FINANCING AGREEMENT
The CIT Group/Commercial Services, Inc.
(as Agent and Lender)
And
Fleet Capital Corporation
(as Lenders)
And
Toymax Inc.
And
Go Fly A Kite, Inc.
And
Monogram International, Inc.
And
Funnoodle, Inc.
(as Borrowers)
Dated: December __, 2000
TABLE OF CONTENTS
Page
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SECTION 1. Definitions...................................................1
SECTION 2. Conditions Precedent.........................................15
SECTION 3. Revolving Loans..............................................19
SECTION 4. Intentionally Omitted........................................27
SECTION 5. Letters of Credit............................................27
SECTION 6. Collateral...................................................29
SECTION 7. Representations, Warranties and Covenants....................32
SECTION 8. Interest, Fees and Expenses..................................40
SECTION 9. Powers.......................................................47
SECTION 10. Events of Default and Remedies...............................47
SECTION 11. Termination..................................................51
SECTION 12. Miscellaneous................................................51
SECTION 13. Agreement Among the Lenders..................................53
SECTION 14. Agency.......................................................55
EXHIBIT
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Assignment and Transfer Agreement
SCHEDULES
Schedule 1 - Revolving Credit Commitments to Agent
Schedule 2 - Collateral Information
Schedule 3 - Permitted Encumbrances on [Inventory and Equipment}
Schedule 4 - Disbursement Loan Account
Schedule 5 - License Agreements
Schedule 6 - Litigation
THE CIT GROUP/COMMERCIAL SERVICES, INC., a New York corporation, with
offices located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(hereinafter "CIT"), FLEET CAPITAL CORPORATION, a Rhode Island corporation, with
offices located at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Fleet") and
CIT as agent for the lenders (the "Agent"), and any other party which now or
hereafter becomes a lender hereunder pursuant to Section 13 hereof (individually
a "Lender" and collectively the "Lenders") are pleased to confirm the terms and
conditions under which the Lenders shall make revolving loans, and other
financial accommodations to TOYMAX INC., a New York corporation with a principal
place of business at 000 Xxxx Xxxxxxxx Xx., Xxxxxxxxx, Xxx Xxxx 00000 (herein
"Toymax"), MONOGRAM INTERNATIONAL, INC., a Delaware corporation with a principal
place of business at 00000 00xx Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000 ("Monogram"),
GO FLY A KITE, INC., a Delaware corporation with a principal place of business
at 000 Xxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxxxxxx 00000 (herein "GFK") and FUNNOODLE,
INC., a Delaware corporation, with a principal place of business at 000 Xxxx
Xxxxxxxx Xx., Xxxxxxxxx, Xxx Xxxx 00000 (herein "Funnoodle", and together with
Toymax, Monogram and GFK individually a "Company" and collectively, the
"Companies").
SECTION 1. Definitions
Accounts shall mean all of each of the Companies' now existing and future:
(1) accounts (as defined in the UCC), and any and all other receivables (whether
or not specifically listed on schedules furnished to the Agent), including,
without limitation, all accounts created by, or arising from, all of each of the
Companies' sales, leases, rentals of goods or renditions of services to their
customers, including but not limited to, those accounts arising under any of the
Companies' trade names or styles, or through any of the Companies' divisions;
(2) any and all instruments, documents, chattel paper (including electronic
chattel paper) (all as defined in the UCC); (3) unpaid seller's or lessor's
rights (including rescission, replevin, reclamation, repossession and stoppage
in transit) relating to the foregoing or arising therefrom; (4) rights to any
goods represented by any of the foregoing, including rights to returned,
reclaimed or repossessed goods; (5) reserves and credit balances arising in
connection with or pursuant hereto; (6) guarantees, supporting obligations,
payment intangibles and letter of credit rights (all as defined in the UCC); (7)
insurance policies or rights relating to any of the foregoing; (8) general
intangibles pertaining to any and all of the foregoing (including all rights to
payment, including those arising in connection with bank and non-bank credit
cards), and including books and records and any electronic media and software
thereto; (9) notes, deposits or property of account debtors securing the
obligations of any such account debtors to the Companies or any one of them; and
(10) cash and non-cash proceeds (as defined in the UCC) of any and all of the
foregoing.
Agent Permitted Overadvances shall have the meaning provided for in
Section 14.10 of the Financing Agreement.
Anniversary Date shall mean the date occurring three (3) years from the
Closing Date and the same date in every year thereafter.
Assignment of Credit Balances Agreements shall mean the Toymax Assignment
of Credit Balances Agreement and the Funnoodle Assignment of Credit Balances
Agreement.
Assignment and Transfer Agreement shall mean the Assignment and Transfer
Agreement in the form of Exhibit B hereto.
Availability shall mean, as to the Companies at any time of calculation,
the amount by which: (1) the aggregate amount of the Companies' Borrowing Bases
exceeds (2) the sum of (1) the outstanding aggregate amount of all Obligations,
including without limitation, all Obligations with respect to Revolving Loans,
but excluding the Letters of Credit, and (2) the Availability Reserve.
Availability Reserve shall mean, as to the Companies, the sum of: (1) (1)
two (2) months rental payments or similar charges for the Companies' leased
premises or other Collateral locations for which any Company has not delivered
to the Agent a landlord's waiver in form and substance reasonably satisfactory
to the Agent, plus (2) two (2) months estimated payments plus any other fees or
charges owing by any Company to any applicable warehousemen or third party
processor (as determined by the Agent in its reasonable business judgement),
provided that any of the foregoing amounts shall be adjusted from time to time
hereafter upon (x) delivery to the Agent of any such acceptable waiver, (y) the
opening or closing of a Collateral location and/or (z) any change in the amount
of rental, storage or processor payments or similar charges; and (2) any reserve
which the Agent may reasonably require from time to time pursuant to this
Financing Agreement, including without limitation, for Letters of Credit
pursuant to Paragraph 5.1 of Section 5 hereof; and (3) such other reasonable
reserves as the Agent deems necessary in its commercially reasonable judgment as
a result of (x) negative forecasts and/or trends in the Companies' business,
industry, prospects, profits, operations or financial condition or (y) other
issues, circumstances or facts that could otherwise negatively impact the
Companies, their business, prospects, profits, operations, industry, financial
condition or assets.
Borrowing Base shall mean, as to any Company, the sum of (1) eighty
percent (80%) of such Company's aggregate outstanding Eligible Accounts
Receivable, less 1% for every 1% of dilution of Accounts over 10% for the
trailing 12 month period, plus (2) the lesser of (1) forty percent (40%) of the
aggregate value of such Company's Eligible Inventory, valued at the lower of
cost or market, on a first in, first out basis, as determined by Agent or (2)
the Inventory Loan Cap.
Borrowing Base Certificate shall mean a certificate to be executed and
delivered from time to time by Companies, setting forth the Companies
calculation of the then existing Borrowing Base, in form and substance
satisfactory to Agent.
Business Day shall mean any day on which the Agent and The Chase Manhattan
Bank are open for business.
Capital Expenditures shall mean, for any period, the aggregate
expenditures of the Companies during such period on account of, property, plant,
equipment or similar fixed assets
that, in conformity with GAAP, are required to be reflected in the balance sheet
of the Companies.
Capital Improvements shall mean operating Equipment and facilities (other
than land) acquired or installed for use in any of the Companies' business
operations.
Capital Lease shall mean any lease of property (whether real, personal or
mixed) which, in conformity with GAAP, is accounted for as a capital lease or a
Capital Expenditure in the balance sheet of the Companies.
Change of Control shall mean the Parent shall cease to retain voting
control over all classes of voting stock of Toymax, Monogram, GFK or Funnoodle,
provided, however, that if, subject to the terms of this Agreement,
substantially all of the stock or assets of any one of Monogram, GFK or
Funnoodle are sold or merged, such transaction shall not be a Change of Control.
Chase Bank Rate shall mean the rate of interest per annum announced by The
Chase Manhattan Bank from time to time as its prime rate in effect at its
principal office in New York City. (The prime rate is not intended to be the
lowest rate of interest charged by The Chase Manhattan Bank to its borrowers).
Chase Bank Rate Loans shall mean any Revolving Loans or advances pursuant
to this Financing Agreement made or maintained at a rate of interest based upon
the Chase Bank Rate.
Closing Date shall mean the date that this Financing Agreement has been
duly executed by the parties hereto and delivered to the Agent.
Collateral shall mean all present and future Accounts, Equipment,
Inventory, Documents of Title, General Intangibles, Real Estate, Investment
Property and Other Collateral of each of the Companies and all proceeds and
products thereof.
Collection Days shall mean with respect to non-factored Accounts four (4)
Business Days to provide for the deposit, clearance and collection of checks or
other instruments representing the proceeds of Collateral, the amount of which
has been credited to the Companies' Revolving Loan Account, and for which
interest may be charged on the aggregate amount of such deposits, at the rate
provided for in Paragraph 8.1 of Section 8 of this Financing Agreement.
Commitment shall mean each Lender's commitment to make Revolving Loans and
participate in Letters of Credit in accordance with the terms of this Financing
Agreement (the "Revolving Credit Commitment") in the amount set forth in
Schedule 1 hereto or the Assignment and Transfer Agreement executed by such
Lender.
Combined Balance Sheet shall mean a combined balance sheet for the
Companies, eliminating all inter-company transactions and prepared in accordance
with GAAP.
Combining Balance Sheet shall mean a Combined Balance Sheet plus
individual balance sheets for each of the Companies, showing all eliminations of
inter-company transactions all prepared in accordance with GAAP.
Copyrights shall mean all of each of the Companies' present and hereafter
acquired copyrights, copyright registrations, recordings, applications, designs,
styles, licenses, marks, prints and labels bearing any of the foregoing,
goodwill, any and all general intangibles, intellectual property and rights
pertaining thereto, and all cash and non-cash proceeds thereof.
Craft shall mean Craft Expressions, Inc., a New York corporation, and its
successors and assigns.
Default shall mean any event specified in Section 10 hereof, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act, has been satisfied.
Default Letter of Credit Guaranty Fee shall mean a fee which is two
percent (2%) more than the amount payable with respect to documentary letters of
credit and standby letters of credit, respectively, as set forth in Paragraph
8.3 of Section 8 hereof.
Default Rate of Interest shall mean a rate of interest per annum on any
Obligations hereunder, equal to the sum of: (1) two percent (2%) and (2) the
applicable increment over the Chase Bank Rate (as set forth in paragraph 8.1
hereof) plus the Chase Bank Rate, or the applicable increment over the LIBOR
Rate (as set forth in paragraph 8.14 hereof) plus the LIBOR Rate, which the
Agent shall be entitled to charge the Companies on all Obligations due the Agent
on behalf of the Lenders by the Companies, as further set forth in Paragraph
10.2 of Section 10 of this Financing Agreement.
Depository Accounts shall mean the collection accounts, which are subject
to the Agent's instructions, as specified in Paragraph 3.4 of Section 3 of this
Financing Agreement.
Documents of Title shall mean all of each of the Companies' present and
future documents (as defined in the UCC), and any and all warehouse receipts,
bills of lading, shipping documents, chattel paper, instruments and similar
documents, all whether negotiable or not and all goods and Inventory relating
thereto and all cash and non-cash proceeds of the foregoing.
Early Termination Date shall mean the date on which the Companies or any
one of them terminates this Financing Agreement or the Revolving Line of Credit
which date is prior to an Anniversary Date. Notice of termination, as aforesaid,
by any one Company shall be deemed to be notice by the Companies for purposes
hereof.
Early Termination Fee shall mean the fee in the amount of $100,000 that
the Agent on behalf of the Lenders is entitled to charge the Companies in the
event the Companies or any one of them terminates the Revolving Line of Credit
or this Financing Agreement on a date prior to an Anniversary Date.
EBITDA shall mean, in any period, all earnings of the Companies on a
combined basis for said period before all interest and tax obligations,
depreciation and amortization of the Companies on a combined basis for said
period, all determined in accordance with GAAP on a consistent basis with the
latest audited financial statements of the Parent and its consolidated
subsidiaries, but excluding the effect of extraordinary or non-reoccurring gains
or losses for such period as determined in accordance with GAAP.
Eligible Accounts Receivable shall mean, as to any Company, the gross
amount of such Company's Trade Accounts Receivable that are subject to a valid,
exclusive, first priority and fully perfected security interest in favor of the
Agent, on behalf of the Lenders, except for the Trade Accounts Receivable of
Toymax and Funnoodle all of which are subject to the prior lien of CIT under the
Toymax Factoring Agreement and the Funnoodle Factoring Agreement, respectively,
which conform to the warranties contained herein and which, at all times,
continue to be acceptable to the Agent in the exercise of its reasonable
business judgment, less, without duplication, the sum of: (1) any returns,
discounts, claims, credits and allowances of any nature (whether issued, owing,
granted, claimed or outstanding), and (2) reserves for any such Trade Accounts
Receivable that arise from or are subject to or include: (1) sales to the United
States of America, any state or other governmental entity or to any agency,
department or division thereof, except for any such sales as to which such
Company has complied with the Assignment of Claims Act of 1940 or any other
applicable statute, rules or regulation, to the Agent's satisfaction in the
exercise of its reasonable business judgment; (2) foreign sales, other than
sales which otherwise comply with all of the other criteria for eligibility
hereunder and are (x) secured by letters of credit (in form and substance
satisfactory to the Agent) issued or confirmed by, and payable at, banks having
a place of business in the United States of America, or (y) to customers
residing in Canada; (3) Accounts not credit approved by CIT that remain unpaid
more than sixty (60) days from due date; (4) Accounts subject to offset; (5)
sales to Parent, any other Company, any subsidiary, or to any company affiliated
with the Companies or Parent in any way; (6) xxxx and hold (deferred shipment)
or consignment sales; (7) sales to any customer which is: (A) insolvent, (B) the
debtor in any bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceedings under any federal or state law, (C) negotiating, or has
called a meeting of its creditors for purposes of negotiating, a compromise of
its debts, or (D) financially unacceptable to the Agent or has a credit rating
unacceptable to the Agent; (8) all sales to any customer if fifty percent (50%)
or more of the aggregate dollar amount of all outstanding invoices to such
customer not credit approved by CIT are unpaid more than sixty (60) days from
due date; (9) pre-billed receivables and receivables arising from progress
billing; (10) an amount representing, historically, returns, discounts, claims,
credits, allowances and applicable terms; (11) sales not payable in United
States currency; and (12) any other reasons deemed necessary by the Agent in its
reasonable judgment, including without limitation those which are customary
either in the commercial finance industry or in the lending practices of the
Agent and/or the Lenders; provided however, that notwithstanding anything to the
contrary contained in this definition of Eligible Accounts Receivable, Trade
Accounts Receivable with respect to which CIT has assumed and retains the credit
risk under the Factoring Agreements shall be Eligible Accounts Receivable. As
long as Fleet owns at least fifty percent (50%) of the outstanding Revolving
Loans, Fleet shall have the right to require the Agent to take an appropriate
reserve for Accounts which would be deemed ineligible under standard practice in
the commercial finance industry.
Eligible Inventory shall mean, as to any Company, the gross amount of such
Company's Inventory that is subject to a valid, exclusive, first priority and
fully perfected security interest in favor of the Agent, on behalf of the
Lenders, and which conforms to the warranties contained herein and which, at all
times, continues to be acceptable to the Agent in the exercise of its reasonable
business judgment, less, without duplication, any (1) work-in-process, (2)
supplies (other than raw materials), (3) Inventory not present in the United
States of America, (4) Inventory returned or rejected by any of the Company's
customers (other than goods that are undamaged and resalable in the normal
course of business) and goods to be returned to a Company's suppliers, (5)
Inventory in transit to third parties (other than a Company's agents or
warehouses), or in the possession of a warehouseman, bailee, third party
processor, or other third party, unless such warehouseman, bailee or third party
has executed a notice of security interest agreement (in form and substance
satisfactory to the Agent) and the Agent shall have a first priority perfected
security interest in such Inventory, (6) Inventory subject to a License
Agreement, unless the licensor party thereto has executed and delivered to the
Agent a licensor agreement in form and substance satisfactory to the Agent and
the Agent shall have a first perfected security interest in such inventory and
(7) less any reserves required by the Agent in its reasonable discretion,
including without limitation for special order goods, discontinued, slow-moving
and obsolete Inventory, market value declines, xxxx and hold (deferred
shipment), consignment sales, shrinkage and any applicable customs, freight,
duties and Taxes. As long as Fleet owns at least fifty percent (50%) of the
outstanding Revolving Loans, Fleet shall have the right to require the Agent to
take an appropriate reserve for Inventory which would be deemed ineligible under
standard practice in the commercial finance industry.
Equipment shall mean all of each Companies' present and hereafter acquired
equipment (as defined in the UCC) including, without limitation, all machinery,
equipment, furnishings and fixtures, and all additions, substitutions and
replacements thereof, wherever located, together with all attachments,
components, parts, equipment and accessories installed thereon or affixed
thereto and all proceeds thereof of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as
amended from time to time and the rules and regulations promulgated thereunder
from time to time.
Eurocurrency Reserve Requirements for any day, as applied to a LIBOR Loan,
shall mean the aggregate (without duplication) of the maximum rates of reserve
requirements (expressed as a decimal fraction) in effect with respect to the
Agent and/or any present or future Lender or participant on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
Regulation D or any other applicable regulations of the Board of Governors of
the Federal Reserve System or other governmental authority having jurisdiction
with respect thereto, as now and from time to time in effect, dealing with
reserve requirements prescribed for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by the
Agent and/or any such Lenders or participants (such rate to be adjusted to the
nearest one sixteenth of one percent (1/16 of 1%) or, if there is not a nearest
one sixteenth of one percent (1/16 of 1%), to the next higher one sixteenth of
one percent (1/16 of 1%)).
Event(s) of Default shall have the meaning provided for in Section 10 of
this Financing Agreement.
Factoring Agreements shall mean the Funnoodle Factoring Agreement and the
Toymax Factoring Agreement.
Fiscal Quarter shall mean, with respect to the Companies, each three (3)
month period ending on June 30, September 30, December 31, and March 31 of each
Fiscal Year.
Fiscal Year shall mean each twelve (12) month period commencing on April 1
of each year and ending on the following March 31.
Fleet shall mean Fleet Capital Corporation, a Rhode Island corporation,
and its successors and assigns.
Funnoodle shall mean Funnoodle, Inc., a Delaware corporation, and its
successors and assigns.
Funnoodle Assignment of Credit Balances Agreement shall mean the
Assignment of Factoring Credit Balance Agreement executed on or about the date
hereof by and among Funnoodle and CIT, in its capacity as factor under the
Funnoodle Factoring Agreement and as Agent hereunder.
Funnoodle Factoring Agreement shall mean the Collection Factoring
Agreement dated on or about the date hereof between CIT and Funnoodle, as
amended, supplemented or otherwise modified from time to time.
GAAP shall mean generally accepted accounting principles in the United
States of America as in effect from time to time and for the period as to which
such accounting principles are to apply, provided that in the event the
Companies modify their accounting principles and procedures as applied as of the
Closing Date, the Companies shall provide to the Agent and the Lenders such
statements of reconciliation as shall be in form and substance acceptable to the
Agent and the Lenders.
GFK shall mean Go Fly a Kite, Inc., a Delaware corporation, and its
successors and assigns.
General Intangibles shall mean all of each of the Companies' present and
hereafter acquired general intangibles (as defined in the UCC), and shall
include, without limitation, all present and future right, title and interest in
and to: (1) all Trademarks, tradenames, corporate names, business names, logos
and any other designs or sources of business identities, (2) Patents, together
with any improvements on said Patents, utility models, industrial models, and
designs, (3) Copyrights, (4) trade secrets, (5) licenses, permits and
franchises, (6) all applications with respect to the foregoing, (7) all right,
title and interest in and to any and all extensions and renewals, (8) goodwill
with respect to any of the foregoing, (9) any other forms of similar
intellectual property, (10) all customer lists, distribution agreements, supply
agreements, blue prints, indemnification rights and tax refunds, together with
all monies and claims for monies
now or hereafter due and payable in connection with any of the foregoing or
otherwise, (11) all monies and claims for monies due or to become due under the
Factoring Agreements, and all cash and non-cash proceeds thereof, including,
without limitation, the proceeds or royalties of any licensing agreements
between any Company and any licensee of any such Company's General Intangibles.
Guaranties shall mean the guaranty documents executed and delivered by the
Guarantors guaranteeing the Obligations.
Guarantors shall mean (1) the Parent, (2) each of the Companies and (3)
Craft.
Hedging Debt shall mean have the meaning provided for in the definition
"Obligations".
Indebtedness shall mean, without duplication, all liabilities, contingent
or otherwise, which are any of the following: (1) obligations in respect of
borrowed money or for the deferred purchase price of property, services or
assets, other than Inventory, or (2) lease obligations which, in accordance with
GAAP, have been, or which should be capitalized.
Insurance Proceeds shall mean proceeds or payments from an insurance
carrier with respect to any loss, casualty or damage to Collateral.
