Exhibit 10.27
AMENDMENT NO. 3 dated as of August 18, 1999 to the Amended
and Restated Credit and Guaranty Agreement dated as of July
9, 1997, as amended and restated as of August 10, 1998,
among ARTISAN PICTURES INC. ("Pictures"), ARTISAN HOME
ENTERTAINMENT INC. ("Home Entertainment"; and together with
Pictures, collectively, the "Borrower"), the Guarantors
named therein, the Lenders referred to therein and THE CHASE
MANHATTAN BANK, as Administrative Agent and as Fronting Bank
for the Lenders (the "Agent") (as the same may be amended,
supplemented or otherwise modified, the "Credit Agreement").
INTRODUCTORY STATEMENT
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The Lenders have made available to the Borrower a credit facility
pursuant to the terms of the Credit Agreement.
Artisan Entertainment Inc. or one of its subsidiaries, together with
other unaffiliated investors, will arrange for the formation of Artisan Film
Investors ("AFI"), an unaffiliated Delaware business trust to be formed solely
for the purpose of acquiring completed theatrical feature films to be
distributed by Pictures, all as described in the Term Sheet attached hereto as
Exhibit A (the "AFI Transaction").
The Borrower, the Guarantors, the Lenders and the Agent have agreed to
amend the Credit Agreement in order to permit Pictures to enter into, and
perform its obligations in connection with, the AFI Transaction, all on the
terms and subject to the conditions hereinafter set forth.
Therefore, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used herein and not
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otherwise defined herein shall have the meaning given them in the Credit
Agreement.
Section 2. Amendments to the Credit Agreement. Subject to the
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satisfaction of the conditions precedent set forth in Section 4 hereof, the
Credit Agreement is hereby amended as of the Effective Date (as hereinafter
defined) as follows:
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(A) Article 1 of the Credit Agreement is hereby amended by adding the
following definition in the appropriate alphabetical sequence:
"AFI" shall mean Artisan Film Investors, a Delaware business trust to
be formed in connection with the AFI Transaction.
"AFI Transaction" shall mean the transaction described in the Term
Sheet attached as Exhibit A to Amendment No. 3 to the Credit
Agreement.
(B) The definitions of "Affiliate" and "Subsidiary" appearing in Article 1
of the Credit Agreement are each hereby amended by adding the following sentence
at the end of each definition:
"For the avoidance of doubt, AFI shall not be deemed to be an
'Affiliate' or a 'Subsidiary' of a Credit Party unless and until such
time that a Credit Party acquires an equity or membership interest in
AFI."
(C) The definition of "Borrowing Base" appearing in Article 1 of the
Credit Agreement is hereby amended to add the following clause at the end of the
existing text:
"(iii) the Borrowing Base shall not include any distribution fees
earned with respect to, or any other component attributable to, any
Picture owned by AFI."
(D) The definition of "Indebtedness" appearing in Article 1 of the Credit
Agreement is hereby amended by adding the following sentence at the end thereof:
"For the avoidance of doubt, the Indebtedness incurred by AFI in
connection with the AFI Transaction shall not be deemed to be
'Indebtedness' of a Credit Party under this Credit Agreement."
(E) The definition of "Off-Balance Sheet Commitments" appearing in Article
1 of the Credit Agreement is hereby amended by adding the following proviso at
the end thereof:
"; provided, further, that with respect to an item of Product for
which Pictures has committed to provide a portion of the production
costs in connection with an item of Product subject to the AFI
Transaction, Off-Balance Sheet Commitments in respect of Pictures'
commitment for such item of Product shall be reduced (but not below
zero) by any amounts in the approved budget of such Product (e.g.
overhead costs and producers' fees) which are payable to Pictures for
its own account.
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(F) Section 6.1 of the Credit Agreement is hereby amended by adding the
following clause (p) at the end thereof:
"(p) Indebtedness incurred by a Credit Party arising from (i) the
theatrical exhibition of "Blair Witch Project" in the United States
and Canada and (ii) prior to the earlier to occur of December 31, 1999
and the closing of the AFI Transaction, the theatrical exhibition of
Pictures other than "Blair Witch Project" in the United States and
Canada; provided that such Indebtedness is non-recourse to any Credit
Party except for customary representations and warranties in form and
substance acceptable to the Administrative Agent and security
interests in the receivables from the exhibition of such Pictures
granted in connection with the incurrence of such Indebtedness."
