stock determined pursuant to Section 4.4 have been deposited with the Conversion Agent, the Securities shall, without further action, automatically convert to shares of Common Stock at the Conversion Rate and, notwithstanding that any Securities shall not have been surrendered to the Conversion Agent, from and after the Company Conversion Date, interest shall cease to accrue on the Securities, the Securities shall no longer be deemed outstanding and the Company shall have no further obligation with respect to the Securities so converted. (d) The Conversion Agent shall mail to each Security Holder a notice of (i) the date of conversion of the securities pursuant to Section 4.1(c), together with the respective dates sufficient shares of Common Stock and sufficient cash in lieu of fractional shares of Common Stock were deposited with it, (ii) the amount of cash in lieu of fractional shares deposited, and (iii) the amount of cash such Security Holder will receive in lieu of fractional shares of Common Stock. The failure of the Conversion Agent to give such notice or any defect in such notice shall not affect the -18- 26 validity of the conversion of the Securities. The Conversion Agent shall deliver all Securities received by it to the Trustee for destruction in accordance with Section 2.12. (e) The Company shall pay any and all documentary, stamp or similar transfer taxes due upon the issue and transfer of shares of Common Stock in connection with the conversion under this Section 4.1. Section 4.2 Conversion Privilege. A Holder of a Security may elect to convert such Security into Common Stock of the Company at any time before the close of business on the Maturity Date; provided that if such Security is called for redemption, the Holder may convert it only until the close of business on the redemption date established pursuant to Article 3. For a Security acquired upon its original issuance by a Strategic Investor, the number of shares of Common Stock issuable upon such conversion shall for each $1,000 of principal amount of a Security be equal to the Conversion Rate then in effect. For a Security acquired upon its original issuance by a Person other than a Strategic Investor, the number of shares of Common Stock issuable upon such conversion shall for each $1,000 of principal amount of a Security be equal to the lesser of (a) the Conversion Rate then in effect, or (b) the rate obtained by dividing 1,000 by the average of the Quoted Prices of the Common Stock for the 30 consecutive trading days ending on the Issue Date of the Security being converted (such price being referred to herein as the "Third Party Stock Price"), as such rate may be adjusted to give effect to any adjustments made in the Conversion Rate pursuant to this Article 4. Section 4.3 Conversion Procedure. To convert a Security at the election of the Holder thereof such Holder must (1) complete and manually sign the conversion notice on the back of the Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Registrar and the Conversion Agent, (2) surrender the Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Registrar and the Conversion Agent and (4) pay any transfer or similar tax, if required. The date on which all of the foregoing requirements have been satisfied is the optional conversion date (the "Optional Conversion Date"). No later than five (5) Business Days after the Optional Conversion Date, the Company shall deliver to the Holder, through the Conversion Agent, a certificate representing the number of full shares of Common Stock issuable upon the conversion and cash in lieu of any fractional share determined pursuant to Section 4.4. The person in whose name the certificate is registered shall be treated as a stockholder of record on and after the Optional Conversion Date (or, if such date is not a Business Day, the next succeeding Business Day). Upon conversion of a Security, such person shall no longer be a Holder of such Security. No payment or adjustment will be made for dividends on or other distributions with respect to any Common Stock except as provided in this Article 4. -19- 27 On conversion of a Security on the Optional Conversion Date, all accrued but unpaid interest to such date with respect to the converted Security shall be paid in cash. If the Holder converts more than one Security at the Optional Conversion Date, the number of shares of Common Stock issuable upon the conversion shall be based on the total principal amount of the Securities converted. Section 4.4 Fractional Shares. The Company will not issue a fractional share of Common Stock upon conversion of a Security. Instead, the Company will deliver cash in lieu of the fractional share. For purposes of this Section 4.4, each share of Common Stock shall be deemed to have a value of $0.75 (for a Security acquired upon its original issuance by a Strategic Investor) or the Third Party Stock Price (for a Security acquired upon its original issuance by a Person other than a Strategic Investor), in each case subject to adjustment in an amount corresponding to any adjustment to the Conversion Rate as provided in this Article 4. Section 4.5 Taxes on Conversion. If a Holder converts a Security on the Optional Conversion Date, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name, or that may be payable if the Company pays cash in lieu of issuing fractional shares of Common Stock upon conversion. The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulations. Section 4.6 Company to Provide Stock. The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of all of the Securities. All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim created by the Company or which the Company suffers to exist. The Company will endeavor promptly to comply with all Federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or in the over-the- -20- 28 counter market or such other market on which the Common Stock is then listed or quoted. Section 4.7 Adjustment for Change in Capital Stock. Subject to Section 4.14, if, after the Issue Date of the Securities, the Company: (a) pays a dividend or makes a distribution on its Common Stock in shares of any class of its Capital Stock; (b) subdivides its outstanding shares of Common Stock into a greater number of shares; (c) combines its outstanding shares of Common Stock into a smaller number of shares; or (d) issues by reclassification of its Common Stock any shares of its Capital Stock (other than rights, warrants, or options for its Capital Stock); then the Conversion Rate in effect immediately prior to such action shall be adjusted so that the Holder of a Security thereafter converted may receive the number of shares of Capital Stock of the Company which such Holder would have owned immediately following such action if such Security had been converted immediately prior to such action. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification. If after an adjustment a Holder of a Security upon conversion of such Security may receive shares of two or more classes of Capital Stock of the Company, the Conversion Rate shall thereafter be subject to adjustment upon the occurrence of an action taken with respect to such class of Capital Stock, on terms comparable to those applicable to Common Stock in this Article 4. Section 4.8 Adjustment for Rights Issue. Subject to Section 4.14, if, after the Issue Date of the Securities, the Company distributes any rights, warrants or options to all holders of Common Stock entitling them to purchase shares of Common Stock at a price per share less than the Quoted Price of the Common Stock at the Time of Determination, the Conversion Rate shall be adjusted in accordance with the formula: -21- 29 R' = R x ( O+N ) --------- O+(NxP) --- M where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. O = the number of shares of Common Stock outstanding on the record date for the distribution to which this Section 4.8 is being applied on a fully diluted basis. N = the number of additional shares of Common Stock offered pursuant to such distribution. P = the offering price per share of the additional shares. M = the Average Quoted Price. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the rights, warrants or options to which this Section 4.8 applies. No adjustment shall be made under this Section 4.8 if the application of the formula stated above in this Section 4.8 would result in a value of R' that is equal to or less than the value of R. Section 4.9 Adjustment for Certain Distributions. Subject to Section 4.14 if, after the Issue Date of the Securities, the Company distributes to all holders of Common Stock any of its assets or debt securities or any rights, warrants or options to purchase securities of the Company (including securities or cash, but excluding (a) distributions of Capital Stock referred to in Section 4.7 and distributions of rights, warrants or options referred to in Section 4.8 and (b) cash dividends or other cash distributions that are paid out of consolidated current net earnings or earnings retained in the business as shown on the books of the Company unless such cash dividends or other cash distributions are Extraordinary Cash Dividends (which shall be governed by Section 4.10)), the Conversion Rate shall be adjusted, subject to the provisions of the last paragraph of this Section 4.9, in accordance with the formula: R' = R x M --- M-F where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. M = the Average Quoted Price. -22- 30 F = the fair market value (on the record date for the distribution to which this Section 4.9 applies) of the assets, securities, rights, warrants or options to be distributed in respect of each share of Common Stock in the distribution to which this Section 4.9 is being applied. The Board of Directors shall determine fair market values for the purposes of this Section 4.9. This Section 4.9 shall not apply to distributions of rights or warrants referred to in Section 4.8 hereof. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the distribution to which this Section 4.9 applies. In the event that, with respect to any distribution to which this Section 4.9 would otherwise apply, the difference of "M-F" as defined in the above formula is less than $1.00 or "F" is greater than "M", then the adjustment provided by this Section 4.9 shall not be made and in lieu thereof, the provisions of Section 4.14 shall apply to such distribution. Section 4.10 Adjustment for Extraordinary Cash Dividends. Subject to Section 4.14, if, during any 12-month period, the Company distributes to any holder of Common Stock, cash as a dividend on shares of such class of Common Stock and the aggregate value of such distributions exceeds 12.5% of the market value of the Common Stock (an "Extraordinary Cash Dividend"), the Conversion Rate shall be adjusted in accordance with the formula: R' = R x M --- M-D where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. M = the Average Quoted Price. D = the amount of cash distributed per share of Common Stock (excluding cash distributed per share of Common Stock during such 12-month period for which a prior adjustment in the Conversion Rate has been made pursuant to this Section 4.10). For purposes of this Section, any amount paid by the Company or a Subsidiary to repurchase shares of Common Stock from one or more holders thereof, -23- 31 in the open market or otherwise, that exceeds, on a per-share basis, the Average Quoted Price of such Common Stock, shall be deemed a cash distribution for purposes of this Section 4.10. For purposes of this Section 4.10, the "market value" of the Common Stock shall mean the product of the Average Quoted Price and the number of shares of Common Stock outstanding at the Time of Determination. The adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after each Time of Determination. In the event that, with respect to any distribution to which this Section 4.10 would otherwise apply, the difference of "M-D" as defined in the above formula is less than $1.00 or "D" is greater than "M", then the adjustment provided by this Section 4.10 shall not be made and in lieu thereof the provisions of Section 4.14 shall apply to such distribution. Section 4.11 Adjustment for Common Stock Issue. Subject to Section 4.14, if the Company issues shares of Common Stock for a consideration per share less than the Average Quoted Price as of the Time of Determination, the Conversion Rate shall be adjusted in accordance with the formula: R' = R x A ----- O + P/M where: R' = the adjusted Conversion Rate. R = the current Conversion Rate. O = the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares on a fully diluted basis. P = the aggregate consideration received for the issuance of such additional shares. M = the Average Quoted Price. A = the number of shares of Common Stock outstanding immediately after the issuance of such additional shares on a fully diluted basis. The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance. This Section does not apply to (1) any of the transactions described in Sections 4.7, 4.8, 4.9 or 4.10 hereof, (2) Common Stock issued upon the conversion of the Securities, or upon the conversion, exchange or exercise of other securities convertible, exchangeable or exercisable for Common Stock, (3) Common Stock issued under employee benefit plans adopted by the Board of Directors, or pursuant -24- 32 to employment agreements with officers or employees of the Company if the price per share is not less than 95% of the market price per share of Common Stock, (4) Common Stock issued to acquire, or in the acquisition of, all or any portion of a business as a going concern, in an arm's-length transaction between the Company and an unaffiliated third party, whether such acquisition shall be effected by purchase of assets, exchange of securities, merger, consolidation or otherwise or (5) Common Stock issued in a bona fide public offering pursuant to a firm commitment underwriting. Section 4.12 Consideration Received. For purposes of any computation respecting consideration received pursuant to Section 4.11 hereof, the following shall apply: (a) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith; and (b) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors (irrespective of the accounting treatment thereof), whose determination shall be conclusive, and described in a Board Resolution which shall be filed with the Trustee. Section 4.13 When Adjustment May Be Deferred. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment. In the case of any adjustment deferred pursuant to this paragraph, the Company shall make appropriate elections under the Treasury Regulations promulgated pursuant to Section 305 of the Internal Revenue Code of 1986. All calculations under this Article 4 shall be made to the nearest cent or to the nearest 1/1,000th of a share, as the case may be. Section 4.14 When No Adjustment Required. No adjustment need be made for a transaction referred to in Section 4.7, 4.8, 4.9, 4.10 or 4.11 if Security Holders are entitled to participate in the transaction on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction. No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest. -25- 33 No adjustment need be made for a change in the par value or no par value of the Common Stock. If the Company makes a distribution to all holders of Common Stock payable in shares of any class of its Capital Stock, or of any of its assets, or debt securities or any rights, warrants or options to purchase securities of the Company that, but for the provisions of the last paragraph of Section 4.9 or 4.10, would otherwise result in an adjustment in the Conversion Rate pursuant to the provisions of Section 4.7, 4.9 or 4.10, then, from and after the record date for determining the holders of Common Stock entitled to receive the distribution, a Holder of a Security that is converted in accordance with the provisions of this Indenture shall upon such conversion be entitled to receive, in addition to the shares of Common Stock into which the Security is convertible, the kind and amount of securities, cash or other assets comprising the distribution that such Holder would have received if such Security had been converted immediately prior to the record date for determining the holders of Common Stock entitled to receive the distribution. In furtherance of the foregoing, the Company shall segregate and hold in escrow for the benefit of the Holders such Capital Stock, assets, debt securities or other rights for distribution to the Holders upon conversion of the Securities. Section 4.15 Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Security Holders a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice and a certificate from the Company's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof. Section 4.16 Voluntary Increase of Conversion Rate. The Company from time to time may increase the Conversion Rate by any amount for any period of time. Whenever the Conversion Rate is increased the Company shall mail to Security Holders and file with the Conversion Agent, a notice of increase. The Company shall mail the notice at least 15 days before the date the increased Conversion Rate will take effect. The notice shall state the increased Conversion Rate and the period of time it will be in effect. Section 4.17 Notice of Certain Transactions. If: (a) the Company takes any action that would require an adjustment in the Conversion Rate; (b) the Company takes any action that would require a supplemental indenture pursuant to Section 4.18 hereof; or -26- 34 (c) there is a liquidation or dissolution of the Company; then the Company shall mail to the Trustee, any Conversion Agent and the Security Holders a notice stating the proposed record date for a dividend or distribution or the proposed effective date of an issuance, subdivision, combination, reclassification, consolidation, merger, transfer, lease, liquidation or dissolution. The Company shall mail the notice at least fifteen (15) days before such date. Failure to mail the notice or any defect in such notice shall not affect the validity of any transaction. If the proposed dividend, distribution, issuance, subdivision, combination, reclassification, consolidation, merger, transfer, lease liquidation or dissolution does not occur, or if the proposed record date or effective date with respect thereto is changed to a date that is less than fifteen (15) days from the date such change is made, then no further notice shall be required hereunder. Section 4.18 Provisions in Case of Merger, Consolidation, Sale of Assets or Acquisition of Stock. (a) If (i) the Company, in one transaction or a series of transactions, conveys, leases or transfers all or substantially all of its assets to another person or persons or (ii) any person, in one transaction or a series of transactions, acquires all or substantially all of the shares of the Company's outstanding Common Stock pursuant to a merger or other acquisition transaction, then the person to which such assets are conveyed, leased or transferred or that acquires such Common Stock (the "Acquiring Person"), whether or not the transaction is otherwise subject to Section 6.16, the Company and the Trustee shall enter into an indenture supplemental hereto on the terms specified below provided that the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such supplemental indenture complies with this Section and Section 6.16 and that all conditions precedent herein provided for relating to such supplemental indenture have been satisfied. Any such supplemental indenture shall provide that each Holder shall have the right, after the consummation of any such transaction, to convert its Securities on the same terms as set forth in this Article 4 into the kind and amount of securities or assets, or cash, as such Holder would have received in such transaction had the Securities of such Holder been converted into Common Stock immediately prior to such transaction. For purposes of the foregoing calculation, in the case of any conveyance, lease or transfer of all or substantially all assets of the Company to another person or persons, the amount of consideration that would have been received by a Holder in such transaction had the Securities been converted into Common Stock of the Company immediately prior to such transaction shall be calculated by assuming that any and all consideration received by the Company in connection with such transaction is being distributed by the Company pro rata to the holders of its Common Stock, including such Holder, upon consummation of such transaction. Further, for purposes of such calculation, the fair market value of any consideration received in any such transaction shall be determined as follows: If the consideration consists of a combination of common stock of the Acquiring Person and/or cash, the value of such consideration shall be -27- 35 equal to the sum of (x) the mean of the Quoted Price of one share of common stock of the Acquiring Person for the five trading days immediately preceding the closing of such transaction, multiplied by the number of shares that would have been received by any such Holder in such transaction had the Securities been converted prior to consummation thereof, plus (y) the amount of cash, if any, that would have been so received by such Holder. In all other cases, the fair market value of such consideration shall be determined by a nationally recognized investment banking firm selected by the Board of Directors. (b) The successor Company shall mail to each Security Holder a notice describing any supplemental indenture entered into under this Section. Section 4.19 Company Determination Final. Any determination that the Company or the Board of Directors must make pursuant to Article 4 shall be conclusive. Section 4.20 Trustee's Adjustment Disclaimer. The Trustee has no duty to determine when an adjustment under this Article 4 should be made, how it should be made or what it should be. The Trustee has no duty to determine whether any provisions of a supplemental indenture under Section 4.17 are correct. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of the Securities. The Trustee shall not be responsible for the Company's failure to comply with this Article 4. Each Conversion Agent other than the Company shall have the same protection under this Section as the Trustee. ARTICLE 5 SUBORDINATION Section 5.1 Securities Subordinated to Senior Indebtedness. Notwithstanding any other provision contained herein, the Company, for itself and its successors, and each Holder, by his acceptance of Securities, agrees that the payment of the principal of and interest on and all other claims with respect to the Securities is subordinated, to the extent and in the manner provided in this Article 5, to the prior payment in full in Cash or Cash Equivalents of all Senior Indebtedness (including interest accruing subsequent to an event specified in Sections 8.1(f) and 8.1(g) whether or not such interest is an allowed claim enforceable against the Company under the Bankruptcy Law). This Article 5 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 shall be directly enforceable by such holders. -28- 36 Section 5.2 No Payment on Securities in Certain Circumstances. (a) Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, then unless such acceleration shall have been rescinded or shall have otherwise ceased to exist, or the time for payment extended, all principal thereof and premium, if any, and interest thereon and all other claims with respect thereto shall first be paid in full, in Cash or Cash Equivalents, before any payment is made on account of principal of or interest on or any other claim with respect to the Securities. (b) Upon the receipt by the Company and the Trustee of written notice of a default in the payment of any amount of principal of, interest on or any other claim with respect to any Senior Indebtedness, then, unless and until such payment has been made or such event of default shall have been cured or waived in writing or shall have ceased to exist or the holders of such Senior Indebtedness shall have otherwise agreed in writing, no direct or indirect payment shall be made by the Company with respect to the principal of or interest on or any other claim with respect to the Securities. (c) In furtherance of the provisions of Section 6.1, in the event that, notwithstanding the foregoing provisions of this Section 5.2, any payment on account of principal of or interest on or any claim with respect to the Securities shall be made by or on behalf of the Company and received by the Trustee, by any Holder or by any Paying Agent, at a time when such payment was prohibited by the provisions of this Section 5.2, then, unless and until such payment is no longer prohibited by this Section 5.2, such payment (subject to the provisions of Sections 5.7 and 5.8) shall be held for the benefit of and shall be immediately paid over to, the holders of Senior Indebtedness or their representative, ratably according to the aggregate amount remaining unpaid on account of the principal of and interest on and all other claims with respect to the Senior Indebtedness held or represented by each, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in Cash or Cash Equivalents in accordance with its terms, after giving effect to any concurrent payment or distribution or provision therefor to or for the holders of Senior Indebtedness. The Company shall give prompt written notice to the Trustee of any default or failure to make payments of principal, interest or any other claim with respect to such Senior Indebtedness or a default which permits the holders thereof to accelerate such Senior Indebtedness under any agreement pursuant to which Senior Indebtedness may have been issued. Failure to give such notice shall not affect the subordination of the Securities to the Senior Indebtedness provided in this Article 5. (d) If payments with respect to both the Securities and Senior Indebtedness of the Company shall become due on the same day, then all Senior Indebtedness due on that date shall first be paid in full, in Cash or Cash Equivalents, before any payment is made with respect to the principal of, or interest on or any other claim or amount with respect to the Securities. -29- 37 (e) Nothing in this Section 5.2 shall prevent the conversion of the Securities into Common Stock in accordance with Article 4 and paragraphs 6 and 7 of the Securities. Section 5.3 Securities Subordinated to Prior Payments of All Senior Indebtedness on Dissolution, Liquidation or Reorganization of the Company. Upon any distribution of assets of the Company upon any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon any assignment for the benefit of creditors or otherwise) (each a "Bankruptcy Event"): (a) the holders of all Senior Indebtedness shall first be entitled to receive payment in full in Cash or Cash Equivalents thereof of the principal and interest due or to become due thereon and other amounts due on or in connection therewith before the Holders are entitled to receive any payment on account of the principal of or interest on, or any other claims with respect to, the Securities; (b) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on behalf of the Holders would be entitled except for the provisions of this Article 5 shall be paid by the liquidating trustee or agent or other person making such a payment or distribution, directly to the holders of Senior Indebtedness or their Representative, to the extent necessary to make payment in full in Cash or Cash Equivalents or any other manner satisfactory to the holders thereof of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution or provision thereof to the holders of such Senior Indebtedness; and (c) Notwithstanding the foregoing, in the event that holders of Senior Indebtedness are required to disgorge, following a Bankruptcy Event, the proceeds of any assets of the Company which is subject to such Bankruptcy Event, and which proceeds were received by holders of Senior Indebtedness prior to such Bankruptcy Event, due to a finding that the receipt of such proceeds was preferential pursuant to the provisions of Section 547 of the United States Bankruptcy Code, as amended (a "Preference"), then the holders of Senior Indebtedness or their Representatives shall be entitled to recoup the amount of such Preference from any and all payments or distributions of assets of the Company previously made or to be made to the Trustee on behalf of the Holders. (d) in the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, shall be received by the Trustee or the Holders or any Paying Agent on account of principal of or interest on or any other claim with respect to the Securities before all Senior Indebtedness is paid in full in Cash or Cash Equivalents or any other manner satisfactory to the holders thereof of all Senior Indebtedness remaining unpaid, such payment or distribution (subject to the provisions of Sections 5.7 and 5.8) shall be received and held for and shall be paid over to the holders of -30- 38 the Senior Indebtedness remaining unpaid (pro rata as to each of such holders on the basis of the respective amounts of Senior Indebtedness held by them) or their Representative, for application to the payment of such Senior Indebtedness until all such Senior Indebtedness shall have been paid in full in Cash or Cash Equivalents, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company or assignment for the benefit of creditors by the Company. Section 5.4 Security Holders to Be Subrogated to Rights of Holders of Senior Indebtedness. Subject to the payment in full in Cash or Cash Equivalents of all Senior Indebtedness, the Holders shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of assets of the Company applicable to the Senior Indebtedness until all amounts owing on the Securities shall be paid in full, and for the purpose of such subrogation no such payments or distributions to the holders of Senior Indebtedness by or on behalf of the Company or by or on behalf of the Holders by virtue of Article 5, which otherwise would have been made to the Holders shall, as between the Company, the Holders and the Company's creditors other than the holders of Senior Indebtedness, be deemed to be payment by the Company to or on account of the Senior Indebtedness, it being understood that the provisions of this Article 5 are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of Senior Indebtedness, on the other hand. Section 5.5 Restriction on Acceleration, Commencement of Suits and Bankruptcy Proceedings. At any time when there is outstanding any Senior Indebtedness and payments on the Securities are prohibited by the terms of Section 5.2, in the event of any "Event of Default" under