Interest Period shall mean:
(1) with respect to any initial request by any of the Companies for a
LIBOR Loan, a one month, two month or three month period commencing on the
borrowing or conversion date with respect to a LIBOR Loan and ending one, two or
three months thereafter, as applicable; and
(2) thereafter with respect to any continuation of, or conversion to, a
LIBOR Loan, at the option of any of the Companies, any one month, two month or
three month period commencing on the last day of the immediately preceding
Interest Period applicable to such LIBOR Loan and ending one, two or three
months thereafter, as applicable;
provided that, the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period would otherwise end on a day which is not a
Working Day, that Interest Period shall be extended to the next succeeding
Working Day, unless the result of such extension would extend such payment into
another calendar month in which event such Interest Period shall end on the
immediately preceding Working Day;
(2) any Interest Period that begins on the last Working Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month, at the end of such Interest Period) shall end on the last
Working Day of a calendar month; and
(3) for purposes of determining the availability of Interest Periods, such
Interest Periods shall be deemed available if (x) Chase Manhattan Bank quotes an
applicable rate or the
Agent determines LIBOR, as provided in the definition of LIBOR, (y) the LIBOR
determined by Chase Manhattan Bank or the Agent will adequately and fairly
reflect the cost of maintaining or funding its loans bearing interest at LIBOR,
for such Interest Period, and (z) such Interest Period will end on or before the
earlier of Anniversary Date or the last day of the then current term of this
Financing Agreement. If a requested Interest Period shall be unavailable in
accordance with the foregoing sentence, the Companies shall continue to pay
interest on the Obligations at the applicable per annum rate based upon the
Chase Bank Rate.
Inventory shall mean all of each of the Companies' present and hereafter
acquired inventory (as defined in the UCC) and including, without limitation,
all merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in all
stages of production from raw materials through work-in-process to finished
goods - and all proceeds thereof of whatever sort.
Inventory Loan Cap shall mean the amount of $7,500,000.
Investment Property shall have the meaning as defined in the UCC.
Issuing Bank shall mean the bank issuing Letters of Credit for the
Companies which shall be Fleet Bank as long as Fleet remains a Lender unless
Fleet Bank elects not to issue a Letter of Credit.
Lender and Lenders shall have the meaning set forth in the introductory
paragraph of this Agreement.
Ledger Debt shall mean all indebtedness of the Companies to CIT on
accounts arising from the sale of goods or services purchased by the Companies
from any entity factored or financed by CIT.
Letters of Credit shall mean all letters of credit issued with the
assistance of the Agent in accordance with Section 5 hereof by the Issuing Bank
for or on behalf of a Company.
Letter of Credit Guaranty shall mean the guaranty delivered by the Agent,
on behalf of the Lenders, to the Issuing Bank of any Company's reimbursement
obligations under the Issuing Bank's reimbursement agreement, application for
Letter of Credit or other like document.
Letter of Credit Guaranty Fee shall mean the fee the Agent may charge the
Companies under Paragraph 8.3 of Section 8 of this Financing Agreement for: (1)
issuing a Letter of Credit Guaranty, and/or (2) otherwise aiding the Companies,
or any one of them, in obtaining Letters of Credit, all pursuant to Section 5
hereof.
Letter of Credit Sub-Line shall mean the commitment of the Agent to assist
the Companies in obtaining Letters of Credit, pursuant to Section 5 hereof, in
an aggregate amount of $3,500,000.
LIBOR shall mean, at any time of determination, and subject to
availability, for each applicable Interest Period, a variable rate of interest
equal to: (1) at the Agent's election (1) the applicable LIBOR quoted to the
Agent by The Chase Manhattan Bank (or any successor thereof), or (2) the rate of
interest determined by the Agent at which deposits in U.S. dollars are offered
for the relevant Interest Period based on information presented on Telerate
Systems at Page 3750 as of 11:00 A.M. (London time) on the day which is two (2)
Business Days prior to the first day of such Interest Period, provided that, if
at least two such offered rates appear on the Telerate System at Page 3750 in
respect of such Interest Period, the arithmetic mean of all such rates (as
determined by the Agent) will be the rate used; divided by (2) a number equal to
1.0 minus the aggregate (but without duplication) of the rates (expressed as a
decimal fraction) of Eurocurrency Reserve Requirements in effect on the day
which is two (2) Business Days prior to the beginning of such Interest Period.
LIBOR Lending Office with respect to the Agent, shall mean the office of
The Chase Manhattan Bank, or any successor thereof, maintained at 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000.
LIBOR Loan shall mean any Revolving Loans made pursuant to this Financing
Agreement which are made or maintained at a rate of interest based upon LIBOR,
provided that (1) no Default or Event of Default has occurred hereunder, which
has not been waived in writing by the Required Lenders, and (2) no LIBOR Loan
shall be made with an Interest Period that ends subsequent to an Anniversary
Date or any applicable Early Termination Date.
License Agreement shall mean a license agreement between a licensor of
popular characters, trademarks and/or other intellectual property and any
Company.
Loan Documents shall mean this Financing Agreement, the Revolving Credit
Notes, the Factoring Agreements, the mortgages and or deeds of trust, the other
closing documents and any other ancillary loan and security agreements executed
from time to time in connection with this Financing Agreement, all as may be
renewed, amended, extended, increased or supplemented from time to time.
Loan Origination Fee shall mean the fee payable to the Agent and the
Lenders (as applicable) in accordance with, and pursuant to, the provisions of
Paragraph 8.7 of Section 8 of this Financing Agreement.
Monogram shall mean Monogram International, Inc., a Delaware corporation,
and its successors and assigns.
Obligations shall mean all Revolving Loans, advances and extensions of
credit made or to be made by the Agent and/or the Lenders to the Companies, or
any one of them, or to others for the Companies' account (including, without
limitation, all Revolving Loans and Letter of Credit Guaranties); any and all
indebtedness and obligations which may at any time be owing by the Companies or
any one of them to the Agent and/or the Lenders howsoever arising, whether now
in existence or incurred by the Companies or any one of them from time to time
hereafter; whether principal, interest, fees, costs, expenses or otherwise;
whether secured by pledge, lien
upon or security interest in any of the Companies' Collateral, assets or
property or the assets or property of any other person, firm, entity or
corporation; whether such indebtedness is absolute or contingent, joint or
several, matured or unmatured, direct or indirect and whether the Companies are
liable to the Agent and/or the Lenders for such indebtedness as principal,
surety, endorser, guarantor or otherwise. Obligations shall also include
indebtedness owing to the Agent and/or the Lenders by the Companies or any one
of them under any Loan Document or under any other agreement or arrangement now
or hereafter entered into between the Companies and the Agent and/or the
Lenders, including, without limitation all indebtedness of any Company to any
Lender or affiliate thereof arising from or relating to any instrument, document
or agreement to which such Company is a party, or by which it or its property is
bound, and which is designed to hedge or protect against interest rate
fluctuations, such as interest rate swaps, interest rate caps, interest rate
collars, and similar kinds of interest hedging products (any such indebtedness
hereinafter referred to as "Hedging Debt"); indebtedness or obligations incurred
by, or imposed on, the Agent and/or the Lenders as a result of environmental
claims arising out of any of the Companies' operations, premises or waste
disposal practices or sites in accordance with paragraph 7.7 hereof; the
Companies' liability to the Agent and/or the Lenders as maker or endorser of any
promissory note or other instrument for the payment of money; the Companies'
liability to the Agent and/or the Lenders under any instrument of guaranty or
indemnity, or arising under any guaranty, endorsement or undertaking which the
Agent and/or the Lenders may make or issue to others for the Companies' account,
including any Letter of Credit Guaranty or other accommodation extended by CIT
with respect to applications for Letters of Credit, the Agent and/or the
Lender's acceptance of drafts or the Agent and/or the Lender's endorsement of
notes or other instruments for the Companies' account and benefit. Obligations
shall include Ledger Debt.
Other Collateral shall mean all of each of the Companies' now owned and
hereafter acquired lockbox, blocked account and any other deposit accounts
maintained with any bank or financial institutions into which the proceeds of
Collateral are or may be deposited; all cash and other monies and property in
the possession or control of the Agent and/or any of the Lenders; all books,
records, ledger cards, disks and related data processing software at any time
evidencing or containing information relating to any of the Collateral described
herein or otherwise necessary or helpful in the collection thereof or
realization thereon; and all cash and non-cash proceeds of the foregoing.
Out-of-Pocket Expenses shall mean all of the Agent's (and the Lenders'
upon the occurrence of an Event of Default which is not waived by the Required
Lenders) present and future expenses incurred relative to this Financing
Agreement or any other Loan Documents, whether incurred heretofore or hereafter,
which expenses shall include, without being limited to: the cost of record
searches, all costs and expenses incurred by the Agent in opening bank accounts,
depositing checks, receiving and transferring funds, and wire transfer charges,
any charges imposed on the Agent due to returned items and "insufficient funds"
of deposited checks and the Agent's standard fees relating thereto, any amounts
paid by, incurred by or charged to, the Agent and/or the Lenders by the Issuing
Bank under a Letter of Credit Guaranty or a Company's reimbursement agreement,
application for Letters of Credit or other like document which pertain either
directly or indirectly to such Letters of Credit, and the Agent's standard fees
relating to the Letters of Credit and any drafts thereunder, reasonable travel,
lodging and similar
expenses of the Agent's personnel in connection with inspecting and monitoring
the Collateral from time to time hereunder, all reasonable counsel fees and
disbursements including those incurred in connection with the negotiation,
preparation, execution or delivery of the Loan Documents or the transactions or
Collateral thereunder or in connection with the modification or enforcement
thereof or protection of or realization upon the Collateral, fees and taxes
relative to the filing of financing statements, all expenses, costs and fees set
forth in Paragraph 10.3 of Section 10 of this Financing Agreement.
Overadvance Rate shall mean a rate equal to one percent (1%) per annum in
excess of the applicable contract rate of interest determined in accordance with
Section 8, Paragraph 8.1(a) of this Financing Agreement.
Overadvances shall mean the amount by which (1) the sum of all outstanding
Revolving Loans, Letters of Credit and advances made to the Companies hereunder
exceed (2) the aggregate Borrowing Bases of the Companies.
Parent shall mean Toymax International, Inc., a Delaware corporation and
its successors and assigns.
Patents shall mean all of each of the Companies' present and hereafter
acquired patents, patent applications, registrations, any reissues or renewals
thereof, licenses, any inventions and improvements claimed thereunder, and all
general intangible, intellectual property and patent rights with respect thereto
of the Companies or any one of them, and all income, royalties, cash and
non-cash proceeds thereof.
Permitted Encumbrances shall mean: (1)liens granted to CIT as of the date
hereof pursuant to the terms of the Factoring Agreements; (2) liens existing on
the date hereof as set forth on Schedule 3 hereto and other liens expressly
permitted, or consented to in writing by the Agent and the Required Lenders; (3)
Purchase Money Liens; (4) liens of local or state authorities for franchise or
other like Taxes, provided that the aggregate amounts of such liens shall not
exceed $250,000.00 in the aggregate at any one time; (5) statutory liens of
landlords and liens of carriers, warehousemen, bailees, mechanics, materialmen
and other like liens imposed by law, created in the ordinary course of business
and for amounts not yet due (or which are being contested in good faith, by
appropriate proceedings or other appropriate actions which are sufficient to
prevent imminent foreclosure of such liens) and with respect to which adequate
reserves or other appropriate provisions are being maintained by each of the
Companies, as applicable, in accordance with GAAP; (6) deposits made (and the
liens thereon) in the ordinary course of business of any of the Companies
(including, without limitation, security deposits for leases, indemnity bonds,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, contracts (other than for the repayment or
guarantee of borrowed money or purchase money obligations), statutory
obligations and other similar obligations arising as a result of progress
payments under government contracts; (7) easements (including, without
limitation, reciprocal easement agreements and utility agreements),
encroachments, minor defects or irregularities in title, variation and other
restrictions, charges or encumbrances (whether or not recorded) affecting the
Real Estate, if applicable, and which in the aggregate (A) do not materially
interfere with the occupation, use or enjoyment by any of the
Companies of its business or property so encumbered and (B) in the reasonable
business judgment of the Agent do not materially and adversely affect the value
of such Real Estate; (8) liens granted the Agent by the Companies or any one of
them; (9) liens of judgment creditors provided such liens do not exceed, in the
aggregate, at any time, $100,000.00 (other than liens bonded or insured to the
reasonable satisfaction of the Agent); and (10) tax liens which are not yet due
and payable or which are being diligently contested in good faith by the
Companies by appropriate proceedings, and which liens are not (x) filed on any
public records, (y) other than with respect to Real Estate, senior to the liens
of the Agent or (z) for Taxes due the United States of America or any state
thereof having similar priority statutes, as further set forth in paragraph 7.6
hereof.
Permitted Indebtedness shall mean: (1) current Indebtedness maturing in
less than one year and incurred in the ordinary course of business for raw
materials, supplies, equipment, services, Taxes or labor; (2) any indebtedness
under any License Agreement; (3) the Indebtedness secured by Purchase Money
Liens; (4) Indebtedness arising under the Letters of Credit and this Financing
Agreement; (5) deferred Taxes; (6) other expenses incurred in the ordinary
course of business; (7) other Indebtedness existing on the date of execution of
this Financing Agreement and listed in the most recent financial statement
delivered to the Agent and the Lenders or otherwise disclosed to the Agent and
the Lenders in writing prior to the Closing Date; and (8) up to $1,000,000 of
other unsecured Indebtedness.
Pledge Agreement shall mean the Pledge and Security Agreement[s] executed
and delivered by the Parent and Toymax in favor of Agent on or about the date
hereof, as the same may be hereafter amended, modified, supplemented or restated
from time to time.
Post-Closing Fees shall mean subsequent to the Closing Date, the Agent's
then standard fees relating to any and all modifications, waivers, releases,
amendments or additional collateral with respect to this Financing Agreement,
the Collateral and/or the Obligations.
Pro Rata Share shall mean, with respect to any Lender, a fraction
expressed as a percentage, the numerator of which shall be the amount of such
Lender's Commitment and the denominator of which shall be all of the Lenders'
Commitments, as adjusted from time to time in accordance with Paragraph 13.9 of
Section 13 hereof , provided, that, upon the effective date of termination of
this Financing Agreement, the numerator shall be the unpaid amount of such
Lender's Revolving Loans and its interest in the Letters of Credit and the
denominator shall be the aggregate amount of all unpaid Revolving Loans and
Letters of Credit.
Purchase Money Liens shall mean liens on any item of Equipment acquired
after the date of this Financing Agreement provided that (1) each such lien
shall attach only to the property to be acquired and (2) a description of the
Equipment so acquired is furnished to the Agent.
Real Estate shall mean each of the Companies' fee and/or leasehold
interests in the real property.
Required Lenders shall mean the Lenders holding aggregate Commitments
under this Financing Agreement in an amount of 51% or more.
Revolving Credit Note shall mean the note, in the form of Exhibit A
hereto, executed and delivered by the Companies to each of the Lenders to
evidence such Lender's Pro Rata share of the Revolving Loans pursuant to, and
repayable in accordance with, the provisions of Section 3 of this Financing
Agreement.
Revolving Line of Credit shall mean the aggregate amount up to which the
Lenders may in their sole discretion make Revolving Loans and advances pursuant
to Section 3 of this Financing Agreement and issue Letters of Credit Guaranties
pursuant to Section 5 hereof to the Companies, in the aggregate amount of
$40,000,000.
Revolving Loan Account shall mean the accounts on the Agent's books, in
each Company's name in which each Company will be charged with all applicable
Obligations under this Financing Agreement.
Revolving Loans shall mean the Revolving Loans and advances made, from
time to time, to or for the account of each of the Companies by the Agent on
behalf of the Lenders pursuant to Section 3 of this Financing Agreement.
Settlement Date shall mean the date, weekly, and more frequently, at the
discretion of the Agent, upon the occurrence of an Event of Default or a
continuing decline or increase of the Revolving Loans, that the Agent and the
Lenders shall settle amongst themselves so that (x) the Agent shall not have, as
the Agent, any money at risk and (y) on such Settlement Date each of the Lenders
shall have a Pro Rata Share of all outstanding Revolving Loans and Letters of
Credit, provided that each Settlement Date for a Lender shall be a Business Day
on which such Lender and its bank are open for business.
Settlement Period shall have the meaning set forth in Paragraph 3.1(d) of
Section 3.
Taxes shall mean all federal, state, municipal and other governmental
taxes, levies, charges, claims and assessments which are or may be due by the
Companies with respect to their business, operations, Collateral or otherwise.
Total Assets shall mean total assets determined in accordance with GAAP,
on a basis consistent with the latest audited financial statements of the Parent
and its consolidated subsidiaries.
Total Liabilities shall mean total liabilities determined in accordance
with GAAP, on a basis consistent with the latest audited financial statements of
the Parent and its consolidated subsidiaries.
Toymax shall mean Toymax Inc., a New York corporation, and its successors
and assigns.
Toymax Assignment of Credit Balances Agreement shall mean the Assignment
of Factoring Credit Balances Agreement executed on or about the date hereof by
and among Toymax and CIT, in its capacity as factor under the Toymax Factoring
Agreement and as Agent hereunder.
Toymax Factoring Agreement shall mean the Collection Factoring Agreement
dated February 2, 1999 between CIT (as assignee of Congress Financial
Corporation (successor by merger to Congress Xxxxxxx Corporation)) and Toymax,
as amended, supplemented or otherwise modified from time to time.
Trade Accounts Receivable shall mean that portion of each of the
Companies' Accounts which arises from the sale of Inventory or the rendition of
services in the ordinary course of the Companies' business.
Trademarks shall mean all of each of the Companies' present and hereafter
acquired trademarks, trademark registrations, recordings, applications,
tradenames, trade styles, service marks, prints and labels (on which any of the
foregoing may appear), licenses, reissues, renewals, and any other intellectual
property and trademark rights pertaining to any of the foregoing, together with
the goodwill associated therewith, and all cash and non-cash proceeds thereof.
UCC shall mean the Uniform Commercial Code as the same may be amended and
in effect from time to time in the State of New York.
Working Day shall mean any Business Day on which dealings in foreign
currencies and exchanges between banks may be transacted.
SECTION 2. Conditions Precedent
2.1. The right of the Companies to request the initial Revolving Loans
hereunder is subject to the satisfaction of, extension of or waiver in writing
of, on or prior to, the Closing Date, the following conditions precedent:
(1) Revolving Credit Notes - The Companies shall have executed and
delivered to each of CIT and Fleet a Revolving Credit Note in the principal
amount of $20,000,000.
(2) Lien Searches - the Agent shall have received tax, judgment and
Uniform Commercial Code searches satisfactory to the Agent for all locations
presently occupied or used by each of the Companies.
(3) Casualty Insurance - Each of the Companies shall have delivered to the
Agent evidence satisfactory to the Agent that casualty insurance policies
listing the Agent as additional insured, loss payee or mortgagee, as the case
may be, are in full force and effect, all as set forth in Paragraph 7.5 of
Section 7 of this Financing Agreement.
(4) UCC Filings - Any financing statements required to be filed in order
to create, in favor of the Agent, on behalf of the Lenders, a first perfected
security interest in the Collateral, subject only to the Permitted Encumbrances,
shall have been properly filed in each office in each jurisdiction required in
order to create in favor of the Agent for the benefit of the Lenders a perfected
lien on the Collateral. The Agent shall have received acknowledgment copies of
all such filings (or, in lieu thereof, the Agent shall have received other
evidence satisfactory to the Agent that all such filings have been made) and the
Agent shall have received evidence that all necessary filing fees and all taxes
or other expenses related to such filings have been paid in full.
(5) Board Resolutions - The Agent shall have received a copy of the
resolutions of the Board of Directors of each of the Companies and the
Guarantors (as the case may be) authorizing the execution, delivery and
performance of (1) this Financing Agreement, (2) the Guaranties, and (3) any
related agreements, in each case certified by the Secretary or Assistant
Secretary of each of the Companies and the Guarantors (as the case may be) as of
the date hereof, together with a certificate of the Secretary or Assistant
Secretary of the Companies and the Guarantors (as the case may be) as to the
incumbency and signature of the officers of each of the Companies and/or the
Guarantors executing such Loan Documents and any certificate or other documents
to be delivered by them pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(6) Corporate Organization - The Agent shall have received (1) a copy of
the Certificate of Incorporation of each of the Companies and the Guarantors
certified by the Secretary of State of the states of their incorporation, and
(2) a copy of the By-Laws of each of the Companies certified by the respective
Secretary or Assistant Secretary thereof, all as amended through the date
hereof.
(7) Officer's Certificates - The Agent shall have received an executed
Officer's Certificate of each of the Companies, satisfactory in form and
substance to the Agent, certifying that (1) the representations and warranties
contained herein are true and correct in all material respects on and as of the
Closing Date; (2) each of the Companies are in compliance with all of the terms
and provisions set forth herein; and (3) no Default or Event of Default has
occurred.
(8) Opinions - Counsel for the Companies and the Guarantors shall have
delivered to the Agent on behalf of the Lenders opinions satisfactory to the
Agent opining, inter alia, that, subject to the (1) filing, priority and
remedies provisions of the Uniform Commercial Code, (2) the provisions of the
Bankruptcy Code, insolvency statutes or other like laws, (3) the equity powers
of a court of law and (4) such other matters as may be agreed upon with the
Agent; this Financing Agreement, the Guaranty and all other Loan Documents of
each of the Companies and the Guarantors are (A) valid, binding and enforceable
according to their terms, (B) are duly authorized, executed and delivered, and
(C) do not violate any terms, provisions, representations or covenants in the
charter or by-laws of each of the Companies or the Guarantors or, to the best
knowledge of such counsel, of any loan agreement, mortgage, deed of trust, note,
security or pledge agreement, indenture or other contract to which the
Companies, or any one of them, or the Guarantors are signatories or by which the
Companies, or any one of them, or the Guarantors or their assets are bound.
(9) Absence of Default - No Default or Event of Default shall have
occurred and no material adverse change shall have occurred in the financial
condition, business, prospects, profits, operations or assets of any of the
Companies or the Parent, in the case of Toymax, Funnoodle, GFK and the Parent
since March 31, 2000 and in the case of Monogram since September 30 2000.
