EXHIBIT 10.3
AMENDMENT NO. 6 dated as of August 4, 2003 to the
Credit, Security, Guaranty and Pledge Agreement dated
as of August 31, 2001 as amended as of December 14,
2001, December 31, 2001, March 29, 2002, May 14, 2002
and February 5, 2003, among Crown Media Holdings,
Inc. (the "Borrower"), the Guarantors named therein,
the Lenders referred to therein and JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), as
Administrative Agent and as Issuing Bank for the
Lenders (the "Agent") ( as the same may be further
amended, supplemented or otherwise modified, the
"Credit Agreement").
INTRODUCTORY STATEMENT
WHEREAS, the Lenders have made available to the Borrower a credit
facility pursuant to the terms of the Credit Agreement.
WHEREAS, pursuant to Amendment No. 1 to the Credit Agreement, the
Borrower (x) formed a subsidiary Delaware business trust, Crown Media Trust, for
the purpose of issuing, among other things, certain preferred securities (the
"Trust Preferred Securities") (y) raised $265 million in capital from investors
in exchange for the sale of units (each a "Unit") consisting of: (i) one Trust
Preferred Security, and (ii) one contingent appreciation certificate (each a
"Contingent Appreciation Certificate") to receive cash or to purchase shares of
Class A Common Stock, par value $0.01 per share, of the Borrower and (z) issued
subordinated debentures (the "Trust Debentures") of the Borrower to Crown Media
Trust.
WHEREAS, the Borrower has informed the Agent that it intends to issue a
senior, unsecured note to HC Crown Corp in the amount of $400 million on the
terms set forth in Exhibit A attached hereto (the "Note Offering"), the proceeds
of which will be used (i) to purchase all of the outstanding Units, (ii) to pay
up to $3 million in fees and expenses associated with the Note Offering, and
(iii) to prepay a portion of the outstanding Revolving Credit Loans pursuant to
Section 2.11(d) of the Credit Agreement and (iv) for general corporate purposes.
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement and the Lenders and the Agent have agreed to such amendments, all on
the terms and subject to the conditions hereinafter set forth.
NOW THEREFORE, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meaning given them in the Credit
Agreement.
Section 2. Amendments to the Credit Agreement. Subject to the
satisfaction of the conditions precedent set forth in Section 6 hereof, the
Credit Agreement is hereby amended as of the Effective Date (as hereinafter
defined) as follows:
(A) Article 1 of the Credit Agreement is hereby amended by adding the
following proviso to the end of the definition of "Investments"; "provided,
however, that the purchase by the Borrower of the outstanding Trust Preferred
Securities and the Contingent Appreciation Certificates shall not be considered
an Investment."
(B) Article 1 of the Credit Agreement is hereby amended by amending the
definition of "EBITDA" in its entirety to read as follows:
"'EBITDA' shall mean, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum for such period of (i)
Consolidated Net Income, (ii) interest expenses deducted in computing
Consolidated Net Income, (iii) provision for income taxes during such period,
(iv) total depreciation expense and (v) total amortization expense (other than
amortization of capitalized film costs related to acquisitions of new
programming), all as determined for such period in conformity with GAAP
excluding non-cash extraordinary, unusual or non-recurring gains and losses
(e.g., shutdown and consolidation expenses)."
(C) Article 1 of the Credit Agreement is hereby amended by amending the
definition of "Restricted Payments" by adding the following clause (vi) to the
end thereof: "(vi) any cash payment with respect to the 2003 HCC Note."
(D) Section 6.1 of the Credit Agreement is hereby amended by adding the
following clause (xii) at the end thereof:
"(xii) in addition to the Indebtedness set forth in clauses
(vi), (vii) and (xi) hereof, senior, unsecured Indebtedness to HCC of
up to $400 million on the terms and conditions set forth on Exhibit A
to Amendment No. 6 to the Credit Agreement (the "2003 HCC Notes") and
provided that the Agent in its reasonable discretion has approved the
final versions of all documentation to be executed in connection
therewith."