Section 8.1 (other than an Event of Default specified in subsections (f) and (g) of Section 8.1), neither the Trustee nor the Holders (pursuant to Section 8.6) shall, so long as payments on the Securities are so prohibited: (a) accelerate by declaration pursuant to Section 8.1 the maturity of the principal of and accrued interest on the Securitiesunless the holders of Senior Indebtedness in an aggregate principal amount in excess of $10,000,000 shall have accelerated (and not rescinded pursuant to Section 8.2(b)) the maturity of such Senior Indebtedness, (b) commence any judicial action or proceedings pursuant to Section 8.3 to collect the payment of principal of or interest on the Securities unless the holders of Senior Indebtedness in an aggregate principal amount in excess of $10,000,000 shall have commenced judicial action or proceedings to collect payment of the principal of or interest on such Indebtedness, or -31- 39 (c) commence an involuntary case or proceeding in bankruptcy against the Company unless the holders of Senior Indebtedness of the Company shall have commenced such a case proceeding. At such time as payments on the Securities are no longer prohibited by the terms of Section 5.2, the Trustee (or the Holders) shall be free to accelerate (if then permitted by Section 8.2) the maturity of the Securities, to commence any judicial action or proceeding to collect the payment of principal of, or interest on, the Securities or to commence an involuntary case or proceeding in bankruptcy against the Company or any of its Subsidiaries. Section 5.6 Obligations of the Company Unconditional. Nothing contained in this Article 5 or elsewhere in this Indenture or in any Security is intended to or shall impair, as between the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Securities 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 and creditors of the Company other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the provisions of Section 5.5 and to the rights, if any, under this Article 5 of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article 5, the Trustee, subject to the provisions of Sections 9.1 and 9.2, and the Holders shall be entitled to rely upon the delivery to it or them, as the case may be, of 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 Trustee or to the Holders 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, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 5. In the event that the Trustee determines, in good faith, that further evidence is required with respect to the right of any person as a holder of Senior Indebtedness to participate in any payments or distribution pursuant to this Article 5, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such person, as to the extent to which such person is entitled to participate in such payment or distribution, and as to other facts pertinent to the rights of such person under this Article 5, and if such evidence is not furnished, the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment. -32- 40 Section 5.7 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice. Notwithstanding any provision of this Article 5 or any other provision of this Indenture, the Trustee and Paying Agent shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee or a Paying Agent or the taking of any other action by the Trustee or a Paying Agent unless and until the Trustee or such Paying Agent, as the case may be, shall have received written notice thereof from the Company or from one or more holders of Senior Indebtedness or from any trustee or representative therefor (or there shall have been an acceleration of the Securities) and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Sections 9.1 and 9.2, and such Paying Agent, shall be entitled in all respects conclusively to assume that no such fact exists. The Trustee shall be entitled to reasonably rely on the delivery to it of a written notice by a person representing himself, herself or itself to be a holder of Senior Indebtedness (or a representative on behalf of such holder) to establish that such notice has been given by a holder of Senior Indebtedness or a representative on behalf of any such holder. Section 5.8 Application by Trustee of Monies Deposited With It. Any deposit of monies by the Company with the Trustee or any Paying Agent (whether or not in trust, unless held in trust for application to the payment of particular Securities, payment for which was made available to the holders of such Securities on the relevant payment date but which remains uncollected) for the payment of principal of or interest on any Securities shall be subject to the provisions of Sections 5.1, 5.2, 5.3 and 5.4 except that, if prior to the fifth (5th) Business Day preceding the date on which by the terms of this Indenture any such monies may become payable for any purpose (including without limitation, the payment of either principal of or interest on any Security) the Trustee or such Paying Agent shall not have received with respect to such monies the written notice provided for in Section 5.7 (or there shall not have been an acceleration of the Securities prior to such applications), then notwithstanding any provisions of this Article 5 or any other provisions of this Indenture, the Trustee or such Paying Agent shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary which may be received by it on or after such date. Section 5.9 Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Indebtedness. No right of any present or future holders of any Senior Indebtedness to enforce subordination as provided herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof which any such holder may have or be otherwise charged with. The holders of Senior Indebtedness may extend, renew, modify or amend the terms of the Senior Indebtedness or any security -33- 41 therefor and release, sell or exchange such security and otherwise deal freely with the Company, all without affecting the liabilities and obligations of the parties to the Indenture or the Holders. Section 5.10 Security Holders Authorize Trustee to Effectuate Subordination of Securities. Each Holder of the Securities by his acceptance thereof authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article 5 and appoints the Trustee his attorney-in-fact for such purpose, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the business and assets of the Company, the timely filing of a claim for the unpaid balance of its or his Securities in the form required in said proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or proof of debt in the form required in such proceeding prior to thirty (30) days before the expiration of the time to file such claim or claims, then the holders of the Senior Indebtedness are hereby authorized to have the right to file and are hereby authorized to file an appropriate claim for and on behalf of the holders of said Securities; provided, however, that any such claim filed by the holders of Senior Indebtedness shall be superseded by any properly filed claim subsequently filed by the Trustee. Section 5.11 Right of Trustee to Hold Senior Indebtedness and Receive Compensation. The Trustee shall be entitled to all of the rights set forth in this Article 5 in respect of any Senior Indebtedness at any time held by it to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder. Nothing in this Article 5 shall apply to claims of, or payments to, the Trustee pursuant to Section 9.7. Section 5.12 Article 5 Not to Prevent Events of Default. The failure to make a payment on account of principal of or interest on the Securities by reason of any provisions of this Article 5 shall not be construed as preventing the occurrence of an Event of Default under Section 8.1; provided that all Senior Indebtedness then or thereafter due or declared to be due shall first be paid in full, in Cash or Cash Equivalents, before the Holders are entitled to receive any payment from the Company of principal of, or interest on or any other claim or amount with respect to the Securities or with respect to any purchase, acquisition or redemption of any of the Securities. Section 5.13 No Fiduciary Duty to Holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article 5 and no implied covenants or obligations with respect to the -34- 42 holders of Senior Indebtedness shall be read into this Indenture against the Trustee or Paying Agent. Neither the Trustee nor the Paying Agent shall be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and, subject to the provisions of Section 9.1, the Trustee shall not be liable to any holder of Senior Indebtedness if it shall in the absence of bad faith pay over or deliver to Holders of Securities, the Company or any other person monies or assets to which any holder of Senior Indebtedness shall be entitled by virtue of Article 5 or otherwise. ARTICLE 6 COVENANTS Section 6.1 Payment of Securities. The Company shall pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in accordance with the terms hereof. An installment of principal or interest shall be considered paid on the date due if the Trustee or Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of the Company) holds in trust on that date money designated for and sufficient to pay the installment then due. Section 6.2 Maintenance of Office or Agency. The Company shall maintain in The City of New York, Borough of Manhattan, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and, in such event, the Trustee shall act as the Company's agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in The City of New York, Borough of Manhattan for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby initially designates the Corporate Trust Office of the Trustee located in the Borough of Manhattan, The City of New York, as such office of the Company in accordance with this Section. -35- 43 Section 6.3 Money for Securities Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to the Securities, it will, on or before each due date of the principal of or interest on the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for the Securities, it will, on, in case the payment referred to below is made in same day funds, or, in all other cases, prior to, each due date of the principal of or interest on the Securities, deposit with a Paying Agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or interest on any Security and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease in accordance with Section 10.3. Section 6.4 SEC Reports to Security Holders. Within 15 days after the Company files with the SEC copies of its quarterly and annual reports and other information, documents and reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which it is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, the Company shall file the same with the Trustee. So long as the Securities remain outstanding, the Company shall cause quarterly reports (containing unaudited financial statements) for the first three quarters of each fiscal year, annual reports (containing audited financial statements and an opinion thereon by the Company's independent certified public accountants) and current reports which it is, or if it had a class of securities listed on a national securities exchange, would be, required to file under Section 13 of the Exchange Act, to be mailed to the Trustee and the Holders at their addresses appearing in the Security Register when such report is, or would have been, as the case may be, required to be filed under Section 13 of the Exchange Act. The Company also shall comply with the other provisions of TIA Section 314(a). -36- 44 Section 6.5 Compliance Certificate. (a) The Company shall deliver to the Trustee, at the time the Company is required to furnish its quarterly reports to the Trustee pursuant to Section 6.4 or, if the Company is not required to file quarterly reports with the SEC, within 60 days following the end of each of its first three fiscal quarters of each fiscal year, an Officers' Certificate (one of the signers of which shall be the principal accounting or principal executive officer) stating whether or not the signers know of any Default or Event of Default that occurred during such fiscal quarter. If they do know of such Default or Event of Default, the certificate shall describe any such Default or Event of Default and its status. The first certificate to be delivered pursuant to this Section shall be for the first fiscal quarter beginning after the execution of this Indenture. (b) The Company shall deliver to the Trustee, at the time the Company is required to furnish its annual report to the Trustee pursuant to Section 6.4 or, if the Company is not required to file an annual report with the SEC, within one hundred twenty (120) days following the end of each fiscal year of the Company, an Officers' Certificate (one of the signers of which shall be the principal accounting or principal executive officer) stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such officer signing such certificate, that to the best of such Officer's knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he may have knowledge). Section 6.6 Notice of Default. The Company will deliver to the Trustee an Officers' Certificate promptly upon becoming aware of any Default or Event of Default, which Officers' Certificate will specify such Default or Event of Default. Section 6.7 Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may materially affect the covenants or the performance of this Indenture in a manner inconsistent with the provisions of this Indenture and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the -37- 45 Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. This Section shall not prevent the Company from complying with any judgment or order of a court of competent jurisdiction which judgment or order was not sought by the Company. Section 6.8 Corporate Existence. Subject to Section 6.16, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate or other existence of each of its Significant Subsidiaries in accordance with the respective organizational documents of the Company and each such Significant Subsidiary and will use its best efforts to do or cause to be done all things necessary to preserve and keep in full force and effect its material rights (charter and statutory) and material franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders. Section 6.9 Maintenance of Properties. Subject to Section 6.16, the Company shall cause all properties used or useful in the conduct of its business or the business of each of its Significant Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary, so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties, or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Board of Directors of the Company or the Significant Subsidiary concerned, and of an Officer (or other agent employed by the Company or any of the Subsidiaries) of the Company or such Significant Subsidiary having managerial responsibility for any such property, desirable in the conduct of the business of the Company or such Significant Subsidiary. Section 6.10 Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges (including withholding taxes and any penalties, interest and additions to taxes) levied or imposed upon the Company or any of its Significant Subsidiaries (whether or not the Company or such Significant Subsidiary is directly