(G) Section 6.2 of the Credit Agreement is hereby amended by adding the
following clauses (v) and (w) at the end thereof:
"(v) Liens securing the obligations of Pictures and the other Credit
Parties in connection with the AFI Transaction; provided that the
secured party of such Lien shall have entered into an intercreditor
agreement with the Collateral Agent in form and substance satisfactory
to the Administrative Agent; and
"(w) Liens on certain theatrical receivables as contemplated by
Section 6.1(p)."
(H) Section 6.3 of the Credit Agreement is hereby amended by (1) adding
the words ", (vii) Guarantees of the obligations of Pictures under the
AFI Transaction, and" after the word "hereunder" appearing in clause
(vi) therein and (2) changing the reference to the existing clause
(vii) from "(vii") to "(viii)".
(I) Section 6.8 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"SECTION 6.8. Receivables. Sell, discount or otherwise dispose of
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notes, accounts receivable or other obligations owing to any Credit
Party except (i) for the purpose of collection in the ordinary course,
(ii) the factoring on a fully non-recourse basis (except for customary
representations and warranties in form and substance acceptable to the
Administrative Agent) of receivables arising from the theatrical
exhibition of "Blair Witch Project" in the United States and Canada
and (iii) prior to the earlier to occur of December 31, 1999 and the
closing of the AFI Transaction, the factoring on a fully non-recourse
basis (except for customary representations and warranties in form and
substance acceptable to the Administrative Agent) of receivables
arising from the theatrical exhibition of Pictures other than "Blair
Witch Project" in the United States and Canada."
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(J) Section 6.9 of the Credit Agreement is hereby amended by adding the
phrase "Except pursuant to the AFI Transaction," at the beginning of
the existing text.
(K) Section 6.13(a) of the Credit Agreement is hereby amended by adding
the following clause (z) at the end thereof:
"or (z) any term or provision of the AFI Transaction in a manner which
would change or alter any material term of the transaction set forth
on the Term Sheet attached as Exhibit A to Amendment No. 3 to the
Credit Agreement, and which change or alteration could reasonably be
expected to (i) materially and adversely affect the financial
condition of Pictures, (ii) materially and adversely affect the rights
of the Lenders under this Credit Agreement, the other Fundamental
Documents and any other agreements contemplated hereby, or (iii)
materially decrease the value of the Collateral."
(L) Section 6.19 (Leverage Ratio) of the Credit Agreement is hereby
amended in its entirety to read as follows:
"SECTION 6.19. Leverage Ratio. Permit the ratio (the "Leverage
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Ratio") of (i) the sum of Consolidated Senior Debt plus Off-Balance
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Sheet Commitments (excluding, in the case of each transaction in which
the applicable Credit Party has provided no monetary commitment other
than a print and advertising commitment, the first $3,000,000 of the
amount of such print and advertising commitment) less all Off-Balance
Sheet Receivables and Borrowing Base credits that relate to items of
Product that are the subject of such Off-Balance Sheet Commitments
(but not more with respect to any particular items of Product than the
related amount of Off-Balance Sheet Commitments (without taking into
account the $3,000,000 deduction permitted above)) to (ii)
Consolidated Capital Base, all as determined as of each quarter end,
to be greater than (x) 5.5:1 for the quarter ending September 30,
1999, (y) 5.0:1 for the quarters ending December 31, 1999, March 31,
2000, and June 30, 2000, and (z) 4.0:1 for the quarter ending
September 30, 2000 and each quarter thereafter.
(M) Section 10.1(c) of the Credit Agreement is hereby amended by adding
the following clause (xii) at the end thereof:
"(xii) to enter into an intercreditor agreement (in such form as the
Administrative Agent may deem appropriate) to implement the
allocations of gross receipts and the security interest granted by
Pictures and certain of its affiliates, each in connection with the
AFI Transaction (as described in the Term Sheet attached to Amendment
No. 3 to the Credit Agreement)."
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(N) The Schedule of Commitments appearing in Schedule 1 to the Credit
Agreement is hereby replaced in its entirety by Schedule 1 (Revised)
attached to this Amendment No. 3.