(10) Legal Restraints/Litigation - As of the Closing Date, except as
listed in Schedule G, there shall be no: (x) litigation, investigation or
proceeding (judicial or administrative) pending or threatened against the
Companies or any one of them, Parent or the Guarantors or their assets, by any
agency, division or department of any county, city, state or federal government
arising out of this Financing Agreement; (y) injunction, writ or restraining
order restraining or prohibiting the financing arrangements contemplated under
this Financing Agreement; or (z) suit, action, investigation or proceeding
(judicial or administrative) pending against the Companies or any one of them or
the Guarantors or their assets, which, in the opinion of the Agent, if adversely
determined, could have a material adverse effect on the business, operation,
assets, financial condition or Collateral of the Companies or any one of them
and/or the Guarantors.
(11) Guaranties - The Guarantors shall have executed and delivered to the
Agent guaranties, in form acceptable to the Agent, guaranteeing all present and
future Obligations of the Companies.
(12) Cash Budget Projections - The Agent shall have received, reviewed and
been satisfied with a twelve (12) month cash budget projection prepared by each
of the Companies on the form satisfactory to the Agent.
(13) Trademark Collateral Assignment and Security Agreements - Each of
Toymax, GFK and Monogram shall have executed and delivered to the Agent on
behalf of the Lenders a Trademark Collateral Assignment and Security Agreement
together with a duly executed special power of attorney with respect thereto,
all in form and substance satisfactory to the Agent.
(14) Patent Collateral Assignment and Security Agreement - Toymax shall
have executed and delivered to the Agent on behalf of the Lenders a Trademark
Collateral Assignment and Security Agreement together with a duly executed
special power of attorney, all in form and substance satisfactory to the Agent.
(15) General Security Agreements - Each of the Parent and Craft shall have
executed and delivered to the Agent on behalf of the Lenders a General Security
Agreement in form and substance satisfactory to the Agent.
(16) Pledge Agreements - Parent and Toymax, as the case may be, shall (1)
execute and deliver to the Agent on behalf of the Lenders a Pledge and Security
Agreement pledging to the Agent on behalf of the Lenders as additional
collateral for the Obligations of the Companies not less than 100% of the issued
and outstanding stock of each of the Companies, not less than 75% of the stock
of Craft and, (2) deliver to the Agent on behalf of the Lenders the stock
certificates evidencing such stock together with duly executed stock powers
(undated and in-blank) with respect thereto, all in form and substance
satisfactory to the Agent.
(17) Funnoodle Factoring Agreement - Funnoodle shall have executed and
delivered to CIT a Collection Factoring Agreement in form and substance
satisfactory to CIT.
(18) Assignment of Factoring Credit Balance Agreements - Toymax shall have
executed and delivered to the Agent the Toymax Assignment of Factoring Credit
Balances Agreement and Funnoodle shall have executed and delivered to the Agent
the Funnoodle Assignment of Factory Credit Balances Agreement.
(19) Additional Documents - Each of the Companies shall have executed and
delivered to the Agent all Loan Documents necessary (as determined by Agent) to
consummate the lending arrangement contemplated between the Companies, the Agent
and the Lenders.
(20) Disbursement Authorization - The Companies shall have delivered to
the Agent all information necessary for the Agent and the Lenders to issue wire
transfer instructions on behalf of each of the Companies for the initial and
subsequent Revolving Loans to be made under this Financing Agreement including,
but not limited to, disbursement authorizations in form acceptable to the Agent.
(21) Examination & Verification - The Agent and each of the Lenders shall
have completed, to their respective satisfaction, an examination and
verification of the Accounts, Inventory, financial statements, books and records
of each of the Companies which examination shall indicate that, after giving
effect to all Revolving Loans, advances and extensions of credit to be made at
closing, the Companies shall have an aggregate opening additional Availability
of at least $5,000,000, as evidenced by a Borrowing Base Certificate delivered
by each of the Companies to the Agent as of the Closing Date. It is understood
that such requirement contemplates that all debts and obligations are current,
and that all payables are being handled in the normal course of the Companies'
business and consistent with their past practice.
(22) Depository Accounts - Each of the Companies shall have established a
system of lockbox and bank accounts with respect to the collection of Accounts
and the deposit of proceeds of Collateral as shall be acceptable to the Agent in
all respects. Such accounts shall be subject to three party agreements (between
the Companies, the Agent and the depository bank), which shall be in form and
substance satisfactory to the Agent. So long as Fleet remains a Lender, a lock
box and blocked account shall be maintained by the Companies at Fleet Bank as
long as Fleet Bank elects.
(23) Termination of Existing Credit Agreement - Toymax' and GFK's existing
credit agreement with State Street Bank shall be: (1) terminated; (2) all
obligations of the Companies and/or the Guarantors thereunder shall be paid or
satisfied in full, including through utilization of the proceeds of the initial
Revolving Loans to be made under this Financing Agreement; and (3) all liens or
security interests in favor of State Street Bank on the Collateral and otherwise
in connection therewith shall be terminated and/or released upon such payment.
(24) Equity Investment - Parent and/or the Companies shall provide the
Agent with documentation evidencing a cash contribution to the capital of the
Parent in the amount of $4,000,000 and the contribution of such cash
contribution by the Parent to one or more of the Companies.
(25) Schedules - The Companies or their counsel shall provide the Agent
with schedules of: (a) any of the Companies' (i) Trademarks, (ii) Patents, and
(iii) Copyrights, as applicable and all in such detail as to provide appropriate
recording information with respect thereto, (b) any tradenames, (c) monthly
rental payments for any leased premises or any other premises where any
Collateral may be stored or processed, and (d) Permitted Liens, all of the
foregoing in form and substance satisfactory to the Agent.
Upon the execution of this Financing Agreement and the initial disbursement of
Revolving Loans hereunder, all of the above Conditions Precedent shall have been
deemed satisfied except as otherwise set forth hereinabove or as the Companies
and the Agent shall otherwise agree in writing.
2.2. Conditions to Each Extension of Credit
Subject to the terms of this Financing Agreement, including without
limitation the Agent's rights pursuant to paragraph 10.2 of Section 10 hereof,
any extension of credit requested to be made by the Agent to any of the
Companies on any date (including without limitation, the initial extension of
credit) is subject to the satisfaction of the following conditions precedent:
(1) Representations and Warranties - Each of the representations and
warranties made by each of the Companies in or pursuant to this Financing
Agreement shall be true and correct in all material respects on and as of such
date as if made on and as of such date.
(2) No Default - No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extension of credit
requested to be made on such date.
(3) Borrowing Base - Except for Agent Permitted Overadvances and
except as may be otherwise agreed to from time to time by the Agent, the
Required Lenders and the Companies in writing, after giving effect to the
extension of credit requested to be made by any of the Companies on such date,
the aggregate outstanding balance of the Revolving Loans and outstanding Letters
of Credit owing by the Companies will not exceed the lesser of (1) the Revolving
Line of Credit or (2) the aggregate amount of the Companies' Borrowing Bases.
Each borrowing by a Company hereunder shall constitute a representation and
warranty by the Companies as of the date of such loan or advance that each of
the representations, warranties and covenants contained in the Financing
Agreement have been satisfied and are true and correct, except as the Companies
and the Agent and/or the Required Lenders shall otherwise agree herein or in a
separate writing.
SECTION 3. Revolving Loans
3.1. (1) The Agent and the Lenders shall, in their sole discretion,
subject to the terms and conditions of this Financing Agreement, from time to
time, and within (x) Availability and (y) the Revolving Line of Credit (but
subject to the Agent's and the Lenders' right, in their sole discretion, to make
Overadvances), make Revolving Loans and advances to Toymax, as agent for the
Collective Borrowers (as defined in Paragraph 3.6(b), on a revolving basis (i.e.
subject to the limitations set forth herein, Toymax may borrow, repay and
re-borrow Revolving Loans). Such Revolving Loans and advances shall not exceed
the aggregate amount of the Companies' Borrowing Bases. All requests for
Revolving Loans must be received by an officer of the Agent no later than (1)
1:00 p.m., New York time, of the Business Day on which any such Chase Bank Rate
Loans and advances are required or (2) three Business Days prior to any
requested LIBOR Loan. Subject to paragraph 14.10 hereof, should the Agent, on
behalf of the Lenders, for any reason honor requests for Overadvances, such
Overadvances shall be made in the Agent's sole discretion, subject to any
additional terms the Agent and/or any Lender deems necessary.
(2) Whenever the Companies desire the Agent, on behalf of the
Lenders, to make a Revolving Loan pursuant to this Section 3, Toymax, as agent
for the Collective Borrowers (as defined in Paragraph 3.6(b)), shall give the
Agent notice in writing or irrevocable telephonic notice confirmed promptly in
writing, specifying (A) the amount to be borrowed, and (B) the requested
borrowing date (which shall be a Business Day and shall be prior to: the
Anniversary Date, and if applicable, any Early Termination Date, or prior to any
effective termination date of this Financing Agreement, all as further set forth
herein), and (C) specify whether the requested Revolving Loan shall bear
interest at the Chase Bank Rate or at the LIBOR Rate, as further set forth
herein. All requests for Revolving Loans must be received by an officer of the
Agent no later than 1:00 P.M. New York time on any borrowing date. The procedure
for Revolving Loans to be made on a requested borrowing date may be such other
procedure as is mutually satisfactory to the Companies, the Agent and the
Required Lenders. The Agent shall make Revolving Loans and advances to the loan
disbursement account specified on Schedule 4 hereto.
(3) Notwithstanding any other provision of this Financing Agreement,
in order to reduce the number of fund transfers among the Companies, the Lenders
and the Agent, the Companies, the Lenders and the Agent agree that the Agent
may, but shall not be obligated to fund, and the Companies and the Lenders
hereby irrevocably authorize the Agent to fund, on behalf of the Lenders,
Revolving Loans pursuant to Section 3.1(a), subject to the procedures for
settlement set forth below, provided, however, that (1) the Agent shall in no
event fund any Revolving Loan or request that any Lender so fund such Revolving
Loan if the Agent shall have received written notice from the Required Lenders
on the Business Day prior to the date of the proposed Revolving Loan that one or
more of the conditions precedent contained in Section 2.2 hereof will not be
satisfied on the date of the proposed Revolving Loan and (2) the Agent shall not
otherwise be required to determine that, or take notice whether, the conditions
precedent in Section 2.2 have been satisfied. If the Agent elects not to fund a
requested Revolving Loan on behalf of the Lenders promptly after receipt of a
request for a Revolving Loan pursuant to Section 3.1(b), the Agent shall so
notify each Lender. If the Agent notifies the Lenders that it will not fund a
request for a Revolving Loan on behalf of the Lenders, each Lender shall make
its Pro Rata Share of the Revolving Loan so requested available to the Agent, in
immediately available funds, at the payment office of the Agent designated by
it, no later than 2:00 p.m. (New York time) on the date of the Revolving Loan so
requested, in which case the Agent will then disburse to the Companies
disbursement account the proceeds of all amounts so received by the Agent in
accordance with Sections 3.1(a) and 3.1(b).
(4) Settlement Procedure. With respect to all periods for which the
Agent, on behalf of the Lenders, has funded Revolving Loans pursuant to Section
3.1(c), on the first Business Day after the last day of each week, or such
shorter period as the Agent may from time to time select (any such week or
shorter period being herein called a "Settlement Period"), the Agent shall
notify each Lender of the unpaid principal amount of the Revolving Loans
outstanding at the close of business on the last Business Day of such Settlement
Period. In the event that such amount is greater than the unpaid principal of
the Revolving Loans outstanding at the close of business on the last Business
Day of the Settlement Period immediately preceding such Settlement Period (or,
if there has been no preceding Settlement Period, the amount of the Revolving
Loans made on the date of such Lender's initial funding) each Lender shall
promptly make available to the Agent such Lender's Pro Rata Share of the
difference in immediately available funds. In the event that such amount is less
than such unpaid principal amount, the Agent shall promptly pay over to each
other Lender such Lender's Pro Rata Share of the difference in immediately
available funds. In addition, if the Agent shall so request at any time when a
Default or an Event of Default shall have occurred and be continuing or any
other event shall have occurred as a result of which the Agent shall determine
that it is desirable to present claims against the Borrower for repayment, each
Lender shall promptly remit to the Agent or, as the case may be, the Agent shall
promptly remit to each Lender, sufficient funds to adjust the interests of the
Lenders in the then outstanding Revolving Loans to such an extent that, after
giving effect to such adjustment, each Lender's interest in the then outstanding
Revolving Loans will be equal to its Pro Rata Share thereof. If a Lender
receives a request for funds from the Agent pursuant to this Section 3(a) by
1:00 P.M., then such Lender shall remit such funds to the Agent by 4:00 P.M. of
the same Business Day. If a Lender receives such request for funds after 1:00
P.M., then such Lender shall remit such funds to the Agent by 4:00 P.M. of the
immediately following Business Day. The obligations of the Agent and each Lender
under this Section shall be absolute and unconditional. Each Lender shall only
be entitled to receive interest on its Pro Rata Share of the Revolving Loans
which have been actually funded by such Lender.
(5) The Companies' Revolving Loan Obligations hereunder shall be
evidenced by Revolving Credit Notes in the form of Exhibit A attached hereto.
3.2. In furtherance of the continuing assignment and security interest in
each of the Companies' Accounts and Inventory, each of the Companies will, upon
the creation of Accounts and purchase or acquisition of Inventory, execute and
deliver to the Agent in such form and manner as the Agent may reasonably
require, solely for the Agent's convenience in maintaining records of
Collateral, such confirmatory schedules of Accounts and Inventory as the Agent
may reasonably request, including, without limitation, schedules of Accounts on
the 1st and 15th of each month (or if any such day is not a Business Day, on the
next succeeding Business Day) and monthly schedules of Inventory, all in form
and substance satisfactory to the Agent, and each of the Companies will deliver
to the Agent and each Lender such other appropriate reports
designating, identifying and describing the Accounts and Inventory as the Agent
and each Lender may reasonably request, and provided further that the Agent may
request any such information more frequently, from time to time, upon its
reasonable prior request. In addition, upon the Agent's request, each of the
Companies shall provide the Agent with copies of agreements with, or purchase
orders from, such Companies' customers, and copies of invoices to customers,
proof of shipment or delivery, access to their computers, electronic media and
software programs associated therewith (including any electronic records,
contracts and signatures) and such other documentation and information relating
to said Accounts and other Collateral as the Agent may reasonably require.
Failure to provide the Agent with any of the foregoing shall in no way affect,
diminish, modify or otherwise limit the security interests granted herein. Each
of the Companies hereby authorizes the Agent to regard the Companies' (or a
Company's) printed name or rubber stamp signature on assignment schedules or
invoices as the equivalent of a manual signature by one of the Companies'
authorized officers or agents.
3.3. Each of the Companies hereby represents and warrants that: each
Trade Account Receivable is based on an actual and bona fide sale and delivery
of Inventory or rendition of services to their respective customers, any other
Account is bona fide, made by the Companies in the ordinary course of their
business; the Inventory being sold, and the Trade Accounts Receivable created,
are the exclusive property of the Companies and are not and shall not be subject
to any lien, consignment arrangement, encumbrance, security interest or
financing statement whatsoever, other than the Permitted Encumbrances; the
invoices evidencing such Trade Accounts Receivable are in the name of the
Companies; and the Companies' customers have accepted the Inventory or services,
owe and are obligated to pay the full amounts stated in the invoices according
to their terms, without dispute, offset, defense, counterclaim or contra, except
for disputes and other matters arising in the ordinary course of business with
respect to which the Companies have complied with the notification requirements
of Paragraph 3.5 of this Section 3. Each of the Companies agrees to give the
Agent and Fleet (as long as Fleet owns at least 50% of the outstanding Revolving
Loans) written notice of any invoice to be issued by it which will grant more
than 60 day terms to the customer, such notice to be given at least 3 days prior
to the issuance of such invoice. The Agent and Fleet (as long as Fleet owns at
least 50% of the outstanding Revolving Loans) shall have the right in their
discretion whether or not to accept such invoices as Eligible Accounts
Receivable. The Companies confirm to the Agent that any and all Taxes or fees
relating to their business, their sales, the Accounts or Inventory relating
thereto, are their sole responsibility and that same will be paid by the
Companies when due, subject to Paragraph 7.6 of Section 6 of this Financing
Agreement, and that none of said Taxes or fees represent a lien on or claim
against the Accounts. The Companies hereby further represent and warrant that
they shall not acquire any Inventory on a consignment basis, nor co-mingle their
Inventory with any of their customers or any other person, including pursuant to
any xxxx and hold sale or otherwise, and that their Inventory is marketable to
their customers in the ordinary course of business of the Companies, except as
it may otherwise report in writing to the Agent pursuant to Paragraph 3.5 hereof
from time to time. Each of the Companies also warrants and represents that its
is a duly and validly existing corporation and is qualified in all states where
the failure to so qualify would have an adverse effect on its business or its
ability to enforce collection of Accounts due from customers residing in that
state. The Companies agree to maintain such books and records regarding Accounts
and Inventory as the Agent may reasonably require and agree that the books and
records of the Companies will reflect the Agent's
interest in the Accounts and Inventory. All of the books and records of the
Companies will be available to the Agent at normal business hours, including any
records handled or maintained for the Companies or any one of them by any other
company or entity.
3.4. (1) Until the Agent has advised the Companies to the contrary after
the occurrence of an Event of Default, the Companies, at their expense, will
enforce, collect and receive all amounts owing on their respective Accounts in
the ordinary course of their business and any proceeds they so receive shall be
subject to the terms hereof, and held on behalf of and in trust for the Agent on
behalf of the Lenders. Such privilege shall terminate at the election of the
Agent, upon the occurrence of an Event of Default, and until such Event of
Default is waived in writing by the Required Lenders. Any checks, cash, credit
card sales and receipts, notes or other instruments or property received by a
Company with respect to any Collateral, including Accounts, shall be held by
such Company in trust for the Agent, on behalf of the Lenders, separate from
such Company's own or the Companies' property and funds, and promptly turned
over to the Agent with proper assignments or endorsements by deposit to the
Depository Accounts. Each of the Companies shall: (1) indicate on all of their
invoices except for the invoices assigned to CIT pursuant to the Factoring
Agreements that funds should be delivered to and deposited in a Depository
Account; (2) direct all of their account debtors to deposit any and all proceeds
of Collateral into the Depository Accounts; (3) irrevocably authorize and direct
any banks which maintain the Companies' initial receipt of cash, checks and
other items to promptly wire transfer all available funds to a Depository
Account; and (4) advise all such banks of the Agent's security interest in such
funds. The Companies shall provide the Agent with prior written notice of any
and all deposit accounts opened or to be opened subsequent to the Closing Date.
All amounts received by the Agent in payment of Accounts will be credited to the
Revolving Loan Account when received by the Agent. However, the Companies'
Revolving Loan Account will be charged monthly with the cost of four (4)
additional Business Days on all such collections at the interest rate (based
upon the Chase Bank Rate) applicable to Revolving Loans. No checks, drafts or
other instrument received by the Agent shall constitute final payment to the
Agent and/or the Lenders unless and until such instruments have actually been
collected.
(2) Each of GFK and Monogram shall, as the Agent requests and at such
Companies' expense, direct that all remittances and other proceeds of Accounts
and all proceeds of other Collateral be sent to a lock box designated by the
Agent and deposited in to a Blocked Account (as defined below). Each of GFK and
Monogram shall establish and maintain, in their name and at their expense,
Deposit Accounts with such banks as are acceptable to the Agent (the "Blocked
Accounts") into which each of such Companies shall promptly cause to be
deposited: (1) all proceeds of Collateral received by any of such Companies,
including all amounts payable to such Companies from credit card issuers and
credit card processors, and (2) all amounts on deposit in deposit accounts used
by such Companies at each of their locations, all as further provided in
Paragraph 3.4(a) above. The banks at which the Blocked Accounts are established
shall enter into an agreement, in form and substance satisfactory to the Agent
(the "Blocked Account Agreements"), providing that all cash, checks and items
received or deposited in the Blocked Accounts are the property of the Agent,
that the depository bank has no lien upon, or right of set off against, the
Blocked Accounts and any cash, checks, items, wires or other funds from time to
time on deposit therein, except as otherwise provided in the Blocked Account
Agreements, and
that automatically, on a daily basis the depository bank will wire, or otherwise
transfer, in immediately available funds, all funds received or deposited into
the Blocked Accounts to such bank account as the Agent may from time to time
designate for such purpose. GFK and Monogram hereby confirm and agree that all
amounts deposited in such Blocked Accounts and any other funds received and
collected by the Agent, whether as proceeds of Inventory or other Collateral or
otherwise, shall be the property of the Agent. In order to implement the
provisions of this subparagraph (b), each of GFK and Monogram shall execute and
deliver to CIT such lock box agreements and Blocked Account Agreements as CIT
shall request.
3.5. The Companies agree to notify the Agent: (1) of any matters
affecting the value, enforceability or collectibility of any Account and of all
customer disputes, offsets, defenses, counterclaims, returns, rejections and all
reclaimed or repossessed merchandise or goods, and of any adverse effect in the
value of their Inventory, in their weekly and monthly collateral reports (as
applicable) provided to the Agent hereunder, in such detail and format as the
Agent may reasonably require from time to time and (2) promptly of any such
matters which are material, as a whole, to the Accounts and/or the Inventory.
The Companies agree to issue credit memoranda promptly (with duplicates to the
Agent upon request after the occurrence of an Event of Default) upon accepting
returns or granting allowances. Upon the occurrence of an Event of Default
(which is not waived in writing by the Required Lenders or cured to Agent's and
the Required Lenders' satisfaction,) and on notice from the Agent, the Companies
agree that all returned, reclaimed or repossessed merchandise or goods shall be
set aside by the Companies, marked with the Agent's name (as secured party) and
held by the Companies for the Agent's account.
