AMENDMENT NO. 8 TO TRANSACTION DOCUMENTS
Exhibit
10.34
AMENDMENT NO. 8 TO TRANSACTION DOCUMENTS
Dated as of February 17, 2009
THIS AMENDMENT NO. 8 TO TRANSACTION DOCUMENTS (this “Amendment No. 8”) is entered into by and
among MVL Film Finance LLC (the “Borrower”), MVL Productions LLC (“MPROD”), Marvel Entertainment,
Inc. (“MEI”), Marvel Studios, Inc. (“Marvel Studios” and together with the Borrower, MPROD and
MEI, collectively, the “Marvel Parties” and each a “Marvel Party”) HSBC Bank USA, National
Association, in its capacities as Collateral Agent and Collection Account Bank (the “Collateral
Agent”) and Ambac Assurance Corporation, in its capacity as Control Party (as defined in the Credit
Agreement referred to below) (“Ambac”). All capitalized terms used herein without definition shall
have the meanings specified in the Credit Agreement referred to below, or, if not defined therein,
in the Master Agreement referred to below.
PRELIMINARY STATEMENTS:
(1) WHEREAS, reference is made to (i) the Credit and Security Agreement dated as of August 31,
2005 (the “Credit Agreement”) among the Borrower, the financial institutions and commercial paper
conduits from time to time party thereto, General Electric Capital Corporation, as Administrative
Agent, and the Collateral Agent, (ii) the Master Development and Distribution Agreement dated as of
August 31, 2005 (the “Master Agreement”) among the Borrower, MPROD and Marvel Studios, (iii)
Amendment No. 1 to Transaction Documents dated as of September 29, 2006 (“Amendment No. 1”),
Amendment No. 2 to Transaction Documents dated as of February 21, 2007 (“Amendment No. 2”), and
Amendment No. 3 to Transaction Documents dated as of April 13, 2007 (“Amendment No. 3”) each by and
between the Borrower, MPROD, Marvel Studios, Marvel Characters, Inc., MVL Rights LLC, Ambac and the
Collateral Agent, (iv) Amendment No. 6 to Transaction Documents dated as of September 17, 2008
(“Amendment No. 6”) by and among Ambac, the Collateral Agent, Marvel Studios, MPROD and the
Borrower, and (v) Acknowledgement No. 1 to Transaction Documents dated as of April 6, 2007
(“Acknowledgment No. 1”), Amendment No. 4 to Transaction Documents dated as of January 15, 2008
(“Amendment No. 4”), Amendment No. 5 to Transaction Documents dated as of March 7, 2008 (“Amendment
No. 5”), Amendment No. 7 to Transaction Documents dated as of December 5, 2008 (“Amendment No. 7”)
each by and among Ambac, Marvel Studios, MPROD and the Borrower;
(2) WHEREAS, pursuant to Section 5.02(xix) of the Credit Agreement, a valid and enforceable
Completion Bond for a Motion Picture is a precondition for the Initial Funding which is a
Film-Related Advance for such Motion Picture; and
(3) WHEREAS, the Contingency required for such Completion Bond is ten percent (10%) of the
Budget excluding certain items enumerated in Amendment No. 3; and
(4) WHEREAS, the Completion Guarantor has indicated it will be able to offer the Completion
Bond at a significantly lower rate if the Contingency is increased; and
(5) WHEREAS, MEI is willing, at its option, to provide as a capital
contribution to the Borrower, the additional increased Contingency amounts during all relevant
time periods;
(6) WHEREAS, pursuant to Section 1.28 of the Iron Man License, the Maximum Budget for a
Picture may be increased with Ambac’s prior written consent;
(7) WHEREAS, the Borrower has informed Ambac that it desires to increase the Maximum Budget
for the Picture entitled Iron Man II and Ambac has agreed on the terms and conditions set forth
herein to such increased Maximum Budget;
(8) WHEREAS, Ambac has informed the Borrower that it desires to modify the definition of
Permitted Investments contained in the Credit Agreement and the Borrower has agreed on the terms
and conditions set forth herein to such modified definition;
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the undersigned hereby agree as follows:
SECTION 1. Completion Bond
(a) Each of the following defined terms is hereby added to Section 1.01(b) of the Credit
Agreement in its proper alphabetical order:
“Contingency” means for each Motion Picture the sum of the Standard Contingency and
the MEI Contingency Reserve Amount (if applicable pursuant to Annex 7.1) for such Motion
Picture.