(E) Section 6.2 of the Credit Agreement is hereby amended by adding the
following clauses (xii) through (xvi) at the end thereof:
"(xii) interests of lessees and licensees in property owned by
the Borrower or any of its Subsidiaries where such interests are
created in the ordinary course of their respective leasing and
licensing activities and are not created directly or indirectly in
connection with the borrowing of money or the securing of Indebtedness
by the Borrower or any of its Subsidiaries;
(xiii) Liens in favor of customs and revenue authorities
arising as a matter of law or regulation to secure the payment of
customs duties in connection with the importation of goods and deposits
made to secure statutory obligations in the form of excise taxes;
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(xiv) statutory Liens of depository or collecting banks on
items in collection and any accompanying documents or the proceeds
thereof;
(xv) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(xvi) statutory and contractual landlords Liens securing
amounts which are not delinquent beyond any applicable grace period or
which are being contested in good faith."
(F) Section 6.5 of the Credit Agreement is hereby amended by adding the
following clauses (xi), and (xii) at the end thereof:
"(xi) payments by the Borrower to purchase all of the
outstanding Trust Preferred Securities and the Contingent Appreciation
Certificates and to pay fees and expenses related thereto in an amount
not to exceed $500,000; and
"(xii) payments by the Borrower of fees and expenses in an
amount not to exceed $3 million to HCC in relation to the issuance of
the 2003 HCC Notes."
(G) Section 6.12 of the Credit Agreement is hereby amended by adding
the following two sentences at the end thereof:
"No Credit Party shall be entitled to amend, alter, modify,
waive or consent to any amendment, alteration, modification or
waiver to any of the documents entered into in connection with
the 2003 HCC Notes if such amendment, alteration, modification
or waiver changes any term thereof to the detriment of the
Borrower or is reasonably likely to materially and adversely
affect the interests of the Lenders. Notwithstanding anything
to the contrary herein, (a) the Amended and Restated
Declaration of Trust may be amended to provide for the
dissolution of Crown Media Trust upon the Borrower's election,
(b) a certificate of cancellation of Crown Media Trust may be
filed in connection with the dissolution thereof, (c) upon
delivery by the Borrower to JPMorgan Chase Bank as Indenture
Trustee of the Trust Indenture Debentures, an acknowledgement
may be entered into acknowledging the satisfaction and
discharge of the Trust Indenture and (d) any of the Subsidiary
Trust Documents may otherwise be amended, altered, modified,
waived or terminated at any time after the Borrower purchases
all of the Trust Preferred Securities and the Contingent
Appreciation Certificate."
(H) Section 6.13 of the Credit Agreement is hereby amended by adding
the phrase: "or the note purchase agreement for the 2003 HCC Notes substantially
on the terms set forth in the form of Exhibit A to Amendment No. 6 to the Credit
Agreement" after the words "Fundamental Documents" appearing in the
parenthetical therein.
