Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CROWN MEDIA HOLDINGS INC | mainbody.htm |
| EX-3.3 - FORM OF THIRD CERT OF INC - CROWN MEDIA HOLDINGS INC | thirdcert.htm |
| EX-2.2 - FORM OF MERGER HEH - CROWN MEDIA HOLDINGS INC | mergerheh.htm |
| EX-3.1 - FORM OF SECOND CERT OF INC - CROWN MEDIA HOLDINGS INC | secondcert.htm |
| EX-2.1 - FORM OF MERGER HEIC - CROWN MEDIA HOLDINGS INC | mergerheic.htm |
| EX-10.3 - FORM OF AMENDMENT NO. 2 TO TAX SHARING - CROWN MEDIA HOLDINGS INC | taxsharing.htm |
| EX-10.1 - MASTER RECAPITALIZATION AGREEMENT - CROWN MEDIA HOLDINGS INC | masterrecap.htm |
| EX-99.1 - PRESS RELEASE - CROWN MEDIA HOLDINGS INC | pressrelease.htm |
| EX-3.2 - FORM OF CERTIFICATE OF DESIGNATION - CROWN MEDIA HOLDINGS INC | certpreferred.htm |
| EX-4.2 - FORM OF REGISTRATION RIGHTS AGREEMENT - CROWN MEDIA HOLDINGS INC | registrationrights.htm |
| EX-4.1 - FORM OF STOCKHOLDERS AGREEMENT - CROWN MEDIA HOLDINGS INC | stockholdersagreement.htm |
Exhibit
10.2
CREDIT
AGREEMENT
DATED AS
OF
[
], 2010
AMONG
CROWN
MEDIA HOLDINGS, INC.
AS
BORROWER
AND
HC CROWN
CORP.,
AS
LENDER
AND
EACH OF
THE CREDIT
PARTIES
IDENTIFIED ON
THE
SIGNATURE PAGES HERETO
5258558.25
TABLE OF
CONTENTS
Page
|
1.
|
DEFINITIONS
|
|
2.
|
THE
LOANS
|
|
|
Section
2.1
|
The
Term A Loan
|
|
|
Section
2.2
|
The
Term B Loan
|
|
|
Section
2.3
|
Deemed
Making of the Loans
|
|
|
Section
2.4
|
Notes;
Repayment
|
|
|
Section
2.5
|
Interest
on Loans
|
|
|
Section
2.6
|
Default
Interest
|
|
|
Section
2.7
|
Prepayment
of Loans. Voluntary
|
|
|
Section
2.8
|
Prepayment
of Loans. Mandatory
|
|
|
Section
2.9
|
Application
of Mandatory and Voluntary Prepayments
|
|
|
Section
2.10
|
Manner
of Payments
|
|
|
Section
2.11
|
United
States Withholding
|
|
|
Section
2.12
|
Debt
Exchange Transaction
|
|
|
Section
2.13
|
Change
in Circumstances
|
|
3.
|
REPRESENTATIONS
AND WARRANTIES
|
|
|
Section
3.1
|
Corporate
Existence and Power
|
|
|
Section
3.2
|
Authority
and No Violation
|
|
|
Section
3.3
|
Governmental
and Other Approvals
|
|
|
Section
3.4
|
Financial
Statements
|
|
|
Section
3.5
|
No
Material Adverse Change
|
|
|
Section
3.6
|
Subsidiaries
|
|
|
Section
3.7
|
Intellectual
Property
|
|
|
Section
3.8
|
Fictitious
Names
|
|
|
Section
3.9
|
Title
to Properties
|
|
|
Section
3.10
|
Litigation
|
|
|
Section
3.11
|
Regulations
T, U and X
|
|
|
Section
3.12
|
Investment
Company Act
|
|
|
Section
3.13
|
Binding
Agreements
|
|
|
Section
3.14
|
Taxes
|
|
|
Section
3.15
|
Compliance
with ERISA and Applicable Law
|
|
|
Section
3.16
|
Indebtedness;
Guaranties; Liens
|
|
|
Section
3.17
|
Security
Interest
|
|
|
Section
3.18
|
Disclosure
|
|
|
Section
3.19
|
Environmental
Liabilities
|
|
|
Section
3.20
|
Compliance
with Laws
|
|
|
Section
3.21
|
Bank
Accounts
|
|
|
Section
3.22
|
Solvency
|
|
|
Section
3.23
|
Fundamental
Documents
|
|
|
Section
3.24
|
Agreements
|
|
|
Section
3.25
|
Licensed
Rights
|
|
4.
|
CONDITIONS
TO EFFECTIVENESS
|
|
|
Section
4.1
|
Conditions
Precedent to Effectiveness
|
|
5.
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AFFIRMATIVE
COVENANTS
|
|
|
Section
5.1
|
Financial
Statements and Reports
|
|
|
Section
5.2
|
Corporate
Existence
|
|
|
Section
5.3
|
Maintenance
of Properties
|
|
|
Section
5.4
|
Notice
of Material Events
|
|
|
Section
5.5
|
Insurance
|
|
|
Section
5.6
|
Music
|
|
|
Section
5.7
|
Copyrights
and Trademarks
|
|
|
Section
5.8
|
Books
and Records
|
|
|
Section
5.9
|
Observance
of Agreements
|
|
|
Section
5.10
|
Laboratories;
No Removal
|
|
|
Section
5.11
|
Taxes
and Charges in Ordinary Course of Business
|
|
|
Section
5.12
|
Liens
|
|
|
Section
5.13
|
ERISA
Compliance and Reports
|
|
|
Section
5.14
|
Subsidiaries
|
|
|
Section
5.15
|
Environmental
Laws
|
|
|
Section
5.16
|
Further
Assurances; Security Interests
|
|
|
Section
5.17
|
Bank
Accounts
|
|
|
Section
5.18
|
Credit
Ratings
|
|
6.
|
NEGATIVE
COVENANTS
|
|
|
Section
6.1
|
Limitations
on Indebtedness
|
|
|
Section
6.2
|
Limitations
on Liens
|
|
|
Section
6.3
|
Guaranties
|
|
|
Section
6.4
|
Limitations
on Investments
|
|
|
Section
6.5
|
Restricted
Payments
|
|
|
Section
6.6
|
Limitations
on Sale of Assets
|
|
|
Section
6.7
|
Receivables
|
|
|
Section
6.8
|
Tax
Shelters, Sale and Leaseback etc
|
|
|
Section
6.9
|
Places
of Business; Change of Name
|
|
|
Section
6.10
|
Limitations
on Capital Expenditures
|
|
|
Section
6.11
|
Transactions
with Affiliates
|
|
|
Section
6.12
|
Prohibition
of Amendments or Waivers
|
|
|
Section
6.13
|
No
Negative Pledge
|
|
|
Section
6.14
|
Acquisitions
or Mergers, etc
|
|
|
Section
6.15
|
Change
in Business
|
|
|
Section
6.16
|
ERISA
Compliance
|
|
|
Section
6.17
|
Interest
Rate Protection Agreements, etc
|
|
|
Section
6.18
|
Subsidiaries
|
|
|
Section
6.19
|
Hazardous
Materials
|
|
|
Section
6.20
|
Cash
Interest Coverage Ratio
|
|
7.
|
EVENTS
OF DEFAULT
|
|
8.
|
NICC
RESERVE ACCOUNT
|
|
|
Section
8.1
|
NICC
Reserve Account
|
|
9.
|
MISCELLANEOUS
|
|
|
Section
9.1
|
Notices
|
|
|
Section
9.2
|
Survival
of Agreement, Representations and Warranties, etc
|
|
|
Section
9.3
|
Expenses;
Documentary Taxes
|
|
|
Section
9.4
|
Indemnification
of the Lender
|
|
|
Section
9.5
|
Choice
of Law
|
|
|
Section
9.6
|
Waiver
of Jury Trial
|
|
|
Section
9.7
|
Waiver
with Respect to Damages and Venue
|
|
|
Section
9.8
|
No
Waiver
|
|
|
Section
9.9
|
Extension
of Payment Date
|
|
|
Section
9.10
|
Amendments,
etc
|
|
|
Section
9.11
|
Severability
|
|
|
Section
9.12
|
Service
of Process
|
|
|
Section
9.13
|
Headings
|
|
|
Section
9.14
|
Execution
in Counterparts
|
|
|
Section
9.15
|
Confidentiality
|
|
|
Section
9.16
|
Entire
Agreement
|
|
|
Section
9.17
|
Right
of Set-Off
|
|
|
Section
9.18
|
Assignment
|
|
|
Section
9.19
|
Revolver
Intercreditor Agreement
|
5258558.25
Exhibits
A Form
of Security Agreement
B Form
of Pledge Agreement
Schedules
3.1 List
of Credit Parties
3.6 List
of Subsidiaries
3.8 Fictitious
Names
3.10 Litigation
3.16 Existing
Indebtedness, Guarantees and Liens
3.21 Bank
Accounts
3.24 Agreements
5258558.25
CREDIT
AGREEMENT, dated as of _____, 2010
among (i)
CROWN MEDIA HOLDINGS, INC.,
a
Delaware corporation (the “Borrower”),
(ii) HC
CROWN CORP., a Delaware corporation (the “Lender”),
and
(iii)
EACH OF THE CREDIT PARTIES identified on the signature page hereto.
INTRODUCTORY
STATEMENTS
All terms
not otherwise defined above or in this Introductory Statement are as defined in
Article 1 hereof, or as defined elsewhere herein.
The
Borrower and the Lender, together with its Subsidiaries and Affiliates are a
party to the HCC Debt (as amended, restated, modified or supplemented from time
to time).
Immediately
prior to the Closing Date, there was outstanding [$__________] (the “Original
Obligations”) under the HCC Debt.
Effective
upon the Closing Date: (a) $185,000,000 of the Original Obligations will be
exchanged in consideration for Series A Preferred Stock on the terms set forth
in the Master Recapitalization Agreement, (b) $315,000,000 of the Original
Obligations will be exchanged in consideration for the Lender providing a Term A
Loan of $200,000,000 and a Term B Loan of $115,000,000; (c) the balance of the
Original Obligations will be exchanged in consideration for the Lender receiving
common stock in the Borrower at the Conversion Price and on the terms set forth
in the Master Recapitalization Agreement; and (d) Hallmark Entertainment
Holdings, Inc. and Hallmark Entertainment Investments Co., (the “Hallmark Entities”)
will merge with and into the Borrower, with the Borrower being the surviving
entity and the shareholders of the Hallmark Entities prior to such merger
receiving their pro rata issuance of common stock in the Borrower on the terms
set forth in the Master Recapitalization Agreement and the exhibits
thereto.
To
provide security for the repayment of the Original Obligations, each of the
Credit Parties granted to the Lender a first priority Lien, subject to certain
Permitted Encumbrances, on substantially all of its real and personal property
(the “Original Lien”). The Credit Parties shall modify the documents
which create the Original Lien such that the liens securing the Original
Obligations shall secure the Obligations, and each of the Credit Parties (other
than the Borrower) will provide a Subsidiary Guaranty in favor of the Lender to
guarantee repayment of the Loans and all other obligations of the
Borrower.
As a
result of the Transactions, all of the HCC Debt, except to the extent converted
and continued as the Term A Loan and Term B Loan, shall be extinguished and
discharged. In consideration of the premises and the covenants and agreements
contained herein, the parties hereto agree as follows:
|
1.
|
DEFINITIONS
|
For the
purposes hereof unless the context otherwise requires, the following terms shall
have the meanings indicated, all accounting terms not otherwise defined herein
shall have the respective meanings accorded to them under GAAP and all terms
defined in the UCC and not otherwise defined herein shall have the respective
meanings accorded to them therein. Unless the context otherwise
requires, any of the following terms may be used in the singular or the plural,
depending on the reference:
“Affiliate” means,
with respect to any Person, another Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by or is under common
Control with the person specified.
“Agreement” and “Credit Agreement”
shall mean this Credit Agreement, as it may be amended, supplemented or
otherwise modified from time to time.
“Applicable Law” shall
mean, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directives, requests, licenses, authorizations
and permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.
“Authorized Officer”
shall mean, with respect to any Person, its chief executive officer, chief
operating officer or chief financial officer.
“Board” shall mean the
Board of Governors of the Federal Reserve System of the United States of
America.
“Borrower” shall have
the meaning given to it in the Introductory Statements.
“Business Day” shall
mean any day other than a Saturday, Sunday or other day on which banks in the
City of New York are permitted to close.
“Capital Expenditures”
shall mean, with respect to any Person for any period, the sum of (i) the
aggregate of all expenditures (whether paid in cash or accrued as a liability)
by such Person during that period which, in accordance with GAAP, are or should
be included in “additions to property, plant or equipment” or similar items
included in cash flows (including Capital Leases) and (ii) to the extent not
covered by clause (i) hereof, the aggregate of all expenditures properly
capitalized in accordance with GAAP by such Person to acquire, by purchase or
otherwise, the business, property or fixed assets of, or stock or other evidence
of beneficial ownership of, any other Person (other than the portion of such
expenditures allocable in accordance with GAAP to net current assets or which is
allocable to the acquisition of items of Product). For the avoidance
of doubt, no expenditures for the acquisition of items of Product shall be
included in the definition of “Capital Expenditures.”
“Capital Lease”, as
applied to any Person, shall mean any lease of any property (whether real,
personal or mixed) by that Person as lessee which, in accordance with GAAP, is
or should be accounted for as a capital lease on the balance sheet of that
Person.
“Cash Equivalents”
shall mean any of the following types of Investments, to the extent owned by the
Borrower or any of its Subsidiaries free and clear of all Liens (other than
Liens created under the Fundamental Documents and Permitted
Encumbrances):
(i) readily
marketable obligations issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof having
maturities of not more than 90 days from the date of acquisition thereof;
provided that the full faith and credit of the United States of America is
pledged in support thereof;
(ii) time
deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that is (A) organized under the laws of the United States of
America, any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States of America, any state thereof or the District of Columbia, and is
a member of the Federal Reserve System, (B) issues (or the parent of which
issues) commercial paper rated as described in clause (iii) of this definition
and (C) has combined capital and surplus of at least $1,000,000,000, in each
case with maturities of not more than 90 days from the date of acquisition
thereof; and
(iii) Investments,
classified in accordance with GAAP as current assets of the Borrower or any of
its Subsidiaries, in money market investment programs registered under the
Investment Company Act of 1940, which are administered by financial institutions
that have the highest rating obtainable from either Moody’s or S&P, and the
portfolios of which are limited solely to Investments of the character, quality
and maturity described in clauses (i), and (ii) of this definition.
“Cash Interest Coverage
Ratio” shall mean, at any date, with respect to the Borrower and its
Consolidated Subsidiaries, the ratio of (a) EBITDA of such Persons to (b) the
sum of the Term Loan A Cash Interest Expense of such persons and the Term Loan B
Cash Interest Expense of such Persons, in each case for the most recently
completed Measurement Period.
“Cash Interest
Expense” shall mean the sum of the Term A Loan Cash Interest Expense and
the Term B Loan Cash Interest Expense.
“Casualty” shall mean
any casualty, loss, damage, destruction or similar loss with respect to real or
personal property or improvements.
“Change in Control”
shall mean (a) the Lender or its Affiliates shall cease to own (directly or
indirectly) at least 80% of the Equity Interests of the Borrower, or (b) the
Lender shall cease to have sufficient voting power to elect (or cause to be
elected) a majority of the members of the Borrower’s Board of
Directors.
“Closing Date” shall
have the meaning set forth in Section 4.1.
“Code” shall mean the
Internal Revenue Code of 1986 and the rules and regulations issued thereunder,
as heretofore and hereafter amended, as codified at 26 U.S.C. et seq., or any
successor provision thereto.
“Collateral” shall
have the meaning given to it in the Fundamental Documents.
“Compliance
Certificate” means a certificate in form and substance reasonably
satisfactory to the Lender.
“Condemnation” shall
mean any taking by a Governmental Authority of property or assets, or any part
thereof or interest therein, for public or quasi-public use under the power of
eminent domain, by reason of any public improvement or condemnation or in any
other matter.
“Consolidated Net
Income” shall mean, for any period for which such amount is being
determined, the consolidated net income of such Person for such period in
accordance with GAAP.
“Consolidated
Subsidiaries” shall mean, for any Person, all subsidiaries of such Person
which are required or permitted to be consolidated with such Person for
financial reporting purposes in accordance with GAAP.
“Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power by contract or otherwise. “Controlling” and
“Controlled”
have meanings correlative thereto.
“Conversion Price”
shall have the meaning given to it in the Master Recapitalization
Agreement.
“Copyright Security
Agreement” shall mean the Copyright Security Agreement, dated on or about
the date of this Agreement, among the Borrower, the Subsidiary Guarantors and
the Lender, as the same may be amended or supplemented from time to time by
delivery of a copyright security agreement supplement or otherwise.
“Credit Parties” shall
mean the Borrower and each of the Subsidiary Guarantors.
“Currency Agreement”
shall mean any foreign exchange contract, currency swap agreement, futures
contract, option contract, synthetic cap or other similar agreement designed to
protect the Borrower against fluctuations in currency values.