3.6. (1) Subject to the provisions of paragraph (b) below, the Agent
shall maintain a Revolving Loan Account on its books in which each of the
Companies will be charged with all Revolving Loans and advances made by the
Agent to such Company or for its account, and with any other Obligations,
including any and all costs, expenses and reasonable attorney's fees which the
Agent may incur in connection with the exercise by or for the Agent of any of
the rights or powers herein conferred upon the Agent, or in the prosecution or
defense of any action or proceeding to enforce or protect any rights of the
Agent in connection with this Financing Agreement, the other Loan Documents or
the Collateral assigned hereunder, or any Obligations owing by such Company. The
Companies will be credited with all amounts received by the Agent and/or the
Lenders from the Companies or from others for the Companies' account, including,
as above set forth, all amounts received by the Agent in payment of Accounts,
and such amounts will be applied to payment of the Obligations as set forth
herein. In no event shall prior recourse to any Accounts or other security
granted to or by the Companies be a prerequisite to the Agent's right to demand
payment of any Obligation. Further, it is understood that the Agent and/or the
Lenders shall have no obligation whatsoever to perform in any respect any of the
Companies' contracts or obligations relating to the Accounts.
(2) In order to utilize the collective borrowing powers of the
Companies (collectively the "Collective Borrowers") in the most efficient and
economical manner, and in order to facilitate the handling of the accounts of
the Collective Borrowers on the Agent's books, the Collective Borrowers have
requested, and the Agent has agreed to handle accounts of the Collective
Borrowers on the Agent's books on a combined basis, all in accordance with the
following provisions: (1) In lieu of maintaining separate accounts on the
Agent's books in the
name of each of the Collective Borrowers, the Agent shall maintain one account
under the name: Toymax (herein the "Collective Account"). Confirmatory
assignments of Accounts will be made by Toymax and Funnoodle to CIT under the
Factoring Agreements and by GFK and Monogram to the Agent under this Agreement.
Revolving Loans and advances made by the Agent to any of the Collective
Borrowers will be charged to the Collective Account indicated above, along with
any charges and expenses under this Financing Agreement. The Collective Account
will be credited with all amounts received by the Agent from any of the
Collective Borrowers or from others for their account including all amounts
received by the Agent in payment of Accounts assigned to the Agent as provided
in this Financing Agreement; (2) Each month the Agent will render to the
Collective Borrowers one extract of the combined Collective Account, which shall
be deemed to be an account stated as to each of the Collective Borrowers and
which will be deemed correct and accepted by all of the Collective Borrowers
unless the Agent receives a written statement of exceptions from them within
thirty (30) days after such extract has been rendered by the Agent. It is
expressly understood and agreed by each of the Collective Borrowers that the
Agent shall have no obligation to account separately to any of the Collective
Borrowers; (3) Requests for Revolving Loans and advances may be made by Toymax
as agent for the Collective Borrowers to the Agent and the Agent is hereby
authorized and directed to accept, honor and rely on such instructions and
requests, subject to the limitation and provisions set forth in this Financing
Agreement. It is expressly understood and agreed by each of the Collective
Borrowers that neither Agent nor any Lender shall have any responsibility to
inquire into the correctness of the apportionment, allocation, or disposition of
(x) any Revolving Loans and advances made to any of the Collective Borrowers or
(y) any of the Agent's expenses and charges relating thereto. All Revolving
Loans and advances are made for the Collective Account; (4) The Collective
Borrowers jointly and severally unconditionally guarantee to the Agent and the
Lenders the prompt payment in full of (A) all Revolving Loans and advances made
and to be made by the Agent and/or the Lenders to any of them under this
Financing Agreement, as well as (B) all other Obligations of the Collective
Borrowers to the Agent and/or the Lenders and hereby expressly confirm in all
respects the Guaranties executed by each of the Collective Borrowers in the
Agent's and/or the Lenders' favor as more fully set forth therein; (5) All
Accounts assigned to the Agent for the benefit of the Lenders by any of the
Collective Borrowers and any other collateral security now or hereafter given to
the Agent and/or the Lenders by any of the Collective Borrowers (be it Accounts
or otherwise), shall secure all Revolving Loans and advances made by the Agent
and/or the Lenders to any of the Collective Borrowers, and shall be deemed to be
pledged to the Agent as security for any and all other Obligations of the
Collective Borrowers to the Agent and/or the Lenders as set forth under this
Financing Agreement, the Guaranties, or any other agreements between the Agent
and/or the Lenders and any of the Collective Borrowers; (6) It is understood
that the handling of the accounts of the Collective Borrowers in a combined
fashion, as more fully set forth herein, is done solely as an accommodation to
the Collective Borrowers and at their request, and that the Agent shall incur no
liability to the Collective Borrowers as a result hereof. To induce the Agent
and the Lenders to do so, and in consideration thereof, each of the Collective
Borrowers hereby agrees to indemnify the Agent and the Lenders and hold the
Agent and the Lenders harmless against any and all liability, expense, loss or
claim of damage or injury, made against the Agent and/or the Lenders by any of
the Collective Borrowers or by any third party whosoever, arising from or
incurred solely by reason of (1) the method of handling the accounts of the
Collective Borrowers as herein provided, (2) the Agent relying on any
instructions of any of the Collective
Borrowers, or (3) any other action taken by the Agent in accordance with this
subparagraph (b) of Paragraph 3.6 of Section 3 of this Financing Agreement; and
(7) The foregoing request was made because the Collective Borrowers are engaged
in an integrated operation that requires financing on a basis permitting the
availability of credit from time to time to each of the Collective Borrowers as
required for the continued successful operation of each of the Collective
Borrowers. Each of the Collective Borrowers expects to derive benefit, directly
or indirectly, from such availability since the successful operation of each of
the Collective Borrowers is dependent on the continued successful performance of
the functions of the integrated group. In addition, the Companies have informed
the Agent that:
(A) Toymax, in order to increase the efficiency and productivity of each
of the other Collective Borrowers, has centralized in itself a cash
management system which entails, in part, central disbursement and
operating accounts in which it provides the working capital needs of each
of the other Collective Borrowers and manages and timely funds each of the
other Collective Borrowers so that each of the Collective Borrowers timely
pays its accounts payable;
(B) Since all of the Collective Borrowers are now engaged in an integrated
operation that requires financing on an integrated basis and since each
Collective Borrower expects to benefit from the continued successful
performance of such integrated operations and in order to best utilize the
collective borrowing powers of each Collective Borrower in the most
effective and cost efficient manner and to avoid adverse effects on the
operating efficiencies of each Collective Borrower and the existing
back-office practices of the Collective Borrowers, each Collective
Borrower has requested and each of the Agent and Lenders agrees that,
notwithstanding anything contained herein to the contrary, all Revolving
Loans and advances be disbursed solely upon the request of Toymax and to
bank accounts managed solely by Toymax and that Toymax will manage for the
benefit of each Collective Borrower the expenditure and usage of such
funds and the allocation of such funds as between the Collective Borrowers
shall be in Toymax's sole discretion.
3.7. After the end of each month, the Agent shall promptly send Toymax on
behalf of the Companies a statement showing the accounting for the charges,
Revolving Loans, advances and other transactions occurring between the Agent and
each of the Companies during that month. The monthly statements shall be deemed
correct and binding upon each of the Companies and shall constitute an account
stated between the Companies and the Agent unless the Agent receives a written
statement of the exceptions within thirty (30) days of the date of the monthly
statement.
3.8. In the event that Agent determines that, as a result of making any
requested Revolving Loan, (1) the aggregate amount of Revolving Loans then
outstanding exceeds Availability or (2) the sum of (1) the outstanding balance
of Revolving Loans and (2) outstanding balance of Letters of Credit exceeds
(b)(x) the Borrowing Base or (y) the Revolving Line of Credit, any such
nonconsensual Overadvance shall be due and payable to the Agent on behalf of the
Lenders immediately upon the Agent's demand therefor.
3.9. Solely with respect to the Accounts of Toymax and Funnoodle,
notwithstanding anything to the contrary contained in this Financing Agreement,
all Accounts of Toymax and Funnoodle shall be collected by CIT in accordance
with the terms of their respective the Factoring Agreements and the net proceeds
thereof shall be remitted to Agent in accordance with the terms of the
Assignment of Credit Balances Agreements.
3.10. The Companies, for a period of ninety (90) consecutive days during
each period commencing October 1 and ending December 31 of each year shall
reduce to zero the Indebtedness outstanding under this Agreement arising out of
Revolving Loans made in respect of Eligible Inventory.
3.11. All Obligations shall be due and payable to the Agent on behalf of
the Lenders upon Agent's demand therefor made pursuant to written direction by
the Required Lenders.
SECTION 4. Intentionally Omitted
SECTION 5. Letters of Credit
In order to assist the Companies, or any one of them, in establishing or
opening Letters of Credit with an Issuing Bank, the Companies have requested the
Agent, on behalf of the Lenders, to join in the applications for such Letters of
Credit, and/or guarantee payment or performance of such Letters of Credit and
any drafts or acceptances thereunder through the issuance of the Letters of
Credit Guaranty, thereby lending the Agent's credit to the Companies and the
Agent has agreed to do so. These arrangements shall be handled by the Agent
subject to the terms and conditions set forth below.
5.1. Within the Revolving Line of Credit and Availability, the Agent on
behalf of the Lenders shall, in its sole discretion, assist each of the
Companies in obtaining Letters of Credit in an amount not to exceed the
outstanding amount of the Letter of Credit Sub-Line. It is understood that the
term, form and purpose of each Letter of Credit and all documentation in
connection therewith, and any amendments, modifications or extensions thereof,
must be mutually acceptable to the Agent, the Issuing Bank and the Companies.
Any and all outstanding Letters of Credit issued hereunder for any Company shall
be reserved dollar for dollar from Company's Availability as an Availability
Reserve.
5.2. The Agent shall have the right, without notice to any of the
Companies, to charge a Company's Revolving Loan Account with the amount of any
and all indebtedness, liability or obligation of any kind incurred by the Agent
and/or the Lenders under the Letters of Credit Guaranty at the earlier of (1)
payment by the Agent under a Letter of Credit Guaranty; or (2) the occurrence of
an Event of Default which has not been waived in writing by the Required
Lenders. Any amount charged to the Companies' Revolving Loan Accounts shall be
deemed a Revolving Loan hereunder and shall incur interest at the rate provided
in Paragraph 8.1 of Section 8 of this Financing Agreement.
5.3. Each of the Companies jointly and severally and unconditionally
indemnifies the Agent and the Lenders and holds the Agent and the Lenders
harmless from any and all loss, claim or liability incurred by the Agent arising
from any transactions or occurrences relating to Letters of Credit established
or opened for any Company's account, the collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any
such loss or claim due to any errors, omissions, negligence, misconduct or
action taken by any Issuing Bank, other than for any such loss, claim or
liability arising out of the gross negligence or willful misconduct by the Agent
and/or the Lenders under the Letters of Credit Guaranty. This indemnity shall
survive termination of this Financing Agreement. The Companies agree that any
charges incurred by the Agent for any of the Companies account by the Issuing
Bank shall be conclusive on the Agent and may be charged to such Company's
Revolving Loan Account.
5.4. The Agent and/or the Lenders shall not be responsible for: (1) the
existence, character, quality, quantity, condition, packing, value or delivery
of the goods purporting to be represented by any documents; (2) any difference
or variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; (3) the validity,
sufficiency or genuineness of any documents or of any endorsements thereon, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (4) the time, place, manner or order in
which shipment is made; (5) partial or incomplete shipment, or failure or
omission to ship any or all of the goods referred to in the Letters of Credit or
documents; (6) any deviation from instructions; (7) delay, default, or fraud by
the shipper and/or anyone else in connection with the goods or the shipping
thereof; or (8) any breach of contract between the shipper or vendors and the
Companies.
5.5. The Companies agree that any action taken by the Agent and/or the
Lenders, if taken in good faith, or any action taken by any Issuing Bank, under
or in connection with the Letters of Credit, the Letter of Credit Guarantees,
the drafts or acceptances, or the Collateral, shall be binding on each of the
Companies and shall not put the Agent and/or the Lenders in any resulting
liability to the Companies. In furtherance thereof, the Agent shall have the
full right and authority to: (1) clear and resolve any questions of
non-compliance of documents; (2) give any instructions as to acceptance or
rejection of any documents or goods; (3) execute any and all steamship or
airways guaranties (and applications therefore), indemnities or delivery orders;
(4) grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and (5) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances; all in the Agent's sole name. The Issuing Bank shall be entitled
to comply with and honor any and all such documents or instruments executed by
or received solely from the Agent, all without any notice to or any consent from
the Companies or any one of them. Notwithstanding any prior course of conduct or
dealing with respect to the foregoing including amendments and non-compliance
with documents and/or any of the Company's instructions with respect thereto,
the Agent may exercise its rights hereunder in its sole and reasonable business
judgement. In addition, without the Agent's express consent and endorsement in
writing, the Companies agree: (a) not to execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders; to grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances or documents; or to agree to any amendments, renewals,
extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; and (b) after the occurrence of an
Event of Default and during the continuance thereof, not to (i) clear and
resolve any questions of non-compliance of documents, or (ii) give any
instructions as to acceptances or rejection of any documents or goods.
5.6. The Companies agree that: (1) any necessary import, export or other
licenses or certificates for the import or handling of the Collateral will have
been promptly procured; (2) all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or the
financing thereof will have been promptly and fully complied with in all
material respects; and (3) any certificates in that regard that the Agent may at
any time request will be promptly furnished. In connection herewith, the
Companies warrant and represent that all shipments made under any such Letters
of Credit are in accordance with the laws and regulations of the countries in
which the shipments originate and terminate, and are not prohibited by any such
laws and regulations. Each of the Companies assumes all risk, liability and
responsibility for, and agrees to pay and discharge, all present and future
local, state, federal or foreign Taxes, duties, or levies. Any embargo,
restriction, laws, customs or regulations of any country, state, city, or other
political subdivision, where the Collateral is or may be located, or wherein
payments are to be made, or wherein drafts may be drawn, negotiated, accepted,
or paid, shall be solely the Companies' risk, liability and responsibility.
5.7. Upon any payments made to the Issuing Bank under the Letter of
Credit Guaranty, the Agent on behalf of the Lenders shall acquire by
subrogation, any rights, remedies, duties or obligations granted or undertaken
by the Companies or any one of them to the Issuing Bank in any application for
Letters of Credit, any standing agreement relating to Letters of Credit or
otherwise, all of which shall be deemed to have been granted to the Agent on
behalf of the Lenders and apply in all respects to the Agent and shall be in
addition to any rights, remedies, duties or obligations contained herein.
SECTION 6. Collateral
6.1. (10 As security for the prompt payment in full of all Obligations,
each of the Companies hereby pledges and grants to the Agent, for the benefit of
Agent and on behalf of the Lenders, a continuing general lien upon, and security
interest in, all of its:
(10 Accounts;
(20 Inventory;
(30 General Intangibles;
(40 Documents of Title;
(50 Other Collateral;
(60 Equipment;
(70 Investment Property;
(80 Real Estate; and
(90 The proceeds and products of all of the foregoing.
(20 Notwithstanding anything to the contrary set forth in Subsection
6.1(a) above, the types or items of Collateral described in such Subsection
shall not include any rights under any contract, lease or license agreement in
respect of which the valid grant of a security interest requires the consent of
the other party to the contract, lease or license agreement which has not been
or is not obtained, provided, that, the foregoing exclusion shall in no way be
construed so as to limit or impair Agent's unconditional continuing security
interest in and lien upon any rights or interests of any Company to monies due
or to become due under any such contract, lease or license agreement.
6.2. The security interests granted hereunder shall extend and attach to:
(10 All Collateral which is owned by any of the Companies or in
which any of the Companies have any interest, whether held by any of the
Companies or others for any of their account, and, if any Collateral is
Equipment, whether any of the Companies' interest in such Equipment is as owner,
finance lessee or conditional vendee;
(20 All Equipment, whether the same constitutes personal property or
fixtures, including, but without limiting the generality of the foregoing, all
dies, jigs, tools, benches, molds, tables, accretions, component parts thereof
and additions thereto, as well as all accessories, motors, engines and auxiliary
parts used in connection with, or attached to, the Equipment; and
(30 All Inventory and any portion thereof which may be returned,
rejected, reclaimed or repossessed by either the Agent or any of the Companies
from any of the Companies' customers, as well as to all supplies, goods,
incidentals, packaging materials, labels and any other items which contribute to
the finished goods or products manufactured or processed by any of the
Companies, or to the sale, promotion or shipment thereof.
6.3. Each of the Companies agrees to safeguard, protect and hold all
Inventory for the Agent's account and make no disposition thereof except in the
ordinary course of its business, as herein provided. Each of the Companies
represent and warrant that Inventory will be sold and shipped by the Company to
its customers only in the ordinary course of the Company's business, and then
only on open account and in the ordinary course of business, provided that,
absent the prior written consent of the Agent, none of the Companies shall sell
Inventory on a consignment basis nor retain any lien or security interest in any
sold Inventory except sales upon prior written notice to Agent which are in the
aggregate less than 2% of annual gross sales of the Companies. Upon the sale,
exchange, or other disposition of Inventory, as herein provided, the security
interest in the Inventory provided for herein shall, without break in continuity
and without further formality or act, continue in, and attach to, all proceeds,
including any instruments for the payment of money, Trade Accounts Receivable,
documents of title, shipping documents, chattel
paper and all other cash and non-cash proceeds of such sale, exchange or
disposition. As to any such sale, exchange or other disposition, the Agent shall
have all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation. The Companies hereby agree to immediately
forward any and all proceeds of Collateral to the Depository Account, and to
hold any such proceeds (including any notes and instruments), in trust for the
Agent on behalf of the Lenders pending delivery to the Agent. Irrespective of
the Agent's perfection status in any and all of the General Intangibles,
including, without limitations, any Patents, Trademarks, Copyrights or licenses
with respect thereto, each of the Companies hereby irrevocably grants the Agent
a royalty free license to sell, or otherwise dispose or transfer, in accordance
with Paragraph 10.3 of Section 10 of this Financing Agreement, and the
applicable terms hereof, of any of the Inventory upon the occurrence of an Event
of Default which has not been waived in writing by the Agent.
6.4. Each of the Companies agrees at its own cost and expense to keep the
Equipment in as good and substantial repair and condition as the same is now or
at the time the lien and security interest granted herein shall attach thereto,
reasonable wear and tear excepted, making any and all repairs and replacements
when and where necessary. Each of the Companies also agrees to safeguard,
protect and hold all Equipment in accordance with the terms hereof and subject
to the Agent's security interest. Absent the Agent's prior written consent, any
sale, exchange or other disposition of any Equipment shall be made by the
Companies in the ordinary course of their business and as set forth herein. The
Companies may, in the ordinary course of their business, sell, exchange or
otherwise dispose of obsolete or surplus Equipment provided, however, that the
proceeds of any such sales or dispositions shall be held in trust by the
Companies for the Agent and shall be immediately delivered to the Agent by
deposit to the Depository Account, except that the Companies may retain and use
such proceeds to purchase forthwith replacement Equipment which the Companies
determine in their reasonable business judgment to have a collateral value at
least equal to the Equipment so disposed of or sold; provided, however, that the
aforesaid right shall automatically cease upon the occurrence of a Default or an
Event of Default which is not waived in writing by the Agent and the Required
Lenders. Upon the sale, exchange, or other disposition of the Equipment, as
herein provided, the security interest provided for herein shall, without break
in continuity and without further formality or act, continue in, and attach to,
all proceeds, including any instruments for the payment of money, Accounts,
documents of title, shipping documents, chattel paper and all other cash and
non-cash proceeds of such sales, exchange or disposition. As to any such sale,
exchange or other disposition, the Agent and the Lenders shall have all of the
rights of an unpaid seller, including stoppage in transit, replevin, rescission
and reclamation.
6.5. The rights and security interests granted to the Agent and the
Lenders hereunder are to continue in full force and effect, notwithstanding the
termination of this Financing Agreement or the fact that the Revolving Loan
Account maintained in the Companies' name on the books of the Agent may from
time to time be temporarily in a credit position, until the final payment in
full to the Agent of all Obligations and the termination of this Financing
Agreement. Any delay, or omission by the Agent to exercise any right hereunder
shall not be deemed a waiver thereof, or be deemed a waiver of any other right,
unless such waiver shall be in writing and signed by the Agent. A waiver on any
one occasion shall not be construed as a bar to, or waiver of, any right or
remedy on any future occasion.
6.6. Notwithstanding the Agent's security interest in the Collateral and
to the extent that the Obligations are now or hereafter secured by any assets or
property other than the Collateral or by the guarantee, endorsement, assets or
property of any other person, the Agent shall have the right in its sole
discretion to determine which rights, liens, security interests or remedies the
Agent shall at any time pursue, foreclose upon, relinquish, subordinate, modify
or take any other action with respect to, without in any way modifying or
affecting any of them, or any of the Agent's and/or the Lenders' rights
hereunder.
6.7. Any balances to the credit of the Companies, or any one of them, and
any other property or assets of the Companies, or any one of them, in the
possession or control of the Agent and/or the Lenders may be held by the Agent
as security for any Obligations and applied in whole or partial satisfaction of
such Obligations when due. The liens and security interests granted herein, and
any other lien or security interest the Agent and/or the Lenders may have in any
other assets of the Companies, shall secure payment and performance of all now
existing and future Obligations. The Agent may in its discretion charge any or
all of the Obligations to the Revolving Loan Account when due.