(I) Section 6.23 of the Credit Agreement is hereby amended by in its
entirety by replacing the same with the following:
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"EBITDA. Permit EBITDA (i) for the preceding quarter to be
less than the amounts set forth below measured at the end of each
fiscal quarter through December 31, 2003 or (ii) for any consecutive
rolling four-quarter period to be less than the amount set forth below
starting with the fiscal quarter ending March 31, 2004:
"FISCAL QUARTER AMOUNT
------------------ -------------
March 31, 2003 - 20,000,000
June 30, 2003 - 10,000,000
September 30, 2003 - 10,000,000
December 31, 2003 0
March 31, 2004 0
June 30, 2004 0
September 30, 2004 0
December 31, 2004 40,000,000
March 31, 2005 40,000,000
June 30, 2005 40,000,000
September 30, 2005 40,000,000
December 31, 2005 125,000,000
March 31, 2006 125,000,000
June 30, 2006 125,000,000"
(J) Section 6.25 of the Credit Agreement is hereby amended by deleting
the chart appearing therein in its entirety and replacing the same with the
following:
"FISCAL QUARTER ENDING BASE AMOUNT
---------------------- -----------
December 31, 2003 250,000,000
March 31, 2004 150,000,000
June 30, 2004 150,000,000
September 30, 2004 150,000,000
December 31, 2004 150,000,000
March 31, 2005 100,000,000
June 30, 2005 100,000,000
September 30, 2005 100,000,000
December 31, 2005 100,000,000"
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(K) Section 6.27 of the Credit Agreement is hereby amended by deleting
the chart appearing therein in its entirety and replacing the same with the
following:
"DATE MAXIMUM LEVERAGE RATIO
----- ----------------------
December 31, 2004 12.00:1.00
March 31, 2005 6.00:1.00
June 30, 2005 6.00:1.00
September 30, 2005 6.00:1.00
December 31, 2005 6.00:1.00
March 31, 2006 3.50:1.00
June 30, 2006 3.50:1.00
(L) Article 7 of the Credit Agreement is hereby amended by adding the
following clause (q) to the end thereof:
"(q) failure of the Borrower (a) to deposit proceeds of the
2003 HCC Notes in an amount sufficient to purchase all of the
outstanding Trust Preferred Securities and the Contingent Appreciation
Certificates directly into a Collection Account and maintain such
amount on deposit until used to repurchase the Trust Preferred
Securities and the Contingent Appreciation Certificates and (b) within
forty-eight hours (subject to extensions granted by the Agent) from the
time that proceeds of the 2003 HCC Note are deposited pursuant to
clause (a) above, to use such proceeds to purchase all of the
outstanding Trust Preferred Securities and the Contingent Appreciation
Certificates."
Section 3. Consent. The Borrower has requested that the Agent and the
Lenders consent to a waiver of compliance by the Borrower of (A) Section 2.11(d)
of the Credit Agreement, relating to prepayment of the Revolving Credit Loans,
to allow the Borrower (a) to use up to $330,500,000 of the proceeds of the Note
Offering to purchase all of the outstanding Units and to pay fees and expenses
relating to such repurchase and (b) to use up to $3 million of the proceeds of
the Note Offering to pay fees and expenses relating to the Note Offering to HCC
Crown and (B) Section 6.12 of the Credit Agreement, relating to amendments of
the Fundamental Documents, to allow the amendment contemplated by Section 5
hereof. At the request of the Borrower, each Lender, by its signature hereto
hereby consents to each of the actions described in clauses (A) and (B) of the
first sentence of this Section 3.
Section 4. Exclusion of the one-time charge from EBITDA. Each of the
undersigned hereby agrees that the $31,000,000 one-time charge incurred in
connection with repurchasing the Units shall be treated as an extraordinary,
unusual and non-recurring loss and shall be excluded for the purposes of
computing EBITDA for fiscal year 2003.
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Section 5. Amendment to Hallmark Cards Subordination and Support
Agreement. Each of the undersigned hereby approves the amendment to the Hallmark
Cards Subordination and Support Agreement in the form attached hereto as Exhibit
B.
Section 6. Conditions to Effectiveness. The effectiveness of this
Amendment is subject to the satisfaction in full of each of the conditions
precedent set forth in this Section 6 (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 the Required Lenders.
(B) the Agent shall have received and be satisfied with final versions
of all documentation to be executed in connection with the Note Offering.
(C) all legal matters incident to this Amendment shall be satisfactory
to Xxxxxx, Xxxxx & Xxxxxxx, counsel for the Agent.
Section 7. Covenants of the Borrower. The Borrower covenants that
immediately subsequent to its repurchase of the Units it shall (i) provide for
the dissolution of Crown Media Trust, (ii) request that JPMorgan Chase Bank as
Indenture Trustee discharge the Trust Indenture and (iii) deliver the Units to
the applicable trustee for cancellation.