“Debt Issuance” shall
mean the issuance or incurrence by any Credit Party of any
Indebtedness.
“Default” shall mean
any event, act or condition which with notice or lapse of time, or both, would
constitute an Event of Default.
“Default Rate” shall
mean with respect to any Obligation, a rate of interest per annum equal to the
rate of interest otherwise in effect from time to time pursuant to the terms of
this Agreement with respect to such Obligation, plus two percent
(2%).
“Disposition” or
“Dispose” means
the sale, transfer, license, lease or other disposition of any property (except
for ad sales and programming time to the extent Disposed in the ordinary course
of business and any other sale, transfer, license, lease, or other disposition
of property in the ordinary course of business that has a value of less than
$100,000 individually or $500,000 in the aggregate) by any Person (including any
sale/leaseback transaction), including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith; provided, however, that a sale under
threat of eminent domain shall not be deemed to be a Disposition.
“Dollars” and “$” shall mean lawful
money of the United States of America.
“EBITDA” shall
mean for any period, for the Borrower and its Subsidiaries on a consolidated
basis the sum of: (a) Consolidated Net Income, plus (b) to the
extent Consolidated Net Income was reduced by such items: (i) provision for
income taxes during such period, (ii) interest expense deducted in computing
Consolidated Net Income, (iii) total depreciation expense and total amortization
expense (other than the amortization of capitalized film costs), (iv) any
extraordinary, unusual or non-recurring expense or loss, whether or not included
as a separate item in the statement of Consolidated Net Income for such period
(including, but not limited to any loss on the sales of assets outside of the
ordinary course of business, impairment of assets, restructuring charges,
Transaction Costs and write-offs of deferred costs for such period), and (v) any
other non-cash charges (other than write-offs or write-downs during such period
of inventory, accounts receivable or any other current assets or liabilities in
the ordinary course of business), minus (c)(i) any
extraordinary, unusual or non-recurring item of income or gain (including,
whether or not such item is otherwise included as a separate item in the
statement of Consolidated Net Income for such period, any gain on the sale of
assets outside of the ordinary course of business) for such period, and (ii) any
other non-cash income items increasing Consolidated Net Income for such period,
all as determined for such period in conformity with GAAP.
“Environmental Laws”
shall mean any and all federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees or requirements of any
Governmental Authority regulating, relating to, or imposing liability or
standards of conduct concerning, any Hazardous Material or environmental
protection or health and safety, as now or at any time hereafter in effect,
including without limitation, the Clean Water Act also known as the Federal
Water Pollution Control Act (“FWPCA”), 33 U.S.C.
Section 1251 et seq., the Clean Air Act (“CAA”), 42 U.S.C.
Sections 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act
(“FIFRA”), 7
U.S.C. Sections 136 et seq., the Surface Mining Control and Reclamation Act
(“SMCRA”), 30
U.S.C. Sections 1201 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”), 42 U.S.C.
Section 9601 et seq., the Superfund Amendments and Reauthorization Act of 1986
(“SARA”),
Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to
Know Act (“EPCRA”), 42 U.S.C.
Section 11001 et seq., the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C.
Section 6901 et seq., the Occupational Safety and Health Act as amended (“OSHA”), 29 U.S.C.
Section 655 and Section 657, and other such laws relating to the storage,
transportation, treatment and disposal of Hazardous Materials into the air,
surface water, ground water, land surface, subsurface strata or any building or
structure and, together, in each case, with any amendment thereto, and the
regulations adopted pursuant thereto.
“Equity Interest”
shall mean shares of the capital stock, partnership interests, membership
interest in a limited liability company, beneficial interests in a trust or
other equity interests in any Person or any warrants, options or other rights to
acquire such interests.
“Equity Issuance”
shall mean: (i) any sale or issuance by any Credit Party to any Person other
than the Lender of any Equity Interests, and (ii) the receipt by any Credit
Party of any cash capital contributions, whether or not paid in connection with
any issuance of Equity Interests of any Credit Party, from any Person other than
the Lender.
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as heretofore and hereafter
amended, as codified at 29 U.S.C. Section 1001 et seq., and the regulations
promulgated thereunder.
“ERISA Affiliate”
shall mean each Person (as defined in Section 3(9) of ERISA) which is treated as
a single employer with any Credit Party under Section 414(b), (c), (m) or (o) of
the Code.
“Events of Default”
shall have the meaning given such term in Article 7 hereof.
“Excess Cash Flow”
shall mean, with respect to Borrower and its Consolidated Subsidiaries for any
period, an amount equal to the greater of zero or the sum of:
(a) the
amount of “Cash Flow from Operating Activities”, as shown in Borrower’s
Consolidated Statement of Cash Flows reported in its filing on form 10-K for
such period, minus;
(b) all cash
outflows shown in the “Cash Flow from Investing Activities” section of
Borrower’s Consolidated Statement of Cash Flows reported in its filing on form
10-K for such period to the extent such payments were made in compliance with
this Agreement, minus;
(c) any
principal payments made on capital lease obligations, as shown in the “Cash Flow
from Financing Activities” section of Borrower’s Consolidated Statement of Cash
Flows reported in its filing on form 10-K for such period to the extent such
payments were made in compliance with this Agreement, minus;
(d) any net
reduction to the balance of the Revolving Credit Agreement during such period,
minus;
(e) any
voluntary repayment of the Term A Loan or the Term B Loan, minus;
(f) the
aggregate amount of cash transferred during such period to the NICC Reserve
Account, minus;
(g) any cash
dividend on the Series A Preferred Stock during such period, minus;
(h) any cash
payments made pursuant to the Tax Sharing Agreement.
Provided,
however that for the purposes of the calculation set forth in Section 2.8(a)(ii)
hereof all references herein to the Borrower’s Consolidated Statement of Cash
Flows reported filing on form 10-K for such period shall include the equivalent
section of the Borrower’s filing on form 10-Q for such period as required in
connection with such calculation.
“Executive Officer”
shall mean, with respect to any Person, its chief executive officer, chief
operating officer, chief financial officer or executive or senior vice
president.
“Fundamental
Documents” shall mean this Credit Agreement, the Notes, the Security
Agreement, the Pledge Agreement, the Copyright Security Agreement, the Trademark
Security Agreement, the UCC Financing Statements, the Subsidiary Guaranty, the
Intercreditor Agreement and any other ancillary agreement which is required to
be or otherwise executed by such Credit Party and delivered to the Lender in
connection with this Agreement or any other Fundamental Document.
“GAAP” shall mean
generally accepted accounting principles in the United States of America
consistently applied as in effect on the date hereof; provided, however, that if
either the Lender or the Borrower proposes that GAAP be modified as a result of
any changes allowed by or in response to FASB releases or other authoritative
pronouncements issued after the date hereof, the Lender or the Borrower (as
applicable) agree not to unreasonably withhold or delay their consent to any
such proposal so long as such proposed modification would not affect the
calculation of any of the financial covenants contained herein.
“Governmental
Authority” shall mean any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, or any court,
in each case whether of the United States or foreign or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
“Guaranty” shall mean,
as to any Person, any direct or indirect obligation of such Person guaranteeing
or intended to guarantee any Indebtedness, Capital Lease, dividend or other
monetary obligation (“primary obligation”) of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, or (c) to purchase property, securities or
services, in each case, primarily for the purpose of assuring the owner of any
such primary obligation. The amount of any Guaranty shall be deemed
to be an amount equal to (x) the stated or determinable amount of the primary
obligation in respect of which such Guaranty is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) or (y) the stated
maximum liability under such Guaranty, whichever is less.
“Hallmark Guaranty”
shall (1) mean the obligation of Hallmark Cards to guarantee the Revolving
Credit Agreement pursuant to the Stockholders Agreement (as such term is defined
in the Master Recapitalization Agreement), and (2) any Guaranty of the Revolving
Credit Agreement by Hallmark Cards or its Affiliates.
“Hazardous Materials”
shall mean any flammable materials, explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or similar materials
defined as such in any Environmental Law.
“HCC Debt” shall have
the meaning set forth in the Master Recapitalization Agreement.
“Indebtedness” shall
mean (without double counting), at any time and with respect to any Person, (i)
indebtedness of such Person for borrowed money (whether by loan or the issuance
and sale of debt securities) or for the deferred purchase price of property or
services purchased (other than amounts constituting trade payables (payable
within 90 days) arising in the ordinary course of business); (ii) obligations of
such Person in respect of letters of credit, acceptance facilities, or drafts or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (iii) obligations of such Person under Capital
Leases; (iv) deferred payment obligations of such Person resulting from the
adjudication or settlement of any litigation; (v) obligations of such Person
under synthetic leases or financing leases (but not operating leases); and (vi)
indebtedness of others of the type described in clauses (i), (ii), (iii), (iv)
and (v) hereof which such Person has (a) directly or indirectly assumed or
guaranteed in connection with a Guaranty or (b) secured by a Lien on the assets
of such Person, whether or not such Person has assumed such indebtedness
(provided, that if such Person has not assumed such indebtedness of another
Person then the amount of indebtedness of such Person pursuant to this clause
(vi) for purposes of this Credit Agreement shall be equal to the lesser of the
amount of the indebtedness of the other Person and the fair market value of the
assets of such Person which secure such other indebtedness).
“Interest Expense”
shall mean, for any period in respect of the Borrower and its Consolidated
Subsidiaries, the sum of (a) the interest expense (including the interest
component in respect of Capital Lease obligations), plus (b) all commitment
fees, letter of credit fees, issuing bank fees, or similar fees paid by such
Persons during such period in respect of any Indebtedness, plus (c) the net
amounts paid by such Persons during such period in connection with any Interest
Rate Protection Agreement, Currency Agreement or other hedging arrangement, plus
(d) any dividends or similar amounts paid by such Persons during such period in
respect of any preferred stock.
“Interest Payment
Date” shall mean each March 31, June 30, September 30 and December 31 of
each year commencing on the first of such dates following the Closing Date;
provided that if the Closing Date occurs on the last day of a quarter, the
initial Interest Payment Date shall commence on the Interest Payment Date
following the first full quarter after the Closing Date.
“Interest Rate Protection
Agreement” shall mean any interest rate swap agreement, interest rate cap
agreement, synthetic cap, collar or floor or other financial agreement or
arrangement designed to protect a Credit Party against fluctuations in interest
rates.
“Intercreditor
Agreement” shall mean the Intercreditor Agreement, dated on or about the
date of this Agreement among the Borrower, the Lender and the lender under the
Borrower’s revolving credit facility.
“Investment” shall
mean any stock, evidence of indebtedness or other security of any Person, any
loan, advance, contribution of capital, extension of credit or commitment
therefor (including, without limitation, the Guaranty of loans made to others,
but excluding current trade and customer accounts receivable arising in the
ordinary course of business and payable in accordance with customary trading
terms in the ordinary course of business), any purchase of (i) any security of
another Person or (ii) any business or undertaking of any Person or any
commitment to make any such purchase, or any other investment; provided,
however, that any acquisition of, or licensing agreements or arrangements with
respect to, Product or rights to Product shall not be deemed an Investment for
purposes of this Agreement.
“JPM Credit Agreement”
means the Credit Agreement, dated August 31, 2001 among the Borrower, the
subsidiaries named therein as guarantors, and the lenders and agents named
therein, as the same may be amended, modified or supplemented from time to
time.
“Laboratory” shall
mean any laboratory acceptable to the Lender which is located in the United
States and is a party to a Pledgeholder Agreement or a Laboratory Access
Letter.
“Laboratory Access
Letter” shall mean a letter agreement among: (i) a Laboratory holding any
elements of any Product to which any Credit Party has the right of access, (ii)
such Credit Party and (iii) the Lender, in form and substance acceptable to the
Lender.
“Lender” shall have
the meaning given to it in the Introductory Statements.
“License Agreements”
shall mean any and all agreements entered into by any Credit Party pursuant to
which such Credit Party acquires license rights in any item of
Product.
“Lien” shall mean any
mortgage, pledge, security interest, copyright mortgage, lien, charge or
encumbrance of any kind whatsoever (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code of
any jurisdiction).
“Loans” shall mean the
Term A Loan and the Term B Loan.
“Master Recapitalization
Agreement” shall mean the agreement entered into between the Borrower and
the Lender, dated February 26, 2010.
“Material Adverse
Effect” shall mean any change or effect that (a) has a materially adverse
effect on the business, assets, properties, operations, or condition (financial
or otherwise) of the Borrower and its Subsidiaries, taken as a whole, (b)
materially impairs the ability of any Credit Party to perform its respective
obligations under the Fundamental Documents to which it is a party, or (c)
materially impairs the validity or enforceability of, or materially impairs the
security interests, rights, remedies or benefits available to the Lender under
any of the Fundamental Documents. As the term Material Adverse effect
is used in Section 4 hereof, solely with regard to subsection (a) of the
definition, no effect, change, event, occurrence, development, condition or
state of facts arising or resulting from any of the following, either alone or
in combination, shall constitute or be taken into account in determining whether
there has been a Material Adverse Effect: (i) changes in general economic
conditions or changes affecting the industry generally in which the Borrower and
its Subsidiaries operate, except to the extent such changes have a
disproportionate effect on the Borrower and its Subsidiaries, (ii) the
announcement or performance of the Transactions, (iii) acts of war or terrorism
or natural disasters, except to the extent such acts of war, terrorism or
natural disasters have a disproportionate effect on the Borrower and its
Subsidiaries (iv) the fact, in and of itself (and not the underlying causes
thereof) that any Credit Party failed to meet any projections, forecasts, or
revenue or earnings predictions for any period, or (v) any change, in and of
itself (and not the underlying causes thereof) in the stock price of the common
stock of the Borrower.
“Maturity Date” shall
mean December 31, 2013.
“Measurement Period”
shall mean, as at any date of determination, the four (4) consecutive fiscal
quarters of the Borrower ending on such day, or, if fewer than four consecutive
fiscal quarters of the Borrower have been completed since the Closing Date, the
fiscal quarters of the Borrower that have been completed since the Closing Date,
provided that:
(i) for purposes of determining an amount of any item/the amount of Cash
Interest Expense included in the calculation of the Cash Interest Coverage Ratio
for the first full fiscal quarter ended after the Closing Date, such amount for
the Measurement Period then ended shall equal such item for such fiscal quarter
multiplied by four; (ii) for purposes of determining an amount of any item/the
amount of Cash Interest Expense included in the calculation of the Cash Interest
Coverage Ratio for the second fiscal quarter ended after the Closing Date, such
amount for the Measurement Period then ended shall equal such item for the two
fiscal quarters then ended multiplied by two; and (iii) for purposes of
determining an amount of any item/the amount of Cash Interest Expense included
in the calculation of the Cash Interest Coverage Ratio for the third fiscal
quarter ended after the Closing Date, such amount for the Measurement Period
then ended shall equal such item for the three fiscal quarters then ended
multiplied by 4/3.
“Multiemployer Plan”
shall mean a plan that is a multiemployer plan as defined in Section 4001(a)(3)
of ERISA to which any Credit Party or ERISA Affiliate is making or accruing an
obligation to make contributions or has within any of the five preceding plan
years made or accrued an obligation to make contributions.
“Net Cash Proceeds”
shall mean: (a) with respect to any Equity Issuance or Debt Issuance by any
Credit Party, cash payments received in exchange for the issuance of any debt or
equity security by any Credit Party net of commissions and other reasonable fees
and expenses incurred, any taxes payable and reasonably estimated income taxes
payable with respect to the fiscal year during which such issuance occurs, as a
consequence of any repatriation of such cash payments, (b) with respect to the
Disposition of any asset by any Credit Party, any cash payments (including any
cash received by way of a deferred payment pursuant to, or by monetization of, a
note receivable or otherwise, but only as and when so received) received from
such Disposition, net of any bona fide direct costs (including professional fees
and costs) incurred in connection with such Disposition, including (i) income
taxes reasonably estimated to be actually payable by any direct or indirect
equity owner of Borrower within two years of the date of such Disposition as a
result of any gain recognized in connection with such Disposition and (ii) the
payment of the outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness (other than the Loans) that is (A) secured by a
Lien on the stock or assets in question and that is required to be repaid under
the terms thereof as a result of such Disposition and (B) actually paid within
thirty (30) days of receipt of such cash payment to a Person that is not an
Affiliate of any Credit Party; provided, however, that Net Cash Proceeds shall
not include (x) any cash payments received from any Disposition by a foreign
Subsidiary unless and until such proceeds may be repatriated (by reason of a
repayment of an intercompany note or otherwise) to the United States without
resulting in a material tax liability to Borrower or to any direct or indirect
equity owner of Borrower, or (y) amounts provided as a reserve against any
liabilities under any indemnification obligation, or any anticipated indemnity
obligation or purchase price adjustment associated with a Disposition; provided
that such amounts so reserved shall become Net Cash Proceeds if, when and to the
extent, any such reserve is reversed or released, and (c) with respect to any
Casualty or Condemnation, any cash payments or proceeds received by any Credit
Party (i) under any business interruption or property insurance policy in
respect of a covered loss thereunder, or (ii) as a result of the taking of any
assets of any Credit Party or any of its Subsidiaries by any Person pursuant to
the power of eminent domain, condemnation or otherwise, or pursuant to a sale of
any such assets to a purchaser with such power under threat of such a taking, in
each case net of any actual and reasonable documented costs incurred by any
Credit Party or any of its Subsidiaries in connection with the adjustment or
settlement of any claims of any Credit Party or such Subsidiary in respect
thereof.