6.8. Each of the Companies possess all General Intangibles and rights
thereto necessary to conduct its business as conducted as of the Closing Date
and each of the Companies shall maintain its rights in, and the value of, the
foregoing in the ordinary course of its business, including, without limitation,
by making timely payment with respect to any applicable licensed rights. Each of
the Companies shall deliver to the Agent, and/or shall cause the appropriate
party to deliver to the Agent, from time to time such pledge or security
agreements with respect to General Intangibles (now or hereafter acquired) of
such Company as the Agent shall require to obtain valid first liens thereon. In
furtherance of the foregoing, each of the Companies shall provide reasonable
notice to the Agent of any additional Patents, Trademarks, tradenames, service
marks, Copyrights, brand names, trade names, logos and other trade designations
acquired or applied for subsequent to the Closing Date and each of the Companies
shall execute such documentation as the Agent may reasonably require to obtain
and perfect its lien thereon. The Companies hereby confirm that they shall
deliver, or cause to be delivered, any pledged stock issued subsequent to the
Closing Date to the Agent in accordance with the applicable terms of the Pledge
Agreement and prior to such delivery, shall hold any such stock in trust for the
Agent. Each of the Companies hereby irrevocably grants to the Agent a
royalty-free, non-exclusive license in the General Intangibles, including
tradenames, Trademarks, Copyrights, Patents, licenses, and any other proprietary
and intellectual property rights and any and all right, title and interest in
any of the foregoing, for the sole purpose, upon the occurrence of an Event of
Default, of the right to: (1) advertise for sale and sell or transfer any
Inventory bearing any of the General Intangibles, and (2) make, assemble,
prepare for sale or complete, or cause others to do so, any applicable raw
materials or Inventory bearing any of the General Intangibles, including use of
the Equipment and Real Estate for the purpose of completing the manufacture of
unfinished goods, raw materials or work-in-process comprising Inventory, and
apply the proceeds thereof to the Obligations hereunder, all as further set
forth in this Financing Agreement and irrespective of the Agent's lien and
perfection in any General Intangibles.
SECTION 7. Representations, Warranties and Covenants
7.1. Each of Toymax, GFK and Funnoodle hereby warrants, represents and
covenants that: (10 the fair value of its Total Assets exceeds its Total
Liabilities; (2) it is generally able to pay its debts as they become due and
payable; and (3) it does not have unreasonably small capital to carry on its
business as it is currently conducted absent extraordinary and unforeseen
circumstances. Each of the Companies warrant and represent that: (1) Schedule 2
hereto correctly and completely sets forth its (A) chief executive office, (B)
Collateral locations, (C) tradenames, and (D) all the other information listed
on said Schedule; (2) except for the Permitted Encumbrances, after filing of
financing statements in the applicable filing clerks' offices at the locations
set forth in Schedule 2, this Financing Agreement creates a valid, perfected and
first priority security interest in the Collateral and the security interests
granted herein constitute and shall at all times constitute the first and only
liens on the Collateral; (3) except for the Permitted Encumbrances, it is, or
will be, at the time additional Collateral is acquired by it, the absolute owner
of the Collateral with full right to pledge, sell, consign, transfer and create
a security interest therein, free and clear of any and all claims or liens in
favor of others; (4) it will, at its expense, forever warrant and, at the
Agent's request, defend the same from any and all claims and demands of any
other person other than a holder of a Permitted Encumbrance; (5) it will not
grant, create or permit to exist, any lien upon, or security interest in, the
Collateral, or any proceeds thereof, in favor of any other person other than the
holders of the Permitted Encumbrances; and that the Equipment does not comprise
a part of any Company's Inventory; (6) the Equipment is and will only be used by
it in its business and will not be held for sale or lease, or removed from their
premises, or otherwise disposed of by it except as otherwise permitted in this
Financing Agreement; and (7) Schedule 5 hereto correctly and completely sets
forth its License Agreements.
7.2. Each of the Companies agrees to maintain books and records
pertaining to the Collateral in accordance with GAAP and in such additional
detail, form and scope as the Agent shall reasonably require. Each of the
Companies agrees that the Agent or its agents and any of the Lenders who may
wish to accompany the Agent at their own cost and expense, may enter upon its
premises at any time during normal business hours, and from time to time in its
reasonable business judgement, for the purpose of inspecting the Collateral and
any and all records pertaining thereto. Each of the Companies agrees to afford
the Agent thirty (30) days prior written notice of any change in the location of
any Collateral, other than to locations, that as of the Closing Date, are known
to the Agent and at which the Agent has filed financing statements and otherwise
fully perfected its liens thereon. Each of the Companies are also to advise the
Agent promptly, in sufficient detail, of any material adverse change relating to
the type, quantity or quality of the Collateral or on the security interests
granted to the Agent therein.
7.3. Each of the Companies agrees to: (1) execute and deliver to the
Agent, from time to time, solely for the Agent's convenience in maintaining a
record of the Collateral, such written statements and schedules as the Agent may
reasonably require, designating, identifying or describing the Collateral; and
(2) provide the Agent on request no more than twice each year so long as no
Event of Default has occurred and is continuing and at any time if an Event of
Default has occurred and is continuing, with an appraisal of the Inventory which
appraisal shall be at the Companies' expense and otherwise acceptable to the
Agent. Any failure, however, to promptly give the Agent such statements, or
schedules shall not affect, diminish, modify or otherwise limit the Agent's
and/or the Lenders' security interests in the Collateral.
7.4. Each of the Companies agrees to comply with the requirements of all
state and federal laws in order to grant to the Agent valid and perfected first
security interests in the Collateral, subject only to the Permitted
Encumbrances. The Agent is hereby authorized by each of the Companies to file
(including pursuant to the applicable terms of the UCC) from time to time any
financing statements, continuations or amendments covering the Collateral
whether or not such Company's signature(s) appears thereon. The Companies hereby
consent to and ratify any and all execution and/or filing of financing
statements on or prior to the Closing Date by the Agent. The Companies agree to
do whatever the Agent may reasonably request, from time to time, by way of: (1)
filing notices of liens, financing statements, amendments, renewals and
continuations thereof; (2) cooperating with the Agent's agents and employees;
(3) keeping Collateral records; (4) transferring proceeds of Collateral to the
Agent's possession; and (5) performing such further acts as the Agent and/or the
Lenders may reasonably require in order to effect the purposes of this Financing
Agreement.
7.5. (10 The Companies agree to maintain insurance on their Real Estate,
Equipment and Inventory under such policies of insurance, with such insurance
companies, in such reasonable amounts and covering such insurable risks as are
at all times reasonably satisfactory to the Agent. All policies covering the
Real Estate, Equipment and Inventory are, subject to the rights of any holders
of Permitted Encumbrances holding claims senior to the Agent, to be made payable
to the Agent on behalf of the Lenders, in case of loss, under a standard
non-contributory "mortgagee", "lender" or "secured party" clause and are to
contain such other provisions as the Agent may require to fully protect the
Agent's interest in the Real Estate, Inventory and Equipment and to any payments
to be made under such policies. All original policies or true copies thereof are
to be delivered to the Agent, premium prepaid, with the loss payable endorsement
in the Agent's favor, and shall provide for not less than thirty (30) days prior
written notice to the Agent of the exercise of any right of cancellation. At the
Companies' request, or if the Companies fail to maintain such insurance, the
Agent may arrange for such insurance, but at the Companies' expense and without
any responsibility on the Agent's part for: (1) obtaining the insurance; (2) the
solvency of the insurance companies; (3) the adequacy of the coverage; or (4)
the collection of claims. Upon the occurrence of an Event of Default which is
not waived in writing by the Required Lenders, the Agent shall, subject to the
rights of any holders of Permitted Encumbrances holding claims senior to the
Agent, have the sole right and at its option, in the name of the Agent or the
Companies or any of them, to file claims under any insurance policies, to
receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.
(20 (10 In the event of any loss or damage by fire or other
casualty, insurance proceeds relating to the Companies' or a Company's Inventory
shall be remitted to Agent and applied to the payment of such Company's then
outstanding Revolving Loans. Upon the occurrence of a Default or Event of
Default, such Insurance Proceeds may be applied to the Obligations in such order
as the Agent may elect;
(20 In the event any part of the Companies Real Estate or
Equipment is damaged by fire or other casualty when a Default or Event of
Default shall have occurred, then
such Insurance Proceeds may be applied to the Obligations in such order as the
Agent may elect in its sole discretion;
(30 Absent the occurrence of an Event of Default (which has
not been waived in writing), and provided (x) the Companies have sufficient
business interruption insurance to replace the lost profits of any of the
Companies' facilities, and (y) the Insurance Proceeds are less than $200,000,
the Companies may elect (by delivering written notice to the Agent) to replace,
repair or restore such Real Estate or Equipment to substantially the equivalent
condition prior to such fire or other casualty as set forth herein. If the
Insurance Proceeds are $200,000 or more, then such Insurance Proceeds may be
applied to the Obligations in such order as the Agent may elect in its sole
discretion. If the Companies do not, or cannot, elect to use the Insurance
Proceeds as set forth above, the Agent may, subject to the rights of any holders
of Permitted Encumbrances holding claims senior to the Agent, apply the
Insurance Proceeds to the payment of the Obligations in such manner and in such
order as the Agent may reasonably elect; and
(40 Absent the occurrence of an Event of Default (which has
not been waived in writing), if the Companies elect to use the Insurance
Proceeds for the repair, replacement or restoration of any Real Estate and/or
Equipment the Agent may set up an Availability Reserve in an amount equal to
said Insurance Proceeds. The Availability Reserve will be reduced
dollar-for-dollar upon receipt of non-cancelable executed purchase orders,
delivery receipts or contracts for the replacement, repair or restoration of
Equipment and/or the Real Estate and disbursements in connection therewith.
Prior to the commencement of any material restoration, repair or replacement of
Real Estate, the Companies shall provide the Agent with a restoration plan and a
total budget certified by an independent third party experienced in construction
costing. If there are insufficient Insurance Proceeds to cover the cost of
restoration as so determined, the Companies shall be responsible for the amount
of any such insufficiency, prior to the commencement of restoration and shall
demonstrate evidence of such before the reserve will be reduced. Completion of
restoration shall be evidenced by a final, unqualified certification of the
design architect employed, if any; an unconditional Certificate of Occupancy, if
applicable; such other certification as may be required by law; or if none of
the above is applicable, a written good faith determination of completion by the
Companies (herein collectively the "Completion"). Upon Completion, any remaining
reserve as established hereunder will be automatically released.
(30 In the event the Companies or any one of them fails to provide
the Agent with timely evidence, acceptable to the Agent, of its maintenance of
insurance coverage required pursuant to paragraph 7.5(a) above, the Agent may
purchase, at the Companies' expense, insurance to protect the Agent's interests
in the Collateral. The insurance acquired by the Agent may, but need not,
protect the Companies' interest in the Collateral, and therefore such insurance
may not pay claims which the Companies may have with respect to the Collateral
or pay any claim which may be made against the Companies in connection with the
Collateral. In the event the Agent purchases, obtains or acquires insurance
covering all or any portion of the Collateral, the Companies shall be
responsible for all of the applicable costs of such insurance, including
premiums, interest (at the applicable Chase Bank Rate for Revolving Loans set
forth in paragraph 8.1 of Section 8 hereof), fees and any other charges with
respect thereto, until the effective date of the cancellation or the expiration
of such insurance. The Agent may charge all
of such premiums, fees, costs, interest and other charges to the Companies'
Revolving Loan Account. Each of the Companies hereby acknowledges that the costs
of the premiums of any insurance acquired by the Agent may exceed the costs of
insurance which the Companies may be able to purchase on their own. In the event
that the Agent purchases such insurance, the Agent will notify the Companies or
the applicable Company of said purchase within thirty (30) days of the date of
such purchase. If, within thirty (30) days after the date of such notice, the
Companies provides the Agent with proof that the Companies had the insurance
coverage required pursuant to 7.5(a) above (in form and substance satisfactory
to the Agent) as of the date on which the Agent purchased insurance and the
Companies continued at all times to have such insurance, then the Agent agrees
to cancel the insurance purchased by the Agent and credit the Companies'
Revolving Loan Account with the amount of all costs, interest and other charges
associated with any insurance purchased by the Agent, including with any such
amounts previously charged to any Revolving Loan Accounts.
7.6. Each of the Companies agrees to pay, when due, all Taxes, including
sales taxes, assessments, claims and other charges lawfully levied or assessed
upon it or the Collateral unless such Taxes are being diligently contested in
good faith by the applicable Companies by appropriate proceedings and adequate
reserves are established in accordance with GAAP. Notwithstanding the foregoing,
if any lien shall be filed or claimed thereunder: (1) for Taxes due the United
States of America, or (2) which in the Agent's opinion might create a valid
obligation having priority over the rights granted to the Agent herein
(exclusive of Real Estate), such lien shall not be deemed to be a Permitted
Encumbrance hereunder and the Companies shall immediately pay such tax and
remove the lien of record. If the Companies or any one of them fails to do so
promptly, then at the Agent's election, the Agent may (1) create an Availability
Reserve in such amount as it may deem appropriate in its business judgement, or
(2) upon the occurrence of a Default or Event of Default, imminent risk of
seizure, filing of any priority lien, forfeiture, or sale of the Collateral, pay
Taxes on the Companies' behalf, and the amount thereof shall be an Obligation
secured hereby and due on demand.
7.7. Each of the Companies: (1) agrees to comply in all material respects
with all acts, rules, regulations and orders of any legislative, administrative
or judicial body or official, which the failure to comply with would have a
material and adverse impact on the Collateral, or any material part thereof, or
on the business or operations of the Companies or any one of them, provided that
the Companies may contest any acts, rules, regulations, orders and directions of
such bodies or officials in any reasonable manner which will not, in the Agent's
reasonable opinion, materially and adversely effect the Agent's and/or the
Lenders' rights or priority in the Collateral; (2) agrees to comply with all
environmental statutes, acts, rules, regulations or orders as presently existing
or as adopted or amended in the future, applicable to the Collateral, the
ownership and/or use of their real property and operation of their business,
which the failure to comply with would have a material and adverse impact on the
Collateral, or any material part thereof, or on the operation of the business of
the Companies or any of them; and (3) shall not be deemed to have breached any
provision of this Paragraph 7.7 if (1) the failure to comply with the
requirements of this Paragraph 7.7 resulted from good faith error or innocent
omission, (2) the Companies promptly commence and diligently pursue a cure of
such breach, and (3) such failure is cured within (30) days following the
Companies' receipt of notice of such failure, or if such cannot in good faith be
cured within thirty (30) days, then such breach is cured within a
reasonable time frame based upon the extent and nature of the breach and the
necessary remediation, and in conformity with any applicable consent order,
consensual agreement and applicable law.
7.8. Until termination of this Financing Agreement and payment and
satisfaction of all Obligations due hereunder, the Companies agree that, unless
the Agent and the Required Lenders shall have otherwise consented in writing,
each of the Companies will furnish to the Agent and each Lender: (1) within one
hundred twenty (120) days after the end of each Fiscal Year of each of the
Companies, a Combined Balance Sheet, with a Combining Balance Sheet attached
thereto, as at the close of such year, and statements of profit and loss, cash
flow and reconciliation of surplus of the Companies for such year on a combined
basis, audited by independent public accountants selected by the Companies and
satisfactory to the Agent ("Accountants"); (2) within seventy-five (75) days
after the end of each Fiscal Quarter a Combined Balance Sheet and Combining
Balance Sheet as at the end of such period and statements of profit and loss,
cash flow and surplus of the Companies on a combined basis, reviewed by the
Accountants; (3) on the first (1st) and fifteenth (15th) of each month (or if
any such day is not a Business Day, on the next succeeding Business Day), a
Borrowing Base Certificate as of such date; (4) on or before Friday of each
week, an Accounts aging for GFK, and Monogram; (5) within 10 days of filing, all
filings made with the Securities and Exchange Commission; and (6) from time to
time, such further information regarding the business affairs and financial
condition of the Parent, the Companies and/or any subsidiaries thereof as the
Agent may reasonably request, including, without limitation (1) the accountant's
management practice letter and (20 on or before sixty (60) days prior to the end
of each Fiscal Year, annual cash flow projections in form satisfactory to the
Agent. Each financial statement which the Companies are required to submit
hereunder must be accompanied by an officer's certificate, signed by the
President, Vice President, Controller, or Treasurer, pursuant to which any one
such officer must certify that: (x) the financial statement(s) fairly and
accurately represent(s) each of the Companies' financial condition at the end of
the particular accounting period, as well as the Companies' operating results
during such accounting period, subject to year-end audit adjustments; and (y)
during the particular accounting period: (A) there has been no Default or Event
of Default under this Financing Agreement, provided, however, that if any such
officer has knowledge that any such Default or Event of Default, has occurred
during such period, the existence of and a detailed description of same shall be
set forth in such officer's certificate; and (B) the Companies have not received
any notice that could result in a material adverse effect on the value of the
Collateral taken as a whole.
7.9. Until termination of the Financing Agreement and payment and
satisfaction of all Obligations hereunder, each of the Companies agrees that,
without the prior written consent of the Agent and the Required Lenders, except
as otherwise herein provided, the Companies or any one of them will not:
(10 Mortgage, assign, pledge, transfer or otherwise permit any lien,
charge, security interest, encumbrance or judgment (whether as a result of a
purchase money or title retention transaction, or other security interest, or
otherwise) to exist on any of the Companies' Collateral or any other assets,
whether now owned or hereafter acquired, except for the Permitted Encumbrances;
(20 Incur or create any Indebtedness other than the Permitted
Indebtedness;
(30 Sell, lease, assign, transfer or otherwise dispose of (1)
Collateral, except as otherwise specifically permitted by this Financing
Agreement, or (2) either all or substantially all of any of the Company's
assets, which do not constitute Collateral;
(40 Merge, consolidate or otherwise alter or modify their respective
corporate names, principal places of business, structure, or existence,
re-incorporate or re-organize, or enter into or engage in any operation or
activity materially different from that presently being conducted by the
Companies or any one of them, except that the Companies may (A) change their
corporate name or address, or (B) a Company may merge with and into any other
Company (with a Company being the survivor of such merger), provided that: (1)
in any such instance under (A) or (B) above the Companies shall give the Agent
thirty (30) days prior written notice thereof and (2) the Companies shall
execute and deliver, prior to or simultaneously with any such action, any and
all documents and agreements requested by the Agent to confirm the continuation
and preservation of all security interests and liens granted to the Agent
hereunder;
(50 Assume, guarantee (other than amounts not to exceed $250,000 in
the aggregate at any time outstanding), endorse, or otherwise become liable upon
the obligations of any person, firm, entity or corporation, except by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business;
(60 Declare or pay any dividend or distributions of any kind on, or
purchase, acquire, redeem or retire, any of the capital stock or equity
interest, of any class whatsoever, whether now or hereafter outstanding, except
that the Companies may declare and pay dividends or distributions on their
capital stock in an amount sufficient to enable the Companies or the Parent to
pay income or franchise Taxes of the Companies due as a result of the filing of
a consolidated, combined or unitary tax return in which the operations of the
Companies are included;
provided that, in any instance under subparagraph (f), (x) no
Default or Event of Default has occurred hereunder, (y) after giving effect to
such payment, no Default and/or Event of Default has occurred or would occur
hereunder and (z) the Companies have sufficient Working Capital to pay their
debts as they come due;
(70 Make any advance or loan in excess of $250,000 in the aggregate
at any one time outstanding to, or any investment in, any firm, entity, person
or corporation or purchase or acquire all or substantially all of the stock or
assets of any entity, person or corporation;
(80 Except in an aggregate amount not to exceed $350,000 in any
Fiscal Year, pay any management, consulting or other similar fees to any person,
corporation or other entity affiliated with the Companies;
(90 Reduce the amount of the net payable owing by them to Toymax
(H.K.) Limited and Toymax International, Inc. to less than $5,000,000 and Toymax
shall confirm to the Agent in writing at least monthly the net amount of such
payable;
(100 Incur or create Indebtedness described in clauses (c), (f) and
(h) of the definition of Permitted Indebtedness in an aggregate amount in excess
of $2,000,000 at any time outstanding.
7.10. Intentionally Omitted.
7.11. The Companies agree to advise the Agent in writing of: (1) all
expenditures by them (actual or anticipated) in excess of $250,000 from the
budgeted amount therefor in any Fiscal Year for (x) environmental clean-up, (y)
environmental compliance or (z) environmental testing and the impact of said
expenses on each of the Companies' Working Capital; and (2) any notices the
Companies receive from any local, state or federal authority advising the
Companies of any environmental liability (real or potential) stemming from any
of the Companies' operations, their premises, their waste disposal practices, or
waste disposal sites used by any of the Companies and to provide the Agent with
copies of all such notices if so required.