“MEI Contingency Reserve Account” means a segregated trust account in the name of the
Collateral Agent maintained at HSBC Bank USA, National Association, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000 (ABA #000000000) to be established by the Borrower within twenty (20) Business Days of the
date of this Amendment No. 8. Immediately upon establishment of the MEI Contingency Reserve
Account, the Marvel Parties shall notify Ambac, the Collateral Agent and the Administrative Agent
of the account number for such account.
“MEI Contingency Reserve Amount” means for each Motion Picture the greater of: (i) (A)
with respect to Iron Man II, $31,489,260, (B) with respect to each Motion Picture with a Budget
equal to or less than $181,500,000, $26,000,000 and (C) with respect to each other Motion Picture,
an amount to be agreed to by the Control Party but not less than $26,000,000; and (ii) the amount
by which the Contingency exceeds the Standard Contingency. For the avoidance of doubt, the Budget
as set forth in (i) shall be inclusive of the Standard Contingency. In the event that the Budget
for a Motion Picture is less than $181,500,000, the Control Party may, in its sole discretion,
determine whether the MEI Contingency Reserve Amount for such Motion Picture may be reduced based
on such lower Budget, the timing for delivery of such Motion Picture and such other factors as the
Control Party deems relevant. The MEI Contingency Reserve Amount for a Motion Picture shall be
reduced to such amount as so determined by the Control Party. The Control Party shall provide
written notice of any such reduction to the Borrower, the Collateral Agent and the Administrative
Agent.”
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“MEI Contingency Reserve Requirements” means the requirement that prior to the Initial
Funding which is a Film-Related Advance for a Motion Picture, MEI shall, as a capital contribution
to the Borrower, deposit an amount equal to: (i) the MEI Contingency Reserve Amount for such Motion
Picture into the MEI Contingency Reserve Account; and (ii) the MEI Paramount Pre-Sale Amount for
such Motion Picture into the Borrower Blocked Account.
“Standard Contingency” means for each Motion Picture, ten percent (10%) of the Budget
of such Motion Picture excluding the following items: (1) Marvel’s Affiliate Producer Fee; (2) any
overhead costs of MPROD or any Marvel Company included in the Budget pursuant to the definition of
Direct Negative Cost; (3) fees paid to the Completion Guarantor; and (4) for the avoidance of
doubt, the Standard Contingency.
(b) The definition of Permitted Distribution in Schedule I of the Credit Agreement is hereby
amended to add at the end thereof as follows:
“Notwithstanding the forgoing, the Collateral Agent shall make the payments contemplated by
sub-clause (iii) of the second paragraph of Section 3.06 of the Credit Agreement in accordance with
such Section 3.06 of the Credit Agreement.”
(c) The definition of Budget in Section 1(a) of the Master Agreement is hereby amended
and restated to read as follows:
““Budget” means, with respect to a Motion Picture, the final budget for such
Motion Picture as approved in writing by the applicable Completion Guarantor on or
prior to the date on which the principal photography for such Motion Picture
commences (subject to later increases for Enhancements, if any), which budget has
been prepared by the Development Company in accordance with standard practices in
the United States motion picture industry and reflects an estimate of the Cost to
Complete with respect to such Motion Picture, plus a contingency reserve of no less
than the Standard Contingency which may be liquidated during production in the
amount required by the applicable Completion Guarantor, and which final budget, once
so approved, may be increased by MPROD or the applicable Production Company only if
(i) with respect to any Enhancements, the applicable Completion Guarantor agrees in
writing to cover such Enhancements under the applicable Completion Bond, and (ii)
with respect to any Material Enhancements, the Control Party agrees in writing
thereto; provided that, in the case of clauses (i) and (ii) above, if the
amount of such final budget, as so increased, exceeds $165,000,000, the prior
written consent of the Required Lenders shall also be required. For the avoidance of
doubt, the MEI Contingency Reserve Amount for a Motion Picture shall not be included
in the Budget for such Motion Picture.”
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(d) Section 7(a)(viii) of the Master Agreement is hereby amended to add at the end thereof as
follows:
“Increased Contingency Completion Bond. In the event that MPROD satisfies
the MEI Contingency Reserve Requirements for a Completion Bond, the terms for
such Completion Bond shall be modified from those set forth in Annex 7 as
provided on Annex 7.1 (such modified Completion Bond referred to herein as
an “Increased Contingency Completion Bond”). In connection with each Increased
Contingency Completion Bond, the parties agree that the expenditure of the
Contingency shall be: (i) first, from the Standard Contingency included in the
applicable Budget; (ii) thereafter, from the applicable MEI Contingency Reserve
Amount contained in the MEI Contingency Reserve Account.”