“NICC Preferred
Interest” shall mean the $25,000,000 preferred interest in Crown Media
United States, LLC described in Section 5 of the Crown Media United States, LLC
limited liability company agreement.
“NICC Reserve Account”
shall mean, a segregated bank account with a balance not in excess of
$25,000,000, in the name of the Borrower which shall be used by the Borrower for
the sole purpose of paying the NICC Preferred Interest.
“Note” or “Notes” shall mean the
Term Note(s).
“Obligations” shall
mean the obligation of the Borrower to make due and punctual payment of
principal of and interest (including, for the avoidance of doubt, any payment in
kind interest) on the Loans, any fees, costs and attorneys’ fees and all other
monetary obligations of the Borrower to the Lender, under this Agreement, the
Notes, or any other Fundamental Document.
“Original Obligations”
shall have the meaning set forth in the recitals hereto.
“PBGC” shall mean the
Pension Benefit Guaranty Corporation established pursuant to Section 4002 of
ERISA, or any successor thereto.
“Perfection
Certificate” has the meaning given to it in the Security
Agreement.
“Permitted
Encumbrances” shall mean Liens permitted under Section 6.2
hereof.
“Person” shall mean
any natural person, corporation, division of a corporation, partnership, trust,
joint venture, association, company, estate, unincorporated organization or
Governmental Authority.
“Physical Materials”
shall mean all tangible personal property relating to such item of Product,
including, without limitation, all exposed film, developed film, positives,
negatives, prints, positive prints, answer prints, special effects, preparing
materials (including interpositives, duplicate negatives, internegatives, color
reversals, intermediates, lavenders, fine grain master prints and matrices, and
all other forms of pre-print elements), sound tracks, cutouts, trims and any and
all other physical properties of every kind and nature relating to such item of
Product whether in completed form or in some state of completion, and all
masters, duplicates, drafts, versions, variations and copies of each thereof, in
all formats whether on film, videotape, disk or other optical or electronic
media or otherwise and all music sheets and promotional materials relating to
such item of Product.
“PIK Election” means
an election by Borrower by written notice to the Lender at least ten (10)
Business Days prior to the beginning of a calendar quarter to pay interest on
the Term A Loan and/or the Term B Loan for that calendar quarter, on any
Interest Payment Date entirely in kind, other than elections to pay interest in
kind pursuant to Section 2.5(b)(i); provided, that (a) the Borrower may only
make such written election in respect of three (3) interest payments; and (b)
the parties understand that PIK Elections with respect to the Term A Loan and
the Term B Loan in a single calendar quarter shall constitute two (2) of the
three (3) PIK Elections.
“Plan” shall mean an
employee benefit plan within the meaning of Section 3(3) of ERISA (other than a
Multiemployer Plan) which is maintained, sponsored or contributed to by any
Credit Party or any ERISA Affiliates, or with respect to which any Credit Party
could otherwise have any liability.
“Platform Agreements”
shall mean any and all agreements entered into by a Credit Party with a
television distributor pursuant to which the television distributor agrees to
deliver channels owned by a Credit Party to subscribers in exchange for a
fee.
“Pledge Agreement”
shall mean the Pledge Agreement, substantially in the form attached as Exhibit B
hereto with such changes as are acceptable to the Lender, dated as of the date
hereof, among the Lender, the Borrower and the Subsidiary Guarantors, as the
same may be amended, modified or supplemented from time to time.
“Pledgeholder
Agreement” shall mean a Laboratory Pledgeholder Agreement among a Credit
Party, the Lender and one or more Laboratories located within the
continental United States, in form and substance acceptable to the
Lender.
“Product” shall mean
any movie-of-the-week, episode of a television series, mini-series, motion
picture, film, videotape or other program produced for television release or for
release in any other medium, shown on network, free, cable, pay and/or other
television medium (including without limitation first run syndication) in each
case whether recorded on film, videotape, cassette, cartridge, disc or on or by
any other means, method, process or device whether now known or hereafter
developed. The term “Product” shall include, without limitation, the
scenario, screenplay or script upon which such item of Product is based, all of
the properties thereof, tangible and intangible, and whether now in existence or
hereafter to be made or produced, whether or not in possession of any of the
Credit Parties, and all rights therein and thereto, of every kind and
character.
“Regulation T”, “Regulation U” and
“Regulation X”
shall mean such regulation of the Board.
“Reportable Event”
shall mean any reportable event as described in Section 4043(c) of ERISA, other
than a reportable event as to which provision for 30-day notice to the PBGC
would be waived under applicable regulations had the regulations in effect on
the Closing Date been in effect on the date of occurrence of such reportable
event.
“Restricted Payment”
shall mean (i) any distribution, dividend or other direct or indirect payment on
account of any Equity Interest in a Credit Party or an Affiliate, in each case
whether now or hereafter outstanding and (ii) any redemption or other
acquisition or re-acquisition by a Credit Party of any Equity Interest in a
Credit Party or an Affiliate, in each case whether now or hereafter
outstanding.
“Revolving Credit
Agreement” has the meaning given to it in Section 6.1(vi).
“S.E.C.” shall mean
the Securities and Exchange Commission or any successor thereto.
“Security Agreement”
shall mean the Security Agreement, substantially in the form attached as Exhibit
A hereto with such changes as are acceptable to the Lender, dated as of the date
hereof, among the Lender, the Borrower and the Subsidiary Guarantors, as the
same may be amended, modified or supplemented from time to time.
“Series A Preferred
Stock” shall mean the Company’s Series A Convertible Preferred Stock, par
value $.01 per share, the terms of which shall be as set forth in the
Certificate of Designation (as such term is defined in the Master
Recapitalization Agreement).
“Solvent” shall mean,
with respect to any Person on any date of determination, that on such date (i)
the fair value of the property of such Person is greater than the total amount
of liabilities, including contingent liabilities, of such Person, (ii) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (iii) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay such debts and liabilities as they mature, (iv) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital and (v) such Person is able to pay its debts and
liabilities, contingent obligations and other commitments as they mature in the
ordinary course of business. The amount of contingent liabilities at
any time shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
“Stockholders
Agreement” shall mean the Stockholders Agreement, dated as of [________]
[__], 2010, by and among Lender, Hallmark Cards, Incorporated, a Missouri
corporation and Borrower.
“Subsidiary” shall
mean with respect to any Person, any corporation, association, joint venture,
partnership, limited liability company or other business entity (whether now
existing or hereafter organized) of which at least a majority of the voting
stock or other ownership interests having ordinary voting power for the election
of directors (or the equivalent) is, at the time as of which any determination
is being made, owned or controlled by such Person or one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such
Person.
“Subscriber” shall
mean any Person or location that receives a channel owned or operated by a
Credit Party either directly from a pay television distributor party to a
Platform Agreement or from cable operators to whom such pay television
distributors sublicense the right to distribute such channel.
“Subsidiary Guaranty”
shall mean the guaranty granted by the Subsidiary Guarantors, in form and
substance reasonably satisfactory to the Lender, in favor of the Lender,
together with each other guaranty or guaranty supplement.
“Subsidiary Guarantor”
means each Subsidiary of Borrower on the Closing Date (other than a foreign
Subsidiary) and each Subsidiary of Borrower that becomes a party to the
Subsidiary Guaranty after the Closing Date, by execution of an agreement in form
and substance acceptable to the Lender and Subsidiary Guarantors
shall mean any two or more of them.
“Tax Sharing
Agreement” shall mean the existing Federal Income Tax Sharing Agreement
between the Lender and the Borrower, dated as of March 11, 2003, as the same may
be amended or supplemented from time to time.
“Term A Loan” shall
mean the term A loan in the principal amount of $200,000,000 deemed to have been
made by the Lender to the Borrower pursuant to this Agreement.
“Term A Loan Cash Interest
Expense” shall mean, at any date, with respect to the Borrower and its
Consolidated Subsidiaries, Interest Expense that has been paid or is payable in
cash with respect to the Term A Loan for the most recently ended Measurement
Period.
“Term B Loan” shall
mean the term B loan in the principal amount of $115,000,000 deemed to have been
made by the Lender to the Borrower pursuant to this Agreement.
“Term B Loan Cash Interest
Expense” shall mean, at any date, with respect to the Borrower and its
Consolidated Subsidiaries, Interest Expense that has been paid or is payable in
cash with respect to the Term B Loan for the most recently ended Measurement
Period.
“Term Loans” shall
mean, collectively, the term loans deemed to have been made hereunder in
accordance with the provisions of Article 2.
“Term Notes” shall
have the meaning given such term in Section 2.4.
“Trademark Security
Agreement” shall mean the Trademark Security Agreement dated on or about
the date of this Agreement, among the Borrower, the Subsidiary Guarantors and
the Lender, as the same may be amended or supplemented from time to time by
delivery of a trademark security agreement supplement or
otherwise.
“Transactions” means
the transactions contemplated by this Agreement and the Master Recapitalization
Agreement and the exhibits thereto.
“Transaction Costs”
shall mean the fees, costs and expenses payable by the Borrower on or before the
sixtieth (60th) day
following the Closing Date in connection with the Transactions.
“UCC” shall mean the
Uniform Commercial Code as in effect in the State of New York on the date of
execution of this Agreement.
|
2.
|
THE
LOANS
|
Section
2.1 The Term A
Loan. Subject to the terms and conditions set forth herein,
the Lender agrees on the Closing Date that the Lender holds the HCC Debt, and
$200,000,000 of the HCC Debt shall be deemed to be, and is hereby converted and
exchanged into, on a dollar for dollar basis, the outstanding Term A Loan
hereunder, without constituting a novation. Any principal amount of
the Term A Loan which is repaid or prepaid may not be reborrowed.
Section
2.2 The Term B
Loan. Subject to the terms and conditions set forth herein,
the Lender agrees on the Closing Date that the Lender holds the HCC Debt, and
that $115,000,000 of the HCC Debt shall be deemed to be, and is hereby exchanged
and converted into, on a dollar for dollar basis, the outstanding Term B Loan
hereunder, without constituting a novation. Any principal amount of
the Term B Loan which is repaid or prepaid may not be reborrowed.
Section
2.3 Deemed Making of the
Loans. The Borrower shall give the Lender prior telephonic
notice (immediately confirmed in writing, in form and substance reasonably
satisfactory to the Lender (a “Notice of Deemed
Borrowing”)), not later than 1:00 p.m. (New York City time) on the date
which is one (1) Business Day prior to the Closing Date. Such Notice
of Deemed Borrowing shall be irrevocable and shall specify: (a) the principal
amount of the proposed Loan, and (b) the proposed borrowing date, which must be
a Business Day, and must be the Closing Date. The Lender may act
without liability upon the basis of written, telecopied or telephonic notice
believed by the Lender in good faith to be from the Borrower (or from any
Authorized Officer). The Borrower hereby waives the right to dispute
the Lender’s record of the terms of any such telephonic Notice of Deemed
Borrowing.
Section
2.4 Notes;
Repayment. (a)The Term Loans deemed to be made by the Lender
hereunder shall be evidenced by a promissory note in form and substance
reasonably satisfactory to the Lender (a “Term Note” and
collectively the “Term
Notes”) in the face amount of the Lender’s Term Loan, payable to the
order of the Lender, duly executed on behalf of the Borrower and dated the date
hereof. The principal amount of the Term Loans, together with any
accrued but unpaid interest shall be payable in full on the Maturity Date
subject to acceleration as provided in Article 7 hereof.
(b) The Term
Loans shall bear interest on the outstanding principal balance thereof as set
forth in Section 2.5 hereof. The Lender is hereby authorized by the
Borrower, but not obligated, to enter the amount of each Loan and the amount of
each payment or prepayment of principal or interest thereon in the appropriate
spaces on the reverse of or on an attachment to the Notes; provided, however,
that the failure of the Lender to set forth such Loans, principal payments or
other information shall not in any manner affect the obligations of the Borrower
to repay such Loans.
Section
2.5 Interest on
Loans. Subject to the provisions of Section 2.6, the Term
Loans shall bear interest as follows:
(a) In the
case of the Term A Loan, interest shall be payable by the Borrower on
the outstanding principal amount of the Term A Loan, at a rate per annum
(computed on the basis of a 365-day or 366-day year, as the case may be) equal
to: (x) commencing on the Closing Date through the calendar quarter ending on
December 31, 2011, nine and one half percent (9.5%) per annum, and (y)
thereafter, at a rate per annum equal to twelve percent (12%) per
annum. Interest shall be payable on the Term A Loan, on and to each
Interest Payment Date, upon any prepayment of the Term A Loan and on the
Maturity Date and subject to subparagraph (c) of this Section 2.5, is payable
entirely in cash. Interest shall be payable by the Borrower from and
including the first Business Day of the calendar quarter to (but not including)
the last Business Day of each calendar quarter at the interest rate as
determined in this subparagraph.
(b) In the
case of the Term B Loan, interest shall be payable by the Borrower on the
outstanding principal amount of the Term B Loan, at a rate per annum (computed
on the basis of a 365-day or 366-day year, as the case may be) equal to: (x)
commencing on the Closing Date through the calendar quarter ending on December
31, 2011, eleven and one half percent (11.5%) per annum, and (y) thereafter, at
a rate per annum equal to fourteen percent (14%) per annum. Interest
shall be payable on the Term B Loan, on and to each Interest Payment Date, upon
any prepayment of the Term B Loan and on the Maturity Date and subject to
subparagraph (i) of this Section 2.5(b) and subparagraph (c), is payable
entirely in cash. Interest shall be payable by the Borrower from and
including the first Business Day of the calendar quarter to (but not including)
the last Business Day of each calendar quarter at the interest rate as
determined in this subparagraph.
(i) The
Borrower may, prior to January 1, 2011, pay interest on the outstanding
principal amount of the Term B Loan, entirely in kind. If interest on
the Term B Loan is paid entirely in kind then the amount of interest that the
Borrower elects to pay in kind shall be paid by adding such amount to the
outstanding principal balance of the Term B Loan. From and after
January 1, 2011, interest on the Term B Loan shall be payable entirely in
cash, with the first payment of interest in cash on the Term B Loan due March
31, 2011.
(c) The
Borrower may make three (3) PIK Elections, provided that no Default or Event of
Default has occurred and is continuing at the time such election is made or
would result from the PIK Election being made. If the Borrower does
not timely make the PIK Election prior to any calendar quarter, interest on the
Loans shall be payable entirely in cash during such quarter. If the
Borrower timely makes the PIK Election prior to any calendar quarter, the amount
of interest that the Borrower elects to pay in kind shall be paid by adding such
amount to the outstanding principal balance of the Term A Loan or the Term B
Loan (as the case may be).
(d) Notwithstanding,
anything to the contrary in this Agreement, (i) if an Interest Payment Date
would otherwise occur on a day that is not a Business Day, such Interest Payment
Date shall occur on the next succeeding Business Day; provided that, if any
Interest Payment Date would otherwise fall on a day that is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, such Interest Payment Date shall occur on the next preceding Business
Day, and (ii) in no event shall the rate of interest payable by the Borrower
with respect to any Term A Loan or Term B Loan exceed the maximum amount of
interest permitted to be charged under Applicable Law.
Section
2.6 Default
Interest. (a) If any amount of principal of any Loan is not
paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at an interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by Applicable Laws.
(b) If any
amount (other than principal of any Loan) payable by the Borrower under any
Fundamental Document is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, then
upon the request of the Lender such amount shall thereafter bear interest at an
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by Applicable Laws.
(c) While any
Event of Default exists, the Borrower shall pay interest on the principal amount
of all outstanding Obligations at an interest rate per annum at all times equal
to the Default Rate to the fullest extent permitted by Applicable
Laws.
(d) Accrued
and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.
Section
2.7 Prepayment of Loans.
Voluntary. (a)Subject to the terms of paragraph (b) of this
Section 2.7, the Borrower shall have the right at its option at any time and
from time to time to prepay the Loans at par, in whole or in part, upon at least
one (1) Business Day’s written, facsimile or telephonic (promptly confirmed in
writing) notice, in the principal amount of $100,000 or such greater amount
which is an integral multiple of $100,000. Each notice of prepayment
shall specify the prepayment date, the Loans to be prepaid and the principal
amount thereof, shall be irrevocable and shall commit the Borrower to prepay
such Loans in the amount and on the date stated therein. Such notice
shall also specify the expected principal amount of Loans to be outstanding
after giving effect to such prepayment.
(b) All
voluntary prepayments under this Section 2.7 shall be applied as set forth in
Section 2.9.
(c) All
prepayments shall be accompanied by accrued but unpaid interest on the principal
amount being prepaid to the date of prepayment.