7.12. Each of the Companies hereby agrees to indemnify and hold harmless
the Agent, each Lender and each of their respective officers, directors,
employees, attorneys and agents (each an "Indemnified Party") from, and holds
each of them harmless against, any and all losses, liabilities, obligations,
claims, actions, damages, costs and expenses (including attorney's fees) and any
payments made by the Agent pursuant to any indemnity provided by the Agent with
respect to or to which any Indemnified Party could be subject insofar as such
losses, liabilities, obligations, claims, actions, damages, costs, fees or
expenses arise under or with respect to the Loan Documents, including without
limitation those which may arise from or relate to: (1) the Depository Account,
the lockbox and/or any other depository account and/or the agreements executed
in connection therewith; and (2) any and all claims or expenses asserted against
the Agent as a result of any environmental pollution, hazardous material or
environmental clean-up relating to the Real Estate; or any claim or expense
which results from any of the Companies' operations (including, but not limited
to, any of the Companies' off-site disposal practices) and use of the Real
Estate, which the Agent may sustain or incur (other than solely as a result of
the physical actions of the Agent on the Companies' premises which are
determined to constitute gross negligence or willful misconduct by a court of
competent jurisdiction), all whether through the alleged or actual negligence of
such person or otherwise, except and to the extent that the same results solely
and directly from the gross negligence or willful misconduct of such Indemnified
Party as finally determined by a court of competent jurisdiction. The Companies
hereby agree that this indemnity shall survive termination of this Financing
Agreement, as well as payments of Obligations which may be due hereunder. The
Agent may, in its sole business judgement, establish such Availability Reserves
with respect thereto as it may deem advisable under the circumstances and, upon
any termination hereof, hold such reserves as cash reserves for any such
contingent liabilities.
7.13. Without the prior written consent of the Agent and the Required
Lenders, the Companies agree that they will not enter into any transaction,
including, without limitation, any purchase, sale, lease, loan or exchange of
property with the Parent or any subsidiary or affiliate of the Companies or
Parent, provided that, except as otherwise set forth in this Financing
Agreement, the Companies or any one of them may enter into any transaction in
the ordinary
course of their business and pursuant to the reasonable requirements of the
Companies, and upon standard terms and conditions and fair and reasonable terms,
no less favorable to the Companies than the Companies could obtain in a
comparable arms length transaction with an unrelated third party, provided
further that no Default or Event of Default exists or will occur hereunder prior
to and after giving effect to any such transaction..
7.14. Intentionally Omitted.
7.15. The Companies acknowledge, covenant and agree that the Companies are
jointly and severally liable for the payment and performance in full of all
Obligations on the terms set forth in this Agreement and the other Loan
Documents.
7.16. The Companies shall at all times after the Closing Date maintain
Availability of not less than $1,000,000 as of any date of determination.
SECTION 8. Interest, Fees and Expenses
8.1. (10 Interest on the Chase Bank Rate Loans shall be payable monthly
as of the end of each month. Interest on Chase Bank Rate Loans shall be an
amount equal to the Chase Bank Rate on the average of the net balances owing by
each of the Companies to the Lenders in their Revolving Loan Accounts in respect
of Chase Bank Rate Loans at the close of each day during such month. In the
event of any change in said Chase Bank Rate, the rate hereunder for Chase Bank
Rate Loans shall change, effective on the first day of the month after any such
change based on the Chase Bank Rate in effect on the last day of the month in
which any such change occurred. The rate hereunder for Chase Bank Rate Loans
shall be calculated based on a 360-day year. The Agent shall be entitled to
charge each Companies' Revolving Loan Account for Chase Bank Rate Loans at the
rate provided for herein when due until all Obligations have been paid in full.
(20 Notwithstanding any provision to the contrary contained in this
Section 8, in the event that the sum of (1) the outstanding Revolving Loans and
(2) the outstanding Letters of Credit exceed the lesser of either (x) the
maximum aggregate amount available under Sections 3 and 5 of this Financing
Agreement or (y) the Revolving Line of Credit: (A) as a result of Revolving
Loans advanced by the Agent at the request of the Companies or any one of them
(herein "Requested Overadvances"), for any one (1) or more days in any month, or
(B) for any other reason whatsoever (herein "Other Overadvances") and such Other
Overadvances continue for five (5) or more days in any month , the average net
balance of all Revolving Loans for such month shall bear interest at the
Overadvance Rate.
(30 Upon and after the occurrence of an Event of Default and the
giving of any required notice by the Agent in accordance with the provisions of
Section 10, Paragraph 10.2 hereof, all Obligations shall bear interest at the
Default Rate of Interest.
8.2. Intentionally Omitted.
8.3. In consideration of the Letter of Credit Guaranty of the Agent, the
Companies shall pay the Agent the Letter of Credit Guaranty Fee which shall be
an amount equal to (1) one
eighth of one percent (.125%) on the face amount of each documentary Letter of
Credit payable upon issuance thereof and (2) one eighth of one percent (.125%)
per annum, payable monthly, on the face amount of each standby Letter of Credit
less the amount of any and all amounts previously drawn under such standby
Letter of Credit.
8.4. Any and all charges, fees, commissions, costs and expenses charged
to the Agent for the Companies' account by any Issuing Bank in connection with,
or arising out of, Letters of Credit or out of transactions relating thereto
will be charged to the Revolving Loan Account in full when charged to, or paid
by the Agent, or as may be due upon any termination of this Financing Agreement
hereof, and when made by any such Issuing Bank shall be conclusive on the Agent.
8.5. Each of the Companies shall reimburse or pay the Agent, as the case
may be, for: (1) all Out-of-Pocket Expenses and (2) any applicable Post-Closing
Fee.
8.6. As of the end of each month the Companies shall pay to the Agent
interest in respect of the Collection Days.
8.7. To induce the Agent to enter into this Financing Agreement and to
extend to the Companies the Revolving Loans and Letters of Credit Guaranties,
the Companies shall pay to the Agent a Loan Origination Fee in the amount of
$200,000, earned in full and payable upon execution of this Financing Agreement.
8.8. The Companies shall pay the Agent's standard charges and fees for
the Agent's personnel used by the Agent for reviewing the books and records of
the Companies (a field examination fee in the amount of $750 per day per
examiner as of the date hereof) and for verifying, testing, protecting,
safeguarding, preserving or disposing of all or any part of the Collateral
(which fees shall be in addition to any Out-of-Pocket Expenses). The Companies
shall after the occurrence of an Event of Default (which is not waived by the
Required Lenders) pay to the Agent for the account of any Lender other than CIT,
such Lender's standard charges and fees for such Lender's personnel used by such
Lender for reviewing the books and records of the Companies (a field examination
fee in the amount of $750 per day per examiner as of the date hereof) and for
verifying, testing, protecting, safeguarding, preserving or disposing of all or
any part of the Collateral (which fees shall be in addition to any Out-of-Pocket
Expenses.)
8.9. Each of the Companies hereby authorizes the Agent to charge their
respective Revolving Loan Account(s) with the amount of all their Obligations
due hereunder as such payments become due. The Companies hereby confirm and
agree that they shall promptly pay any Obligations to the Agent upon its request
therefor. Each of the Companies confirms that (1) its liability for any and all
of the fee obligations (including without limitation, those set forth in 8.6
through 8.9 above) and Out-of-Pocket Expenses, set forth in this Financing
Agreement and in any of the other Loan Documents is joint and several, (2) the
Companies, as between themselves, shall determine how to pro-rate any such
payments due hereunder, and (3) for ease of administration, the Agent may charge
any of their Revolving Loan Accounts with the amount of any such fee payments
and any such charges which the Agent may so make to any of the Companies'
Revolving Loan Account(s) as herein provided will be made as an accommodation to
the Companies and solely at the Agent's discretion.
8.10. In the event that the Agent, any Lender or any participant hereunder
(or any financial institution which may from time to time become a participant
or Lender hereunder) shall have determined in the exercise of its reasonable
business judgement that, subsequent to the Closing Date, any change in
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change in the interpretation or administration thereof, or compliance by the
Agent or any Lender or such participant with any new request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Agent's, such Lender's or such participant's
capital as a consequence of its obligations hereunder to a level below that
which the Agent, or any Lender or such participant could have achieved but for
such adoption, change or compliance (taking into consideration the Agent, such
Lender's or such participant's policies with respect to capital adequacy) by an
amount reasonably deemed by the Agent, or any Lender or such participant to be
material, then, from time to time, the Companies shall pay no later than five
(5) days following demand, to the Agent or such participant such additional
amount or amounts as will compensate the Agent, such Lender or such
participant's for such reduction. In determining such amount or amounts, the
Agent, such Lender or such participant may use any reasonable averaging or
attribution methods. The protection of this Paragraph 8.11 shall be available to
the Agent, such Lender or such participant regardless of any possible contention
of invalidity or inapplicability with respect to the applicable law, regulation
or condition. A certificate of the Agent, any Lender or such participant setting
forth such amount or amounts as shall be necessary to compensate the Agent, such
Lender or such participant with respect to this Section 8 and the calculation
thereof when delivered to the Companies shall be conclusive on the Companies
absent manifest error. Notwithstanding anything in this paragraph to the
contrary, in the event the Agent, such Lender or such participant has exercised
its rights pursuant to this paragraph, and subsequent thereto determines that
the additional amounts paid by the Companies in whole or in part exceed the
amount which the Agent, such Lender or such participant actually required to be
made whole, the excess, if any, shall be returned to the Companies by the Agent,
such Lender or such participant, as applicable.
8.11. In the event that any applicable law, treaty or governmental
regulation, or any change therein or in the interpretation or application
thereof, or compliance by the Agent, any Lender or such participant with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(1) subject the Agent, such Lender or such participant to any tax of
any kind whatsoever with respect to this Financing Agreement or change the basis
of taxation of payments to the Agent, such Lender or such participant of
principal, fees, interest or any other amount payable hereunder or under any
other documents (except for changes in the rate of tax on the overall net income
of the Agent, such Lender or such participant by the federal government or the
jurisdiction in which it maintains its principal office);
(2) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or Revolving Loans by, or other credit extended by the
Agent, such lender or such participant by reason of or in respect to this
Financing Agreement and the Loan Documents, including (without
limitation) pursuant to Regulation D of the Board of Governors of the Federal
Reserve System; or
(3) impose on the Agent or such participant any other condition with
respect to this Financing Agreement or any other document, and the result of any
of the foregoing is to increase the cost to the Agent, such Lender or such
participant of making, renewing or maintaining its Revolving Loans hereunder by
an amount that the Agent or such participant deems to be material in the
exercise of its reasonable business judgement or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Revolving Loans by an amount that the Agent or such participant deems to be
material in the exercise of its reasonable business judgement, then, in any case
the Companies shall pay the Agent, such Lender or such participant, within five
(5) days following its demand, such additional cost or such reduction, as the
case may be. The Agent, such Lender or such participant shall certify the amount
of such additional cost or reduced amount to the Companies and the calculation
thereof and such certification shall be conclusive upon the Companies absent
manifest error. Notwithstanding anything in this paragraph to the contrary, in
the event the Agent, such Lender or such participant has exercised its rights
pursuant to this paragraph, and subsequent thereto determine that the additional
amounts paid by the Companies in whole or in part exceed the amount which the
Agent, such Lender or such participant actually required pursuant hereto, the
excess, if any, shall be returned to the Companies by the Agent, such Lender or
such participant.
8.12. The Companies may request LIBOR Loans on the following terms and
conditions:
(1) The Companies may elect, subsequent to the Closing Date and from
time to time thereafter (1) to request any loan made hereunder to be a LIBOR
Loan as of the date of such loan or provided, that each LIBOR Loan shall be in
the minimum amount of $1,000,000 or a multiple thereof (2) to convert Chase Bank
Rate Loans to LIBOR Loans, and may elect from time to time to convert LIBOR
Loans to Chase Bank Rate Loans by giving the Agent at least three (3) Business
Days' prior irrevocable notice of such election, provided that any such
conversion of LIBOR Loans to Chase Bank Rate Loans shall only be made, subject
to the second following sentence, on the last day of an Interest Period with
respect thereto. Should the Companies elect to convert Chase Bank Rate Loans to
LIBOR Loans, it shall give the Agent at least four Business Days' prior
irrevocable notice of such election. If the last day of an Interest Period with
respect to a loan that is to be converted is not a Business Day or Working Day,
then such conversion shall be made on the next succeeding Business Day or
Working Day, as the case may be, and during the period from such last day of an
Interest Period to such succeeding Business Day, as the case may be, such loan
shall bear interest as if it were an Chase Bank Rate Loan. Subject, to the last
sentence of this subparagraph (a), all or any part of outstanding Chase Bank
Rate Loans then outstanding may be converted to LIBOR Loans as provided herein,
provided that partial conversions shall be in multiples in an aggregate
principal amount of $1,000,000 or more. The aggregate amount of all such LIBOR
Loans shall not exceed $30,000,000 at any one time outstanding.
(2) Any LIBOR Loans may be continued as such upon the expiration of
an Interest Period, provided the Companies give the Agent irrevocable notice
thereof, at least three
(3) Business Days' prior to the expiration of said Interest Period, and provided
further that no LIBOR Loan may be continued as such upon the occurrence of any
Default or Event of Default under this Financing Agreement, but shall be
automatically converted to a Chase Bank Rate Loan on the last day of the
Interest Period during which occurred such Default or Event of Default. Absent
such notification, and in the event of the occurrence of any Default or Event of
Default during an Interest Period, LIBOR Loans shall convert to Chase Bank Rate
Loans on the last day of the applicable Interest Period. Each notice of
election, conversion or continuation furnished by the Companies pursuant hereto
shall specify whether such election, conversion or continuation is for a one,
two, or three month period. Notwithstanding anything to the contrary contained
herein, the Agent and Lenders (or any participant, if applicable) shall not be
required to purchase United States Dollar deposits in the London interbank
market or from any other applicable LIBOR rate market or source or otherwise
"match fund" to fund LIBOR Loans, but any and all provisions hereof relating to
LIBOR Loans shall be deemed to apply as if the Agent and Lenders (and any
participant, if applicable) had purchased such deposits to fund any LIBOR Loans.
(3) The Companies may request a LIBOR Loan, convert any Chase Bank
Rate Loan or continue any LIBOR Loan provided there is then no Default or Event
of Default in effect.
8.13. (1) Subject to Paragraph 8.21, the LIBOR Loans shall bear interest
for each Interest Period with respect thereto on the unpaid principal amount
thereof at a rate per annum equal to the LIBOR determined for each Interest
Period in accordance with the terms hereof plus 2.75%; provided, however, if the
Companies on a combined basis achieve EBITDA of $7,500,000 for the Fiscal Year
ending March 31, 2001, then effective on the first of the month next following
receipt by the Lenders of the financial statements of the Companies on a
combined basis for the Fiscal Year ending March 31, 2001, such percentage shall
decrease to 2.50%; provided further, however, that the Companies shall receive a
credit only from CIT to their Collective Account in an amount equal to .50% of
the unpaid principal amount of LIBOR Loans as and when interest is charged to
the Companies thereon.
(2) If all or a portion of the outstanding principal amount of the
Obligations shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such outstanding amount, to the extent it is a LIBOR
Loan, shall be converted to a Chase Bank Rate Loan at the end of the last
Interest Period therefor.
(3) The Companies may not have more than three 3 LIBOR Loans
outstanding at any given time.
8.14. (1) Interest in respect of the LIBOR Loans shall be calculated on
the basis of a 360 day year and shall be payable as of the end of each month.
(2) the Agent shall, at the request of the Companies, deliver to the
Companies a statement showing the quotations given by The Chase Manhattan Bank
and the computations used in determining any interest rate pursuant to Paragraph
8.14 of Section 8 hereof.
8.15. As further set forth in Paragraph 8.12 above, in the event that the
Agent, any Lender (or any financial institution which may become a participant
hereunder) shall have determined in the exercise of its reasonable business
judgement (which determination shall be conclusive and binding upon the
Companies) that by reason of circumstances affecting the interbank LIBOR market,
adequate and reasonable means do not exist for ascertaining LIBOR applicable for
any Interest Period with respect to; (1) a proposed loan that the Companies have
requested be made as a LIBOR Loan; (2) a LIBOR Loan that will result from the
requested conversion of a Chase Bank Rate Loan into a LIBOR Loan; or (3) the
continuation of LIBOR Loans beyond the expiration of the then current Interest
Period with respect thereto, the Agent shall forthwith give written notice of
such determination to the Companies at least one day prior to, as the case may
be, the requested borrowing date for such LIBOR Loan, the conversion date of
such Chase Bank Rate Loan or the last day of such Interest Period. If such
notice is given (1) any requested LIBOR Loan shall be made as a Chase Bank Rate
Loan, (2) any Chase Bank Rate Loan that was to have been converted to a LIBOR
Loan shall be continued as a Chase Bank Rate Loan, and (3) any outstanding LIBOR
Loan shall be converted, on the last day of then current Interest Period with
respect thereto, to a Chase Bank Rate Loan. Until such notice has been withdrawn
by the Agent, no further LIBOR Loan shall be made nor shall the Companies have
the right to convert a Chase Bank Rate Loan to a LIBOR Loan.
8.16. If any payment on a LIBOR Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day or Working Day unless the result of such extension would
be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day or Working Day.
8.17. Notwithstanding any other provisions herein, if any law, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof, shall make it unlawful for the Agent or any Lender to make
or maintain LIBOR Loans as contemplated herein, the then outstanding LIBOR
Loans, if any, shall be converted automatically to Chase Bank Rate Loans as of
the end of the then current month, or within such earlier period as required by
law. The Companies hereby agree promptly to pay the Agent, upon demand, any
additional amounts necessary to compensate the Agent and Lenders for any costs
incurred by the Agent and Lenders in making any conversion in accordance with
this Section 8 including, but not limited to, any interest or fees payable by
the Agent to lenders of funds obtained by the Agent in order to make or maintain
LIBOR Loans hereunder.
8.18. The Companies agree to indemnify and to hold the Agent and Lenders
(including any participant) harmless from any loss or expense which the Agent,
Lenders or such participant may sustain or incur as a consequence of: (1)
Default by the Companies in payment of the principal amount of or interest on
any LIBOR Loans, as and when the same shall be due and payable in accordance
with the terms of this Financing Agreement, including, but not limited to, any
such loss or expense arising from interest or fees payable by the Agent, Lenders
or such participant to lenders of funds obtained by any of them in order to
maintain the LIBOR Loans hereunder; (2) default by the Companies in making a
borrowing or conversion after the Companies have given a notice in accordance
with Paragraph 8.13 of Section 8 hereof; (3) any prepayment of LIBOR Loans on a
day which is not the last day of the Interest Period applicable
thereto, including, without limitation, prepayments arising as a result of the
application of the proceeds of Collateral to the Revolving Loans; and (4)
default by the Companies in making any prepayment after the Companies have given
notice to the Agent thereof. The determination by the Agent of the amount of any
such loss or expense, when set forth in a written notice to the Companies,
containing the Agent's calculations thereof in reasonable detail, shall be
conclusive on the Companies in the absence of manifest error. Calculation of all
amounts payable under this paragraph with regard to LIBOR Loans shall be made as
though the Agent and Lenders had actually funded the LIBOR Loans through the
purchase of deposits in the relevant market and currency, as the case may be,
bearing interest at the rate applicable to such LIBOR Loans in an amount equal
to the amount of the LIBOR Loans and having a maturity comparable to the
relevant Interest Period; provided, however, that the Agent and Lenders may fund
each of the LIBOR Loans in any manner the Agent and Lenders see fit and the
foregoing assumption shall be used only for calculation of amounts payable under
this paragraph. In addition, notwithstanding anything to the contrary contained
herein, the Agent shall apply all proceeds of Collateral and all other amounts
received by it from or on behalf of the Companies (1) initially to the Chase
Bank Rate Loans and (2) subsequently to LIBOR Loans; provided, however, (x) upon
the occurrence of an Event of Default or (y) in the event the aggregate amount
of outstanding LIBOR Rate Loans exceeds Availability or the applicable maximum
levels set forth therefor, the Agent may apply all such amounts received by it
to the payment of Obligations in such manner and in such order as the Agent may
elect in its reasonable business judgment. In the event that any such amounts
are applied to Revolving Loans which are LIBOR Loans, such application shall be
treated as a prepayment of such Revolving Loans and the Agent shall be entitled
to indemnification hereunder. This covenant shall survive termination of this
Financing Agreement and payment of the outstanding Obligations.
8.19. Notwithstanding anything to the contrary in this Agreement, in the
event that, by reason of any Regulatory Change (for purposes hereof "Regulatory
Change" shall mean, with respect to the Agent and Lenders, any change after the
date of this Financing Agreement in United States federal, state or foreign law
or regulations (including, without limitation, Regulation D) or the adoption or
making after such date of any interpretation, directive or request applying to a
class of banks including the Agent of or under any United States federal, state
or foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful)), the Agent or any
Lender either (a) incurs any material additional costs based on or measured by
the excess above a specified level of the amount of a category of deposits or
other liabilities of such bank which includes deposits by reference to which the
interest rate on LIBOR Loans is determined as provided in this Financing
Agreement or a category of extensions of credit or other assets of the Agent or
of such Lender which includes LIBOR Loans, or (b) becomes subject to any
material restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if the Agent so elects by notice to the Companies, the
obligation of the Agent and Lenders to make or continue, or to convert Chase
Bank Rate Loans into LIBOR Loans hereunder shall be suspended until such
Regulatory Change ceases to be in effect.
8.20. For purposes of this Financing Agreement and Section 8 thereof, any
reference to the Agent shall include any financial institution which may at any
time become a participant or co-lender hereunder.
SECTION 9. Powers
9.1. Each Company hereby constitutes the Agent, or any person or agent
the Agent may designate, as its attorney-in-fact, at the Companies' cost and
expense, to exercise all of the following powers set forth in this Section 9,
which being coupled with an interest, shall be irrevocable until all Obligations
to the Agent have been paid in full:
(1) To receive, take, endorse, sign, assign and deliver, all in the
name of the Agent or the Companies or any one of them, any and all checks,
drafts, and other documents or instruments relating to the Collateral; and
(2) To request from customers indebted on Accounts at any time, in
the name of the Companies or any one of them, in the name of certified public
accountant designated by the Agent or in the name of the Agent's designee,
information concerning the amounts owing on the Accounts.