(e) Section 3 of the Credit Agreement is hereby amended to add the following new Section 3.06:
“Section 3.06 MEI Contingency Reserve Account. Within twenty (20) Business
Days of the date of this Amendment No. 8, the Borrower shall establish the MEI
Contingency Reserve Account with the Collection Account Bank. Without limiting
Article IV of the Credit Agreement, the Borrower hereby grants a security interest
to the Collateral Agent, for the benefit of the Secured Parties, in the MEI
Contingency Reserve Account and all amounts and investments on deposit or held
therein to secure all Obligations of the Borrower to the Secured Parties under the
Credit Agreement and the other Transaction Documents. The Borrower hereby agrees
that the Collateral Agent shall have exclusive dominion and control over the MEI
Contingency Reserve Account and that the Collection Account Bank will comply solely
with instructions originated by the Collateral Agent (i) directing disposition of
the funds or (ii) directing transfer or redemption of the financial assets in the
MEI Contingency Reserve Account without further consent by the Borrower or any
Marvel Company but with notice thereto; provided, that until the Collateral
Agent provides notice to the contrary to the Collection Account Bank, the Collection
Account Bank shall be entitled to comply with the investment directions originated
by the Borrower without further consent by the Collateral Agent.
The Collateral Agent shall instruct the Collection Account Bank to withdraw funds
from the MEI Contingency Reserve Account under the following circumstances: (i) upon
notice (the form of which is attached hereto as Appendix A) from the
Completion Guarantor that the Standard Contingency for a Motion Picture has been
exhausted to fund the Production Price for such Motion Picture; (ii) upon notice
(the form of which is attached hereto as Appendix B) from the Borrower that
the Guarantor’s Aggregate Obligation for a Motion Picture has been exhausted to fund
any amounts otherwise payable by the Completion Guarantor pursuant to the Increased
Contingency Completion Bond for such Motion Picture to the Beneficiaries (as defined
in such Increased Contingency Completion Bond); and (iii) upon both notice (the form
of which is attached hereto as Appendix C) from the Completion Guarantor of
Delivery of the applicable Motion Picture and notice (the form of which is attached
hereto as Appendix D) from the Borrower to pay any remaining MEI Contingency
Reserve Amount for such Motion Picture to MEI. Except pursuant to the conditions set
forth above, the Borrower shall not instruct the Collection Account Bank to
withdraw or transfer any funds or financial assets held in the MEI Contingency
Reserve Account.
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The taxpayer identification number associated with the MEI Contingency Reserve
Account shall be that of the Borrower and the Borrower will report for federal,
state and local income tax purposes, the income, if any, represented by the MEI
Contingency Reserve Account. The Collection Account Bank and the Collateral Agent
shall be entitled to rely on this Section notwithstanding any contrary provision
herein and the Borrower agrees to enter into a separate control agreement with
respect to the MEI Contingency Reserve Account pursuant to Section 4.07 of the
Credit Agreement.”
(f) Attached to this Amendment No. 8 is Annex 7.1.
(g) Inclusion of the MEI Contingency Reserve Account in the Collateral. Section 4.01
of the Credit Agreement is hereby amended to add at the end thereof:
“(o) For the avoidance of doubt, the Collateral shall include the Borrower’s
interest in the MEI Contingency Reserve Account and Article IV of the Credit
Agreement shall apply to the MEI Contingency Reserve Account.”
(h) Authorization to Establish the MEI Contingency Reserve Account. Ambac
hereby authorizes the Collateral Agent and the Collateral Agent hereby agrees to establish
and control the MEI Contingency Reserve Account as contemplated by this Amendment No. 8.
Ambac, as the Control Party, hereby authorizes and instructs the Collateral Agent to execute
and deliver this Amendment.
SECTION 2. Maximum Budget for Iron Man II
With
respect to the Picture entitled Iron Man II (“Iron Man II”), Ambac hereby consents
to a Maximum Budget of not more than the amount set forth on Exhibit A. MSI hereby
waives its Fixed Producer Fee for Iron Man II. For the avoidance of doubt, MSI’s Back-End
Producer Fee for Iron Man II shall be an amount equal to five percent (5.0%) of the
aggregate of the Gross Receipts and Co-Financing Amounts for Iron Man II. The Marvel Parties
agree that all amounts received with respect to MSI’s Back-End Producer Fee for Iron Man II
up to the Additional Amount shall be deposited into the Collection Account within five (5)
Business Days after receipt.