Section 3. Consent. The Borrower has requested that the Lenders
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consent to a waiver of compliance by the Credit Parties with respect to (i)
Section 2.7 of the Credit Agreement which requires any partial reduction of the
Revolving Credit Commitments to be made among the Lenders in accordance with
their respective Percentages and (ii) Section 10.2 of the Credit Agreement which
requires that any payment of interest and repayment of principal in respect of
any Loans be made pro rata among the Lenders in accordance with their respective
Percentages. At the request of the Borrower, each Lender by its signature
hereto hereby (i) consents to the reduction of the Revolving Credit Commitment
of City National Bank by $2,500,000 and (ii) waives the requirements of Section
2.7 in connection with such reduction in the Revolving Credit Commitments. In
connection with such reduction, each Lender hereby authorizes and directs the
Administrative Agent to allocate subsequent repayments and/or prepayments by the
Borrower of Revolving Credit Loans such that after giving effect to such
repayment or prepayment, the outstanding Revolving Credit Loans attributable to
each Lender shall be in proportion to such Lender's Percentage of the Revolving
Credit Commitments of all the Lenders after giving effect to this Amendment.
The waiver contained in this Section 3 is limited to the specific
provision provided above and shall not in any way be construed as entitling the
Credit Parties to any waiver of any matters other than as specifically provided
above or to any future waivers regarding similar matters or otherwise.
Section 4. Conditions to Effectiveness. The effectiveness of this
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Amendment is subject to the satisfaction in full of each of the conditions
precedent set forth in this Section 4 (the date on which all such conditions
have been satisfied being herein called the "Effective Date"):
(A) the Agent shall have received counterparts of this Amendment
which, when taken together, bear the signatures of the Borrower, each Guarantor,
the Agent and such of the Lenders as are required by the Credit Agreement;
(B) the Agent shall have received the written consent of the holders
of the Secured Subordinated Notes; and
(C) all legal matters incident to this Amendment shall be
satisfactory to Morgan, Lewis & Bockius LLP, counsel for the Agent.
Section 5. Fees. In consideration for the Lenders and the Agent
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entering into this Amendment, on the Effective Date, the Borrower agrees to pay
the Agent for the account of each
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of the Lenders an aggregate fee equal to 0.125% of the aggregate Commitment of
each Lender under the Credit Agreement after giving effect to the provisions of
this Amendment.
Section 6. Representations and Warranties. Each Credit Party
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represents and warrants that:
(A) after giving effect to this Amendment, the representations and
warranties contained in the Credit Agreement are true and correct in all
material respects on and as of the date hereof as if such representations and
warranties had been made on and as of the date hereof (except to the extent that
any such representations and warranties specifically relate to an earlier date);
and
(B) after giving effect to this Amendment, no Event of Default or
Default will have occurred and be continuing on and as of the date hereof.
Section 7. Further Assurances. At any time and from time to time,
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upon the Agent's request and at the sole expense of the Credit Parties, each
Credit Party will promptly and duly execute and deliver any and all further
instruments and documents and take such further action as the Agent reasonably
deems necessary to effect the purposes of this Amendment.
Section 8. Fundamental Documents. This Amendment is designated a
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Fundamental Document by the Agent.
Section 9. Full Force and Effect. Except as expressly amended
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hereby, the Credit Agreement and the other Fundamental Documents shall continue
in full force and effect in accordance with the provisions thereof on the date
hereof. As used in the Credit Agreement, the terms "Agreement", "this
Agreement", "herein", "hereafter", "hereto", "hereof", and words of similar
import, shall, unless the context otherwise requires, mean the Credit Agreement
as amended by this Amendment.
Section 10. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
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CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 11. Counterparts. This Amendment may be executed in two or
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more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one instrument.
Section 12. Expenses. The Borrower agrees to pay all out-of-pocket
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expenses incurred by the Agent in connection with the preparation, execution and
delivery of this Amendment, including, but not limited to, the reasonable fees
and disbursements of counsel for the Agent.
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Section 13. Headings. The headings of this Amendment are for the
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purposes of reference only and shall not affect the construction of or be taken
into consideration in interpreting this Amendment
IN WITNESS WHEREOF, the parties hereby have caused this Amendment to
be duly executed as of the date first written above.
ARTISAN PICTURES INC.
ARTISAN ENTERTAINMENT INC.
ARTISAN HOME ENTERTAINMENT INC.
ARTISAN RELEASING INC.
ARTISAN MUSIC INC.
BE MINE PRODUCTIONS, INC.
BEACH DANCE PRODUCTIONS, INC.
DETENTION PRODUCTIONS, INC.
HEATWAVE PRODUCTIONS, INC.
LIVE AMERICA INC.
LIVE VENTURES INC.
LIVENET INC.
MILK MISSION PRODUCTIONS INC.
SWEET TIME PRODUCTIONS, INC.
VESTRON INC.
WISH AGAIN PRODUCTIONS, INC.