liable therefor) or upon the income, profits or property of the Company or any such Significant Subsidiary, and (ii) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon the property of the Company or any such Significant Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by -38- 46 appropriate proceedings and for which disputed amounts reserves adequate in the Company's judgment have been established in accordance with GAAP. Section 6.11 Insurance. The Company shall provide, or cause to be provided, for itself and each of its Significant Subsidiaries, insurance against loss or damage of the kinds customarily insured against by corporations similarly situated and owning like properties, including, but not limited to, products liability insurance, public liability insurance and errors and omissions liability insurance, with reputable insurers or with the government of the United States of America or an agency or instrumentality thereof, in such amounts with such deductibles and by such methods as shall be customary for responsible Persons engaged in a business similar to that of the Company and its Significant Subsidiaries. Section 6.12 Maintenance of Books and Records. The Company will make and keep books, records and accounts in which full, true and correct entries in accordance with GAAP and all requirements of its governing instruments and of law are made of all dealings and transactions in relation to its business and activities. Section 6.13 Compliance with Laws. The Company will comply, and will cause each of its Subsidiaries to comply, with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities (including, without limitation, all environmental laws and the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder) except (i) where the failure to so comply would not materially adversely affect the business, consolidated financial position or consolidated results of operations of the Company and would not in any manner draw into question the validity of this Indenture or (ii) where the necessity of compliance therewith is contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP, and the Company will maintain, and will and cause each of its Subsidiaries to maintain, all governmental licenses, approvals, authorizations and consents necessary for the conduct of the business of the Company and its Subsidiaries, except where the failure to maintain such governmental licenses, approvals, authorizations and consents would not materially adversely affect the business, consolidated financial position or consolidated results of operations of the Company and its Subsidiaries taken as a whole and would not in any manner draw into question the validity of this Indenture. Section 6.14 Restricted Payments. The Company shall not, and shall not permit any Subsidiary of the Company to, directly or indirectly, make any Restricted Payment unless, at the time thereof and after giving effect thereto no Event of Default shall have occurred and be continuing. Notwithstanding the foregoing, the provisions of this Section shall not prevent (a) any purchase, redemption, acquisition or retirement for value of any Capital Stock of any Subsidiary (a "Designated Subsidiary") of the Company beneficially owned by any Person that is not an Affiliate of the Company or such -39- 47 Subsidiary within one year of the date that such Designated Subsidiary became a Subsidiary of the Company if such purchase, redemption, acquisition or retirement for value is in satisfaction of any agreement or commitment of the Company or a Subsidiary thereof executed or announced by it prior to or within 60 days after the date that such Designated Subsidiary became a Subsidiary or Affiliate of the Company and the terms of such agreement or commitment did not violate this Section, (b) the payment of any dividend within 60 days after the date of declaration if the dividend would have been permitted on the date of declaration, or (c) the acquisition of any shares of Capital Stock of the Company solely out of the proceeds of the substantially concurrent sale (other than a Subsidiary) of shares of Qualified Capital Stock of the Company. Nothing in this Indenture shall prohibit or restrict the ability of the Company to consummate the Restructuring and the exchanges contemplated in the Restructuring shall not be considered Restricted Payments for any purpose hereunder. Section 6.15 Limitation on Certain Transactions Between the Company and Affiliates. The Company shall not enter into, and shall not permit any Subsidiary to enter into, directly or indirectly, any agreement, and shall not renew or permit any Subsidiary to renew any existing agreement, relating to the sale, purchase or lease of any assets, property or services with any Affiliate of the Company or of any Subsidiary of the Company (except that neither the Company nor any Subsidiary the Capital Stock of which is at least 95% owned by the Company shall be considered an Affiliate for the foregoing purposes), unless a majority of a committee of disinterested directors shall have approved such transaction. The approval of such committee of such disinterested directors shall be conclusive and shall be evidenced by a certified Board Resolution filed with the Trustee. Nothing contained in this Section shall prohibit (i) any of the transactions which are specifically excluded from the prohibitions against Restricted Payments and (ii) the payment of reasonable and customary regular fees to directors of the Company who are not employees of the Company. Section 6.16 Company or Subsidiaries May Consolidate, Etc. Only on Certain Terms. The Company shall not, in a single transaction or through a series of related transactions, consolidate with or merge with or into any other Person or, sell, assign, convey, transfer, lease or otherwise dispose of ("Transfer") all or substantially all of its properties and assets to any other Person or group of affiliated Persons if such transaction or transactions, in the aggregate, would result in a sale of all or substantially all of the assets of the Company and its Subsidiaries, on a consolidated basis, unless: (a) either (i) the Company shall be the continuing corporation or (ii) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by Transfer all or substantially all the properties and assets of the Company and its -40- 48 Subsidiaries on a consolidated basis (A) shall be a corporation organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (B) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, and in accordance with the requirements of Section 4.18, if applicable, all the obligations of this Indenture on the part of the Company; (b) except in the case of a Designated Merger, immediately after giving effect to such transaction (and treating any Indebtedness not previously an obligation of the Company or a Subsidiary thereof which becomes the obligation of the Company or any of its Subsidiaries in connection with or as a result of such transaction as having been incurred at the time of such transaction), the Company (in the case of clause (i) of Subsection (a) above) or such Person (in the case of clause (ii) thereof) shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of the Company immediately prior to such transaction; (c) immediately before and immediately after giving effect to such transaction (and treating any Indebtedness not previously an obligation of the Company or any of its Subsidiaries which becomes the obligation of the Company or any of its Subsidiaries in connection with or as a result of such transaction as having been incurred at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and (d) the Company or such Person, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger or Transfer and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Section and Articles 6 and 10 hereof and that all conditions precedent herein provided for relating to such transaction have been satisfied. ARTICLE 7 SUCCESSOR CORPORATION Section 7.1 Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company in accordance with Section 6.16, the successor corporation formed by such consolidation or into which the Company is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, and shall be obligated to discharge every obligation of, the Company under this Indenture with the same effect as if such successor corporation has been named as the Company -41- 49 herein. Thereafter, all obligations of the Company under the Securities and this Indenture shall terminate. ARTICLE 8 DEFAULTS AND REMEDIES Section 8.1 Events of Default. An "Event of Default" shall occur if: (a) the Company defaults in the payment of interest on any Security when the same becomes due and payable and such Default continues for a period of thirty (30) days; or (b) the Company defaults in the payment of the principal of any Security when the same becomes due and payable at maturity or otherwise; or (c) the Company fails to comply with any of its other agreements in the Securities or this Indenture and such Default continues for the period and after the notice specified below; or (d) the Company or any of its Subsidiaries defaults in the performance of any mortgage, indenture, loan agreement or other debt instrument providing for or securing Indebtedness of the Company or any of its Subsidiaries for borrowed money having an aggregate principal amount of more than ten million dollars ($10,000,000) with the result that more than ten million dollars ($10,000,000) has been accelerated and become due and payable prior to its stated maturity and such acceleration shall not be rescinded or annulled within thirty (30) days; provided that a default on any indebtedness of any Subsidiary of the Company engaged solely in the production of a particular motion picture, which indebtedness is secured only by the Subsidiary's interest in such motion picture and any related properties, equipment, distribution agreements or other contracts pertaining solely to the production of such motion picture of said Subsidiary and which indebtedness is without recourse to the assets of the Company or any other Subsidiary shall not give rise to an Event of Default under this Section 8.1(d); or (e) one or more judgments, orders or decrees for the payment of money, either individually or in the aggregate, in excess of ten million dollars ($10,000,000) is entered by a court of competent jurisdiction against the Company or any Subsidiary of the Company and such judgment, order or decree remains undischarged and unbonded and an enforcement proceeding has been commenced by any creditor on such judgment, order or decree for a period (during which execution shall not be effectively stayed) of sixty (60) consecutive days after the date on which the right of appeal has expired; or -42- 50 (f) the Company or any Significant Subsidiary of the Company, pursuant to or within the meaning of any Bankruptcy Law (i) becomes insolvent within the context of a Bankruptcy filing, (ii) commences a voluntary case or proceeding, (iii) consents to, or acquiesces in, the institution of a bankruptcy, liquidation or an insolvency proceeding against it or entry of a judgment, decree or order for relief against it in an involuntary case or proceeding, (iv) applies for, consents to or acquiesces in the appointment of or taking possession by a Custodian of the Company or any Significant Subsidiary of the Company or of any substantial part of its property, (v) makes a general assignment for the benefit of its creditors, or (vi) takes any corporate action to authorize, conditionally or otherwise, any of the foregoing; or (g) a court of competent jurisdiction enters a judgment, decree or order under any Bankruptcy Law which (i) is for relief against the Company or any Significant Subsidiary in any involuntary case, (ii) appoints a Custodian of the Company or any Significant Subsidiary of the Company or for any substantial part of its property or (iii) orders the winding-up or liquidation of its affairs, and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or any bankruptcy, insolvency, or liquidation petition or application is filed, or any bankruptcy case or insolvency proceeding is commenced, against the Company or any Significant Subsidiary of the Company and such petition, application, case or proceeding is not dismissed within 60 days; or any warrant, order or writ of attachment is issued against all or substantially all of the property of the Company and its Significant Subsidiaries on a consolidated basis which is not released within 60 days of service. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law now or hereafter in effect for the relief, supervision, conservation, reorganization or liquidation of debtors or for the benefit of creditors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A Default under Section 8.1(c) is not an Event of Default until the Trustee or the Holders of at least 33-1/3% in principal amount of the Securities notify the Company of the Default and the Company does not cure the Default within thirty (30) days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a "Notice of Default." Such notice shall be given by the Trustee if requested by the Holders of at least 33-1/3% in principal amount of the Securities then outstanding. Section 8.2 Acceleration. (a) Subject to the provisions of Section 5.5, if an Event of Default (other than an Event of Default specified in Section 8.1(f) or (g)) occurs and is continuing, the Trustee or the Holders of at least 35% in aggregate principal amount of the Securities then outstanding by written notice to the -43- 51 Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on the Securities to be due and payable immediately and, upon any such declaration, the same shall become immediately due and payable. (b) In the event of a declaration of acceleration solely because an Event of Default set forth in Section 8.1(d) has occurred and is continuing, such declaration of acceleration shall be automatically annulled if (i) such defaulted Indebtedness is paid in full or the acceleration in respect of such defaulted Indebtedness shall have been rescinded, in either such case within 60 days thereof and the Company or a representative, in either such case, of the holder of such defaulted Indebtedness has delivered a notice of such rescission to the Trustee, and (ii) no other Event of Default (other than the failure to pay any claims or amounts on the Securities by reason of such acceleration) has occurred and is continuing which has not been cured or waived before or during such 60-day period. (c) If an Event of Default specified in Section 8.1(f) or (g) occurs, all unpaid principal of and the accrued interest on the Securities then outstanding shall automatically become due and payable without any declaration or other act on the part of the Trustee or any Holder. (d) Upon payment of such principal amount and interest, all of the Company's obligations under the Securities and this Indenture, other than obligations under Section 9.7, shall terminate. At any time after such acceleration under this Section 8.2, the Holders of a majority in principal amount of the outstanding Securities by notice to the Trustee may rescind an acceleration and its consequences if: (i) The Company has paid or deposited with the Trustee a sum sufficient to pay: (A) all overdue interest on all Securities; (B) the principal of