SECTION 3. Definition of Permitted Investments
The definition of Permitted Investments set forth in Section 1.01(b) of the Credit
Agreement is hereby amended and restated as follows:
““Permitted Investments” shall mean:
(a) cash (insured at all times by the Federal Deposit Insurance Corporation);
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(b) direct obligations of (including obligations issued or held in book entry form on
the books of) the Department of the Treasury of the United States of America;
(c) obligations of the following federal agencies of the United States which
obligations represent the full faith and credit of the United States of America: (1) Export
Import Bank; (2) Rural Economic Community Development Administration; (3) US Maritime
Administration; (4) Small Business Administration; (5) US Department of Housing & Urban
Development (PHAs); (6) Federal Housing Administration; (7) Federal Financing Bank; and (8)
any other federal agencies of the United States which obligations represent the full faith
and credit of the United States of America and are approved in writing by the Control Party;
(d) direct obligations of any of the following federal agencies which obligations are
not fully guaranteed by the full faith and credit of the United States of America:
(i) senior debt obligations rated “Aaa” by Xxxxx’x and “AAA” by S&P issued by
the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage
Corporation (FHLMC);
(ii) senior debt obligations rated “Aaa” by Xxxxx’x and “AAA” by S&P of the
Federal Home Loan Bank System; and
(iii) senior debt obligations of other government sponsored agencies approved
in writing by the Control Party and with notification to the Rating Agencies;
(e) dollar denominated deposit accounts, federal funds and bankers’ acceptances with
domestic commercial banks which have a rating on their short term certificates of deposit on
the date of purchase of “P-1” by Xxxxx’x and “A-1” or “A-1+” by S&P and maturing no more
than 360 calendar days after the date of purchase (ratings on holding companies are not
considered as the ratings of the bank) ratings at the time of purchase must be “stable”;
(f) commercial paper, excluding asset-backed commercial paper (“ABCP”) and excluding
extendable commercial paper, which is rated at the time of purchase in the single highest
classification, “P-1” by Xxxxx’x and “A-1+” by S&P and which matures not more than 90
calendar days after the date of purchase ratings at the time of purchase must be “stable”;
(g) investments in money market funds rated “AAAm” or “AAAm-G” or better by S&P
(including those managed by the Collateral Agent or its Affiliates);
(h) debt obligations or other obligations of any state of the United States of America
or of any agency, instrumentality or local governmental unit of any such state which are not
callable at the option of the obligor prior to maturity or as to which irrevocable
instructions have been given by the obligor to call on the date specified in the notice, and
(i) which are rated, based on an irrevocable escrow account or fund (the
“escrow”), in the highest rating category of S&P and Xxxxx’x or any successors thereto;
or
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(ii) (A) which are fully secured as to principal and interest and redemption
premium, if any, by an escrow consisting only of cash or obligations described in
clause (c) above, which escrow may be applied only to the payment of such
principal of and interest and redemption premium, if any, on such obligations or
other obligations on the maturity date or dates thereof or the specified redemption
date or dates pursuant to such irrevocable instructions, as appropriate, and (b) which
escrow is sufficient, as verified by a nationally recognized independent certified
public accountant, to pay principal of and interest and redemption premium, if any, on
the obligations or other obligations described in this paragraph on the maturity date
or dates specified in the irrevocable instructions referred to above, as appropriate;
(i) municipal obligations rated “Aaa” by Xxxxx’x and “AAA” by S&P or general
obligations of States of the United States of America with a rating of at least “Aa2” by
Xxxxx’x and “AA” by S&P; and
(j) investment agreements approved in writing by the Control Party with notification to
the Rating Agencies.
Any Permitted Investment may be purchased by or through the Collateral Agent or its
Affiliates. All Permitted Investments held in the Collection Account and Class A Liquidity
Reserve Account, and Permitted Investments in the Borrower Blocked Account up to an amount
equal to the Minimum Interest Reserve, shall mature no later than the following Quarterly
Payment Date.”
SECTION 4. Representations and Warranties of the Marvel Parties.
