(EXHIBIT 10.45)
AMENDMENT NO. 3 (the "Amendment") dated as of
December 31, 1995 to the Third Amended and Restated Credit
Agreement, dated as of February 9, 1990, as amended and
restated as of December 14, 1990, as of May 1, 1992 and as
of August 31, 1993, (as heretofore amended, the "Credit
Agreement"), among THE ▇▇▇▇▇▇▇-▇▇▇▇▇ COMPANY, a California
corporation (the "Company"), the other Individual Borrowers
referred to therein (collectively with the Company,
"Borrower"), the Lenders referred to therein (the "Lenders")
and IMPERIAL BANK, a California banking corporation as Agent
(the "Agent").
INTRODUCTORY STATEMENT
All capitalized terms not otherwise defined in this Amendment are as
defined in the Credit Agreement.
The Company has requested that certain provisions of the Credit
Agreement be amended and waived as hereinafter set forth.
Accordingly, the parties hereby agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT.
Subject to the conditions set forth in Section 4, the Credit Agreement
is hereby amended as follows:
(A) The definition of "Borrowing Base Availability" appearing in
Article 1 of the Credit Agreement is hereby amended in its entirety to read as
follows:
"'BORROWING BASE AVAILABILITY' shall mean, at any date of
determination, the LESSER of: (i) an amount equal to the sum of (a)
the lesser of the Tier 1 Borrowing Base or $15,000,000; PLUS (b) the
lesser of the Tier 2 Borrowing Base or $4,000,000; PLUS (c) the least
of the Tier 3 Borrowing Base, $6,000,000 or 40% of the Borrowing Base;
PLUS (d) the lesser of the Tier 4 Borrowing Base or $2,500,000, or
(ii) the Commitment then in effect, MINUS, in both cases, the sum of
(A) the aggregate then outstanding principal amount of all Advances
and Letter of Credit Usage under the Credit Facility, and
(B) aggregate amount of any then imposed Third Party Financing
Reserve."
(B) Clause (xiv) of the definition of "Ineligible Receivable(s)"
appearing in Article 1 of the Credit Agreement is hereby amended by adding the
following proviso at the end thereof:
", provided, however, that aggregate receivables owing from TaurusFilm
GmbH & Company included in the Borrowing Base may exceed 15% of the
Borrowing Base but may not exceed $3,000,000."
(C) The following definition is hereby added to Article 1 of the
Credit Agreement in the correct alphabetical sequence"
" 'NET INCOME' shall mean, for any period for which such amount is
being determined, the net income of the Borrower for such period in
accordance with GAAP."
(D) The definition of "Maturity Date" appearing in Article l of the
Credit Agreement is amended in its entirety to read as follows:
"'Maturity Date' shall mean December 31, 1996."
(E) Section 2.2.2 of the Credit Agreement is hereby amended by
changing the date appearing therein to December 31, 1996.
(F) The following clause (c) is hereby added at the end of Section
2.12.2 of the Credit Agreement:
"(c) The Commitment shall automatically be reduced to the amount
set forth in column (y) below as of the date set forth in column (x)
below:
Column (x) Column (y)
---------- ----------
May 31, 1996 $14,583,000
June 28, 1996 14,166,000
July 31, 1996 13,749,000
August 30, 1996 13,332,000
September 30, 1996 12,915,000
October 31, 1996 12,500,000
December 31, 1996 0
(G) Section 5.4 of the Credit Agreement is hereby amended as follows:
(i) to amend the heading of such Section in its entirety to read as follows:
"Borrowing Base Certificates and Liquidity Certificates"; (ii) to insert "(a)"
at the beginning of the existing text of such Section, immediately preceding the
word "Concurrently"; and (iii) to add the following paragraph at the end
thereof:
"(b) On a monthly basis no later than the last day of each
calendar month, Borrower shall deliver to the Agent a liquidity
certificate (in a form mutually agreed upon by Borrower and the Agent
and certified as true and correct by the Chief Financial Officer of
KLC)
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demonstrating in reasonable detail compliance with the provisions of
Section 5.8 hereof as of the last day of the applicable calendar
month, provided, however, that in demonstrating such compliance,
additional availability under the Facility shall be determined using
the Borrowing Base set forth in the Borrowing Base Certificate most
recently delivered to the Agent. Failure by Borrower to fully comply
with the foregoing within ten (10) days of the last day of each
calendar month shall constitute an Event of Default hereunder, and,
without limiting the Agent's, the Issuing Bank's or the Lenders'
rights and remedies, shall entitle the Agent, the Issuing Bank or the
Lenders, as the case may be, without notice, to thereafter refrain
from making any Advances or issuing any Letters of Credit hereunder
until such liquidity certificate has been delivered to the Agent."