9.2. Notwithstanding anything in this Section 9 contained to the
contrary, the following powers may only be exercised after the occurrence of an
Event of Default and until such time as such Event of Default is waived in
writing by the Agent:
(1) To receive, open and dispose of all mail addressed to the
Companies or any one of them and to notify postal authorities to change the
address for delivery thereof to such address as the Agent may designate;
(2) To request from customers indebted on Accounts at any time, in
the name of the Agent information concerning the amounts owing on the Accounts;
(3) To transmit to customers indebted on Accounts notice of the
Agent's interest therein and to notify customers indebted on Accounts to make
payment directly to the Agent for the Companies' account; and
(4) To take or bring, in the name of the Agent or the Companies or
any one of them, all steps, actions, suits or proceedings deemed by the Agent
necessary or desirable to enforce or effect collection of the Accounts.
SECTION 10. Events of Default and Remedies
10.1. Notwithstanding anything hereinabove to the contrary, the Agent may
terminate this Financing Agreement immediately upon the occurrence of any one of
the following Events of Default:
(1) cessation of the business of any Company or the calling of a
meeting of the creditors of any Company for purposes of compromising the debts
and obligations of such Company;
(2) the failure of any Company to generally meet its debts as they
mature;
(3) (1) the commencement by any Company of any bankruptcy,
insolvency, arrangement, reorganization, receivership or similar proceedings
under any federal or state law; (2) the commencement against any Company, of any
bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceeding under any federal or state law by creditors of such Company, which
proceeding shall not have been controverted within ten (10) days or shall not
have been dismissed and vacated within sixty (60) days of commencement, or any
of the actions sought in any such proceeding shall occur or the Company shall
take action to authorize or effect any of the actions in any such proceeding; or
(iii) the commencement (x) by Parent, any other Guarantor or any Company, or any
one of them, of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceeding under any applicable state law, or (y)
against Parent, Guarantor or any Company, or any one of them, of any involuntary
bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceeding under applicable law, which proceeding shall not have been
controverted within ten (10) days and shall not have been dismissed or vacated
within sixty (60) days of commencement, or any of the actions sought in any such
proceeding shall occur or Parent, any other Guarantor or any Company, or any one
of them, shall take action to authorize or effect any of the actions in any such
proceeding;
(4) breach by any Company of any warranty, representation or
covenant contained herein (other than those referred to in sub-paragraph (e) and
(f) below) or in any other Loan Document, provided that such Default by such
Company of any of the warranties, representations or covenants referred in this
clause (d) shall not be deemed to be an Event of Default unless and until such
Default shall remain unremedied to the Agent's satisfaction for a period of ten
(10) days from the date of discovery of such breach by such Company or by the
Agent, whichever shall first occur;
(5) breach by any Company of any warranty, representation or
covenant of Paragraphs 3.3 (other than the fourth sentence of Paragraph 3.3) and
3.4 , 3.8 of Section 3 hereof; Paragraphs 6.3, 6.4 (other than the first
sentence of Paragraph 6.4) and 6.8 , 6.9 and 6.10 of Section 6 hereof;
Paragraphs 7.1, 7.2, 7.5, 7.6, 7.8, 7.9, 7.11 through 7.13 and 7.16 hereof;
(6) failure of the Companies or any one of them to pay any of the
Obligations within five (5) Business Days of the due date thereof, provided that
nothing contained herein shall prohibit the Agent from charging such amounts to
the Revolving Loan Account on the due date thereof;
(7) the Parent or the Companies or any one of them shall (i) engage
in any "prohibited transaction" as defined in ERISA, (ii) have any "accumulated
funding deficiency" as defined in ERISA, (iii) fail to inform the Agent and each
Lender of the occurrence of any "reportable event" as defined in ERISA, with ten
(10) days of the occurrence of such reportable event, (iv) terminate any "plan",
as defined in ERISA or (v) be engaged in any proceeding in which the Pension
Benefit Guaranty Corporation shall seek appointment, or is appointed, as trustee
or administrator of any "plan", as defined in ERISA, and with respect to this
sub-paragraph (g) such event or condition (x) remains uncured for a period of
sixty (60) days from date of occurrence and (y) could, in the reasonable opinion
of the Agent, subject any of the Parent or the Companies to any tax, penalty or
other liability material to the business, operations or financial condition of
any such Company;
(8) the occurrence of any default or event of default (after giving
effect to any applicable grace or cure periods) under any instrument or
agreement evidencing Indebtedness of the Companies or any one of them having a
principal amount in excess of $250,000 in any one instance or in the aggregate;
(9) or other claim in excess of $250,000 becomes a lien on any
material portion of any Company's or any Guarantor's properties or assets;
(10) A Change of Control shall occur.
10.2. Upon the occurrence of an Event of Default, the Agent in its sole
discretion may, or upon the written direction of the Required Lenders the Agent
shall, provided, that as long as Fleet owns at least fifty percent (50%) of the
outstanding Revolving Loans, the Agent shall, unless the Required Lenders direct
that the Agent shall not, declare that: (1) all Obligations shall become
immediately due and payable; (2) the Agent may charge the Companies the Default
Rate of Interest on all then outstanding or thereafter incurred Obligations in
lieu of the interest provided for in Section 8 of this Financing Agreement,
provided that, with respect to this clause "(b)" the Agent has given the
Companies written notice of the Event of Default, provided further however, that
no notice is required if the Event of Default is the Event listed in Paragraph
10.1(c) of this Section 10; (3) the Agent may charge the Companies the Default
Letter of Credit Guaranty Fee on each documentary Letter of Credit thereafter
issued and on each standby Letter of Credit then outstanding or thereafter
issued in lieu of the Letter of Credit Guaranty Fee provided for in Section 8 of
this Financing Agreement, provided that, with respect to this clause "(c)" the
Agent has given the Companies' written notice of the Event of Default, provided
further, however, that no notice is required if the Event of Default is the
Event listed in Paragraph 10.1(c) of this Section 10; and (4) the Agent may
immediately terminate this Financing Agreement upon notice to the Companies,
provided, however, that upon the occurrence of an Event of Default listed in
Paragraph 10.1(c) of this Section 10, this Financing Agreement shall
automatically terminate and all Obligations shall become due and payable,
without any action, declaration, notice or demand by the Agent. The exercise of
any option is not exclusive of any other option, which may be exercised at any
time by the Agent. Notwithstanding anything to the contrary contained in this
Agreement, the Agent shall at all times have the right to demand payment in full
of all Obligations.
10.3. Immediately upon the occurrence of any Event of Default, the Agent
(and only the Agent) may, to the extent permitted by law: (1) remove from any
premises where same may be located any and all books and records, computers,
electronic media and software programs associated with any Collateral (including
any electronic records, contracts and signatures pertaining thereto), documents,
instruments, files and records, and any receptacles or cabinets containing same,
relating to the Accounts, or the Agent may use, at the Companies' expense, such
of the Companies' personnel, supplies or space at the Companies' places of
business or otherwise, as may be necessary to properly administer and control
the Accounts or the handling of collections and realizations thereon; (2) bring
suit, in the name of the Companies or the Agent, and generally shall have all
other rights respecting said Accounts, including without limitation the right
to: accelerate or extend the time of payment, settle, compromise, release in
whole or in part any amounts owing on any Accounts and issue credits in the name
of the Companies or the
Agent; (3) sell, assign and deliver the Collateral and any returned, reclaimed
or repossessed Inventory, with or without advertisement, at public or private
sale, for cash, on credit or otherwise, at the Agent's sole option and
discretion, and the Agent may bid or become a purchaser at any such sale, free
from any right of redemption, which right is hereby expressly waived by the
Companies; (4) foreclose the security interests in the Collateral created herein
or by the Loan Documents by any available judicial procedure, or to take
possession of any or all of the Collateral, including any Inventory, Equipment
and/or Other Collateral without judicial process, and to enter any premises
where any Inventory and Equipment and/or Other Collateral may be located for the
purpose of taking possession of or removing the same; and (5) exercise any other
rights and remedies provided in law, in equity, by contract or otherwise. The
Agent shall have the right, without notice or advertisement, to sell, lease, or
otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, in the name of the
Companies or the Agent, or in the name of such other party as the Agent may
designate, either at public or private sale or at any broker's board, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such other terms and conditions as the Agent in its sole discretion may
deem advisable, and the Agent shall have the right to purchase at any such sale.
If any Inventory and Equipment shall require rebuilding, repairing, maintenance
or preparation, the Agent shall have the right, at its option, to do such of the
aforesaid as is necessary, for the purpose of putting the Inventory and
Equipment in such saleable form as the Agent shall deem appropriate and any such
costs shall be deemed an Obligation hereunder. The Companies agree, at the
request of the Agent, to assemble the Inventory and Equipment and to make it
available to the Agent at premises of the Companies or elsewhere and to make
available to the Agent the premises and facilities of the Companies for the
purpose of the Agent's taking possession of, removing or putting the Inventory
and Equipment in saleable form. If notice of intended disposition of any
Collateral is required by law, it is agreed that ten (10) days notice shall
constitute reasonable notification and full compliance with the law. The net
cash proceeds resulting from the Agent's exercise of any of the foregoing
rights, (after deducting all charges, costs and expenses, including reasonable
attorneys' fees) shall be applied by the Agent to the payment of the
Obligations, whether due or to become due, in such order as the Agent may elect,
and the Companies shall remain liable to the Agent for any deficiencies, then,
to the payment, pari passu, of Ledger Debt and Hedging Debt, and the Agent in
turn agrees to remit to the Companies or their successors or assigns, any
surplus resulting therefrom. The enumeration of the foregoing rights is not
intended to be exhaustive and the exercise of any right shall not preclude the
exercise of any other rights, all of which shall be cumulative. The Companies
hereby indemnifies the Agent and holds the Agent harmless from any and all
costs, expenses, claims, liabilities, Out-of-Pocket Expenses or otherwise,
incurred or imposed on the Agent by reason of the exercise of any of its rights,
remedies and interests hereunder, including, without limitation, from any sale
or transfer of Collateral, preserving, maintaining or securing the Collateral,
defending its interests in Collateral (including pursuant to any claims brought
by the Companies, the Companies as debtor-in-possession, any secured or
unsecured creditors of the Companies, any trustee or receiver in bankruptcy, or
otherwise), and the Companies hereby agree to so indemnify and hold the Agent
harmless, absent the Agent's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. The foregoing indemnification
shall survive termination of this Financing Agreement until such time as all
Obligations (including the foregoing) have been finally and indefeasibly paid in
full. In furtherance thereof the Agent, may establish such reserves for
Obligations hereunder (including any contingent Obligations) as it may deem
advisable in its reasonable business judgement. Any applicable mortgage(s),
deed(s) of trust or assignment(s) issued to the Agent on the Real Estate shall
govern the rights and remedies of the Agent thereto. Notwithstanding anything to
the contrary contained in this Financing Agreement or in any other Loan
Document, the provisions of the UCC or any other applicable law, Agent and
Lenders agree that the Agent shall have the sole and exclusive right to
exercise, for the benefit of Agent and for the ratable benefit of Lenders, the
rights and remedies enumerated herein, in any other Loan Document and under the
UCC and other applicable law.
SECTION 11. Termination
Unless terminated as provided for in this Financing Agreement, this
Financing Agreement shall have an initial term of three (3) years from the date
hereof and shall be automatically extended from Anniversary Date to Anniversary
Date. Except as otherwise permitted herein, the Agent may terminate this
Financing Agreement only as of the initial or any subsequent Anniversary Date
and then only by giving the Companies at least ninety (90) days prior written
notice of termination. Notwithstanding the foregoing the Agent may terminate the
Financing Agreement immediately upon the occurrence of an Event of Default,
provided, however, that if the Event of Default is an event listed in Paragraph
10.1(c) of Section 10 of this Financing Agreement, this Financing Agreement
shall terminate in accordance with paragraph 10.2 of Section 10. The Companies
or any one of them may terminate this Financing Agreement at any time upon
ninety (90) days' prior written notice to the Agent, provided that the Companies
pay to the Agent immediately on demand an Early Termination Fee. Notice of
termination, as aforesaid, by any one Company shall be deemed to be notice by
the Companies for purposes hereof. All Obligations shall become due and payable
as of any termination hereunder or under Section 10 hereof and, pending a final
accounting, the Agent may withhold any balances in the Companies' account
(unless supplied with an indemnity satisfactory to the Agent) to cover all of
the Obligations, whether absolute or contingent, including, but not limited to,
cash reserves for any contingent Obligations, including an amount of 110% of the
face amount of any outstanding Letters of Credit with an expiry date on or after
the effective date of termination of this Financing Agreement. All of the
Agent's rights, liens and security interests shall continue after any
termination until all Obligations have been paid and satisfied in full.
SECTION 12. Miscellaneous
12.1. The Companies hereby waive diligence, notice of intent to
accelerate, notice of acceleration, demand, presentment and protest and any
notices thereof as well as notice of nonpayment. No delay or omission of the
Agent or the Companies to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by the Agent of any right or remedy precludes any
other or further exercise thereof, or precludes any other right or remedy.
12.2. This Financing Agreement and the Loan Documents executed and
delivered in connection therewith constitute the entire agreement between the
Companies and the Agent; supersede any prior agreements; can be changed only by
a writing signed by all the Companies and the Agent and acknowledged and
consented to by all Guarantors; and shall bind and benefit the Companies and the
Agent and their respective successors and assigns.
12.3. In no event shall the Companies, upon demand by the Agent for
payment of any Indebtedness relating hereto, by acceleration of the maturity
thereof, or otherwise, be obligated to pay interest and fees in excess of the
amount permitted by law. Regardless of any provision herein or in any agreement
made in connection herewith, the Agent shall never be entitled to receive,
charge or apply, as interest on any indebtedness relating hereto, any amount in
excess of the maximum amount of interest permissible under applicable law. If
the Agent ever receives, collects or applies any such excess, it shall be deemed
a partial repayment of principal and treated as such; and if principal is paid
in full, any remaining excess shall be refunded to the Companies. This paragraph
shall control every other provision hereof, the Loan Documents and of any other
agreement made in connection herewith.
12.4. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in full force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be added
automatically as a part of the applicable agreement a legal and enforceable
provision as similar in terms to the severed provision as may be possible.
12.5. THE COMPANIES, THE LENDERS AND THE AGENT EACH HEREBY WAIVE ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THE LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREUNDER. EACH OF THE COMPANIES HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE OF
PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED. IN NO EVENT
WILL THE AGENT BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL
DAMAGES.
12.6. Except as otherwise herein provided, any notice or other
communication required hereunder shall be in writing (provided that, any
electronic communications from any of the Companies with respect to any request,
transmission, document, electronic signature, electronic mail or facsimile
transmission shall be deemed binding on the Companies for purposes of this
Financing Agreement, provided further that any such transmission shall not
relieve the Companies from any other obligation hereunder to communicate further
in writing), and shall be deemed to have been validly served, given or delivered
when hand delivered or sent by facsimile, or three days after deposit in the
United State mails, with proper first class postage prepaid and addressed to the
party to be notified or to such other address as any party hereto may designate
for itself by like notice, as follows:
(A) if to the Agent:
c/o The CIT Group/Commercial Services, Inc., as Agent
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Fax No.: 000-000-0000
(B) if to the Companies:
c/o Toymax Inc.
000 Xxxx Xxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Xx.
Fax No.:000-000-0000
with a copy to:
Xxxx Marks & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx, Esq.
Fax No.: 000-000-0000
12.7. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK (WITHOUT REFERENCE TO THE CONFLICT OF LAW PRINCIPLES OF
SUCH STATE), EXCEPT TO THE EXTENT THAT ANY OTHER LOAN DOCUMENT INCLUDES AN
EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
12.8. This Agreement may be executed in any number of counterparts, and by
the Agent, the Lenders and the Companies in separate counterparts, each of which
shall be an original, and all of which shall together constitute one and the
same agreement.
SECTION 13. Agreement Among the Lenders
13.1. (1) The Agent, for the account of the Lenders, shall disburse all
Revolving Loans and advances to the Companies and shall handle all collections
of Collateral and repayment of Obligations. It is understood that for purposes
of advances to the Companies and for purposes of this Section 13 the Agent is
using the funds of the Agent.
(2) Unless the Agent shall have been notified in writing by any
Lender prior to any advance to the Companies that such Lender will not make the
amount which would constitute its share of the borrowing on such date available
to the Agent, the Agent may assume that such Lender shall make such amount
available to the Agent on a Settlement Date, and the Agent may, in reliance upon
such assumption, make available to the Companies a corresponding amount. A
certificate of the Agent submitted to any Lender with respect to any amount
owing under this subsection shall be conclusive, absent manifest error. If such
Lender's share of such borrowing is not in fact made available to the Agent by
such Lender on the Settlement Date, the Agent shall be entitled to recover such
amount with interest thereon at the rate per annum applicable to Revolving Loans
hereunder, on demand, from the Companies without prejudice to any rights which
the Agent may have against such Lender hereunder. Nothing contained in this
subsection shall relieve any Lender which has failed to make available its
ratable portion of any borrowing hereunder from its obligation to do so in
accordance with the terms hereof. Nothing
contained herein shall be deemed to obligate the Agent to make available to the
Companies the full amount of a requested advance when the Agent has any notice
(written or otherwise) that any of the Lenders will not advance its ratable
portion thereof.
13.2. On the Settlement Date, the Agent and the Lenders shall each remit
to the other, in immediately available funds, all amounts necessary so as to
ensure that, as of the Settlement Date, the Lenders shall have their Pro Rata
Share of all outstanding Obligations.
13.3. The Agent shall forward to each Lender, at the end of each month, a
copy of the account statement rendered by the Agent to the Companies.
13.4. The Agent shall, after receipt of any interest and fees earned under
this Financing Agreement, promptly remit to each Lender: (1) its Pro Rata Share
of all fees, provided, however, that the Lenders (other than CIT in its role as
Agent) shall not share in the fees provided for in Section 8, Paragraph 8.8, and
(2) interest computed at the rate and as provided for in Section 8 of this
Financing Agreement on its Pro Rata Share of the Revolving Loans which have been
actually funded by such Lender.
13.5. (1) The Companies acknowledge that the Lenders with the prior
written consent of the Agent may sell participations in the Revolving Loans and
extensions of credit made and to be made to the Companies hereunder provided
,however, that the Companies shall not be obligated to pay any additional fees
or expenses in connection with any such participations. The Companies further
acknowledge that in doing so, the Lenders may grant to such participants certain
rights which would require the participant's consent to certain waivers,
amendments and other actions with respect to the provisions of this Financing
Agreement, provided that the consent of any such participant shall not be
required except for matters requiring the consent of all Lenders hereunder as
set forth in Section 14, Paragraph 14.10 hereof.
(2) The Companies authorize each Lender to disclose to any
participant or purchasing lender (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Companies and their affiliates which has been delivered to such
Lender by or on behalf of the Companies pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Companies in connection
with such Lender's credit evaluation of the Companies and their affiliates prior
to entering into this Agreement, provided that such Transferee agrees to hold
such information in confidence in the ordinary course of its business.
13.6. The Companies hereby agree that each Lender is solely responsible
for its portion of the Revolving Line of Credit and that neither the Agent nor
any Lender shall be responsible for, nor assume any obligations for the failure
of any Lender to make available its portion of the Revolving Line of Credit.
Further, should any Lender refuse to make available its portion of the Revolving
Line of Credit, then the other Lenders may, but without obligation to do so,
increase, unilaterally, their respective portion of the Revolving Line of Credit
in which event the Companies shall be so obligated to such other Lenders.
13.7. In the event that the Agent, the Lenders or any one of them is sued
or threatened with suit by the Companies or any one of them, or by any receiver,
trustee, creditor or any
committee of creditors on account of any preference, voidable transfer or lender
liability issue, alleged to have occurred or been received as a result of, or
during the transactions contemplated under this Financing Agreement, then in
such event any money paid in satisfaction or compromise of such suit, action,
claim or demand and any expenses, costs and attorneys' fees paid or incurred in
connection therewith, whether by the Agent, the Lenders or any one of them,
shall be shared by the Lenders in accordance with their Pro Rata Shares. In
addition, any costs, expenses, fees or disbursements incurred by outside
agencies or attorneys retained by the Agent to effect collection or enforcement
of any rights in the Collateral, including enforcing, preserving or maintaining
rights under this Financing Agreement shall be shared between and among the
Lenders to the extent not reimbursed by the Companies or from the proceeds of
Collateral in accordance with their Pro Rata Shares. The provisions of this
paragraph shall not apply to any suits, actions, proceedings or claims that (1)
predate the date of this Financing Agreement or (2) are based on transactions,
actions or omissions that predate the date of this Financing Agreement.
13.8. Each of the Lenders agrees with each other Lender that any money or
assets of the Companies held or received by such Lender, no matter how or when
received, shall be applied to the reduction of the Obligations to all Lenders,
in accordance with their Pro Rata Shares (to the extent permitted hereunder)
after (1) the occurrence of an Event of Default and (2) the election by the
Required Lenders to accelerate the Obligations. In addition, the Companies
authorize, and the Lenders shall have the right, without notice, upon any amount
becoming due and payable hereunder, to set-off and apply against any and all
property held by, or in the possession of such Lender the Obligations due to all
Lenders, in accordance with their Pro Rata Shares the Lenders.