4.1 The Marvel Parties each hereby represent and warrant to Ambac as follows:
(a) It is a corporation or limited liability company, as applicable, duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by it of this Amendment No. 8 and each Transaction
Document to which it is a party, and the transactions contemplated hereby and thereby, are within
its limited liability company or corporate powers, have been duly authorized by all necessary
limited liability company or corporate action, and do not (i) contravene, or constitute a default
under, its constitutive documents, (ii) violate any Law or applicable writ, judgment, injunction,
decree, determination or award except where such violations, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, (iii) conflict with or result
in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage,
deed of trust, lease or other instrument binding on it or any of its properties, in each case which
breach or default has not been permanently waived in accordance therewith or (iv) result in or
require the creation or imposition of any Adverse Claim upon or with respect to any of its
properties, other than Permitted Liens.
(c) No consent of any other Person and no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or any other third party
that has not been obtained is required for the due execution, delivery or performance by it of this
Amendment No. 8 or any Transaction Document to which it is or is to be a party.
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(d) This Amendment No. 8 has been, and each Transaction Document to which it is a party has
been, duly executed and delivered by it and is its legal, valid and binding obligation, enforceable
against it in accordance with the terms of such document, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles.
4.2 In addition, the Marvel Parties each hereby represent and warrant to Ambac as
follows:
No Event of Default, Potential Event of Default, MSI Default Event, MEI Event of Default or
Acceleration Event has occurred and is continuing or would result from the execution, delivery and
performance by it of this Amendment No. 8 and the transactions contemplated hereby.
SECTION 5. Reference to and Effect on the Transaction Documents, Etc.
(a) This Amendment No. 8 shall pertain only to the matters expressly referred to above and is
effective only for the limited purposes set forth above, and shall not be deemed to authorize any
other action or non-compliance on the Borrower’s, MPROD’s, MEI’s or Marvel Studio’s part.
(b) The Transaction Documents, as specifically modified by Amendment Xx. 0, Xxxxxxxxx Xx. 0,
Xxxxxxxxx Xx. 0, Amendment Xx. 0, Xxxxxxxxx Xx. 0, Xxxxxxxxx Xx. 0, Xxxxxxxxx Xx. 0, Xxxxxxxxxxxxxx
Xx. 0 and this Amendment No. 8 are and shall continue to be in full force and effect and are hereby
in all respects ratified and confirmed. This Amendment No. 8 constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, there being no other agreements or
understandings, oral, written or otherwise, respecting such subject matter, any such agreement or
understanding being superseded hereby.
SECTION 6. Execution in Counterparts. This Amendment No. 8 may be executed in any
number of counterparts and by any combination of the parties hereto in separate counterparts, each
of which counterparts shall be an original and all of which taken together shall constitute one and
the same Amendment No. 8. Delivery of an executed counterpart of a signature page to this
Amendment No. 8 by facsimile shall be effective as delivery of a manually executed counterpart of
this Amendment No. 8.
SECTION 7. Governing Law. This Amendment No. 8 shall be governed by, and construed in
accordance with, the internal laws of the State of New York.
SECTION 8. Amendment Fee. Within ten (10) days of execution of this Amendment No. 8,
the Borrower shall pay to Ambac an amendment fee of $250,000 and this Amendment No. 8 shall only be
effective upon such payment to Ambac.
[Signature pages follow]
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IN WITNESS WHEREOF, the undersigned have caused this Amendment No. 8 to be executed by their
respective officers thereunto duly authorized, as of the date first above written.
| AMBAC ASSURANCE CORPORATION |
||||
| By: | /s/ Xxxxxxx Xxxxx | |||
| Name: | Xxxxxxx Xxxxx | |||
| Title: | First Vice President | |||
HSBC BANK USA, NATIONAL ASSOCIATION,
As Collateral Agent
As Collateral Agent
By:
|
/s/ Xxxxxx X. Xxxxxxx
|
|||
| Name: Xxxxxx X. Xxxxxxx | ||||
| Title: Vice President |
| MVL FILM FINANCE LLC | ||||||
| By: | /s/ Xxxxxxx Xxxx | |||||
| Name: | Xxxxxxx Xxxx | |||||
| Title: | SVP | |||||
| MVL PRODUCTIONS LLC | ||||||
| By: | /s/ Xxxx Xxxxxx | |||||
| Name: | Xxxx Xxxxxx | |||||
| Title: | Secretary | |||||
| MARVEL STUDIOS, INC. | ||||||
| By: | /s/ Xxx Xxxxxxx | |||||
| Name: | Xxx Xxxxxxx | |||||
| Title: | COO | |||||
| MARVEL ENTERTAINMENT, INC. | ||||||
| By: | /s/ Xxxx Xxxxxxxx | |||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | EVP, Office of the Chief Executive | |||||