(H) Sections 5.7, 5.8, 5.9, 5.10 and 5.11 appearing in Article 5 of
the Credit Agreement are hereby amended by deleting them in their entirety and
replacing them with the following:
"5.7. MINIMUM CONSOLIDATED CAPITAL BASE.
Borrower's Consolidated Capital Base shall not be less than
$36,000,000 during the period from 12/31/95 through 3/30/96;
$37,000,000 during the period from 3/31/96 through 6/29/96;
$39,650,000 during the period from 6/30/96 through 9/29/96;
$40,900,000 during the period from 9/30/96 through 12/30/96 and
$43,400,000 thereafter. For purposes hereof, Consolidated Capital
Base shall mean Tangible Net Worth plus Subordinated Debt. In the
event any item of Product with a budget in excess of $1,500,000 has
not been released or aired within 12 months of its completion,
Tangible Net Worth shall be reduced by the book value of such item of
Product. In addition, to the extent that Subordinated Debt increases
at any time due solely to accreted interest, the amount of such
accreted interest shall also be deducted for purposes of this
calculation.
5.8. LIQUIDITY.
Borrower shall maintain a minimum total amount of cash, cash
equivalents and Borrowing Base Availability of not less than
$2,000,000 at all times. For purposes of this Section 5.8 only, if
the Borrower shall have cash and cash equivalents which total
$1,000,000 or more, then Borrowing Base Availability shall be
determined using only clause (i) of the definition of Borrowing Base
Availability and disregarding clause (ii) of such definition.
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5.9. MINIMUM NET INCOME.
Borrower shall not permit Net Income for the period ended on the
dates listed below in column (x) to be less than the amount listed
opposite such period in column (y) below:
Column (x) Column (y)
---------- ----------
12/31/95 $1,000,000
3/31/96 750,000
6/30/96 2,650,000
9/30/96 1,250,000
12/31/96 2,400,000
5.10 [Intentionally omitted]
5.11 [Intentionally omitted]"
(I) Article 5 of the Credit Agreement is hereby amended by adding the
following new Section 5.31 thereto:
"5.31. ING NOTICES AND DOCUMENTS.
No later than February 29, 1996, the Borrower shall have taken
all appropriate and necessary action (as determined by the Agent in
its reasonable discretion) in connection with the various notices and
documents previously distributed by Internationale Nederlanden (U.S.)
Capital Corporation ("ING") or the Company relating to a possible
financing transaction between ING and the Borrower."
(J) The second sentence of Section 7.2 of the Credit Agreement is
hereby amended as follows: (i) to add the words "and Section 5.4(b)" after the
words "under Section 5.2" appearing therein; and (ii) to insert "(a)" after the
number 5.4 appearing therein.
(K) Article 7 of the Credit Agreement is hereby amended by adding the
following Sections 7.17, 7.18 and 7.19 at the end thereof:
"7.17. CHAIN OF TITLE REVIEW. On or prior to March 31, 1996,
the Agent shall not have received such copyright search reports and
chain of title material on such titles as the Agent shall have
reasonably requested, which reports and materials shall be
satisfactory to the Agent in its reasonable discretion.
7.18. WARRANT AGREEMENT. On or prior to March 31, 1996, the
Agent shall not have received a Warrant Agreement executed by the
Borrower in form and
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substance reasonably satisfactory to the Agent with respect to 500,000
shares of KLC's common stock at an exercise price no less than the
fair market value of such stock on the date the warrant is granted.
7.19. INDEBTEDNESS OF KLC OR IO INTERNATIONAL LTD. KLC or IO
International Ltd. shall default in the payment when due of any
indebtedness or other obligation owed to Imperial Bank (individually
or as agent) or any other lender in connection with the series "Time
Warrior", including, without limitation, the payment of the unpaid
balance of the backend profit participation and the consideration for
the release by Imperial Bank of its participation in the future
revenue stream thereof."