any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities; (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Securities; and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel except as a result of negligence or bad faith; and -44- 52 (ii) all existing Events of Default (except nonpayment of principal or interest that has become due solely because of the acceleration) have been cured, waived or otherwise remedied, and if such rescission would not conflict with any judgment or decree. No such rescission shall effect any subsequent default or impair any right or consequence thereon. Section 8.3 Other Remedies. Subject to the provisions of Section 5.5, if an Event of Default occurs and is continuing and the Security Holders are entitled to payment as a result of an acceleration or at maturity, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered, subject to Section 8.10 hereof. Section 8.4 Waiver of Past Defaults. Subject to Sections 8.7 and 11.2, the Holders of a majority in principal amount of the Securities by notice to the Trustee may waive any past default or an existing Default and its consequences except a Default in the payment of the principal of or interest on any Security. When a Default or Event of Default is waived, it is cured and ceases. Section 8.5 Control by Majority. The Holders of a majority in principal amount of the outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities, provided that: (a) such direction shall not be in conflict with any rule of law or with the provisions of this Indenture; (b) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction and shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not be lawfully taken, or the Trustee shall determine that the action or proceedings would subject the Trustee to personal liability; or -45- 53 (c) the Trustee shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of Securities not joining in the giving of said direction, it being understood that (subject to Sections 9.1 and 9.2) the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such holders. Section 8.6 Limitation on Suits. A Security Holder may pursue a remedy with respect to this Indenture or the Securities only if an Event of Default occurs and is continuing and the Security Holders are entitled to payment as a result of an acceleration or at maturity and if: (a) the Holder gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 33-1/3% in principal amount of the Securities then outstanding make a written request to the Trustee to pursue the remedy; (c) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within sixty (60) days after receipt of the notice, request and the offer of indemnity; and (e) during such sixty (60) day period the Holders of a majority in principal amount of the Securities then outstanding do not give the Trustee a written direction inconsistent with the request. A Security Holder may not use this Indenture to prejudice the rights of another Security Holder or to obtain a preference or priority over another Security Holder. Section 8.7 Rights of Holders to Receive Payment. Subject to the provisions of Article 5, but notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of principal of and interest on the Security, on or after the respective due dates expressed in the Security, to convert the Securities in accordance with Article 4, or to bring suit for the enforcement of any such payment on or after such respective dates or conversion of the Securities in accordance with Article 4, shall not be impaired or affected without the consent of such Holder. Section 8.8 Collection Suit by Trustee. If an Event of Default specified in Section 8.1(a) or (b) occurs and is continuing, the Company will, subject to the provisions of Article 5, upon demand of the Trustee, pay to it for the benefit of the Holders of the Securities, the whole amount then due and payable on such Securities for principal and interest, and, to the extent that payment of such interest -46- 54 shall be legally enforceable, interest on any overdue principal and on any overdue interest, at the rate borne by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, except as a result of the Trustee's negligence or bad faith. Until such demand is made by the Trustee, the Company may, subject to the provisions of Article 5, pay the principal of and interest on the Securities to the registered Holders, whether or not the Securities may be overdue. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as Trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein or to enforce any other power or remedy. Section 8.9 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due under Section 9.7) and the Security Holders allowed in any judicial proceedings relative to the Company, its creditors or its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute it, and any Custodian in any such judicial proceedings is hereby authorized by each Security Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Security Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 9.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Security Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Security Holder in any such proceeding. -47- 55 Section 8.10 Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 9.7; Second: subject to the provisions of Article 5, to Holders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and Third: to the Company or any other obligor on the Securities, as their interests may appear or as a court of competent jurisdiction may direct. The Trustee, upon prior written notice to the Company, may fix a record date and payment date for any such payment to Security Holders. Section 8.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee (including any suit in any action related to any case pending under any Bankruptcy Law), a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section shall not apply to a suit instituted by the Trustee, a suit instituted by a Holder pursuant to Section 8.7, or a suit instituted by any Holder, or group of Holders, of more than 10% in aggregate principal amount of the Securities then outstanding. Section 8.12 Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Company, the Trustee and the Holders shall continue as though no such proceeding had been instituted. Section 8.13 Rights and Remedies Cumulative. Except as provided in Section 8.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. -48- 56 Section 8.14 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Subject to Section 8.6, every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. ARTICLE 9 TRUSTEE Section 9.1 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) Except during the continuance of an Event of Default: (i) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, however, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and -49- 57 (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.5. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 9.2 Rights of Trustee. Subject to Section 9.1: (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officers' Certificate or an Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed by the Trustee with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. Section 9.3 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 9.10 and 9.11. Section 9.4 Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication. -50- 58 Section 9.5 Notice of Defaults. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Security Holders a notice of the Default within thirty (30) days after it occurs. Section 9.6 Reports by Trustee to Holders. Within forty-five (45) days after each May 15 beginning with the first May 15 following the date of this Indenture, the Trustee shall mail to Holders a brief report dated as of such reporting date that complies with TIA Section 313(a) if so required. The Trustee also shall comply with TIA Sections 313(b) and 313(c). A copy of each report at the time of its mailing to Security Holders shall be filed with the SEC and each stock exchange on which the Securities are listed. The Company shall notify the Trustee when the Securities are listed on any stock exchange. Section 9.7 Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses shall include the reasonable compensation and out-of-pocket expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee against any loss or liability incurred by it. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity but the failure of the Trustee to so notify the Company shall not limit the Trustee's right to indemnity hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense thereof. The Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through negligence or bad faith on the part of the Trustee. To secure the Company's payment obligations in this Section, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay principal of and interest on particular Securities. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 8.1(f) and (g) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. -51- 59 Section 9.8 Replacement of Trustee. A resignation or removal of the Trustee and the appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section. The Trustee may resign by so notifying the Company in writing at least thirty (30) Business Days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the outstanding Securities may remove the Trustee by so notifying the Trustee and the Company. The Company may remove the Trustee if: (a) the Trustee fails to comply with Section 9.10; (b) the Trustee is adjudged a bankrupt or an insolvent; (c) a receiver or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If a successor Trustee does not take office within sixty (60) days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 9.10, any Security Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Security Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 9.7. Section 9.9 Successor Trustee by Merger, Etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to another corporation, the successor corporation without any further act shall be the successor Trustee. -52- 60 Section 9.10 Eligibility; Disqualification. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall always have a combined capital and surplus of at least ten million dollars ($10,000,000). The Trustee shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. Section 9.11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. Section 9.12 Authenticating Agents. From time to time the Trustee, in its sole discretion, may appoint one or more Authenticating Agents (other than the Company) with power to act on the Trustee's behalf and subject to its direction in the authentication and delivery of or in connection with transfers and exchanges under Section 2.7 as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections of this Indenture to authenticate and deliver Securities. For all purposes of this Indenture, the authentication and delivery of Securities by an Authenticating Agent pursuant to this Section shall be deemed to be authentication and delivery of such Securities "by the Trustee." Each such Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $100,000,000 and subject to supervision or examination by federal, state or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which any Authenticating Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation or to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. -53- 61 An Authenticating Agent may resign at any time by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail notice of such appointment to all Holders, as the names and addresses of such Holders appear on the Security Register. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee shall incur no liability for the appointment of any Authenticating Agent or for any misconduct or negligence of such Authenticating Agent. In the event the Trustee does incur liability for any such misconduct or negligence of the Authenticating Agent, the Company agrees to indemnify the Trustee for, and hold it harmless against, any such liability, including the costs and expenses of defending itself against any liability in connection with such misconduct or negligence of the Authenticating Agent. If an appointment is made pursuant to this Section, the Securities may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the form provided in the form of Security attached hereto as Exhibit A. ARTICLE 10 DISCHARGE OF INDENTURE Section 10.1 Termination of Company's Obligations. The Company may terminate all of its obligations under the Securities and this Indenture if all Securities of all series previously authenticated and delivered (other than destroyed, lost or stolen Securities which have been replaced or paid) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder or if: (1) the Company irrevocably deposits in trust with the Trustee, solely for the benefit of the Holders, money, U.S. Government Obligations or a combination of money and U.S. Government Obligations, maturing as to principal and interest in such amounts (and at such times as are sufficient in the opinion of a nationally recognized firm of independent certified public accountants expressed in a written certification thereof delivered to the Trustee), without consideration of any reinvestment of such interest, to pay principal of and interest on the Securities to -54- 62 maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder and the Trustee shall have been irrevocably instructed to apply such trust funds to the payment of principal of and interest on the Securities; (2) the Company delivers to the Trustee an Officers' Certificate stating that all of the provisions of this Section 10.1 have been complied with, and an Opinion of Counsel, reasonably satisfactory to the Trustee, to the same effect; and (3) unless the Securities mature within one year from the date of such deposit or all of them are to be called for redemption within one year from the date of such deposit under arrangements satisfactory to the Trustee for giving the notice of redemption, the Company shall have delivered to the Trustee an Opinion of Counsel, reasonably satisfactory to the Trustee, to the effect that, based on federal income tax laws then in effect, the Holders of the Securities will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of its option under this Section 10.1 and shall be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised or a ruling to that effect received from or published by the Internal Revenue Service. Notwithstanding the foregoing, none of the Company's obligations under this Indenture shall terminate prior to the expiration of 90 days from the date of the deposit referred to in clause (1) above. Thereafter only the Company's obligations in Sections 2.4, 2.5, 2.6, 2.7, 2.8, 6.1, 6.7, 6.8, 9.7, 9.8, 10.3, and 10.4 shall survive until the Securities are no longer outstanding. Thereafter the Company's obligations in Sections 9.7, 10.3 and 10.4 shall survive. Subject to Section 10.4 herein, after a deposit the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified above. In order to have money available on a payment date to pay principal of or interest on the Securities, the U.S. Government Obligations shall be payable as to principal of or interest on, on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's option. Section 10.2 Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 10.1. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. Section 10.3 Repayment to Company. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or -55- 63 securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years; provided that the Company shall have first caused notice of such payment to be mailed to each Security Holder entitled thereto no less than thirty (30) days prior to such repayment. After payment to the Company, Security Holders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. Section 10.4 Reinstatement. If the Trustee or the Paying Agent is unable to apply any money in accordance with Section 10.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.1 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 10.2; provided, however, that, if the Company has made any payment of interest on or principal of any Security because of the reinstatement of their respective obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or the Paying Agent. ARTICLE 11 AMENDMENTS AND WAIVERS Section 11.1 Without Consent of Holders. The Company, when duly authorized by Board Resolution, and the Trustee may enter into one or more indentures supplemental hereto, in form and substance satisfactory to the Trustee without the consent of any Security Holder: (a) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power conferred upon the Company herein; (b) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein or in the Securities; (c) to comply with Sections 4.17, 6.16 and Article 7; (d) to comply with the requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA, including as contemplated by Section 11.3; -56- 64 (e) to evidence, and provide for the acceptance of, the appointment of a successor Trustee hereunder; or (f) to make any change that does not adversely affect the rights of any Security Holder. Section 11.2 With Consent of Holders. The Company, when authorized by Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of amending any provision of this Indenture or the Securities with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding without prior notice to any Holder (evidenced by delivery to the Trustee of an Officers' Certificate attaching such consents and stating that they were validly obtained in accordance with this Indenture); provided, however, that no such supplemental indenture shall, without the consent of the Holder of each outstanding Security of each series affected thereby: (a) reduce the amount of Securities whose Holders must consent to an amendment or waiver; (b) reduce the rate of or change the time for payment of interest on any Security; (c) reduce the principal of or change the fixed maturity of any Security; (d) make any Security payable in money other than that stated in such Security; (e) except for adjustments described in Article 4, change the Conversion Rate; (f) change the dates upon which a conversion of the Securities to shares of Common Stock is permitted to be made; (g) make any changes in Articles 4 and 5 that adversely affect the rights of any Security Holder; (h) modify the proviso of this Section or Sections 8.4 or 8.7 or impair the right to institute suit for the enforcement of any payment after the stated Maturity Date thereof; or (i) reduce the percentage in principal amount of the outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any -57- 65 waiver of compliance with certain provisions of this Indenture or certain Defaults hereunder and their consequences provided for in this Indenture. An amendment under this Section 11.2 may not make any change that adversely affects the rights under Article 4 or Sections 8.1, 8.2, 8.3 or 8.6 of any holder of Senior Indebtedness unless the holder or holders of such Senior Indebtedness pursuant to its terms consent to such change. Upon the request of the Company accompanied by a copy of a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture. After an amendment or waiver under this Section becomes effective, the Company shall mail to Security Holders a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. In connection with any amendment or waiver under this Article, the Company may, but shall not be obligated to, offer to any Holder who consents to such amendment or waiver, or to all Holders, consideration for such Holder's consent to such amendment or waiver. Any consent to any such amendment or waiver given by a Holder of a Security shall remain a valid consent notwithstanding the subsequent sale or transfer of such Security to the Company or any Affiliate thereof. Section 11.3 Compliance with Trust Indenture Act; Effect of Supplemental Indentures. Every amendment to this Indenture or the Securities or waiver of the provisions hereof or thereof shall be set forth in a supplemental indenture that complies with the TIA as then in effect. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified and amended in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 11.4 Revocation and Effect of Consents. Until an amendment or waiver becomes effective, a consent to it by any Holder of a Security is a continuing consent by such Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or -58- 66 portion of a Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than ninety (90) days after such record date. After an amendment or waiver becomes effective, it shall bind every Security Holder, unless it makes a change described in any of the clauses of Section 11.2. In that case, the amendment or waiver shall bind each Holder of a security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. Section 11.5 Notation on Exchange of Securities. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security of the same series that reflects the changed terms. Section 11.6 Trustee Protected. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article 11 is authorized or permitted by this Indenture. Subject to the preceding sentence, the Trustee shall sign such amendment, supplement or waiver if the same does not adversely affect the rights of the Trustee. The Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. ARTICLE 12 MISCELLANEOUS Section 12.1 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control except as specifically set forth in Section 2.09. -59- 67 Section 12.2 Notices. Any notice or communication by the Company or the Trustee to any other party hereto is duly given if in writing and delivered in person or by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to the Company: Carolco Pictures Inc. 8800 Sunset Boulevard Los Angeles, California 90069 Attn: Robert W. Goldsmith, Esq., Senior Vice President, General Counsel and Corporate Secretary with a copy to: Lawrence R. Barnett, Esq. Gipson Hoffman & Pancione 1901 Avenue of the Stars Los Angeles, California 90067 if to the Trustee: American Stock Transfer & Trust Company 40 Wall Street New York, New York 10005 Attention: Corporate Trust Administration with a copy to: Herbert Lemmer, Esq. American Stock Transfer & Trust Company 40 Wall Street New York, New York 10005 The Company or the Trustee by written notice delivered from time to time by an Officers' Certificate of such party to the other parties hereto may designate additional or different addresses for subsequent notices or communications. Any notice or communication to a Holder shall be mailed by first-class mail or other equivalent means to his address shown on the Security Register maintained by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. Except for a notice to the Trustee, which is deemed to be given only when received, if a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. All other notices or communications shall be in writing. -60- 68 In case by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail any notice as required by this Indenture, then such method of notification as shall be made with the approval of the Trustee shall constitute a sufficient mailing of such notice. Section 12.3 Communications by Holders with Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 12.4 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (a) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. Section 12.5 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that each party making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such party, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of each such party, such condition or covenant has been complied with; provided, however, that with respect to matters of law, an Officers' Certificate may be based upon an Opinion of Counsel, unless the signers know, or in the exercise of reasonable care should know, that such Opinion of Counsel is erroneous, and provided further, that with respect to matters of fact an Opinion of Counsel may rely -61- 69 on an Officers' Certificate or certificates of public officials, unless the signer knows, or in the exercise of reasonable care should know, that any such document is erroneous. Section 12.6 Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 12.7 No Recourse Against Others. All liability of any past, present or future stockholder, officer, director or employee of the Company, any Subsidiary or any successor corporation thereof, in respect of such obligor's respective obligations under this Indenture or the Securities by reason of his, her or its status as such stockholder, officer, director or employee is waived and released. Each Security Holder by accepting a Security waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities. Section 12.8 Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Section 12.9 Governing Law. The internal laws of the State of New York shall govern this Indenture and the Securities, without regard to the conflicts of laws rules thereof. The Company hereby irrevocably submits to the jurisdiction of any New York State court sitting in the Borough of Manhattan in respect of any suit, action or proceeding arising out of or relating to this Indenture if such suit, action or proceeding is commenced by the Trustee or the Holders in such jurisdiction or if the Company commences any such suit, action or proceeding, and the Company irrevocably agrees that all claims in respect of any such suit, action or proceeding commenced in such jurisdiction by such parties may be heard and determined in any such court. The Company irrevocably waives, to the fullest extent it may effectively do so under applicable law, any objection which it may now or hereafter have to the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. The two immediately preceding sentences shall not be read to prohibit the Trustee or the Holders from commencing any action in any other jurisdiction which the Trustee or the Holders, as the case may be, may deem appropriate. Section 12.10 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. -62- 70 Section 12.11 Successors. All agreements of the Company in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 12.12 Severability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. CAROLCO PICTURES INC., Issuer By /s/ WILLIAM SHPALL ---------------------------------- Name: William Shpall ---------------------------- Title: Executive Vice President --------------------------- [Seal] Attest: /s/ ROBERT W. GOLDSMITH ------------------------------ Name: Robert W. Goldsmith -------------------------------- Title: Senior Vice President ------------------------------- AMERICAN STOCK TRANSFER & TRUST COMPANY, Trustee By /s/ HERBERT J. LEMMER ---------------------------------- Name: Herbert J. Lemmer ---------------------------- Title: Vice President --------------------------- [Seal] Attest: /s/ JOSEPH WOLF ------------------------------ Name: Joseph Wolf -------------------------------- Title: Vice President ------------------------------- -63- 71 ACKNOWLEDGEMENTS STATE OF CALIFORNIA ) ) ss: COUNTY OF LOS ANGELES ) On the 13th day of October, in the year 1994, before me personally came William Shpall, to me known, who, being by me duly sworn, did depose and say that he resides at Los Angeles, California, that he is a Exec. V.P. of Carolco Pictures Inc., the corporation described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. /s/ Laurie A. Paul ------------------------------------ Notary Public [NOTARIAL SEAL] STATE OF NEW YORK ) ) ss: COUNTY OF KINGS ) On the 14th day of October, in the year 1994, before me personally came Herbert J. Lemmer, to me known, who, being by me duly sworn, did depose and say that he resides at Westfield, NJ, that he is a V.P. of American Stock Transfer & Trust Company, the corporation described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. /s/ James E. Hagan ------------------------------------ Notary Public [NOTARIAL SEAL] -64- 72 EXHIBIT A [FORM OF SECURITY] [FACE OF SECURITY] No.____________ $_____________ CAROLCO PICTURES INC. 7% CONVERTIBLE SUBORDINATED NOTE DUE JUNE 30, 2006 SERIES __ THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF. CAROLCO PICTURES INC., a Delaware corporation (together with any successor corporation under the Indenture hereinafter referred to as the "Company"), for value received, promises to pay to _______________________________________________ or registered assigns, the principal sum of ____________________ Dollars on June 30, 2006. Interest Payment Dates: December 30 and June 30 Record Dates: December 15 and June 15 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof which further provisions shall for all purposes have the same effect as if set forth in this place. A-1 73 IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. CAROLCO PICTURES INC. By _________________________________ Title:___________________________ Attest: By________________________ Secretary [SEAL] Date:_____________________ A-2 74 CERTIFICATE OF AUTHENTICATION This Security is one of the Securities referred to in the within-mentioned Indenture. AMERICAN STOCK TRANSFER & TRUST COMPANY, as Trustee By________________________________ Authorized Officer A-3 75 [REVERSE OF SECURITY] CAROLCO PICTURES INC. 7% CONVERTIBLE SUBORDINATED NOTE DUE JUNE 30, 2006 1. Interest. Carolco Pictures Inc., a Delaware corporation (together with any successor corporation under the Indenture hereinafter referred to as the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on December 30 and June 30 of each year, (each such date, an "Interest Payment Date") commencing on the first Interest Payment Date following the Issue Date. Interest on this Security will accrue from the Issue Date of the Security or from the most recent date to which interest has been paid. The Company shall pay interest on overdue principal and, to the extent permitted by law, on overdue installments of interest at the rate per annum borne by this Security. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company will pay interest on this Security (except defaulted interest paid after the grace period provided for the payment of such interest in Section 8.1(a) of the Indenture) to the Person who is the registered Holder of this Security at the close of business on the December 15 or June 15, as the case may be, next preceding each Interest Payment Date. The Holder must surrender this Security to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may mail an interest check to the Holder's registered address. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. 