By /s/ Mark Curcio
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Name:
Title: Authorized Signatory for each of the
foregoing
FILM HOLDINGS CO.
By /s/ Geoff Rehnert
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Name:
Title: Principal
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SILENT DEVELOPMENT CORP.
TONGUE-TIED INC.
By /s/ Ken Schapiro
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Name:
Title:
LENDERS:
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent
By /s/ Constance M. Coleman
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Name: Constance M. Coleman
Title: Vice President
SOCIETE GENERALE
By /s/ Maureen E. Kelly
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Name: Maureen E. Kelly
Title: Director
UNION BANK OF CALIFORNIA
By /s/ Thomas P. Garry, Jr.
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Name: Thomas P. Garry, Jr.
Title: Vice President
COMERICA BANK -- CALIFORNIA
By /s/ Carmen Carpenter
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Name: Carmen Carpenter
Title: AVP
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FLEET BANK, N.A.
By /s/ Eric S. Meyer
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Name: Eric S. Meyer
Title: Vice President
PACIFIC CENTURY BANK, N.A.
By /s/ David K. Henry
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Name: David K. Henry
Title: Vice President
BANQUE INTERNATIONALE A LUXEMBOURG
By /s/ E. Rolin
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Name: E. Rolin
Title: General Manager
By /s/ N. Weaver
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Name: N. Weaver
Title: Asst. Director
NATEXIS BANQUE BFCE
By /s/ Bennett C. Pozil
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Name: Bennett C. Pozil
Title: Vice President and Group Manager
Entertainment Finance
By /s/ Mark A. Harrington
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Name: Mark A. Harrington
Title: Senior Vice President
and Regional Manager
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CITY NATIONAL BANK
By /s/ Norman B. Starr
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Name: Norman B. Starr
Title: Vice President
DE NATIONALE INVESTERINGSBANK N.V.
By /s/ C. Mulder
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Name: C. Mulder
Title: Legal Counsel
By /s/ P.N.S. Luttjehuizen
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Name: P.N.S. Luttjehuizen
Title: Senior Executive Vice President
BANQUE NATIONALE DE PARIS
By /s/ Janice Ho
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Name: Janice Ho
Title: Vice President
By /s/ Mitch Ozawa
-------------------------------------
Name: Mitch Ozawa
Title: Vice President
THE FUJI BANK, LTD.
By /s/ Hiromitsu Ugawa
-------------------------------------
Name: Hiromitsu Ugawa
Title: Senior Vice President
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PARIBAS
By /s/ David J. Pastre / /s/ Thomas G. Brandt
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Name: David J. Pastre / Thomas G. Brandt
Title: Vice President / Director
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Schedule 1
(Revised as of August 18, 1999)
Schedule of Commitments
Revolving Revolving Term Term
Total Credit Credit Loan Loan
Banks Commitment Commitment Percentage Commitment Percentage
1. Chase $ 20,242,104.00 $ 17,968,422.00 12.203753% $ 2,273,682.00 12.000000%
2. Societe Generale 17,350,374.86 15,401,504.57 10.460360% 1,948,870.29 10.285714%
3. Union Bank of California 17,350,374.86 15,401,504.57 10.460360% 1,948,870.29 10.285714%
4. Fleet Bank 17,350,374.86 15,401,504.57 10.460360% 1,948,870.29 10.285714%
5. Comeria Bank-California 14,458,645.71 12,834,587.14 8.716967% 1,624,058.57 8.571429%
6. California United Bank 14,458,645.71 12,834,587.14 8.716967% 1,624,058.57 8.571429%
7. Natexis Banque 9,639,097.14 8,556,391.43 5.811311% 1,082,705.71 5.714286%
8. BIL 9,639,097.14 8,556,391.43 5.811311% 1,082,705.71 5.714286%
9. De National Investeringsbank 9,639,097.14 8,556,391.43 5.811311% 1,082,705.71 5.714286%
10. Banque National de Paris 9,639,097.14 8,556,391.43 5.811311% 1,082,705.71 5.714286%
11. The Fuji Bank, Ltd. 9,639,097.14 8,556,391.43 5.811311% 1,082,705.71 5.714286%
12. Banque Paribas 9,639,097.14 8,556,391.43 5.811311% 1,082,705.71 5.714286%
13. City National Bank 7,139,097.14 6,056,391.43 4.113367% 1,082,705.71 5.714286%
TOTAL $166,184,199.98 $147,236,850.00 100% $18,947,349.98 100%
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