13.9. Each of CIT and Fleet shall have the right at any time to assign to
any affiliate or one or more commercial banks, commercial finance lenders or
other financial institutions all or a portion of its rights and obligations
under this Financing Agreement (including, without limitation, its obligations
under the Revolving Line of Credit, and Revolving Loans and its rights and
obligations with respect to Letters of Credit). Upon execution of an Assignment
and Transfer Agreement, (1) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such assignment, have the rights and obligations of CIT or Fleet, as
the case may be, as assignor, hereunder and (2) CIT or Fleet, as the case may
be, shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such assignment, relinquish its rights and be
released from its obligations under this Financing Agreement. The Companies
shall, if necessary, execute any documents reasonably required to effectuate the
assignments. No other Lender may assign its interest in the Revolving Loans and
advances and extensions of credit hereunder without the prior written consent of
the Agent, which consent shall not be unreasonably withheld provided, however,
that no such consent shall be required to assignments by one affiliate of a
Lender to another affiliate of such Lender. In the event that the Agent consents
to any such assignment by any other Lender or in the case of an assignment to or
by an affiliate of a Lender (1) the amount being assigned shall in no event be
less than the lesser of (x) $5,000,000 or (y) the entire interest of such Lender
hereunder, and (2) the parties to such assignment shall execute and deliver to
the Agent an Assignment and Transfer Agreement, and, at the Agent's election, a
processing and recording fee of $1,000 payable by the Companies to the Agent for
its own account.
SECTION 14. Agency
14.1. Each Lender hereby irrevocably designates and appoints CIT as the
Agent for the Lenders under this Financing Agreement and any Loan Documents and
irrevocably authorizes CIT as the Agent for such Lender, to take such action on
its behalf under the provisions of this Financing Agreement and all ancillary
documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Financing Agreement and all
ancillary documents together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Financing Agreement, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Financing Agreement and the
ancillary documents or otherwise exist against the Agent.
14.2. The Agent may execute any of its duties under this Financing
Agreement and all ancillary documents by or through agents or attorneys-in-fact
and shall be entitled to the advice of counsel concerning all matters pertaining
to such duties.
14.3. Neither the Agent nor any of its officers, directors, employees,
agents, or attorneys-in-fact shall be (1) liable to any Lender for any action
lawfully taken or omitted to be taken by it or such person under or in
connection with this Financing Agreement and all ancillary documents (except for
its or such person's own gross negligence or willful misconduct), or (2)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Companies or any officer thereof
contained in this Financing Agreement and all ancillary documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Financing Agreement
and all ancillary documents or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Financing Agreement and all
ancillary documents or for any failure of the Companies to perform their
obligations thereunder. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Financing Agreement and all
ancillary documents or to inspect the properties, books or records of the
Companies.
14.4. The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or
persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Companies), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Financing Agreement and all ancillary documents
unless it shall first receive such advice or concurrence of the Lenders, or the
Required Lenders, as the case may be, as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Financing Agreement and all ancillary
documents in accordance with a request of the Lenders, or the Required Lenders,
as the case may be, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
14.5. The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received written notice from a Lender or the Companies describing such Default
or Event of Default. In the event that the Agent receives such a notice, the
Agent shall promptly give notice thereof to the Lenders. The Agent shall
commence action with respect to such Default or Event of Default if so directed
by the Required Lenders provided that unless and until the Agent shall have
received such direction, the Agent may in the interim (but shall not be
obligated to) commence action, or refrain from commencing such action, with
respect to such Default or Event of Default as it shall deem advisable and in
the best interests of the Lenders. In the event the Agent in its sole
discretion, or at the request of the Required Lenders, continues to make
Revolving Loans and advances under this Financing Agreement upon the occurrence
of a Default or Event of Default, any such Revolving Loans and advances may be
in such amounts (subject to Paragraph 14.10 hereof) and on such additional terms
and conditions as the Agent or the Required Lenders may deem appropriate.
14.6. Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents or attorneys-in-fact has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Companies shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, financial and other condition and
creditworthiness of the Companies and made its own decision to enter into this
Financing Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under the Financing Agreement and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition or creditworthiness of the Companies. The Agent, however,
shall provide the Lenders with copies of all financial statements, projections
and business plans which come into the possession of the Agent or any of its
officers, employees, agents or attorneys-in-fact.
14.7. (1) The Lenders agree to indemnify the Agent in its capacity as such
(to the extent not reimbursed by the Companies and without limiting the
obligation of the Companies to do so), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements (including, without limitation, all Out-of-Pocket
Expenses) of any kind whatsoever (including negligence on the part of the Agent)
which may at any time be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Financing Agreement or any other
Loan Documents or any documents contemplated by or referred to herein or the
transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence or willful
misconduct. The agreements in this paragraph shall survive the payment of the
Obligations.
(2) The Agent will use its reasonable business judgement in handling
the collection of the Accounts, enforcement of its rights hereunder and
realization upon the Collateral but shall not be liable to the Lenders for any
action taken or omitted to be taken in good faith or on the written advice of
counsel. The Lenders expressly release the Agent from any and all liability and
responsibility (express or implied), for any loss, depreciation of or delay in
collecting or failing to realize on any Collateral, the Obligations or any
guaranties therefor and for any mistake, omission or error in judgment in
passing upon or accepting any Collateral or in making (or in failing to make)
examinations or audits or for granting indulgences or extensions to the
Companies, any account debtor or any guarantor, other than resulting from the
Agent's gross negligence or willful misconduct.
14.8. The Agent may make Revolving Loans to, and generally engage in any
kind of business with the Companies as though the Agent were not the Agent
hereunder. With respect to its Revolving Loans made or renewed by it or loan
obligations hereunder as Lender, the Agent shall have the same rights and
powers, duties and liabilities under this Financing Agreement as any Lender and
may exercise the same as though it was not the Agent and the terms "Lender" and
"Lenders" shall include the Agent in its individual capacity.
14.9. The Agent may resign as the Agent upon 30 days' notice to the
Lenders and such resignation shall be effective upon the appointment of a
successor Agent. If the Agent shall resign as Agent, then the Lenders shall
appoint a successor Agent for the Lenders whereupon such successor Agent shall
succeed to the rights, powers and duties of the Agent and the term "Agent" shall
mean such successor agent effective upon its appointment, and the former Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Financing Agreement. After any retiring Agent's resignation hereunder as
the Agent the provisions of this Section 14 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent.
14.10. Notwithstanding anything contained in this Financing Agreement to
the contrary, the Agent will not, without the prior written consent of all
Lenders: (1) amend the Financing Agreement to (1) increase the Revolving Line of
Credit; (2) reduce the interest rates; (3) reduce or waive (x) any fees in which
the Lenders share hereunder, or (y) the repayment of any Obligations due the
Lenders; (4) extend the maturity of the Obligations; or (5) alter or amend (x)
this Paragraph 14.10 or (y) the definitions of Borrowing Base, Eligible Accounts
Receivable, Eligible Inventory, Inventory Loan Cap, Collateral or Required
Lenders, or (6) increase the advance percentages against Eligible Accounts
Receivable or Eligible Inventory or alter or amend the Agent's criteria for
determining compliance with such definitions of Eligible Accounts Receivable
and/or Eligible Inventory if the effect thereof is to increase Availability; (2)
except as otherwise required in this Financing Agreement, release or limit any
guaranty, or release any Collateral in excess of $500,000 in the aggregate
during any year, (3) waive any Default or Event of Default, or (4) knowingly
make any Revolving Loan or assist in opening any Letter of Credit hereunder if
after giving effect thereto the total of Revolving Loans and Letters of Credit
hereunder for the Company would exceed one hundred and five percent (105%) of
the Availability under this Financing Agreement (the portion in excess of 100%
of such Availability shall be referred to herein as the "Agent Permitted
Overadvances"), provided that the Agent shall not be entitled to continue to
knowingly make such Agent Permitted Overadvances for a period
in excess of ninety (90) days without the Lenders' consent, and provided further
that the foregoing limitations shall not prohibit or restrict advances by the
Agent to preserve and protect Collateral. Subject to the provisions of Section
12, Paragraph 12.2 and the provisions of this Paragraph 14.10 of Section 14 of
this Financing Agreement, in all other respects the Agent is authorized by each
of the Lenders to take such actions or fail to take such actions under this
Financing Agreement if the Agent, in its reasonable discretion, deems such to be
advisable and in the best interest of the Lenders. Notwithstanding any provision
to the contrary contained in this Financing Agreement (including the provisions
of Section 12, Paragraph 12.2 and Section 14, Paragraph 14.10 hereof) the Agent
is authorized to take such actions or fail to take such actions in connection
with (a) the exercise of (i) any and all rights and remedies under this
Financing Agreement (including but not limited to the exercise of rights and
remedies under Section 10, Paragraph 10.2 of this Financing Agreement) and (ii)
its discretion in (x) determining compliance with the eligibility requirements
of Eligible Accounts Receivable and/or Eligible Inventory and establishing
reserves against Availability in connection therewith and/or (y) the making of
Agent Permitted Overadvances, and/or (b) the release of Collateral not to exceed
$250,000 in the aggregate during any Fiscal Year, and/or (c) amend any provision
of the Financing Agreement or any other Loan Document not expressly requiring
the consent of the Required Lenders and/or (d) curing any ambiguity, defect or
inconsistency in the terms of this Financing Agreement; provided that the Agent,
in its reasonable discretion, deems such to be advisable and in the best
interests of the Lenders. In the event the Agent terminates this Financing
Agreement pursuant to the written instructions of the Required Lenders, the
Agent will cease making any Revolving Loans or advances upon the effective date
of termination except for any Revolving Loans or advances which the Agent deems,
in its sole discretion, to be reasonably required to maintain, protect or
realize upon the Collateral.
14.11. In the event any Lender's consent is required pursuant to the
provisions of this Financing Agreement and such Lender does not respond to any
written request by the Agent for such consent within 10 Business Days after such
request is made to such Lender, such failure to respond shall be deemed a
consent. In addition, in the event that any Lender declines to give its consent
to any such request, it is hereby mutually agreed that the Agent and/or any
other Lender shall have the right (but not the obligation) to purchase such
Lender's share of the Revolving Loans for the full amount thereof together with
accrued interest thereon to the date of such purchase.
14.12. Each Lender agrees that notwithstanding the provisions of Section
11 of this Financing Agreement any Lender may terminate this Financing Agreement
and its Commitment only as of the initial or any subsequent Anniversary Date and
then only by giving the Agent at least 120 days prior written notice thereof.
Within 30 days after receipt of any such termination notice, the Agent shall, at
its option, either (1) give notice of termination to the Company hereunder or
(2) purchase, or arrange for the purchase of, the Lender's share of the
Obligations hereunder for the full amount thereof plus accrued interest thereon.
Unless so terminated this Financing Agreement and the Revolving Line of Credit
shall be automatically extended from Anniversary Date to Anniversary Date.
Termination of its Commitment by any of the Lenders or termination of this
Financing Agreement as herein provided shall not affect the Lenders' respective
rights and obligations under this Financing Agreement incurred prior to the
effective date of termination as set forth in the preceding sentence.
14.13. If the Agent is required at any time to return to the Companies or
to a trustee, receiver, liquidator, custodian or other similar official any
portion of the payments made by the Companies to the Agent as result of a
bankruptcy or similar proceeding with respect to the Companies or any of them,
any guarantor or any other person or entity or otherwise, then each Lender
shall, on demand of the Agent, forthwith return to the Agent its ratable share
of any such payments made to such Lender by the Agent, together with its ratable
share of interest and/or penalties, if any, payable by the Lenders; this
provision shall survive the termination of this Financing Agreement.
14.14. The Lenders agree to maintain the confidentiality of any non-public
information provided by the Companies to them, in the ordinary course of their
business, provided that the foregoing confidentiality provision shall terminate
three (3) years after the termination date of this Financing Agreement, and
provided further that any such Lenders may disclose such information (1) to any
applicable bank regulatory and auditor personnel and (2) upon the advice of
counsel.
IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be effective, executed, accepted and delivered at New York, New
York by their proper and duly authorized officers as of the date set forth
above.
TOYMAX INC. THE CIT GROUP/
COMMERCIAL SERVICES, INC.
By: ______________________________ (as Agent and Lender)
Name:_________________________
Title:________________________ By: ______________________________
Name:_________________________
Title:________________________
GO FLY A KITE, INC.
By: ______________________________ FLEET CAPITAL CORPORATION
Name:_________________________
Title:________________________ By: ______________________________
Name:_________________________
Title:________________________
MONOGRAM INTERNATIONAL, INC.
By: ______________________________
Name:_________________________
Title:________________________
FUNNOODLE, INC.
By: ______________________________
Name:_________________________
Title:________________________
EXHIBIT A
REVOLVING CREDIT NOTE
Dated as of _________, 200__
$__________________
FOR VALUE RECEIVED, the undersigned, TOYMAX INC., a New York corporation with a
principal place of business at 000 Xxxx Xxxxxxxx Xx., Xxxxxxxxx, Xxx Xxxx 00000,
MONOGRAM INTERNATIONAL, INC., a Delaware corporation with a principal place of
business at 12395 00 00xx Xxxxxx Xxxxx, Xxxxx, Xxxxxxx 00000 and GO FLY A KITE,
INC., a Delaware corporation with a principal place of business at 000 Xxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxx 00000 and FUNNOODLE, INC., a Delaware corporation,
with a principal place of business at 000 Xxxx Xxxxxxxx Xx., Xxxxxxxxx, Xxx Xxxx
00000 (herein individually a "Company" and collectively the "Companies"),
hereby, jointly and severally, absolutely and unconditionally promise to pay to
the order of _____________________________ ("Holder") at the office of THE CIT
GROUP/COMMERCIAL SERVICES, INC., in its capacity as Agent for the Holder, at
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, in lawful money of the
United States of America and in immediately available funds, the principal
amount of ___________________ ($___________), or such other principal amount
advanced pursuant to Section 3, paragraph 3.1 and Section 5, paragraph 5.1 of
the Financing Agreement (as herein defined). Such Revolving Loan advances shall
be repaid on a daily basis as a result of the application of the proceeds of
collections of the Accounts and the making of additional Revolving Loans as
described in Section 3. Subject to the terms of the Financing Agreement, the
Revolving Loans may be borrowed, repaid and reborrowed by the Companies. A final
balloon payment in an amount equal to the outstanding aggregate balance of
principal and interest remaining unpaid, if any, under this Note as shown on the
books and records of the Agent shall be due and payable on the termination of
the Financing Agreement, as set forth in Section 11 thereof.
The Companies, jointly and severally, further absolutely and unconditionally
promise to pay to the order of the Holder at said office of Agent , interest, in
like money, on the unpaid principal amount owing hereunder from time to time
from the date hereof on the dates and at the rates specified in Section 8 of the
Financing Agreement.
If any payment on this Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
This Note is one of the Revolving Credit Notes referred to in the Financing
Agreement, dated as of the date hereof, as the same may be amended and restated
and in effect from time to time, among the Companies, the Agent, and the Lenders
thereto from time to time (the "Financing Agreement"), and is subject to, and
entitled to, all of the terms, provisions and benefits thereof and is subject to
optional and mandatory prepayment, in whole or in part, as provided therein.
All capitalized terms used herein shall have the meaning provided therefor in
the Financing Agreement, unless otherwise defined herein.
The date and amount of the Revolving Loans made hereunder may be recorded on the
grid page or pages which are attached hereto and hereby made part of this Note
or the separate ledgers maintained by the Agent. The aggregate unpaid principal
amount of all Revolving Loans made pursuant hereto may be set forth in the
balance column on said grid page or such ledgers maintained by the Agent. All
such Revolving Loans, whether or not so recorded, shall be due as part of this
Note.
The Companies confirm that any amount received by or paid to the Agent in
connection with the Financing Agreement and/or any balances standing to its
credit on any of its or their accounts on the Agent's books under the Financing
Agreement may in accordance with the terms of the Financing Agreement be applied
in reduction of this Note, but no balance or amounts shall be deemed to effect
payment in whole or in part of this Note unless the Agent shall have actually
charged such account or accounts for the purposes of such reduction or payment
of this Note.
Upon the occurrence of any one or more of the Events of Default specified in the
Financing Agreement or upon termination of the Financing Agreement, all amounts
then remaining unpaid on this Note shall become, or be declared to be,
immediately due and payable as provided in the Financing Agreement.
Attest: TOYMAX INC.
_______________________________ By:______________________________
Secretary Name: ________________________
Title :_______________________
Attest: MONOGRAM INTERNATIONAL, INC.
_______________________________ By:______________________________
Secretary Name: ________________________
Title :_______________________
Attest: GO FLY A KITE, INC.
_______________________________ By:______________________________
Secretary Name: ________________________
Title :_______________________
Attest: FUNNOODLE, INC.
_______________________________ By:______________________________
Secretary Name: ________________________
Title :_______________________
SCHEDULE TO GRID
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EXHIBIT B
ASSIGNMENT AND TRANSFER AGREEMENT
Dated: __________ , 20__
Reference is made to the Financing Agreement dated as of ___________, 20__
(as amended, modified, supplemented and in effect from time to time, the
"Financing Agreement"), among Toymax Inc., a New York corporation, Monogram
International, Inc., a Delaware corporation, Go Fly a Kite, Inc., a Delaware
corporation, and Funnoodle, Inc., a Delaware corporation (individually, a
"Company" and collectively, the "Companies"), the Lenders named therein, and The
CIT Group/Commercial Services, Inc., as Agent (the "Agent"). Capitalized terms
used herein and not otherwise defined shall have the meanings assigned to such
terms in the Financing Agreement. This Assignment and Transfer Agreement,
between the Assignor (as defined and set forth on Schedule 1 hereto and made a
part hereof) and the Assignee (as defined and set forth on Schedule 1 hereto and
made a part hereof) is dated as of Effective Date (as set forth on Schedule 1
hereto and made a part hereof).
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date, an undivided interest (the "Assigned Interest") in and to all
the Assignor's rights and obligations under the Financing Agreement respecting
those, and only those, financing facilities contained in the Financing Agreement
as are set forth on Schedule 1 (collectively, the "Assigned Facilities" and
individually, an "Assigned Facility"), in a principal amount for each Assigned
Facility as set forth on Schedule 1.
2. The Assignor (i) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Financing Agreement or any other instrument,
document or agreement executed in conjunction therewith (collectively the
"Ancillary Documents") or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Financing Agreement, any Collateral
thereunder or any of the Ancillary Documents furnished pursuant thereto, other
than that it is the legal and beneficial owner of the interest being assigned by
it hereunder and that such interest is free and clear of any adverse claim, (ii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Company or any guarantor or the performance or
observance by any Company or any guarantor of any of its respective obligations
under the Financing Agreement or any of the Ancillary Documents furnished
pursuant thereto, and (iii) attaches its Revolving Credit Note and requests that
the Agent exchange such Revolving Credit Note for a new Revolving Credit Note
payable to Assignee in the principal amount of $____________ [and to Assignor in
the principal amount of $___________, respectively].
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Transfer Agreement; (ii) confirms that it has
received a copy of the Financing Agreement, together with the copies of the most
recent financial statements of the Companies, and such other documents and
information as it has deemed appropriate to make its own credit analysis; (iii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Financing Agreement; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Financing Agreement as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
(v) agrees that it will be bound by the provisions of the Financing Agreement
and will perform in accordance with its terms all the obligations which by the
terms of the Financing Agreement are required to be performed by it as Lender;
and (vi) if the Assignee is organized under the laws of a jurisdiction outside
the United States, attaches the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee's exemption from United
States withholding taxes with respect to all payments to be made to the Assignee
under the Financing Agreement or such other documents as are necessary to
indicate that all such payments are subject to such tax at a rate reduced by an
applicable tax treaty.
4. Following the execution of this Assignment and Transfer Agreement, such
agreement will be delivered to the Agent for acceptance by it and the Companies,
effective as of the Effective Date.
5. Upon such acceptance, from and after the Effective Date, the Agent
shall make all payments in respect of the assigned interest (including payments
of principal, interest, fees and other amounts) to the Assignee, whether such
amounts have accrued prior to the Effective Date or accrue subsequent to the
Effective Date. The Assignor and Assignee shall make all appropriate adjustments
in payments for periods prior to the Effective Date made by the Agent or with
respect to the making of this assignment directly between themselves.
6. From and after the Effective Date, (i) the Assignee shall be a party to
the Financing Agreement and, to the extent provided in this Assignment and
Transfer Agreement, have the rights and obligations of a Lender thereunder, and
(ii) the Assignor shall, to the extent provided in this Assignment and Transfer
Agreement, relinquish its rights and be released from its obligations under the
Financing Agreement.
7. THIS ASSIGNMENT AND TRANSFER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective duly authorized officers on
Schedule 1 hereto.
Schedule 1 to Assignment and Transfer Agreement
Name of Assignor:
-----------------------------
Name of Assignee:
-----------------------------
Effective Date of Assignment:
-----------------
Percentage Assigned of
Each Facility (Shown as a
Principal Amount percentage of aggregate
(or, with respect to original principal amount
Letters of Credit [or, with respect to
face amount) Letters of Credit, face
Assigned Facilities Assigned amount] of all Lenders)
------------------- -------- -----------------------
Revolving Loans $____________ ________%
Letter of Credit
participation interest
(within the Revolving
Line of Credit) $____________ ________%
Term Loans: $____________ ________%
Total: $____________
The aggregate outstanding amount of Obligations as of the date hereof is
$___________. Assignee's aggregate share thereof (based on the foregoing
percentages) is $____________.
Accepted:
THE CIT GROUP/COMMERCIAL
SERVICES, INC., as Agent _________________________________
as Assignor
By:______________________________ By:______________________________
Title :__________________________ Title :__________________________
_________________________________
TOYMAX INC. as Assignee
(a "Company")
By:______________________________ By:______________________________
Title :__________________________ Title :__________________________
MONOGRAM INTERNATIONAL, INC.
(a "Company")
By:______________________________
Title :__________________________
GO FLY A KITE, INC.
(a "Company")
By:______________________________
Title :__________________________
FUNNOODLE, INC.
(a "Company")
By:______________________________
Title :__________________________