Section
2.8 Prepayment of Loans.
Mandatory. (a)Excess Cash
Flow. Within five (5) Business Days after financial statements
are required to have been delivered pursuant to Section 5.1(a) and the related
Compliance Certificate has been delivered pursuant to Section 5.1(c), the
Borrower shall prepay an aggregate principal amount of Loans equal to
seventy-five percent (75%) of Excess Cash Flow for (i) the fiscal year covered
by such financial statements, or (ii) in the case of fiscal year ending December
31, 2010, the portion of such fiscal year after the end of the first calendar
quarter following the Closing Date, (such prepayments to be applied as set forth
in Section 2.9 below).
(b) Dispositions. If
the Borrower or any of its Subsidiaries Disposes of any asset which results in
the realization by such Person of Net Cash Proceeds, the Borrower shall prepay
an aggregate principal amount of Loans equal to one hundred percent (100%) of
such Net Cash Proceeds within three Business Days of receipt of such Net Cash
Proceeds (such prepayments to be applied as set forth in Section 2.9 below);
provided, however, that such Person may reinvest such Net Cash Proceeds in
productive assets of a kind then used or usable in the business of the Borrower
or any of its Subsidiaries within one hundred and eighty (180) days from the
date of such Disposition.
(c) Equity
Issuances. Within three (3) Business Days of an Equity
Issuance, the Borrower shall prepay an aggregate principal amount of Loans equal
to one hundred percent (100%) of all Net Cash Proceeds received therefrom upon
receipt thereof by the Borrower or such Subsidiary (such prepayments to be
applied as set forth in Section 2.9 below).
(d) Debt
Issuances. Within three (3) Business Days of any Debt Issuance
(other than Indebtedness expressly permitted to be incurred pursuant to Section
6.1, the Borrower shall prepay an aggregate principal amount of Loans equal to
one hundred percent (100%) of all Net Cash Proceeds received therefrom upon
receipt thereof by the Borrower or a Subsidiary (such prepayments to be applied
as set forth in Section 2.9 below).
(e) Casualty/Condemnation. Upon
the sale of any assets in advance of a condemnation proceeding, or following the
occurrence of any Casualty or Condemnation for which the Borrower or any of its
Subsidiaries has received any proceeds which are not otherwise included in this
Section 2.8, then after such proceeds have been used to replace such sold, lost,
damaged, destroyed or condemned assets, the Borrower shall prepay an aggregate
principal amount of Loans equal to one hundred percent (100%) of all remaining
Net Cash Proceeds received therefrom immediately upon receipt thereof by the
Borrower or such Subsidiary (such prepayments to be applied as set forth in
Section 2.9 below).
(f) Change in
Control. Upon a Change in Control arising from (i) a Premium
Transaction (as defined in the Stockholders Agreement) or (ii) a transaction
approved by a committee of Borrower's Board of Directors comprised solely of
independent, disinterested members of the Borrower’s Board of Directors, the
principal of and the interest on the Loans and the Notes and all other amounts
related thereto payable hereunder or thereunder shall become and be forthwith
due and payable, without presentment, demand, protest, or other notice of any
kind, all of which are hereby expressly waived, anything in this Agreement or in
the Notes to the contrary notwithstanding.
Section
2.9 Application of Mandatory and
Voluntary Prepayments. Each prepayment of Loans pursuant to
Sections 2.7 and 2.8 shall be applied, first, to the payment
of Obligations due pursuant to Section 9.3 and 9.4 of this
Agreement, second, to the
prepayment of payment in kind interest under the Term A Loan if the PIK Election
has been made by the Borrower, third, to the
prepayment of the principal amount outstanding under the Term A Loan, fourth, to the
prepayment of payment-in-kind interest under the Term B Loan and fifth, to the
prepayment of the principal amount outstanding under the Term B
Loan.
Section
2.10 Manner of
Payments. All payments by the Borrower hereunder and under the
Notes shall be made without offset or counterclaim in Dollars in Federal or
other immediately available funds at the office of the Lender,
Attention: Chief Financial Officer, by no later than 1:00 p.m., New
York City time, on the date on which such payment shall be due. Any
payment received at such office after such time shall be deemed received on the
following Business Day. Interest in respect of any Loan hereunder
shall accrue from and including the date of such Loan to but excluding the date
on which such Loan is paid.
Section
2.11 United States
Withholding. (a)Prior to the Closing Date hereunder and prior
to the effective date set forth in an assignment agreement with respect to any
Lender becoming the Lender after the date hereof, and from time to time
thereafter if requested by the Borrower or required because, as a result of a
change in law or a change in circumstances or otherwise, a previously delivered
form or statement becomes incomplete or incorrect in any material respect, a
Lender organized under the laws of a jurisdiction outside the United States
shall provide, if applicable, the Borrower with complete, accurate and duly
executed forms or other statements prescribed by the internal revenue service of
the United States certifying such Lender’s exemption from, or entitlement to a
reduced rate of, United States withholding taxes (including backup withholding
taxes) with respect to all payments to be made to such Lender hereunder and
under any other Fundamental Document.
(b) Any and
all payments by or on account of any obligation of the Borrower hereunder or
under any Fundamental Document shall be made free and clear of and without
deduction for any taxes other than income or franchise taxes imposed on (or
measured by) the Lender’s net income by the United States, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or in which its applicable lending office is located
(such taxes, “Excluded
Taxes”); provided that, if the
Borrower shall be required to deduct any taxes other than Excluded Taxes from
such payments, then the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.11(a)) the Lender receives an
amount equal to the sum it would have received had no such deduction been
made. In the event the Borrower or the Lender shall so deduct or
withhold taxes from amounts payable hereunder, it (i) shall pay to or deposit
with the appropriate taxing authority in a timely manner the full amount of
taxes it has deducted or withheld, (ii) shall provide evidence of payment of
such taxes to, or the deposit thereof with, the appropriate taxing authority and
a statement setting forth the amount of taxes deducted or withheld, the
applicable rate, and any other information or documentation reasonably requested
by the Lender from whom the taxes were deducted or withheld, and (iii) shall
forward to the Lender any receipt of the deducted or withheld taxes as may be
issued from time to time by the appropriate taxing authority.
(c) In
addition, the Borrower (and, if applicable, the relevant Credit Party) shall
indemnify the Lender for any additional withholding taxes paid by such Lender or
any liability (including penalties and interest) arising therefrom or with
respect thereto, whether or not such additional withholding taxes were correctly
or legally asserted.
(d) Each
assignee of a Lender’s interest in this Credit Agreement in conformity with
Section 9.18 shall be bound by this Section 2.11, so that such assignee will
have all of the obligations and provide all of the forms and statements and all
indemnities, representations and warranties required to be given under this
Section 2.11.
Section
2.12 Debt Exchange
Transaction. On the Closing Date, the following transactions
shall occur: (a) $315,000,000 of the Original Obligations shall be exchanged for
the Term A Loan and the Term B Loan, on the terms set forth in this Agreement;
(b) $185,000,000 of the Original Obligations shall be exchanged in consideration
for the receipt by the Lender of $185,000,000 of Series A Preferred Stock, on
the terms set forth in the Master Recapitalization Agreement; and (c) the
balance of the Original Obligations shall be exchanged in consideration for
receipt by the Lender of common stock of the Borrower at the Conversion Price,
on the terms set forth in the Master Recapitalization Agreement. The
Lender hereby consents to the foregoing transactions. As a result of
the Transactions, all of the HCC Debt, except to the extent converted and
continued as the Term A Loan and Term B Loan, shall be extinguished and
discharged.
Section
2.13 Change in
Circumstances. (a)In the event that after the Closing Date
hereof any change in Applicable Law or in the interpretation or administration
thereof (including, without limitation, any request, guideline or policy not
having the force of law) by any Governmental Authority charged with the
administration or interpretation thereof or, with respect to clause (ii) below,
any change in conditions shall occur which shall:
(i) subject
the Lender to, or increase the net amount of, any tax, levy, impost, duty,
charge, fee, deduction or withholding with respect to any Loan; or
(ii) change
the basis of taxation of any payment to the Lender of principal or any interest
on any Loan or other fees and amounts payable hereunder,
and the
result of any of the foregoing shall be to increase the actual cost to such
Lender of making or maintaining any Loan hereunder or to reduce the amount of
any payment (whether of principal, interest or otherwise) received or receivable
by the Lender, or to require such Lender to make any payment in connection with
any Loan, in each case by or in an amount which such Lender in its sole judgment
shall deem material, then and in each case the Borrower shall pay to the Lender
such amounts as shall be necessary to compensate such Lender for such cost,
reduction or payment.
(b) The
Lender shall deliver to the Borrower from time to time, one or more certificates
setting forth the amounts due to the Lender under paragraph (a) above, the
changes as a result of which such amounts are due and the manner of computing
such amounts. Each such certificate shall be conclusive in the
absence of manifest error. The Borrower shall pay to the Lender
amounts shown as due on any such certificate within ten (10) Business Days after
its receipt of the same. No failure on the part of the Lender to
demand compensation under paragraph (a) above on any one occasion shall
constitute a waiver of its rights to demand compensation on any other
occasion.
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3.
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REPRESENTATIONS
AND WARRANTIES
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In order
to induce the Lender to enter into this Credit Agreement and to make the Loans
provided for herein, the Credit Parties, jointly and severally, make the
following representations and warranties to, and agreements with the
Lender:
Section
3.1 Corporate Existence and
Power. (a)Each Credit Party is a corporation, limited
liability company or partnership, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and is in good
standing or has applied for authority to operate as a foreign entity in all
jurisdictions where the nature of its properties or business so requires it and
where a failure to be in good standing as a foreign entity would have a Material
Adverse Effect on the business, assets or condition, financial or otherwise, of
such Credit Party. As of the Closing Date, the Borrower is engaged in
a U.S. trade or business.
(b) Each
Credit Party has the power and authority (i) to own its respective properties
and carry on its respective businesses as now being conducted, (ii) to execute,
deliver and perform its obligations (as applicable) under this Credit Agreement
and the other Fundamental Documents and any other documents contemplated hereby,
(iii) in the case of the Borrower, to borrow hereunder, (iv) to grant to the
Lender a security interest in the Collateral, as contemplated by the Security
Agreement and the other Fundamental Documents to which it is or will be a party,
and (v) in the case of the Subsidiary Guarantors, to guarantee the Obligations
as contemplated by the Subsidiary Guaranty.
(c) A list of
all of the Credit Parties setting forth their jurisdictions of organization and
the jurisdictions in which they are in good standing as of the date hereof as
provided in Section 3.1(a) hereof is attached hereto as Schedule
3.1.
Section
3.2 Authority and No
Violation. (a)The execution, delivery and performance of this
Credit Agreement and the other Fundamental Documents by each Credit Party and
the grant to the Lender of a security interest in the Collateral as contemplated
in the other Fundamental Documents, and in the case of the Borrower, the
Borrowings hereunder and the execution, delivery and performance of the Notes by
the Borrower and, in the case of each Subsidiary Guarantor, the
guaranty of the Obligations as contemplated by the Subsidiary Guaranty, (a) have
been duly authorized by all necessary corporate or company (as applicable)
action on the part of each Credit Party, (b) will not violate any provision of
any Applicable Law, or any order of any court or other agency of the United
States or any State thereof, applicable to any Credit Party or any of its
respective properties or assets, (c) will not violate any provision of the
certificate of incorporation or by-laws, limited liability company agreement or
other organizational document of any Credit Party, or any indenture, any
agreement for borrowed money, any bond, note or other similar instrument in any
material respect or any other material agreement to which any Credit Party is a
party or by which any Credit Party or any of its properties or assets are bound,
(d) will not be in conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement,
bond, note, instrument or other material agreement and (e) will not result in
the creation or imposition of any Lien of any nature whatsoever upon any
property or assets of any Credit Party other than pursuant to a Fundamental
Document.
Section
3.3 Governmental and Other
Approvals. All authorizations, approvals, registrations or
filings with any Governmental Authority or public regulatory body required for
the execution, delivery and performance by the Credit Parties of this Credit
Agreement and the other Fundamental Documents, and the execution and delivery by
the Borrower of the Notes, have been duly obtained or made and are in full force
and effect or have been duly applied for, and if any such further
authorizations, approvals, registrations or filings should hereafter become
necessary, the Credit Parties shall obtain or make all such authorizations,
approvals, registrations or filings.
Section
3.4 Financial
Statements. Each of the audited financial statements of the
Borrower and its Consolidated Subsidiaries at December 31, 2008 and the
unaudited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at September 30, 2009, together with the related statements of
operations and cash flow and the related notes and supplemental information are
complete and correct and have been prepared in accordance with GAAP in effect as
of such date consistently applied, except as otherwise indicated in the notes to
such financial statements and subject in the case of unaudited statements to
changes resulting from year-end audit adjustments. All of such
financial statements fairly present the financial condition or the results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis at the dates and for the periods indicated and (in the case of the balance
sheets) reflect (including the notes thereto) all known liabilities and subject
in the case of unaudited statements to changes resulting from year-end audit
adjustments, contingent or otherwise, as of such dates required in accordance
with GAAP to be shown or reserved against, or disclosed in notes to financial
statements.
Section
3.5 No Material Adverse
Change. (a)Since the later of September 30, 2009 or the end of
the fiscal period covered by the Borrower’s last annual report filed on form
10-K there has been no change that would be deemed to have had a Material
Adverse Effect.
Section
3.6 Subsidiaries. Annexed
hereto as Schedule 3.6 is a correct and complete list as of the date hereof, of
each Credit Party showing, as to each, (i) its name, (ii) the type of entity it
is, (iii) the jurisdiction in which it was incorporated or otherwise organized,
(iv) in the case of each Credit Party which is a corporation, its authorized
capitalization, the number of shares of its capital stock outstanding and (v) in
the case of each Credit Party which is a limited liability company, the
ownership of its membership interests. Except as noted on Schedule
3.6, as of the date hereof no Credit Party holds any Equity Interest or other
Investment, either directly or indirectly, in any Person other than another
Credit Party and no Credit Party is a general or limited partner in any joint
venture or partnership.
Section
3.7 Intellectual
Property. (a)To the best of each Credit Party’s knowledge, all
items of Product in which any Credit Party has any right, title or interest and
all component parts thereof do not and will not violate or infringe upon any
copyright, right of privacy, trademark, patent, trade name, performing right or
any literary, dramatic, musical, artistic, personal, private, several, care,
contract, property or copyright right or any other right of any Person, in any
material respect or contain any libelous or slanderous
material. There is no claim, suit, action or proceeding pending or,
to the best of each Credit Party’s knowledge, threatened against any Credit
Party that involves a claim of infringement of any copyright with respect to any
item of Product necessary to operate the business of each Credit Party in the
manner in which it is currently operated and no Credit Party has any knowledge
of any existing infringement by any other Person of any copyright held by any
Credit Party with respect to any item of Product necessary to operate the
business of each Credit Party in the manner in which it is currently
operated.
(b) All
necessary applications and registrations for all copyrights, trademarks, service
marks, trade names and service names in which any Credit Party has any right,
title or interest are valid and in full force and effect and are not subject to
the payment of any taxes or maintenance fees or the taking of any other actions
by the Credit Parties (other than standard renewals) to maintain their validity
or effectiveness.
Section
3.8 Fictitious
Names. None of the Credit Parties has done business, is doing
business or intends to do business other than under its full corporate or
company name (as applicable), including, without limitation, under any tradename
or other doing business name other than as listed on Schedule 3.8.
Section
3.9 Title to
Properties. Each Credit Party has good and valid title to,
valid leasehold interests in, or valid licenses to use, all property and assets
material to its business, free and clear of all Liens, except Permitted
Encumbrances.
Section
3.10 Litigation. Except
as set forth on Schedule 3.10, there are no actions, lawsuits or other
proceedings pending (including, but not limited to, matters relating to
environmental liability), or, to the knowledge of any Credit Party, threatened,
against or affecting any Credit Party or any of its respective properties, by or
before any Governmental Authority, arbitration panel, or arbitrator, which could
reasonably be expected to have a Material Adverse Effect on the financial
condition or the business of any Credit Party or which involve this Agreement or
any of the transactions contemplated hereby. No Credit Party is in
default with respect to any order, writ, injunction, decree, rule or regulation
of any Governmental Authority, which default could reasonably be expected to
have a Material Adverse Effect.
Section
3.11 Regulations T, U and
X. No Credit Party is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation T, U
or X). No part of the proceeds of the Loans will be used, directly or
indirectly, and whether immediately, incidentally or ultimately to purchase or
carry any margin stock, to extend credit to others for the purpose of purchasing
or carrying any margin stock.
Section
3.12 Investment Company
Act. No Credit Party is an “investment company” or an
“affiliated person” or “promoter” of, or “principal underwriter” of or for, an
“investment company”, as such terms are defined in the Investment Company Act of
1940, as amended.
Section
3.13 Binding
Agreements. This Credit Agreement and the other Fundamental
Documents when executed will constitute, the legal, valid and enforceable
obligations of each Credit Party that is a party thereto enforceable against
such Credit Party in accordance with its respective terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and to general principles of equity.
Section
3.14 Taxes. All
federal, state and local tax returns which are required to be filed by or on
behalf of the Credit Parties have been filed, and the Credit Parties have paid
or caused to be paid all taxes payable by the Credit Parties whether or not
shown on said returns, to the extent that such taxes have become due, except as
permitted by Section 5.11 hereof. No Credit Party knows of any
proposed or pending tax assessments, deficiencies, audits or other
proceedings. The Credit Parties believe that the charges, accruals
and reserves on their books in respect of taxes or other governmental charges
are accurate in all material respects.