Section 8. Representations and Warranties of the Credit Parties. Each
Credit Party 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 9. Further Assurances. At any time and from time to time, 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 10. Fundamental Documents. This Amendment is designated a
Fundamental Document by the Agent.
Section 11. Full Force and Effect. Except as expressly amended hereby,
the Credit Agreement and the other Fundamental Documents shall continue in full
force and
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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 12. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Section 13. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.
Section 14. Expenses. The Borrower agrees to pay all out-of-pocket
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.
Section 15. Headings. The headings of this Amendment are for the
purposes of reference only and shall not affect the construction of or be taken
into consideration in interpreting this Amendment.
Section 16. Restricted Payments. If the Lenders agree, in their sole
discretion, to extend the Maturity Date beyond August 31, 2006, the Lenders will
consider a request from the Borrower to modify Section 6.5 of the Credit
Agreement to allow interest to be paid in cash on the 2003 HHC Notes, so long as
an Event of Default is not continuing.
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IN WITNESS WHEREOF, the parties hereby have caused this Amendment to be
duly executed as of the date first written above.
BORROWER:
CROWN MEDIA HOLDINGS, INC.
By /s/ X. X. XXXXXX
------------------------------------------
Name: X. X. Xxxxxx
Title:
GUARANTORS:
CM INTERMEDIARY, LLC
CROWN MEDIA INTERNATIONAL, LLC
CROWN MEDIA INTERNATIONAL (SINGAPORE) INC.
CROWN ENTERTAINMENT LIMITED
CROWN MEDIA DISTRIBUTION, LLC
CROWN MEDIA INTERNATIONAL (HK) LIMITED
HEN, LLC
HEN (L) LTD.
CROWN MEDIA UNITED STATES, LLC
CITI TEEVEE, LLC
DOONE CITY PICTURES, LLC
HALLMARK INDIA PRIVATE LIMITED
By /s/ X. XXXXXXXX
------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
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HALLMARK CARDS, INCORPORATED,
solely for purposes of Section 5
By /s/ XXXXXX X. XXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title:
HC CROWN CORP,
solely for purposes of Section 5
By /s/ XXXXXX XXXXXXXXX
------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title:
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LENDERS:
JPMORGAN CHASE BANK (f/k/a The
Chase Manhattan Bank),
individually and as Issuing Bank and Agent
By /s/ XXXXXX X. XXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
BANK OF AMERICA, N. A.
By /s/ XXXXXX X. XXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
CREDIT SUISSE FIRST BOSTON
By /s/ XXXXXXXXX XXXXXXX
------------------------------------------
Name: XXXXXXXXX XXXXXXX
Title: ASSOCIATE
By /s/ XXXX X'XXXX
------------------------------------------
Name: XXXX X'XXXX
Title: DIRECTOR
CITICORP USA, INC.
By /s/ XXXXXX X. XXXX
------------------------------------------
Name: Xxxxxx X. Xxxx
Title: Managing Director
Global Media & Communication
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DEUTSCHE BANK AG
NEW YORK
BRANCH
By /s/ XXXXXX X. XXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
By /s/ XXXXXXX XXXXXXX
------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
ROYAL BANK OF CANADA
By /s/ XXXXXXX X. XXXX
------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
ABN AMRO BANK N.V.
By /s/ XXXXXX NOIQUE
------------------------------------------
Name: Xxxxxx Noique
Title: Group Vice President
By /s/ XXXXX X. XXXXXX
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
BANK ONE, NA (Main Office Chicago)
By /s/ XXXXXX XXXXXXX
------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Director
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WESTLB AG,
NEW YORK BRANCH (f/k/a
Westdeutsche Landesbank Girozentrale)
By
------------------------------------------
Name:
Title:
By
------------------------------------------
Name:
Title:
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