SECTION 2. WAIVERS. The Lenders hereby waive the Borrowers'
compliance with Sections 5.7, 5.8, 5.9, 5.10 and 5.11 of the Credit Agreement as
of and for the period from 9/30/95 through 12/30/95.
SECTION 3. LOAN FEE. The Borrower hereby agrees to pay to the Agent
a loan fee (the "Loan Fee") equal to 2% of the amount of the Commitment upon the
earlier of (i) February 12, 1996 and (ii) execution of this Amendment. The
Agent acknowledges that it has received fifty percent (50%) of the Loan Fee.
SECTION 4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Amendment is subject to the satisfaction in full of the following conditions:
(A) The Agent shall have received executed counterparts of this
Amendment from all the Borrowers and the Lenders;
(B) The Borrower shall have paid to the Agent the unpaid balance of
the Loan Fee referred to in Section 3 of this Amendment in full; and
(C) All legal matters in connection with this Amendment shall be
satisfactory to ▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius LLP, counsel for the Agent.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants that:
(A) 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 such representations and warranties expressly
relate to an earlier date; and
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(B) After giving effect to the provisions of this Amendment, no Event
of Default or event which with the passage of time, or the giving of notice or
both would constitute an Event of Default has occurred and is continuing.
SECTION 6. FULL FORCE AND EFFECT. Except as expressly amended or
waived hereby, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof on the date hereof, and the Credit
Agreement as so amended is hereby ratified and confirmed. As used in the Credit
Agreement, the terms "Agreement", "this Agreement" "herein", "hereinafter",
"hereto", "hereof", and words of similar import, shall, unless the context
otherwise requires, mean the Credit Agreement as amended by this Amendment.
SECTION 7. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 8. 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 9. EXPENSES. Borrower agrees to pay all reasonable
out-of-pocket expenses incurred by the Agent and/or the Lenders in connection
with the preparation, execution and delivery of this Amendment, including, but
not limited to, the reasonable fees and disbursements of ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, counsel for the Agent.
SECTION 10. HEADINGS. The headings of this Amendment are for the
purposes of reference only and shall not affect the construction of this
Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their duly authorized officers, all as of the date and year
first above written.
IMPERIAL BANK
Individually and as Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
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BORROWERS:
THE ▇▇▇▇▇▇▇-▇▇▇▇▇ COMPANY
KL INTERNATIONAL, INC.
(formerly known as AKL
Distributing, Inc., AKL
Distribution, Inc. and KL
Distribution, Inc.)
ACME PRODUCTIONS, INC.
(formerly Acme Game Shows, Inc.)
KL PRODUCTIONS, INC.
(formerly AKL Productions, Inc.
and ▇▇▇▇▇▇▇/▇▇▇▇▇ Company, Inc.)
▇▇▇▇▇▇▇-▇▇▇▇▇ PRODUCTIONS, INC.
(formerly Brave Little Co. and
Atlantic/▇▇▇▇▇▇▇-▇▇▇▇▇
Productions, Inc.)
THE RELATIVES COMPANY
POST AND PRODUCTION SERVICES, INC.
(formerly Post Production
Services, Inc., KW Acquisitions
Corporation and KL Acquisition
Corp.)
L-K ENTERTAINMENT, INC.
FAMILY PICTURES, INC.
INTERNATIONAL COURTROOM
NEWS SERVICE
TROPICAL HEAT, INC.
KL SYNDICATION, INC. (formerly
D.I., Inc.)
ANDRE PRODUCTIONS, INC.
TKLC NO. 2, INC.
TWILIGHT ENTERTAINMENT, INC.
(formerly GENTOX FILMS, INC.)
KLC FILMS, INC.
KL FEATURES, INC. (formerly
KLC, Inc.)
KLF GUILD COMPANY (formerly
KLF Guild Co., Inc.)
KLF DEVELOPMENT CO.
KLTV GUILD CO.
KLTV DEVELOPMENT CO.
▇▇▇▇▇▇▇-▇▇▇▇▇ INTERNATIONAL, INC.
(formerly KLC Worldwide, Inc.)
KL INTERACTIVE MEDIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Name:
Title: Authorized Signatory
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