Section
3.15 Compliance with ERISA and
Applicable Law. (a)Each Plan has been maintained and operated
in all material respects in accordance with all applicable laws, including ERISA
and the Code, and each Plan intended to qualify under section 401(a) of the Code
so qualifies. No Reportable Event has occurred in the last five years
as to any Plan, or to the knowledge of any Credit Party, any Multiemployer
Plan. No Plan has failed to satisfy the “minimum funding standards”
within the meaning set forth in section 302(a) of ERISA or Section 412(a) of the
Code (whether or not waived) and no application has been made to the Secretary
of the Treasury for a waiver or modification of the minimum funding standards
(including required installment payments). No material liability has
been, and no circumstances exist pursuant to which any material liability could
be, imposed upon any Credit Party or ERISA Affiliate (i) under sections 4971
through 4980G of the Code, section 502(i) or 502(l) of ERISA, or Title IV of
ERISA with respect to any Plan or Multiemployer Plan or with respect to any
“employee benefit plan” (within the meaning set forth in section 3(3) of ERISA)
heretofore maintained, sponsored or contributed by any Credit Party or ERISA
Affiliate or any entity that heretofore was an ERISA Affiliate or (ii) for the
failure to fulfill any obligation to contribute to any Multiemployer
Plan. No material liability has been, and no circumstances exist
pursuant to which any material liability could be, imposed upon any Credit Party
with respect to any Plan that provides post-retirement welfare coverage (other
than as required pursuant to Section 4980B of the Code). Neither any
Credit Party nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning set forth in section
4241 of ERISA) or has been terminated within the meaning of Title IV of ERISA,
and no Multiemployer Plan is reasonably expected to be in reorganization or to
be terminated. No Credit Party or ERISA Affiliate has withdrawn from
any Multiemployer Plan in the previous six years.
(b) The
execution, delivery and performance of the Fundamental Documents and the
consummation of the transactions contemplated hereby and thereby will not
involve any “prohibited transaction” within the meaning of ERISA or the
Code.
Section
3.16 Indebtedness; Guaranties;
Liens. (a)Except for this Agreement and as otherwise disclosed
on Schedule 3.16, as of the Closing Date no Credit Party has any outstanding
Indebtedness.
(b) Except
for this Agreement and as otherwise disclosed on Schedule 3.16, as of the
Closing Date no Credit Party is responsible for any Indebtedness of any other
Person.
(c) Except
for (i) Liens arising under this Agreement, (ii) Liens disclosed on Schedule
3.16 and (iii) Permitted Encumbrances, as of the Closing Date no Credit Party
has granted or is aware of the existence of any Liens on any property of any
Credit Party.
Section
3.17 Security
Interest. The Fundamental Documents, when executed and
delivered and, to the extent appropriate, filed in locations where required by
law (together with any other actions necessary to perfect a security interest in
accordance with applicable law), will create and grant to the Lender a valid and
first priority perfected security interest in the Collateral located in the
United States subject only to Permitted Encumbrances.
Section
3.18 Disclosure. Neither
this Credit Agreement nor any other Fundamental Document nor any other
agreement, document, certificate or statement furnished to the Lender by or on
behalf of any Credit Party in connection with the transactions contemplated
hereby at the time it was furnished contained any untrue statement of a material
fact or omitted to state a material fact, under the circumstances under which it
was made, necessary in order to make the statements contained herein or in any
other Fundamental Document not misleading in any material respect. At
the date hereof, there is no fact relating to any Credit Party known to any
Credit Party which would have a Material Adverse Effect or would reasonably be
expected to have a Material Adverse Effect in the future.
Section
3.19 Environmental
Liabilities. (a)No Credit Party has used, stored, treated,
transported, manufactured, refined, handled, produced or disposed of any
Hazardous Materials on, under, at, from or in any way affecting, any properties
or assets owned or leased by a Credit Party, in any manner which at the time of
the action in question violated in any material respect any Environmental Law
governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials, and, to the best of
each Credit Party’s knowledge, no prior owner of any such property or asset or
any tenant, subtenant, prior tenant or prior subtenant thereof has used
Hazardous Materials on or affecting such property or asset, or otherwise, in any
manner which at the time of the action in question violated in any material
respect any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials.
(b) To the
best of each Credit Party’s knowledge, (i) no Credit Party has any obligations
or liabilities, known or unknown, matured or not matured, absolute or
contingent, assessed or unassessed, which could reasonably be expected to have a
Material Adverse Effect and (ii) no claims have been made against any of the
Credit Parties in the past five years and no presently outstanding citations or
notices have been issued against any of the Credit Parties, which could
reasonably be expected to have a Material Adverse Effect which in either case
have been or are imposed by reason of or based upon any provision of any
Environmental Law, including, without limitation, any such obligations or
liabilities relating to or arising out of or attributable, in whole or in part,
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of any Hazardous Materials by any Credit Party, or
any of its employees, agents, representatives or predecessors in interest in
connection with or in any way arising from or relating to any of the Credit
Parties or any of their respective owned or leased properties, or relating to or
arising from or attributable, in whole or in part, to the manufacture,
processing, distribution, use, treatment, storage, disposal, transportation or
handling of any such substance, by any other Person at or on or under any of the
real properties owned or used by any of the Credit Parties or any other location
where such could reasonably be expected to have a Material Adverse
Effect.
Section
3.20 Compliance with
Laws. No Credit Party is in violation of any Applicable Law
except for such violations which in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
Section
3.21 Bank
Accounts. The Credit Parties have no bank accounts other than
those listed on Schedule 3.21.
Section
3.22 Solvency. After
giving effect to the transactions contemplated by this Agreement and the
Fundamental Documents, each Credit Party is, and the Credit Parties on a
consolidated basis are, Solvent.
Section
3.23 Fundamental
Documents. The Borrower has delivered to the Lender a
complete, correct and executed copy of the Fundamental Documents and the
Revolving Credit Agreement, including all schedules and exhibits
thereto. The execution, delivery and performance of the Master
Recapitalization Agreement has been duly authorized by all necessary action
(including, without limitation, the obtaining of any consent of stockholders or
other holders of capital stock required by law or by any applicable corporate or
other organizational documents) on the part of each such Person. No
authorization or approval or other action by, and no notice to filing with or
license from, any Governmental Authority is required for the consummation of the
transaction contemplated thereby other than such as have been obtained on or
prior to the Closing Date. Each of the representations and warranties
contained in the Master Recapitalization Agreement is true, correct and
complete.
Section
3.24 Agreements. (a) No
Credit Party is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument (including any License Agreement or Platform Agreement) to which it
is a party which could reasonably be expected to have a Material Adverse Effect
or result in the loss of more than 7,500,000 Subscribers and (b) Schedule 3.24
is a true and complete listing as of the date hereof of (i) all credit
agreements, indentures, and other agreements related to any indebtedness for
borrowed money of any Credit Party, other than the Fundamental Documents and the
Revolving Credit Agreement among the Credit Parties, (ii) all joint venture
agreements to which any Credit Party is a party, (iii) all material License
Agreements and Platform Agreements, (iv) all agreements or other arrangements
pursuant to which a Credit Party has granted a Lien to any Person other than
Permitted Encumbrances and (v) all other contractual arrangements entered into
by a Credit Party or by which any Credit Party is bound which arrangements are
material to any Credit Party, including but not limited to, Guaranties and
employment agreements. The Credit Parties have delivered or made
available to the Lender a true and complete copy of each agreement described on
Schedule 3.24, including all exhibits and schedules. For purposes of
this Section 3.24, a Platform Agreement, License Agreement or other contract,
agreement or arrangement shall be deemed “material” if the Credit Parties
reasonably expect that any Credit Party would, pursuant to the terms thereof,
(A) recognize future revenues in excess of $1,000,000 per annum or, (B) incur
liabilities, obligations or expenses in excess of $1,000,000 per
annum.
Section
3.25 Licensed
Rights. The License Agreements grant to the Credit Parties
sufficient rights in and to the items of Product licensed thereunder to enable
the Credit Parties to perform their respective obligations under the Platform
Agreements, and no Credit Party is in breach of any of its material obligations
under such agreements, nor does any Credit Party have any knowledge of any
breach or anticipated breach by any other parties thereto which could reasonably
be expected to result in any material adverse change in the business,
properties, assets, operations or condition (financial or otherwise) of any
Credit Party.
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4.
|
CONDITIONS
TO EFFECTIVENESS
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Section
4.1 Conditions Precedent to
Effectiveness. This Agreement shall become effective as of the
Business Day (the “Closing Date”) when
each of the following conditions precedent have been satisfied in the Lender’s
sole discretion:
(a) Corporate
Documents. The Lender shall have received:
(i) a copy of
the articles, certificate of incorporation or other organizational documents of
each Credit Party, certified as of a recent date by the Secretary of State of
the jurisdiction of incorporation or organization of such Credit
Party;
(ii) a
certificate of such Secretary of State, dated as of a recent date, as to the
good standing of and payment of taxes by each Credit Party;
(iii) a
certificate dated as of a recent date as to the good standing of each Credit
Party issued by the Secretary of State of each jurisdiction in which such Credit
Party is qualified as a foreign corporation or limited liability company as
listed in Schedule 3.1;
(iv) a
certificate of the Secretary of each Credit Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of the by-laws
or limited liability company agreement, as the case may be, of such party as in
effect on the date of such certification, (B) that attached thereto is a true
and complete copy of resolutions adopted by the Board of Directors or other
governing body of such party authorizing the execution, delivery and performance
in accordance with their respective terms of this Credit Agreement, the other
Fundamental Documents and any other documents required or contemplated hereunder
or thereunder, the grant of the security interests in the Collateral and the
pledged securities and, in addition, as to the Borrower, the borrowings
hereunder and the Notes and that such resolutions have not been amended,
rescinded or supplemented and are currently in effect, (C) that the certificate
of incorporation or organization of such party has not been amended since the
date of the last amendment thereto indicated on the certificate of the Secretary
of State furnished pursuant to clause (i) above except to the extent specified
in such Secretary’s certificate and (D) as to the incumbency and specimen
signature of each officer of such Credit Party executing any Fundamental
Document (such certificate to contain a certification by another officer of such
Credit Party as to the incumbency and signature of the officer signing the
certificate referred to in this clause (iv)); and
(v) such
additional supporting documents as the Lender or its counsel may reasonably
request.
(b) Credit Agreement;
Notes. The Lender shall have received (i) a complete executed
copy of this Credit Agreement, and (ii) the Notes executed by the
Borrower.
(c) No Material Adverse
Change. No change that would be deemed to have had a Material
Adverse Effect shall have occurred since December 31, 200[8].1
(d) UCC
Searches. The Lender shall have received UCC, copyright office
and other searches satisfactory to it indicating that no other filings,
encumbrances or transfers with regard to the Collateral are of record in any
jurisdiction in which it shall be necessary or desirable for the Lender to make
a UCC filing in order to provide the Lender with a perfected first priority
security interest in the Collateral, subject only to the Permitted
Encumbrances.
(e) Required Consents and
Approvals. The Lender shall be satisfied that all required
consents and approvals have been obtained with respect to the transactions
contemplated hereby from all (i) Governmental Authorities with jurisdiction over
the business and activities of any Credit Party, and (ii) from any other Person
whose consent or approval the Lender in its reasonable discretion deems
necessary to the transactions contemplated hereby.
(f) Federal Reserve
Regulations. The Lender shall be satisfied that the provisions
of Regulations T, U and X of the Board will not be violated by the transactions
contemplated hereby.
(g) Compliance with
Laws. The Lender shall be satisfied that the transactions
contemplated hereby will not violate any provision of Applicable Law or any
order of any court or other agency of the United States or any state thereof
applicable to any of the Credit Parties or any of their respective properties or
assets.
(h) Payment of
Fees. All fees and expenses then due and payable by the
Borrower pursuant hereto to the Lender (or its legal counsel) shall have been
paid.
(i) Fundamental
Documents. This Agreement shall have been duly executed and
delivered by each of the Credit Parties. In addition, all other
Fundamental Documents as well as the Hallmark Guaranty and the Revolving Credit
Agreement shall have been duly executed and delivered to the Lender by each of
the Credit Parties party thereto.
(j) Existing
Agreement. All outstanding obligations under the JPM Credit
Agreement shall have been indefeasibly paid in full concurrently on the Closing
Date.
(k) Master Recapitalization
Agreement. The closing of the transactions contemplated by the
Master Recapitalization Agreement shall have occurred.
(l) Other
Documents. The Lender shall have received such other documents
as the Lender may reasonably require.
(m) Insurance. The
Borrower shall have furnished to the Lender evidence acceptable to the Lender
that the insurance policies required by Section 5.5 have been obtained and are
in full force and effect.
(n) ERISA. The
Lender shall have received copies of all Plans of the Credit Parties
that are in existence on the Closing Date and descriptions of those that are
committed to as of the Closing Date.
(o) Notice of Deemed
Borrowing. The Borrower shall have delivered a Notice of
Deemed Borrowing.
(p) Perfection
Certificate. The Lender shall have received a duly completed
Perfection Certificate.
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5.
|
AFFIRMATIVE
COVENANTS
|
For so
long as any principal of or interest on any Loan or any other Obligation
(whether nor not due) shall remain unpaid, each Credit Party will:
Section
5.1 Financial Statements and
Reports. Furnish or cause to be furnished to the
Lender:
(a) Within 90
days after the end of each fiscal year (commencing with fiscal year _____), (i)
the audited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, as at the end of, and the related statements of operations,
shareholders’ equity and cash flow for, such year, and the corresponding figures
as at the end of, and for, the preceding fiscal year, accompanied, in each case,
by an opinion of KPMG LLP or such other independent public accountants of
recognized standing as shall be retained by the Borrower and satisfactory to the
Lender, which report and opinion shall be prepared in accordance with generally
accepted auditing standards relating to reporting and which report and opinion
shall contain no material exceptions or qualifications except for qualifications
relating to accounting changes (with which such independent public accountants
concur), and (ii) a management discussion and analysis of such financial
statements;
(b) Within 45
days after the end of each of the first three fiscal quarters of each of its
fiscal years, the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries, as at the end of, and the related unaudited
statements of operations, shareholders’ equity and cash flow for, such quarter,
and the corresponding figures as at the end of, and for, the corresponding
period in the preceding fiscal year, in each case together with a management
discussion and analysis of such financial statements and a certificate signed by
an Authorized Officer of the Borrower on behalf of the Borrower to the effect
that such financial statements, while not examined by independent public
accountants, reflect, in the opinion of the Borrower all adjustments necessary
to present fairly the financial position of the Borrower and its Consolidated
Subsidiaries, as at the end of the fiscal quarter and the results of its
operations for the quarter then ended in conformity with GAAP;
(c) Simultaneously
with the delivery of the statements referred to in paragraphs (a) and (b) of
this Section 5.1, a duly completed Compliance Certificate signed by an
Authorized Officer of the Borrower, in form and substance satisfactory to the
Lender stating that in the course of the performance of his or her duties, he or
she would normally have knowledge of any condition or event which would
constitute an Event of Default or Default (including, without limitation, any
violation of the Cash Interest Coverage Ratio) and stating whether or not he or
she has knowledge of any such condition or event and, if so, specifying each
such condition or event of which he has knowledge and the nature
thereof;
(d) Promptly
upon their becoming available, copies of (i) all management projections
presented to any Credit Party’s Board of Directors in connection with any action
by such Board of Directors, (ii) all audits, studies or evaluations prepared by
independent public accountants for or submitted to any Credit Party and (iii)
copies of all reports submitted by independent public accountants to the
Borrower in connection with each annual, interim or special audit or review of
the financial statements of the Borrower, including, without limitation, the
comment letter submitted by such accountants to management in connection with
their annual audit;
(e) Promptly
upon their becoming available, copies of (i) all registration statements, proxy
statements, and all reports which any Credit Party shall file with any
securities exchange or with the S.E.C. and (ii) all reports,
financial statements, press releases and other information which any Credit
Party shall release, send or make available to its stockholders;
(f) Notice of
(i) any action taken by the Board of Directors or governing body of any Credit
Party in connection with any Debt Issuance or Equity Issuance and (ii) the date
on which such Credit Party will receive the Net Cash Proceeds from any Debt
Issuance or Equity Issuance;
(g) Upon
request of the Lender, provide the Lender with copies of any and all material
License Agreements;
(h) Upon
request of the Lender, copies of any and all Platform Agreements;
(i) From time
to time such additional information regarding the financial condition, business
or business prospects of the Credit Parties, the amount of film inventory in
which any of the Credit Parties has rights on an individual or market basis or
otherwise regarding the Collateral, as any Lender may reasonably
request.
Section
5.2 Corporate
Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its corporate existence
(provided, that any Credit Party may merge into or consolidate with another
Credit Party, provided further that the Borrower, if it is a party thereto, is
the surviving entity), and material rights, licenses, permits and franchises,
and comply in all material respects with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, any Governmental
Authority.