3. Paying Agent, Registrar. Initially, American Stock Transfer & Trust Company (the "Trustee") will act as Paying Agent, Conversion Agent and Registrar at its office in 40 Wall Street, New York, New York. The Company may change any Paying Agent, Conversion Agent or Registrar without notice but shall maintain the Registrar, a Paying Agent and Conversion Agent in the Borough of Manhattan, the City of New York. The Company or any of its Subsidiaries may act as Paying Agent, Conversion Agent and/or Registrar. A-4 76 4. Indenture. The Company issued the Securities in one or more series under an Indenture dated as of October 14, 1994 (the "Indenture") between the Company and the Trustee. Unless otherwise defined herein, terms used herein which are defined in the Indenture shall have the meanings given thereto in the Indenture. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Section Section 77aaa-77bbbb) as in effect on the date of the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Securities are general unsecured subordinated obligations of the Company limited to an initial aggregate principal amount of fifty million dollars ($50,000,000). 5. Optional Redemption. The Company may redeem the Securities at any time on or after January 1, 1997 in whole or from time to time in part in cash at a redemption price equal to 100% of the principal amount of Securities outstanding, plus accrued and unpaid interest to the redemption date. If the redemption date is subsequent to a Regular Record Date with respect to any Interest Payment Date and on or prior to such Interest Payment Date, then such accrued interest will be paid to the Person in whose name this Security is registered at the close of business on such Regular Record Date and to no other Person. 6. Conversion at the Election of the Company. The Company may elect to convert all (but not part) of the Securities outstanding at any time before the close of business on the Maturity Date and after the date upon which the average of the Quoted Prices of the Common Stock for any 20 days during a period of 30 consecutive trading days equals or exceeds 250% of the amount obtained by dividing 1,000 by the Conversion Rate (as defined below). The Company shall provide the Trustee and the Registrar with written notice of its election to convert the Securities pursuant to the foregoing sentence and of the date selected by the Company for such conversion (the "Company Conversion Date") at least five (5) Business Days prior to the Company Conversion Date (the "Company Conversion Notice"). The initial conversion rate is 1,333.33 shares of Common Stock for each $1,000 principal amount of Security and each $1,000 of accrued and unpaid interest through the Company Conversion Date. The conversion rate is subject to adjustment in certain events described in the Indenture (the initial conversion rate as so adjusted, the "Conversion Rate"). No fractional shares will be issued upon conversion, but instead, the Company will deliver cash or a check in lieu of any fractional share of Common Stock. For purposes of determining the amount of cash due a Holder upon conversion at the election of the Company in lieu of fractional shares of Common Stock, each share of Common Stock shall be deemed to have a A-5 77 value of $0.75, subject to adjustment in an amount corresponding to any adjustment to the Conversion Rate. The Company shall mail, or shall cause the Trustee to mail, within five (5) Business following its receipt of written notice of the Company Conversion Notice, a notice of conversion to each Security Holder. Such notice of conversion shall state (1) the Company Conversion Date, (2) the Conversion Rate at such date, (3) the name and address of the Conversion Agent, (4) that the Securities of such Holder must be surrendered to the Conversion Agent in order to obtain the shares of Common Stock issuable upon conversion, (5) that each Holder of a Security must complete and manually sign the conversion notice on the back of the Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (6) that each Holder of a Security must furnish appropriate endorsements and transfer documents if required by the Conversion Agent, and (7) that, unless the Company fails to deliver a sufficient number of shares of Common Stock and sufficient cash in lieu of fractional shares to effect the conversion, interest on the Securities shall cease to accrue on and after the Company Conversion Date. The failure of the Company to give notice of conversion to a Security Holder or any defect in such notice shall not affect the validity of the conversion of the Securities on the Company Conversion Date. Once notice of conversion has been mailed and sufficient shares of Common Stock and sufficient cash in lieu of fractional shares of Common Stock have been deposited with the Conversion Agent, the Securities shall, without further action, automatically convert to shares of Common Stock at the Conversion Rate and, notwithstanding that any Securities shall not have been surrendered to the Conversion Agent, from and after the Company Conversion Date, interest shall cease to accrue on the Securities, the Securities shall no longer be deemed outstanding and the Company shall have no further obligation with respect to the Securities so converted. The Company shall pay any and all documentary, stamp or similar transfer taxes due upon the issue and transfer of shares of Common Stock in connection with the conversion of the Securities pursuant to this paragraph. 7. Conversion Privilege. A Holder of this Security may elect to convert this Security into Common Stock of the Company at any time before the close of business on the Maturity Date; provided that if such Security is called for redemption the Holder may convert it only until the close of business on the redemption date. [For a Security acquired upon its original issuance by a Strategic Investor, insert: The number of shares of Common Stock issuable upon such conversion shall for each $1,000 of principal amount of a Security be equal to the Conversion Rate then in effect.] [For a Security acquired upon its original issuance by a Person other than a Strategic Investor, insert: The number of shares of Common Stock issuable upon conversion shall for each $1,000 of principal amount of a Security be equal to the A-6 78 lesser of (i) the Conversion Rate then in effect, or (ii) the rate obtained by dividing 1,000 by the average of the Quoted Prices for the Common Stock for the 30 consecutive trading days ending on the Issue Date of the Security being converted (such price being referred to herein as the "Third Party Stock Price."] This Security may be converted in whole or in part. To convert this Security, a Holder must (1) complete and manually sign the conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such notice to the Registrar and the Conversion Agent, (2) surrender this Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Registrar, the Conversion Agent, the Company or the Trustee, and (4) pay any transfer or similar tax, if required. On conversion of this Security, all accrued but unpaid interest to the Optional Conversion Date with respect to the converted Security shall be paid in cash. The Conversion Rate is subject to adjustment as set forth in the Indenture upon the occurrence of certain events. However, no adjustment need be made in certain cases. No fractional shares will be issued on conversion, but instead, the Company will deliver cash or a check in lieu of any fractional share of Common Stock. For purposes of determining the amount of cash due the Holder upon conversion of this Security in lieu of fractional shares of Common Stock, [For a Security acquired upon its original issuance by a Strategic Investor, insert -- each share of Common Stock shall be deemed to have a value of $0.75, subject to adjustment in an amount corresponding to any adjustment to the Conversion Rate.] [For a Security acquired upon its original issuance by a Person other than a Strategic Investor, insert -- each share of Common Stock shall be deemed to have a value equal to the Third Party Stock Price, subject to adjustment in an amount corresponding to any adjustment to the Conversion Rate.] 8. Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its subsidiaries to, among other things, make payments in respect of its Common Stock, merge into or consolidate with any other person and sell, lease, transfer or otherwise dispose of substantially all of its properties or assets. The limitations are subject to a number of important qualifications and exceptions. 9. Subordination. The Securities are subordinated in right of payment, in the manner and to the extent provided in the Indenture, to the prior payment in full payment in cash or cash equivalents of Senior Indebtedness whether outstanding on the date of A-7 79 the Indenture or thereafter created, incurred, assumed or guaranteed and are subject to rights of recoupment of holders of Senior Indebtedness. Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect. 10. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. In connection therewith, the Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Security previously selected for redemption. 11. Persons Deemed Owners. The registered Holder of a Security may be treated as the owner of the Security for all purposes whether or not the Security may be overdue, and neither the Company, the Trustee nor any Agent shall be affected by notice to the contrary. 12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its request. After that, Holders entitled to the money must look to the Company for payment unless an abandoned property law designates another person. 13. Amendment, Supplement, Waiver. Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount of the Securities, and any past default or compliance with any provision may be waived with the consent of the Holders of a majority in principal amount of the Securities. Without the consent of any Holder, the Company may amend or supplement the Indenture or the Securities to cure any ambiguity, defect or inconsistency or to make any change that does not adversely affect the rights of any Holder. 14. Defaults and Remedies. Under the Indenture, Events of Default include (1) default for 30 days in payment of interest on the Securities; (2) default in payment of principal or premium, if any, on the Securities; (3) failure by the Company for 30 days after notice to it to comply with any of its other agreements in the Indenture or the Securities; (4) acceleration of any Indebtedness (as defined in the Indenture) of the A-8 80 Company or any Subsidiary (as defined in the Indenture) in the aggregate principal amount of $10,000,000 or more, unless, within 30 days of such acceleration, the default with respect to such Indebtedness has been cured or waived, or any acceleration with respect thereto has been rescinded or annulled, or such Indebtedness has been discharged; (5) entry of a judgment or judgments against the Company, either individually or in the aggregate, in excess of $10,000,000, if such judgment or judgments remain undischarged and unbonded for a period of sixty consecutive days after the date on which the right of appeal has expired, and an enforcement proceeding is commenced by any creditor; and (6) certain events of bankruptcy, insolvency or reorganization. If an Event of Default occurs and is continuing, the Trustee, by notice to the Company, or the holders of at least 35% in principal amount of the Securities, by notice to the Company and the Trustee, may declare all the Securities to be due and payable immediately, subject to certain limitations. Security Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power and may rescind an acceleration in certain circumstances. The Company must furnish an annual compliance certificate to the Trustee. 15. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates (as defined in the Indenture), and may otherwise deal with the Company or its Affiliates (as defined in the Indenture), as if it were not the Trustee. 16. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 17. Authentication. This Security shall not be valid until the Trustee or an authenticating agent signs the certificate of authentication on the other side of this Security. 18. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS SECURITY. A-9 81 19. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (== tenants in common), TEN ENT (== tenants by the entireties), JT TEN (==joint tenants with right of survivorship and not as tenants in common), CUST (== Custodian), and U/G/M/A (== Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Corporate Secretary Carolco Pictures Inc. 8800 Sunset Boulevard Los Angeles, California 90069 A-10 82 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (We) assign and transfer this Security to ___________________________________________ (Insert assignee's soc. sec. or tax ID no.) ________________________________________________________________ (insert assignee's soc. sec. or I.D. no.) ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ (print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________ _________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________ Your Signature: ________________________________________________ (Sign exactly as your name appears on the other side of this Security) Date:_________________________ A-11 83 CONVERSION NOTICE To convert this Security into Common Stock of the Company, check the box: ------ To convert only part of this Security, state the principal amount to be converted (which must be $1,000 or an integral multiple of $1,000): $____________ If you want the stock certificate made out in another person's name, fill in the form below: _____________ (Insert other person's soc. sec. or tax ID number) __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ (Print or type other person's name, address and zip code) - ------------------------------------------------------------------------------ Date: ______________ Your Signature:______________________ - ------------------------------------------------------------------------------ (Sign exactly as your name appears on the other side of this Security) A-12 EX-99.AOO 6 FORM OF CAROLCO 7% CONVERTIBLE SUB NOTE 6-30-2006 1 EXHIBIT 99.AOO NO. 3 $7,500,000.00 CAROLCO PICTURES INC. 7% CONVERTIBLE SUBORDINATED NOTE DUE JUNE 30, 2006 SERIES A THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF. CAROLCO PICTURES INC., a Delaware corporation (together with any successor corporation under the Indenture hereinafter referred to as the "Company"), for value received, promises to pay to CINEPOLE PRODUCTIONS B.V. or registered assigns, the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS ($7,500,000.00) on June 30, 2006. Interest Payment Dates: December 30 and June 30 Record Dates: December 15 and June 15 Reference is hereby made to the further provisions of this Security set forth on the reverse hereof which further provisions shall for all purposes have the same effect as if set forth in this place. IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers and a facsimile of its corporate seal to be affixed hereto or imprinted hereon. CAROLCO PICTURES INC. By /s/ WILLIAM SHPALL --------------------------------- Title: EXEC. VICE PRESIDENT AND CFO Attest: By /s/ ROBERT W. GOLDSMITH ------------------------------------ Secretary Date: December 30, 1994 2 [REVERSE OF SECURITY] CAROLCO PICTURES INC. 7% CONVERTIBLE SUBORDINATED NOTE DUE JUNE 30, 2006 1 Interest. Carolco Pictures Inc., a Delaware corporation (together with any successor corporation under the Indenture hereinafter referred to as the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on December 30 and June 30 of each year, (each such date, an "Interest Payment Date") commencing on the first Interest Payment Date following the Issue Date. Interest on this Security will accrue from the Issue Date of the Security or from the most recent date to which interest has been paid. The Company shall pay interest on overdue principal and, to the extent permitted by law, on overdue installments of interest at the rate per annum borne by this Security. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2 Method of Payment. The Company will pay interest on this Security (except defaulted interest paid after the grace period provided for the payment of such interest in Section 8.1(a) of the Indenture) to the Person who is the registered Holder of this Security at the close of business on the December 15 or June 15, as the case may be, next preceding each Interest Payment Date. The Holder must surrender this Security to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may mail an interest check to the Holder's registered address. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. 3 Paying Agent, Registrar. Initially, American Stock Transfer & Trust Company (the "Trustee") will act as Paying Agent, Conversion Agent and Registrar at its office in 40 Wall Street, New York, New York. The Company may change any Paying Agent, Conversion Agent or Registrar without notice but shall maintain the Registrar, a Paying Agent and Conversion Agent in the Borough of Manhattan, the City of New York. The Company or any of its Subsidiaries may act as Paying Agent, Conversion Agent and/or Registrar. 1 3 4 Indenture. The Company issued the Securities in one or more series under an Indenture dated as of October 14, 1994 (the "Indenture") between the Company and the Trustee. Unless otherwise defined herein, terms used herein which are defined in the Indenture shall have the meanings given thereto in the Indenture. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Section Section 77aaa-77bbbb) as in effect on the date of the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Securities are general unsecured subordinated obligations of the Company limited to an initial aggregate principal amount of fifty million dollars ($50,000,000). 5 Optional Redemption. The Company may redeem the Securities at any time on or after January 1, 1997 in whole or from time to time in part in cash at a redemption price equal to 100% of the principal amount of Securities outstanding, plus accrued and unpaid interest to the redemption date. If the redemption date is subsequent to a Regular Record Date with respect to any Interest Payment Date and on or prior to such Interest Payment Date, then such accrued interest will be paid to the Person in whose name this Security is registered at the close of business on such Regular Record Date and to no other Person. 6 Conversion at the Election of the Company. The Company may elect to convert all (but not part) of the Securities outstanding at any time before the close of business on the Maturity Date and after the date upon which the average of the Quoted Prices of the Common Stock for any 20 days during a period of 30 consecutive trading days equals or exceeds 250% of the amount obtained by dividing 1,000 by the Conversion Rate (as defined below). The Company shall provide the Trustee and the Registrar with written notice of its election to convert the Securities pursuant to the foregoing sentence and of the date selected by the Company for such conversion (the "Company Conversion Date") at least five (5) Business Days prior to the Company Conversion Date (the "Company Conversion Notice"). The initial conversion rate is 1,333.33 shares of Common Stock for each $1,000 principal amount of Security and each $1,000 of accrued and unpaid interest through the Company Conversion Date. The conversion rate is subject to adjustment in certain events described in the Indenture (the initial conversion rate as so adjusted, the "Conversion Rate"). No fractional shares will be issued upon conversion, but instead, the Company will deliver cash or a check in lieu of any fractional share of Common Stock. For purposes of determining the amount of cash due a Holder upon conversion at the election of the Company in lieu of fractional shares of Common Stock, each share of Common Stock shall be deemed to have a value of $0.75, subject to adjustment in an amount corresponding to any adjustment to the Conversion Rate. 2 4 The Company shall mail, or shall cause the Trustee to mail, within five (5) Business following its receipt of written notice of the Company Conversion Notice, a notice of conversion to each Security Holder. Such notice of conversion shall state (1) the Company Conversion Date, (2) the Conversion Rate at such date, (3) the name and address of the Conversion Agent, (4) that the Securities of such Holder must be surrendered to the Conversion Agent in order to obtain the shares of Common Stock issuable upon conversion, (5) that each Holder of a Security must complete and manually sign the conversion notice on the back of the Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (6) that each Holder of a Security must furnish appropriate endorsements and transfer documents if required by the Conversion Agent, and (7) that, unless the Company fails to deliver a sufficient number of shares of Common Stock and sufficient cash in lieu of fractional shares to effect the conversion, interest on the Securities shall cease to accrue on and after the Company Conversion Date. The failure of the Company to give notice of conversion to a Security Holder or any defect in such notice shall not affect the validity of the conversion of the Securities on the Company Conversion Date. Once notice of conversion has been mailed and sufficient shares of Common Stock and sufficient cash in lieu of fractional shares of Common Stock have been deposited with the Conversion Agent, the Securities shall, without further action, automatically convert to shares of Common Stock at the Conversion Rate and, notwithstanding that any Securities shall not have been surrendered to the Conversion Agent, from and after the Company Conversion Date, interest shall cease to accrue on the Securities, the Securities shall no longer be deemed outstanding and the Company shall have no further obligation with respect to the Securities so converted. The Company shall pay any and all documentary, stamp or similar transfer taxes due upon the issue and transfer of shares of Common Stock in connection with the conversion of the Securities pursuant to this paragraph. 7 Conversion Privilege. A Holder of this Security may elect to convert this Security into Common Stock of the Company at any time before the close of business on the Maturity Date; provided that if such Security is called for redemption the Holder may convert it only until the close of business on the redemption date. The number of shares of Common Stock issuable upon such conversion shall for each $1,000 of principal amount of a Security be equal to the Conversion Rate then in effect. This Security may be converted in whole or in part. To convert this Security, a Holder must (1) complete and manually sign the conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such notice to the Registrar and the Conversion Agent, (2) surrender this Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Registrar, the Conversion 3 5 Agent, the Company or the Trustee, and (4) pay any transfer or similar tax, if required. On conversion of this Security, all accrued but unpaid interest to the Optional Conversion Date with respect to the converted Security shall be paid in cash. The Conversion Rate is subject to adjustment as set forth in the Indenture upon the occurrence of certain events. However, no adjustment need be made in certain cases. No fractional shares will be issued on conversion, but instead, the Company will deliver cash or a check in lieu of any fractional share of Common Stock. For purposes of determining the amount of cash due the Holder upon conversion of this Security in lieu of fractional shares of Common Stock, each share of Common Stock shall be deemed to have a value of $0.75, subject to adjustment in an amount corresponding to any adjustment to the Conversion Rate. 8 Restrictive Covenants. The Indenture imposes certain limitations on the ability of the Company and its subsidiaries to, among other things, make payments in respect of its Common Stock, merge into or consolidate with any other person and sell, lease, transfer or otherwise dispose of substantially all of its properties or assets. The limitations are subject to a number of important qualifications and exceptions. 9 Subordination. The Securities are subordinated in right of payment, in the manner and to the extent provided in the Indenture, to the prior payment in full payment in cash or cash equivalents of Senior Indebtedness whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed and are subject to rights of recoupment of holders of Senior Indebtedness. Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect. 10. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. In connection therewith, the Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Security previously selected for redemption. 4 6 11. Persons Deemed Owners. The registered Holder of a Security may be treated as the owner of the Security for all purposes whether or not the Security may be overdue, and neither the Company, the Trustee nor any Agent shall be affected by notice to the contrary. 12. Unclaimed Money. If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its request. After that, Holders entitled to the money must look to the Company for payment unless an abandoned property law designates another person. 13. Amendment, Supplement, Waiver. Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the written consent of the Holders of at least a majority in principal amount of the Securities, and any past default or compliance with any provision may be waived with the consent of the Holders of a majority in principal amount of the Securities. Without the consent of any Holder, the Company may amend or supplement the Indenture or the Securities to cure any ambiguity, defect or inconsistency or to make any change that does not adversely affect the rights of any Holder. 14. Defaults and Remedies. Under the Indenture, Events of Default include (1) default for 30 days in payment of interest on the Securities; (2) default in payment of principal or premium, if any, on the Securities; (3) failure by the Company for 30 days after notice to it to comply with any of its other agreements in the Indenture or the Securities; (4) acceleration of any Indebtedness (as defined in the Indenture) of the Company or any Subsidiary (as defined in the Indenture) in the aggregate principal amount of $10,000,000 or more, unless, within 30 days of such acceleration, the default with respect to such Indebtedness has been cured or waived, or any acceleration with respect thereto has been rescinded or annulled, or such Indebtedness has been discharged; (5) entry of a judgment or judgments against the Company, either individually or in the aggregate, in excess of $10,000,000, if such judgment or judgments remain undischarged and unbonded for a period of sixty consecutive days after the date on which the right of appeal has expired, and an enforcement proceeding is commenced by any creditor; and (6) certain events of bankruptcy, insolvency or reorganization. If an Event of Default occurs and is continuing, the Trustee, by notice to the Company, or the holders of at least 35% in principal amount of the Securities, by notice to the Company and the Trustee, may declare all the Securities to be due and payable immediately, subject to certain limitations. Security Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity satisfactory to it 5 7 before it enforces the Indenture or the Securities. Subject to certain limitations, holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power and may rescind an acceleration in certain circumstances. The Company must furnish an annual compliance certificate to the Trustee. 15. Trustee Dealings with Company. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates (as defined in the Indenture), and may otherwise deal with the Company or its Affiliates (as defined in the Indenture), as if it were not the Trustee. 16. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 17. Authentication. This Security shall not be valid until the Trustee or an authenticating agent signs the certificate of authentication on the other side of this Security. 18. Governing Law. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS SECURITY. 19. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (== tenants in common), TEN ENT (== tenants by the entireties), JT TEN (==joint tenants with right of survivorship and not as tenants in common), CUST (== Custodian), and U/G/M/A (== Uniform Gifts to Minors Act). The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: Corporate Secretary Carolco Pictures Inc. 8800 Sunset Boulevard Los Angeles, California 90069 6 8 ASSIGNMENT FORM To assign this Security, fill in the form below: (I) or (We) assign and transfer this Security to ___________________________________________ (Insert assignee's soc. sec. or tax ID no.) __________________________________________________________ (insert assignee's soc. sec. or I.D. no.) __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ (print or type assignee's name, address and zip code) and irrevocably appoint __________________________________ _________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. __________________________________________________________ Your Signature: __________________________________________ (Sign exactly as your name appears on the other side of this Security) Date:___________________ 7 9 CONVERSION NOTICE To convert this Security into Common Stock of the Company, check the box: ______ To convert only part of this Security, state the principal amount to be converted (which must be $1,000 or an integral multiple of $1,000): $____________ If you want the stock certificate made out in another person's name, fill in the form below: _____________ (Insert other person's soc. sec. or tax ID number) __________________________________________________________ __________________________________________________________ __________________________________________________________ __________________________________________________________ (Print or type other person's name, address and zip code) - ------------------------------------------------------------------------------ Date: ______________ Your Signature: ____________________ - -------------------------------------------------------------------------------- (Sign exactly as your name appears on the other side of this Security) 8 10 CERTIFICATE OF AUTHENTICATION This Security is one of the Securities referred to in the within- mentioned Indenture. AMERICAN STOCK TRANSFER & TRUST COMPANY, as Trustee By /s/ HERBERT J. LEMMER ----------------------------- Authorized Officer -----END PRIVACY-ENHANCED MESSAGE-----