Security

i. The obligations of the Borrower to the Bank under this Facility Letter shall be secured by security in the Bank's preferred form as follows:

(a) The Completion Guarantee;

(c) The Interparty Agreement;

(d) The Laboratory Pledgeholder's Agreement;

(e) Such Distributor Notices as may be relevant; and

Any future security which the Bank may from time to time hold for the Borrower's liabilities relating to the Film.

ii. For the avoidance of doubt, the Borrower acknowledges that all security held and to be held by the Bank for the Borrower's liabilities shall, unless the relevant security document expressly states otherwise, secure all the Borrower's liabilities to the Bank for whatsoever purpose.

iii. The Borrower hereby undertakes at the request of the Bank to execute such deeds, documents, mortgages, charges, assignments, notices, communications and other securities or agreements whatsoever as the Bank may require for the purpose of securing the obligations of the Borrower under this Facility Letter or for protecting, perfecting or enforcing the rights and remedies of the Bank under this Agreement or under any security document.

In most cases, a bank will require security for repayment of the facility that it is making available to a borrower. The purpose of security is to give the bank recourse to certain assets of the borrower (or to assets of a third party in the case of a guarantee or third party security) in the event that the borrower fails to repay the facility. The security clause (E) of the facility letter specifies the nature of the security required by the bank, namely a charge covering the Borrower's rights in the Film and an assignment of the benefit of the Borrower's rights and remedies under the Distribution Agreement and any connected guarantee or letter of credit. The nature of security agreements is explored later in this chapter.

Clause (E)(iii) contains what is commonly referred to as a 'further assurance' undertaking. When a bank makes a decision to lend, it will assess the value of the assets offered to it by way of security against the amount of the required facility. This assessment is normally expressed as a percentage and it is common for banks to monitor that the security cover for the amount of the Facility always exceeds a certain percentage. The purpose of this clause is to give the bank a right at any time to require the borrower to execute further security for its obligations under the facility letter in the event that the bank felt uncomfortable about the level of available security cover. Equally, it gives the bank a general power to require the borrower to enter into further security agreements in the event that any defect or problem was found in relation to any existing security or if further documentation was required to supplement, amend or perfect any existing security held by the bank.

Was this article helpful?

0 0
Film Making

Film Making

If you have ever wanted the secrets to making your own film, here it is: Indy Film Insider Tips And Basics To Film Making. Have you ever wanted to make your own film? Is there a story you want to tell? You might even think that this is impossible. Studios make films, not the little guy. This is probably what you tell yourself. Do you watch films with more than a casual eye? You probably want to know how they were able to get perfect lighting in your favorite scene, or how to write a professional screenplay.

Get My Free Ebook


Responses

  • ermias
    How long is security film held by a bank?
    8 years ago

Post a comment