Section
5.3 Maintenance of
Properties. Keep its tangible properties which are material to
its business in good repair, working order and condition subject to ordinary
wear and tear and, from time to time (i) make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto and (ii) comply at
all times with the provisions of all material leases and other material
agreements to which it is a party so as to prevent any loss or forfeiture
thereof or thereunder unless compliance therewith is being currently contested
in good faith by appropriate proceedings and appropriate reserves have been
established in accordance with GAAP.
Section
5.4 Notice of Material
Events. (a) Promptly upon any Executive Officer of a Credit
Party obtaining knowledge of (i) any Default or Event of Default, (ii) any
material adverse change in the condition or operations of any Credit Party,
financial or otherwise, (iii) any action or event which could reasonably be
expected to materially and adversely affect the performance of the Credit
Parties’ obligations under this Credit Agreement or any other Fundamental
Document, the repayment of the Notes, or the security interests granted to the
Lender under the terms of a Fundamental Document, (iv) any other event which
could reasonably be expected to result in a Material Adverse Effect or would
otherwise cause the loss of greater than 7,500,000 Subscribers, (v) the change
of the jurisdiction or form of organization, or the principal place of business
of any Credit Party or of the location of any Credit Party’s books and records,
(vi) any change in the name of any Credit Party, (vii) any other event which
could reasonably be expected to materially and adversely impact upon the amount
of collectability of any material accounts receivable of the Credit Parties or
materially decrease the value of the Collateral, or (viii) any proposed material
amendment to any material agreements that are part of the Collateral, such
Credit Party shall promptly give written notice thereof to the Lender specifying
the nature and period of existence of any such condition or event and what
action such Credit Party has taken, is taking and proposes to take with respect
thereto.
(b) Promptly
upon any Executive Officer of a Credit Party obtaining knowledge of (i) the
institution of, or threat of, any action, suit, proceeding, investigation or
arbitration by any Governmental Authority or other Person against or affecting
any Credit Party or any of its assets, or (ii) any material development in any
such action, suit, proceeding, investigation or arbitration (whether or not
previously disclosed to the Lenders), which, in the case of (i) or (ii) might,
if adversely determined, reasonably be expected to have a Material Adverse
Effect or would otherwise cause the loss of greater than 7,500,000 Subscribers,
such Credit Party shall promptly give notice thereof to the Lender and provide
such other information as may be available to it (without waiver of any
applicable evidentiary privilege) to enable the Lender to evaluate such matters;
and, in addition to the requirements set forth in clauses (i) and (ii) of this
subsection (b), such Credit Party upon request shall promptly give notice of the
status of any action, suit, proceeding, investigation or arbitration covered by
a report delivered to the Lender pursuant to clause (i) and (ii) above to the
Lender and provide such other information as may be reasonably available to it
to enable the Lender to evaluate such matters.
Section
5.5 Insurance. (a)Keep
its assets which are of an insurable character insured (to the extent and for
the time periods consistent with normal industry practices) by financially sound
and reputable insurers against loss or damage by fire, explosion, theft or other
hazards which are included under extended coverage in amounts not less than the
insurable value of the property insured or such lesser amounts, and with such
self-insured retention or deductible levels, as are consistent with customary
industry practices.
(b) Maintain
with financially sound and reputable insurers, insurance against other hazards
and risks and liability to Persons and property to the extent and in the manner
customary for companies in similar businesses.
(c) Maintain,
or cause to be maintained, distributor’s “Errors and Omissions” insurance to the
extent and in amounts consistent with or greater than customary industry
standards.
(d) Maintain,
or cause to be maintained, broadcaster’s “Errors and Omissions” insurance to the
extent and in amounts consistent with or greater than customary industry
standards.
(e) Cause all
such above-described insurance (excluding worker’s compensation insurance) to
(1) provide for the benefit of the Lender that 30 days’ prior written notice of
suspension, cancellation, termination, reduction, non-renewal or lapse or
material change of coverage shall be given to the Lender; (2) name the Lender as
a loss payee (except for “Errors and Omissions” insurance and other third party
liability insurance), provided, however, that so long as an Event of Default has
occurred and is continuing, property insurance proceeds may be used to repair
damage in respect of which such proceeds were received or so long as no Default
or Event of Default has occurred and is then continuing, to reimburse a Credit
Party for its own funds expended to repair the applicable damage; and (3) name
the Lender as an additional insured including, without limitation, under any
“Errors and Omissions” insurance and other third party liability insurance but
only from claims arising from the acts or omissions of any Credit Party or its
employees, representatives or contractors.
(f) Upon the
request of the Lender, the Borrower will render to the Lender a statement in
such detail as the Lender may request as to all such insurance
coverage.
Section
5.6 Music. When
an item of Product produced by a Credit Party has been scored, if requested by
the Lender, promptly deliver to the Lender: (a) written evidence of the music
synchronization rights obtained from the composer or the licensor of the music
and (b) copies of all music cue sheets with respect to such item of
Product.
Section
5.7 Copyrights and
Trademarks. (a)As soon as practicable (but, in the case of an
item of Product, in no event later than sixty (60) days after the initial
release or broadcast of such item of Product and in the case of a screenplay, in
no event later than five (5) days prior to payment by any Credit Party for any
portion of the cost of the item of Product to be based on such screenplay), to
the extent any Credit Party is or becomes the copyright proprietor thereof or
otherwise acquires a copyrightable interest (other than with respect to rights
in items of Product that are acquired pursuant to (x) any License Agreement
under which the aggregate amount required to be paid in respect of such License
Agreement is less than $1,000,000, (y) any License Agreement with a term of less
than three (3) months or (z) License Agreements under which the aggregate
amounts previously paid to acquire such rights which are allocable to unexpired
license periods are less than $10,000,000 (it being understood that amounts paid
under a License Agreement shall be allocated on a straight line basis over the
relevant license term of such License Agreement), in which instance the
applicable Credit Party shall use prudent business judgment as to whether or not
to register such rights), the applicable Credit Party shall notify the Lender
and promptly upon the request of the Lender take any and all actions necessary
to register the copyright for such item of Product or screenplay, in the name of
such Credit Party (subject to a Lien in favor of the Lender) in conformity with
the laws of the United States and such other jurisdictions as the Lender may
reasonably specify, and immediately deliver to the Lender written evidence of
the registration of any and all such copyrights for inclusion in the Collateral
under the Fundamental Documents.
(b) As soon
as practicable after any Credit Party acquires any trademark (other than any
rights which any Credit Party may have in and to the “Hallmark” trademark),
service mark, trade name or service name (other than a domain name), the
applicable Credit Party shall notify the Lender and promptly upon the request of
the Lender take any and all actions necessary to register such trademark,
service mark, trade name or service name (other than a domain name) in the name
of such Credit Party (subject to a Lien in favor of the Lender) in conformity
with the laws of the United States and such other jurisdictions as the Lender
may reasonably specify, and immediately deliver to the Lender: (x) written
evidence of the registration of any and all such trademarks, service marks,
trade names or service names (other than a domain name) for inclusion in the
Collateral; and (y) a Trademark Security Agreement relating to such trademark,
service mark, trade name or service name (other than a domain name), executed by
all of the Credit Parties.
(c) Obtain
instruments of transfer or other documents evidencing the interest of any Credit
Party with respect to the copyright relating to items of Product in which such
Credit Party is not entitled to be the initial copyright proprietor and any
trademark, service mark, trade name or service name which such Credit Party
acquires, and promptly record such instruments of transfer on the United States
Copyright Register or the United States Trademark Register and such other
jurisdictions as the Lender may specify, in each case upon the request of Lender
and to the same extent as would be required under Section 5.7(a)
above.
Section
5.8 Books and
Records. Maintain or cause to be maintained at all times true
and complete books and records of its financial operations and provide the
Lender and its representatives (and each Lender and its representatives during
the continuance of an Event of Default) access to such books and records and to
any of its properties or assets upon reasonable notice and during regular
business hours in order that the Lender may make such audits and examinations
and make abstracts from such books, accounts, records and other papers
pertaining to the Collateral (including, but not limited to, all on and off
balance sheet receivables) and may discuss the affairs, finances and accounts
with, and be advised as to the same by the Credit Parties’ officers and
independent accountants, all as the Lender may deem appropriate for the purpose
of verifying the various reports delivered by any Credit Party to the Lender
pursuant to this Credit Agreement or for otherwise ascertaining compliance with
this Credit Agreement or any Fundamental Document.
Section
5.9 Observance of
Agreements. Duly observe and perform in all material respects
all the terms and conditions of all material agreements with respect to the
distribution and/or exploitation of items of Product and diligently protect and
enforce the rights of the Credit Party under all such agreements in a manner
consistent with prudent business judgment and subject to the terms and
conditions of such agreements.
Section
5.10 Laboratories; No
Removal. (a)To the extent any Credit Party has control over or
rights to receive any of the Physical Materials relating to any item of Product,
deliver or cause to be delivered to a Laboratory or Laboratories all negative
and preprint material, master tapes and all sound track materials with respect
to each such item of Product and deliver to the Lender a fully executed
Pledgeholder Agreement with respect to such materials. To the extent
that any Credit Party has only rights of access to preprint material or master
tapes and has not created duplicate materials sufficient to exploit its rights
and has not stored such duplicate materials at a Laboratory that has delivered a
Pledgeholder Agreement to the Lender, then the Credit Parties will deliver to
the Lender a fully executed Laboratory Access Letter covering such
materials. Prior to requesting any Laboratory to deliver such
negative or other preprint or sound track material or master tapes to another
Laboratory, any such Credit Party shall provide the Lender with a Pledgeholder
Agreement or Laboratory Access Letter, as appropriate, executed by such other
Laboratory and all other parties to such Pledgeholder Agreement (including the
Lender). Without the consent of the Lender, no Credit Party shall
deliver or remove or cause the delivery or removal of the original negative and
film or sound materials or master tapes with respect to any item of Product
owned by such Credit Party or in which such Credit Party has an interest (i) to
a location outside the United States or (ii) to any state or jurisdiction where
UCC-1 financing statements are not effective against such Credit
Party.
(b) With
respect to items of Product acquired after the Closing Date, on at least a
quarterly basis, deliver to the Lender and the Laboratories which are
signatories to Pledgeholder Agreements a revised schedule of Product on deposit
with such Laboratories.
Section
5.11 Taxes and Charges in
Ordinary Course of Business. Duly pay and discharge, or cause
to be paid and discharged, before the same shall become in arrears, all taxes,
assessments, levies and other governmental charges, imposed upon any Credit
Party or its properties, sales and activities, or any part thereof, or upon the
income or profits therefrom, over which such Credit Party has control, as well
as all claims for labor, materials, or supplies which if unpaid could reasonably
be expected to become by law a Lien upon any property of a Credit Party;
provided, however, that any such tax, assessment, charge, levy or claim need not
be paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower shall have set aside on its
books reserves (the presentation of which is segregated to the extent required
by GAAP) adequate with respect thereto if reserves shall be deemed necessary;
and provided, further, that such Credit Party will pay all such taxes,
assessments, levies or other governmental charges forthwith upon the
commencement of proceedings to foreclose any Lien which may have attached as
security therefor. The Credit Parties will pay when due, or in
conformance with customary trade terms, all other obligations (other than
Indebtedness) incident to their respective operations.
Section
5.12 Liens. Defend
the Collateral to the extent commercially reasonable against any and all Liens
howsoever arising, other than Permitted Encumbrances and in any event defend
against any attempted foreclosure.
Section
5.13 ERISA Compliance and
Reports. Furnish to the Lender (i) as soon as possible, and in
any event within thirty (30) days after any Executive Officer of a Credit Party
has knowledge that (A) any Reportable Event with respect to any Plan or
Multiemployer Plan has occurred, a statement of an Executive Officer of the
Credit Party setting forth on behalf of such Credit Party details as to such
Reportable Event and the action which it proposes to take with respect thereto,
together with a copy of the notice, if any, required to be filed of such
Reportable Event given to the PBGC, (B) (v) any Plan fails to satisfy the
minimum funding standards (within the meaning set forth in section 302(a) of
ERISA or section 412(a) of the Code (whether or not waived)) or an application
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard with respect to a Plan, (w) a Plan or Multiemployer
Plan has been or is proposed to be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA, (x) proceedings have been instituted
to terminate a Plan if such Plan is subject to Title IV of ERISA, (y) a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Multiemployer Plan, or (z) any Credit Party or
ERISA Affiliate will incur any liability (including any contingent or secondary
liability) to or on account of the termination of or withdrawal from a Plan
subject to Title IV of ERISA or Multiemployer Plan under Sections 4062, 4063,
4201 or 4204 of ERISA, a statement of an Executive Officer of the Credit Party,
setting forth details as to such event and the action the applicable Credit
Party proposes to take with respect thereto, (ii) promptly upon reasonable
request of the Lender, copies of each annual and other report with respect to
each Plan, (iii) promptly after receipt thereof, a copy of any notice any Credit
Party or ERISA Affiliate may receive from the PBGC relating to the PBGC’s
intention to terminate any Plan subject to Title IV of ERISA or to appoint a
trustee to administer any Plan subject to Title IV of ERISA, and (iv) promptly
after receipt thereof, a copy of any correspondence received by any Credit Party
or ERISA Affiliate from any Multiemployer Plan (or its trustee or
administrator).
Section
5.14 Subsidiaries. Immediately
(i) cause each entity which hereafter becomes a Subsidiary, to become a
Subsidiary Guarantor, to be jointly and severally liable for the Obligations and
to become a party to the other Fundamental Documents, as appropriate, with the
same obligations and responsibilities under this Agreement and the other
Fundamental Documents as if it had originally executed this Agreement and the
other Fundamental Documents, by delivering to the Lender, a joinder agreement,
in form and substance acceptable to Lender, duly executed by such Subsidiary and
(ii) deliver to the Lender certificates evidencing all of the stock or other
ownership interest of the Subsidiary referred to in the preceding clause (i)
(which stock has been pledged to the Lender pursuant to the Pledge Agreement)
together with undated stock powers executed in blank for such certificates (or
such other documents necessary to replace a member of a Subsidiary that is a
limited liability company) and organizational documents to the extent set forth
in Section 4.1 hereof, and, upon request, written opinions of counsel in form
and substance satisfactory to the Lender.
Section
5.15 Environmental
Laws. (a)Promptly notify the Lender upon any Executive Officer
becoming aware of any violation or potential violation or non-compliance with,
or liability or potential liability under any Environmental Laws which, when
taken together with all other pending violations could reasonably be expected to
have a Material Adverse Effect, and promptly furnish to the Lender all notices
of any nature which any Credit Party or any Subsidiary may receive from any
Governmental Authority or other Person with respect to any violation, or
potential violation or non-compliance with, or liability or potential liability
under any Environmental Laws which, in any case or when taken together with all
such other notices, could reasonably be expected to have a Material Adverse
Effect.
(b) Comply in
all material respects with and use commercially reasonable efforts to ensure
compliance in all material respects by all tenants and subtenants with all
Environmental Laws, and obtain and comply in all material respects with and
maintain and use reasonable efforts to ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain any and all
licenses, approvals, registrations or permits required by Environmental
Laws.
(c) Conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under all Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities. Any order or directive whose
lawfulness is being contested in good faith by appropriate proceedings shall be
considered a lawful order or directive when such proceedings, including any
judicial review of such proceedings, have been finally concluded by the issuance
of a final non-appealable order; provided, however, that the appropriate Credit
Party shall have set aside on its books reserves (the presentation of which is
segregated to the extent required by GAAP) adequate with respect thereto if
reserves shall be deemed necessary.
(d) Defend,
indemnify and hold harmless the Lender, and its respective employees, agents,
officers and directors, from and against any claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, known or unknown, contingent or otherwise, arising out of, or in any way
related to the violation of or non-compliance by any Credit Party with any
Environmental Laws, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable external
attorney and consultant fees, investigation and laboratory fees, court costs and
litigation expenses, but excluding therefrom all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses arising out of or
resulting from (i) the gross negligence or willful misconduct of any indemnified
party or (ii) any acts or omissions of any indemnified party occurring after any
indemnified party is in possession of, or controls the operation of, any
property or asset.
Section
5.16 Further Assurances; Security
Interests. (a)Upon the request of the Lender, duly execute and
deliver, or cause to be duly executed and delivered, at the cost and expense of
the Borrower, such further instruments as may be necessary or proper, in the
reasonable judgment of the Lender, to provide the Lender a perfected Lien in the
Collateral and to carry out the provisions and purposes of this Agreement and
the other Fundamental Documents.
(b) Upon the
request of the Lender, promptly perform or cause to be performed any and all
acts and execute or cause to be executed any and all documents (including,
without limitation, the execution, amendment or supplementation of any financing
statement and continuation statement or other statement) for filing under the
provisions of the UCC and the rules and regulations thereunder, or any other
statute, rule or regulation of any applicable foreign, federal, state or local
jurisdiction, which are necessary or advisable, from time to time, in order to
grant and maintain in favor of the Lender the security interest in the
Collateral contemplated under the other Fundamental Documents, subject only to
Permitted Encumbrances.
(c) Promptly
undertake to deliver or cause to be delivered to the Lender from time to time
such other documentation, consents, authorizations and approvals in form and
substance satisfactory to the Lender, as the Lender shall deem reasonably
necessary or advisable to perfect or maintain the Liens of the
Lender.
Section
5.17 Bank
Accounts. Provide the Lender with prompt written notice upon
the opening of any bank account other than those listed on Schedule
3.20.
Section
5.18 Credit
Ratings. At the request of the Lender, (a) obtain, at
Borrower’s expense, ratings issued by Moody’s or S&P with respect to the
Term Loans, and/or (b) obtain, at Borrower’s expense, corporate family ratings
issued by Moody’s or S&P.
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6.
|
NEGATIVE
COVENANTS
|
For so
long as any principal of or interest on any Loan or any other Obligation
(whether or not due) shall remain unpaid, each Credit Party will not and will
not permit any of its Subsidiaries, directly or indirectly, to:
Section
6.1 Limitations on
Indebtedness. Incur, create, assume or suffer to exist any
Indebtedness other than:
(i) the
Indebtedness represented under this Agreement, the Notes and the other
Obligations;
(ii) Indebtedness
in respect of secured purchase money financings, including Capital Leases to the
extent permitted under Section 6.10 hereof, not to exceed $30,000,000 at any
time outstanding;
(iii) ordinary
trade payables which are not yet due and payable and are not the result of a
transaction which is essentially the borrowing of money;
(iv) Indebtedness
by any Credit Party to any other Credit Party to the extent not otherwise
prohibited by this Section 6.1;
(v) existing
Indebtedness listed on Schedule 3.16 hereto but no increases
thereof;
(vi) a
revolving credit facility providing for up to $30,000,000 of borrowings (the
“Revolving Credit Agreement”), provided that such Revolving Credit Agreement is
on terms and conditions satisfactory to the Lender;
(vii) the
Series A Preferred Stock (to the extent classified as Indebtedness under GAAP)
and any refinancing thereof; and
(viii) the
refinancing of existing Indebtedness listed on Schedule 3.16 hereto in an amount
equal to the principal amount plus accrued and unpaid interest and related
transaction fees, along with the repurchase or redemption of the Series A
Preferred Stock.
Section
6.2 Limitations on
Liens. Incur, create, assume or suffer to exist any Lien on
any of the Collateral, whether now owned or hereafter acquired,
except:
(i) with
regard to all items of Product, Liens pursuant to written security agreements
(in form and substance acceptable to the Lender) in favor of guilds as required
pursuant to terms of collective bargaining agreements, which Liens are (A)
subordinated or junior to the claims of the Lender hereunder pursuant to
documentation that is satisfactory in form and substance to the Lender or (B) on
terms otherwise acceptable to the Lender;
(ii) deposits
under workers’ compensation, unemployment insurance and social security laws or
to secure statutory obligations or surety or appeal bonds or performance or
other similar bonds in the ordinary course of business (other than completion
bonds);
(iii) statutory
Liens of landlords, banks (and rights of set-off), of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed by law
(other than any such Lien imposed pursuant to Section 401(a)(29) or 430(k) of
the Internal Revenue Code or by ERISA), in each case incurred in the ordinary
course of business (i) for amounts not yet overdue or (ii) for amounts that are
overdue and that (in the case of any such amounts overdue for a period in excess
of five days) are being contested in good faith by appropriate proceedings, so
long as such reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made for any such contested
amounts;
(iv) purported
Liens evidenced by the filing of precautionary UCC financing statements relating
solely to operating leases or consignments of personal property entered into in
the ordinary course of business;
(v) Liens for
taxes, assessments or other governmental charges or levies due and payable, the
validity or amount of which is currently being contested in good faith by
appropriate proceedings pursuant to the terms of Section 5.11
hereof;
(vi) Liens
customarily granted or incurred in the ordinary course of business to secure
payment for services rendered by laboratories and production houses and
suppliers of materials and equipment;
(vii) mechanic’s
liens and Liens in connection with secured purchase money financings to the
extent permitted in Section 6.1(ii) hereof;
(viii) possessory
Liens other than on Product or physical properties of Product (other than of
laboratories and production houses) which (a) occur in the ordinary course of
business, (b) secure normal trade debt which is not yet due and payable, (c) do
not secure Indebtedness for borrowed money and (d) do not defer payment terms
beyond one hundred and eighty (180) days;
(ix) Liens
arising out of attachments, judgments or awards as to which an appeal or other
appropriate proceedings for contest or review are promptly commenced (and as to
which foreclosure and other enforcement proceedings (a) shall not have been
commenced (unless fully bonded or otherwise effectively stayed) or (b) in any
event shall be promptly fully bonded or otherwise effectively
stayed);
(x) Liens
arising from zoning restrictions or easements;
(xi) the Liens
of the Lender under the Fundamental Documents and other documents contemplated
hereby;
(xii) the Lien
granted by the Borrower which secures the Indebtedness referred to in Section
6.1(vi); and
(xiii) existing
Liens listed on Schedule 3.16 hereto; provided, however, that, without the
consent of the Lender, any Indebtedness secured by any such Lien may not be
increased, extended or renewed and such Lien may not extend to any other
property of the Credit Party.
Section
6.3 Guaranties. Incur,
create, assume or suffer to exist any Guaranty, either directly or indirectly,
or otherwise in any way become responsible for any Indebtedness (including
working capital maintenance, pay-or-play contracts or other similar obligations)
of any other Person (other than another Credit Party), contingently or
otherwise, except (i) for the endorsement of negotiable instruments by a Credit
Party in the ordinary course of business, (ii) for Guaranties which would
constitute investments in items of Product not otherwise prohibited hereunder,
(iii) for existing Guaranties listed on Schedule 3.16 hereto and (iv) as
permitted in Section 6.1 hereof.
Section
6.4 Limitations on
Investments. Make any Investment (including any loans to any
shareholder or other Affiliate of the Borrower) except:
(i) purchases
of Cash Equivalents;
(ii) travel
advances in the ordinary course of business to employees and/or
officers;
(iii) additional
Investments not in excess of $5,000,000 in the aggregate in entities which are
not wholly-owned Subsidiaries; and
(iv) intercompany
advances from the Borrower or any Subsidiary Guarantor to a Subsidiary Guarantor
or from any Subsidiary Guarantor to the Borrower.
Section
6.5 Restricted
Payments. Pay or declare or enter into any agreement to pay or
otherwise become obligated to make any Restricted Payments other
than:
(i) stock
dividends paid solely in shares of stock of the Borrower;
(ii) payments
by a Credit Party to another Credit Party;
(iii) payments
to Hallmark Cards, Incorporated or an Affiliate pursuant to the terms of one or
more service agreement(s); provided that such service agreement(s) shall be in
form and substance acceptable to the Lender; and
(iv) issuance
of common stock for or upon conversion of preferred stock of the
Borrower;
(v) payment
of the NICC Preferred Interest; and
(vi) so long
as no Default has occurred and is continuing, payments of dividends on Series A
Preferred Stock issued pursuant to the Master Recapitalization
Agreement.
Section
6.6 Limitations on Sale of
Assets. Sell, lease, license, transfer or otherwise dispose
of:
(i) items of
Product other than in the ordinary course of business, provided that the Credit
Parties shall not be entitled to sell, transfer or alienate their entire right,
title or interest in and to items of Product with an aggregate value in excess
of $5,000,000; and
(ii) any of
the channels owned or operated by a Credit Party (or any Subsidiary thereof),
whether directly (e.g., by way of an outright sale or other disposition of the
Credit Party’s rights as owner or operator) or indirectly (e.g., by selling,
assigning or otherwise transferring the Credit Party’s rights in any Platform
Agreement), provided that a Credit Party shall at all times be entitled to
dispose of some or all of its rights as owner or operator of a channel in a
territory to the extent such disposition is required (x) by Applicable Law in
the territory in which the channel is available or (y) in order to comply with
local practices and/or customs in the relevant territory relating to the
ownership or operation of channels by non-residents; and
(iii) any other
property of the Credit Parties, other than dispositions made in the ordinary
course of business involving property with an aggregate fair market value at the
time of disposition of less than $100,000.
The
limitation contained in clause (ii) of the preceding sentence shall not limit
the rights of the Credit Parties to shut down existing operations they believe
to be no longer financially beneficial or to acquire the ownership of, or rights
to operate, channels in new territories, or to expand existing channels into new
territories, through joint ventures or such other arrangements as may be
otherwise permitted by the terms of this Agreement, provided that any
disposition of such rights and interests (once so acquired) may only be made in
compliance with the terms of clause (ii) of the preceding sentence.
Section
6.7 Receivables. Sell,
discount or otherwise dispose of notes, accounts receivable or other obligations
owing to a Credit Party except for the purpose of collection in the ordinary
course of business.
Section
6.8 Tax Shelters, Sale and
Leaseback etc. Enter into any arrangement with any Person or
Persons other than a Credit Party, whereby in contemporaneous transactions a
Credit Party sells essentially all of its right, title and interest in an item
of Product or upon which an item of Product is based and acquires or licenses
the right to distribute or exploit such item of Product in media and markets
accounting for substantially all the value of such item of Product; except on
terms customary in the entertainment industry and subject to the Lender’s
approval.
Section
6.9 Places of Business; Change
of Name. Change the location of any of the offices where it
keeps its books and records with respect to the Collateral or change its name or
the jurisdiction or form of its organization without (i) giving the Lender
thirty (30) days prior written notice of such change and (ii) filing any
additional Uniform Commercial Code financing statements, and such other
documents requested by the Lender or which are otherwise necessary or desirable,
to continue the first priority perfected security interest of the Lender in the
Collateral, subject only to the Permitted Encumbrances.
Section
6.10 Limitations on Capital
Expenditures. Make or incur any obligation to make Capital
Expenditures in excess of $10,000,000 for fiscal year 2010, $5,000,000 for
fiscal year 2011, $5,000,000 for fiscal year 2012 and $5,000,000 for fiscal year
2013; provided, however, that in any fiscal year in which the Capital
Expenditures do not meet the threshold Capital Expenditure amount for such
fiscal year, the excess of such Capital Expenditures may be carried into the
next following fiscal year.
Section
6.11 Transactions with
Affiliates. Except if expressly permitted under the terms of
this Agreement, effect any transaction with an Affiliate on a basis less
favorable to a Credit Party than would have been the case if such transaction
had been effected at arms-length with a Person other than an
Affiliate.
Section
6.12 Amendments and
Waivers. Amend, alter, modify, or waive, or consent to any
amendment, alteration, modification or waiver of, any material agreement to
which any Credit Party is a party or enter into or agree to enter into any
material agreement, (a) in any case in such a manner as could be reasonably
expected to be materially adverse to the Lender without the prior written
consent of the Lender, which consent shall not be unreasonably withheld and (b)
without providing prior written notice to the Lender of any proposal to amend,
alter, modify, or waive, or to consent to any amendment, alteration,
modification or waiver of, any material agreement, regardless of the potential
impact on the Lender.
Section
6.13 No Negative
Pledge. Except with respect to (a) specific property to be
sold pursuant to an executed agreement with respect to a permitted sale of
assets, (b) the Revolving Credit Agreement and the Fundamental Documents in
effect on the Closing Date, (c) restrictions imposed by law, (d) restrictions
contained in agreements for or instruments evidencing Indebtedness existing on
the date hereof and listed on Schedule 3.16, (e) restrictions contained in
agreements or instruments assumed or acquired in connection with a permitted
acquisition (in which case any such prohibition or limitation shall apply only
to the assets acquired in such acquisition), (f) restrictions contained in
agreements for or instruments evidencing Indebtedness permitted to be secured
under Section 6.1(ii) (in which case any such prohibition or limitation shall
only apply to the assets subject to the applicable permitted Lien), and (g)
restrictions by reason of customary provisions restricting assignments,
subletting or other transfers contained in leases, licenses and similar
agreements entered into in the ordinary course of business (provided that such
restrictions are limited to the property or assets secured by such Liens or the
property or assets subject to such leases, licenses or similar agreements, as
the case may be), enter into any agreement after the date hereof which prohibits
the creation or assumption of any Lien upon the properties or assets of any
Credit Party, whether now owned or hereafter acquired, or requiring an
obligation to be secured if some other obligation is secured.
Section
6.14 Acquisitions or Mergers,
etc. Merge into or consolidate with a Person or acquire
substantially all the assets of another Person, other than (i) so long as there
would not exist any Default or Event of Default hereunder or as a result
thereof, any acquisition the consideration for which does not include cash and
in which a Credit Party shall be the surviving entity and (ii) the merger of any
Subsidiary Guarantor with any other Subsidiary Guarantor or with the Borrower,
provided that in the case of the Borrower, the Borrower is the surviving entity.
For the avoidance of doubt, the merger of Hallmark Entertainment Holdings, Inc
and Hallmark Entertainment Investments Co. with and into the Borrower, on or
prior to the Closing Date, shall be permitted by this Section 6.14.
Section
6.15 Change in
Business. Engage in any business activity other than (i)
activities incident and related to the acquisition, distribution and licensing
of Product; (ii) the operation of television channels or other activities
incident thereto; or (iii) the development and operation of the interactive
television business.
Section
6.16 ERISA
Compliance. Engage in a “prohibited transaction,” as defined
in Section 406 of ERISA or Section 4975 of the Code, with respect to any Plan or
Multiemployer Plan or knowingly consent to any other “party in interest” or any
“disqualified person,” as such terms are defined in Section 3(14) or ERISA and
Section 4975(e)(2) of the Code, respectively, engaging in any “prohibited
transaction,” with respect to any Plan or Multiemployer Plan; or permit any Plan
to fail to satisfy any minimum funding standard set forth in Section 302 of
ERISA or Section 412 of the Code (whether or not waived); or terminate any Plan
subject to Title IV of ERISA in a manner which could result in the imposition of
a Lien on any property of any Credit Party pursuant to Section 4068 of ERISA; or
breach or knowingly permit any employee or officer or any trustee or
administrator of any Plan to breach any fiduciary responsibility imposed under
Title I of ERISA with respect to any Plan; engage in any transaction which would
result in the incurrence of a liability under Section 4069 of ERISA; or permit
any Reportable Event to occur with respect to any Plan; or fail to make
contributions to a Plan or Multiemployer Plan which could result in the
imposition of a Lien on any property of any Credit Party pursuant to Section
302(f) of ERISA or Section 412(n) of the Code, if the occurrence of any of the
foregoing events (alone or in the aggregate) could result in a liability which
has a Material Adverse Effect.
Section
6.17 Interest Rate Protection
Agreements, etc. Enter into any Interest Rate Protection
Agreement or Currency Agreement for other than bona fide hedging
purposes.
Section
6.18 Subsidiaries. Acquire
or create any new direct or indirect Subsidiary; provided, however, that a
Credit Party may organize additional Subsidiaries under the laws of the United
States, any state thereof or the District of Columbia if (a) each such
Subsidiary executes a joinder agreement in form and substance satisfactory to
the Lender whereby such Subsidiary becomes a Credit Party hereunder, (b) such
Subsidiary grants a first priority Lien, subject only to the Permitted
Encumbrances, to the Lender on substantially all of its assets to secure the
Obligations with respect to such Subsidiary Guaranty in form and substance
satisfactory to the Lender, and (c) the certificates representing 100% of the
shares of capital stock or other Equity Interests of such Subsidiary held by
such Credit Party become part of the pledged securities under the terms of the
Pledge Agreement and are delivered to the Lender together with stock powers for
each such certificate or such other documents that are necessary providing for
the transfer of a membership interest of a Subsidiary that is an
LLC.
Section
6.19 Hazardous
Materials. Cause or permit any of its properties or assets to
be used to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process Hazardous Materials, except in compliance
in all material respects with all applicable Environmental Laws, nor release,
discharge, dispose of or permit or suffer any release or disposal as a result of
any intentional act or omission on its part of Hazardous Materials onto any such
property or asset in material violation of any Environmental Law.
Section
6.20 Cash Interest Coverage
Ratio. Permit the Cash Interest Coverage Ratio of the Borrower
and its Consolidated Subsidiaries, as at the end of each fiscal quarter
(commencing with the first full fiscal quarter after the Closing Date) to be
less than 2.0:1.0.
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7.
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EVENTS
OF DEFAULT
|
In the
case of the happening and during the continuance of any of the following events
(herein called “Events
of Default”):
(a) any
representation or warranty made by any Credit Party in this Credit Agreement or
in any other Fundamental Document or any statement or representation made by any
Credit Party in any report, financial statements, certificate or other document
furnished by or on behalf of any Credit Parties to the Lender pursuant to this
Credit Agreement or any other Fundamental Document, shall prove to have been
false or misleading in any material respect when made or delivered;
(b) default
shall be made in the payment of any principal of or interest on the Loans or of
any fees or other amounts payable by the Borrower hereunder, when and as the
same shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or otherwise, and, in
the case of payments of interest, such default shall continue unremedied for
five (5) days after receipt by the Borrower of an invoice therefor;
(c) default
shall be made by any Credit Party in the due observance or performance of any
covenant, condition or agreement contained in Section 5.4, Section 8.1(b) or
Article 6 of this Agreement;
(d) default
shall be made by any Credit Party in the due observance or performance of any
other covenant, condition or agreement to be observed or performed pursuant to
the terms of this Agreement, or any other Fundamental Document and such default
shall continue unremedied for thirty (30) consecutive days after any Credit
Party obtains knowledge thereof or receives written notice from the Lender
thereof;
(e) default
shall be made with respect to any Indebtedness of any Credit Party in excess of
$1,000,000 when due or the performance of any other obligation incurred in
connection with any such Indebtedness, if the effect of such default is to
accelerate the maturity of such Indebtedness or to permit the holder thereof to
cause such Indebtedness to become due prior to its stated maturity and such
default shall not be remedied, cured, waived or consented to within the period
of grace with respect thereto;
(f) any
Credit Party shall generally not pay its debts as they become due or shall admit
in writing its inability to pay its debts, or shall make a general assignment
for the benefit of creditors; or any such Person shall commence any case,
proceeding or other action seeking to have an order for relief entered on its
behalf or to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
debts under any law relating to bankruptcy, insolvency, reorganization or relief
of such Person or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property or
shall file an answer or other pleading in any such case, proceeding or other
action admitting the material allegations of any petition, complaint or similar
pleading filed against it or consenting to the relief sought therein; or any
such Person shall take any action to authorize any of the
foregoing;
(g) any
involuntary case, proceeding or other action against any Credit Party shall be
commenced seeking to have an order for relief entered against it or to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of such Person,
or seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its property, and such
case, proceeding or other action (i) results in the entry of any order for
relief against it or (ii) shall remain undismissed for a period of sixty (60)
days;
(h) final
judgment(s) for the payment of money in excess of $1,000,000 shall be rendered
in the aggregate against any Credit Party which within thirty (30) days from the
entry of such judgment shall not have been discharged or stayed pending appeal
or which shall not have been discharged within thirty (30) days from the entry
of a final order of affirmance on appeal;
(i) this
Credit Agreement, the Revolving Credit Agreement, or any other Fundamental
Document shall, for any reason, not be or shall cease to be in full force and
effect or shall be declared null and void or any of the Fundamental Documents
shall not give or shall cease to give the Lender the Liens, rights, powers and
privileges purported to be created thereby in favor of the Lender, superior to
and prior to the rights of all third Persons and subject to no other Liens
(other than Permitted Encumbrances), or the validity or enforceability of the
Liens granted, to be granted, or purported to be granted, by any of the
Fundamental Documents shall be contested by any Credit Party or any of their
respective Affiliates;
(j) (i) any
Credit Party or ERISA Affiliate shall fail to make any contributions required to
be made to a Plan subject to Title IV of ERISA or Multiemployer Plan, (ii) any
Plan fails to satisfy the minimum funding standards set forth in section 302(a)
of ERISA or section 412(a) of the Code (whether or not waived) or an application
shall have been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standards (including any required
installment payments), (iii) any Credit Party or ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal
liability to such Multiemployer Plan, or that a Multiemployer Plan is in
reorganization or is being terminated, (iv) a Reportable Event with respect to a
Plan shall have occurred, (v) any Credit Party or ERISA Affiliate shall withdraw
from a Plan during a plan year in which it was a substantial employer (within
the meaning of section 4001(a)(2) or 4062(e) of ERISA), (vi) a Plan subject to
Title IV of ERISA shall be terminated, or notice of intent to terminate a Plan
under section 4041(c) of ERISA shall be filed, (vii) proceedings to terminate, a
Plan subject to Title IV of ERISA shall be instituted by the PBGC or a trustee
shall be appointed with respect to any such Plan, (viii) any other event or
condition which could constitute grounds under section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan subject
to Title IV of ERISA shall occur, or (ix) a Lien pursuant to section 412 of the
Code or section 302 of ERISA shall be imposed as to any Credit Party or ERISA
Affiliate;
(k) default
shall be made with respect to the NICC Preferred Interest under the Crown Media
United States, LLC limited liability company agreement, and such default shall
not be remedied, cured, waived or consented to within the period of grace with
respect thereto;
(l) any
demand for payment is made pursuant to the Hallmark Guaranty;
then, in
every such event and at any time thereafter during the continuance of such
event, the Lender may, take any or all of the following actions, at the same or
different times: (x) declare the principal of and the interest on the
Loans and the Notes and all other amounts payable hereunder or thereunder to be
forthwith due and payable, whereupon the same shall become and be forthwith due
and payable, without presentment, demand, protest, or other notice of any kind,
all of which are hereby expressly waived, anything in this Agreement or in the
Notes to the contrary notwithstanding. If an Event of Default
specified in paragraphs (f) or (g) above shall have occurred, the Notes and all
other amounts payable hereunder and thereunder shall automatically become due
and payable, without presentment, demand, protest, or other notice of any kind,
all of which are hereby expressly waived, anything in this Credit Agreement or
the Notes to the contrary notwithstanding. Such remedies shall be in
addition to any other remedy available to the Lender pursuant to Applicable Law
or otherwise.
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8.
|
NICC
RESERVE ACCOUNT
|
Section
8.1 NICC Reserve
Account. (a)On or prior to the Closing Date, the Borrower
shall establish with a financial institution satisfactory to Lender, the NICC
Reserve Account in the name of the Borrower (the “NICC Reserve
Account”). The Borrower may deposit into the NICC Reserve
Account such amounts as it may choose as a sinking fund with respect to the NICC
Preferred Interest.
(b) Amounts
deposited by the Borrower shall not be withdrawn by the Borrower from the NICC
Reserve Account, except that so long as no Default has occurred and is
continuing, the Borrower may withdraw funds sufficient to make scheduled
payments with respect to the NICC Preferred Interest.
(c) The
Borrower agrees that at no time shall the amount (including, for the avoidance
of doubt, any interest) standing to the credit of the NICC Reserve Account
exceed $25,000,000.
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9.
|
MISCELLANEOUS
|
Section
9.1 Notices. Notices
and other communications provided for herein shall be in writing and shall be
delivered or mailed (or in the case of telegraphic communication, if by
telegram, delivered to the telegraph company and, if by telex, graphic scanning
or other telegraphic or facsimile communications equipment of the sending party
hereto, delivered by such equipment) addressed, if to the Lender, to Hallmark
Cards, Inc., 2501 McGee, Mail Drop 342, Kansas City, MO 64108,
Attention: Chief Financial Officer, with a copy to Willkie Farr & Gallagher
LLP, 787 Seventh Avenue, New York, New York 10019, Attention: Maurice M.
Lefkort, Facsimile No. (212) 728-8111 and if to the Borrower, to Crown Media
Holdings, Inc., 1325 Avenue of the Americas, 22nd Floor, New York, New York
10019, Attention: Chief Executive Officer, with a copy to Crown Media Holdings,
Inc. 12700 Ventura Blvd., Studio City, California 91604, Attention: Chief
Financial Officer and with a copy to Crown Media Holdings, Inc. 12700 Ventura
Blvd., Studio City, California 91604, Attention: General Counsel, or such other
address as such party may from time to time designate by giving written notice
to the other parties hereunder. Any failure of the Lender giving
notice pursuant to this Section 9.1 shall not affect the validity of such
notice. All notices and other communications given to any party
hereto in accordance with the provisions of this Agreement shall be deemed to
have been given on the fifth (5th)
Business Day after the date when sent by registered or certified mail, postage
prepaid, return receipt requested, if by mail, or when delivered to the
telegraph company, charges prepaid, if by telegram, or when receipt is
acknowledged, if by any telegraphic or facsimile communications equipment of the
sender, in each case addressed to such party as provided in this Section 9.1 in
accordance with the latest unrevoked written direction from such
party.
Section
9.2 Survival of Agreement,
Representations and Warranties, etc. All warranties,
representations and covenants made by any of the Credit Parties herein or in any
other Fundamental Document or in any certificate or other instrument delivered
in connection with this Credit Agreement or any other Fundamental Document shall
be considered to have been relied upon by the Lender except for any
terminations, amendments, modifications or waivers thereof in accordance with
the terms hereof, and shall survive the deemed making of the Loans herein
contemplated and the issuance and delivery to the Lender of the Notes regardless
of any investigation made by the Lender and shall continue in full force and
effect so long as any Obligation is outstanding and unpaid. All
statements in any such certificate or other instrument shall constitute
representations and warranties by the Credit Party hereunder.
Section
9.3 Expenses; Documentary
Taxes. Whether or not the transactions hereby contemplated
shall be consummated, the Borrower agrees to pay (a) all reasonable
out-of-pocket expenses incurred by the Lender in connection with, or growing out
of, the performance of due diligence, the negotiation, preparation, execution,
delivery, waiver or modification and administration of this Credit Agreement and
any other documentation contemplated hereby, the deemed making of the Loans, the
Collateral or any Fundamental Document, including, but not limited to, the
reasonable out-of-pocket costs and internally allocated charges of audit or
field examinations of the Lender in connection with the administration of this
Credit Agreement, the verification of financial data and the transactions
contemplated hereby, and (b) all reasonable out-of-pocket expenses incurred by
the Lender in the enforcement or protection of the rights and remedies of the
Lender in connection with this Credit Agreement, the other Fundamental
Documents, or the Notes, or as a result of any transaction, action or non-action
arising from any of the foregoing. Such payments shall be made on the
date this Credit Agreement is executed by the Borrower and thereafter on
demand. The Borrower agrees that it shall indemnify the Lender from
and hold them harmless against any documentary taxes, assessments or charges
made by any Governmental Authority by reason of the execution and delivery of
this Credit Agreement or the Notes or the other Fundamental
Documents. The obligations of the Borrower under this Section shall
survive the termination of this Credit Agreement and the payment of the
Loans.
Section
9.4 Indemnification of the
Lender. The Borrower agrees (a) to indemnify and hold harmless
the Lender, in its capacity as such, and the directors, officers,
employees, trustees, agents and affiliates of the Lender, in their capacity as
such (each, an “Indemnified Party”)
(to the full extent permitted by Applicable Law) from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever nature, and (b) to pay to the Indemnified Parties an
amount equal to the amount of all costs and expenses, including reasonable legal
fees and disbursements, and with regard to both (a) and (b) growing out of or
resulting from any litigation, investigation or other proceedings relating to
the Collateral, this Credit Agreement, the other Fundamental Documents, the
Loans deemed to be made under this Agreement, any attempt to audit, inspect,
protect or sell the Collateral, or the administration and enforcement or
exercise of any right or remedy granted to the Lender hereunder excluding
therefrom all claims, demands, losses, judgments, liabilities, costs and
expenses to be found by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnified Party. The foregoing indemnity
agreement includes any reasonable costs incurred by any Indemnified Party in
connection with any action or proceeding which may be instituted in respect of
the foregoing by any Indemnified Party, or by any other Person either against
any Indemnified Party or in connection with which any officer, director, agent
or employee of any Indemnified Party is called as a witness or deponent,
including, but not limited to, the reasonable fees and disbursements of Willkie
Farr & Gallagher LLP, counsel to the Lender, and any out-of-pocket costs
incurred by any Indemnified Party in appearing as a witness or in otherwise
complying with legal process served upon them.
Section
9.5 CHOICE OF
LAW. THIS AGREEMENT AND THE OTHER FUNDAMENTAL DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). THE BORROWER AND
EACH OTHER CREDIT PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF EITHER THE COURTS OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY, THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK, THE COURTS OF THE STATE OF DELAWARE SITTING IN
NEW CASTLE COUNTY DELAWARE OR OF THE UNITED STATES DISTRICT COURT OF THE
DISTRICT OF DELAWARE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FUNDAMENTAL
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT, THE DELAWARE STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN
ANY OTHER FUNDAMENTAL DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER FUNDAMENTAL DOCUMENT AGAINST THE BORROWER OR ANY OTHER CREDIT PARTY OR
ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
Section
9.6 WAIVER OF JURY
TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FUNDAMENTAL
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
Section
9.7 WAIVER WITH RESPECT TO
DAMAGES AND VENUE. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NO CREDIT PARTY SHALL ASSERT, AND EACH CREDIT PARTY HEREBY WAIVES, ANY CLAIMS
AGAINST THE LENDER, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS CREDIT AGREEMENT,
ANY OTHER FUNDAMENTAL DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY
OR THEREBY, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE
BORROWER AND EACH OTHER CREDIT PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENT IN ANY COURT
REFERRED TO IN SECTION 9.5. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.
Section
9.8 No
Waiver. No failure on the part of the Lender to exercise, and
no delay in exercising, any right, power or remedy hereunder, under the Notes or
any other Fundamental Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not exclusive
of any other remedies provided by law.
Section
9.9 Extension of Payment
Date. Except as otherwise specifically provided in Article 2
hereof, should any payment or prepayment of principal of or interest on the
Notes or any other amount due hereunder, become due and payable on a day other
than a Business Day, the due date of such payment or prepayment shall be
extended to the next succeeding Business Day and, in the case of a payment or
prepayment of principal, interest shall be payable thereon at the rate herein
specified during such extension.
Section
9.10 Amendments,
etc. No modification, amendment or waiver of any provision of
this Credit Agreement or any other Fundamental Document, and no consent to any
departure by the Borrower or any other Credit Party herefrom or therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Lender and the Borrower and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given.
Section
9.11 Severability. Any
provision of this Credit Agreement or of the Notes which is invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
invalidating the remaining provisions hereof or thereof, and any such
invalidity, illegality or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
Section
9.12 SERVICE OF
PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.1. NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.
Section
9.13 Headings. Section
headings used herein and the Table of Contents are for convenience only and are
not to affect the construction of or be taken into consideration in interpreting
this Credit Agreement.
Section
9.14 Execution in
Counterparts. This Credit Agreement may be executed in any
number of counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same
instrument. Facsimile signatures will be treated as
originals.
Section
9.15 Confidentiality. The
Lender and the Borrower hereby agree that each will use its best efforts to
treat any information obtained from the Credit Parties and their Affiliates in
connection with this Credit Agreement as confidential, except that each of the
Lender and the Borrower shall be permitted to disclose information (i) to their
Affiliates and to their (and their Affiliates’) respective officers, directors,
trustees, employees, agents, auditors, attorneys and representatives (who will
be informed of the confidential nature of the material); (ii) to the extent
provided in the Stockholders Agreement (as such term is defined in the Master
Recapitalization Agreement) and (iii) to the extent required by Applicable Law
or by any subpoena or similar legal process.
Section
9.16 Entire
Agreement. This Credit Agreement (including the Exhibits and
Schedules hereto) and the other Fundamental Documents represent the entire
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between any of the parties
hereto prior to the execution of this Credit Agreement which relate to Loans
deemed to be made shall be replaced by the terms of this Credit
Agreement.
Section
9.17 Right of
Set-Off. Upon the occurrence and during the continuance of any
Event of Default, the Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law and without order of or application
to any court, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Person to or for the credit or the account of any Credit
Party against any and all of the Obligations, irrespective of whether or not
such Person shall have made any demand under any Fundamental Document and
although the Obligations may not have been accelerated. The rights
of the Lender under this Section are in addition to other rights and
remedies which the Lender may have upon the occurrence and during the
continuance of any Event of Default.
Section
9.18 Assignment. The
Lender may at any time assign to one or more assignees all or a portion of its
rights and obligations under this Agreement or any other Fundamental Agreement
(including all or a portion of the Loans at the time owing to it). In
connection with any such assignment, the Borrower and the Lender agree to enter
into an amendment to this Agreement in accordance with Section 9.10 as
appropriate to evidence such assignment. The Borrower may not assign
its rights and obligations under this Agreement or any other Fundamental
Agreement without the prior written consent of the Lender.
Section
9.19 Revolver Intercreditor
Agreement. If at any time the Borrower enters into a Revolving
Credit Agreement, as permitted pursuant to Section 6.1(vi) hereof, the Lender
shall enter into the Intercreditor Agreement in such form as may be required by
the lender or lenders providing the commitments under such Revolving Credit
Agreement. Such Intercreditor Agreement shall be on customary terms,
but in any event shall provide for the subordination of the Liens granted to the
Lender in connection with the Transactions to the Liens on the collateral for
the Revolving Credit Agreement in an amount equal to the commitments of the
lender or lenders providing the commitments under such Revolving Credit
Agreement. The subordination of the Liens granted to the Lender in
connection with the Transactions to the Liens securing the Revolving Credit
Agreement shall affect only the relative priority of those Liens, and does not
subordinate the Obligations owed to the Lender in right of payment to the
obligations under the Revolving Credit Agreement, which obligations shall be
pari passu with the Obligations.
IN
WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be duly
executed as of the day and the year first written.
BORROWER:
CROWN
MEDIA HOLDINGS, INC.
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By:
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Name:
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Title:
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LENDER:
HC CROWN
CORP.
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By:
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Name:
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Title:
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[Signature
Page of Credit Agreement]
5258558.25
CREDIT
PARTIES:
CROWN
MEDIA UNITED STATES, LLC
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By:
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Name:
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Title:
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CM
INTERMEDIARY, LLC
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By:
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Name:
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Title:
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CITI
TEEVEE, LLC
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By:
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Name:
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Title:
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DOONE
CITY PICTURES, LLC
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By:
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Name:
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Title:
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[ADDITIONAL
CREDIT PARTIES]