1
EXHIBIT 10.12
AMENDMENT NO. 4 TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT ("Amendment"), dated as of December __, 1997 is
entered into between GALOOB TOYS, INC. (f/k/a Xxxxx Xxxxxx Toys, Inc.),
a Delaware corporation ("Debtor"), and CONGRESS FINANCIAL CORPORATION
(CENTRAL) ("Congress").
W I T N E S E T H:
WHEREAS, the parties hereto are parties to that certain
Amended and Restated Loan and Security Agreement dated as of March 31,
1995 (as amended and/or modified prior to the date hereof, the "Existing
Agreement," and as amended by this Amendment, the "Loan Agreement";
capitalized terms used herein not otherwise defined herein shall have
the meanings ascribed to such terms in the Loan Agreement); and
WHEREAS, Debtor and Congress desire to amend the Existing
Agreement to, inter alia, (i) increase the amount of credit available to
Debtor to $75,000,000, (ii) extend the scheduled maturity date in
Section 2.5 of the Existing Agreement, (iii) modify the interest rates
and other fees under the Existing Agreement and (iv) provide for other
modifications of the Existing Agreement, as described below.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein contained and other good and valuable consideration
(the receipt, adequacy and sufficiency of which are hereby
acknowledged), the parties hereto, intending legally to be bound, hereby
agree as follows:
1. Amendment to Existing Agreement.
1.1. The definitions contained in Section 1.1 of the
Existing Agreement shall be amended to reflect the following additions
or, in the case of terms already defined in the Existing Agreement,
modifications:
"Adjusted Eurodollar Rate" shall mean, with respect to
each Interest Period for any Eurodollar Rate Loan, the rate
per annum (rounded upwards, if necessary, to the next one-
sixteenth (1/16) of one (1%) percent) determined by dividing
(a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve
Percentage. For purposes hereof, "Reserve Percentage" shall
mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority
for determining the reserve requirement which is or would be
applicable to deposits of United States dollars in a non-
United States or an international banking office of
Reference Bank used to fund a Eurodollar Rate Loan or any
Eurodollar Rate Loan made with the proceeds of such deposit,
whether or not the Reference Bank actually holds or has made
any such deposits or loans. The Adjusted Eurodollar Rate
shall be adjusted on and as of the effective day of any
change in the Reserve Percentage.
"Business Day" shall mean (a) for the Prime Rate
Loans, any day other than a Saturday, Sunday, or other day
on which commercial banks are authorized or required to
close under the laws of the States of New York or Illinois
or the Commonwealth of Pennsylvania, and a day on which the
Reference Bank and Lender are open for the transaction of
business, and (b) for all Eurodollar Rate Loans, any such
day as described in (a) above in this definition of Business
Day, excluding any day on which banks are closed for
dealings in dollar deposits in the London interbank market
or other applicable Eurodollar Rate market.
"Eurodollar Rate" shall mean with respect to the
Interest Period for a Eurodollar Rate Loan, the interest
rate per annum equal to the arithmetic average of the rates
of interest per annum (rounded upwards, if necessary, to the
next one-sixteenth (1/16) of one (1%) percent) at which
Reference Bank is offered deposits of United States dollars
in the London interbank market (or other Eurodollar Rate
market selected by Debtor and approved by Lender) on or
about 9:00 a.m. (New York time) two (2) Business Days prior
to the commencement of such Interest Period in amounts
substantially equal to the principal amount of the
Eurodollar Rate Loans requested by and available to Debtor
in accordance with this Agreement, with a maturity of
comparable duration to the Interest Period selected by
Debtor.
"Eurodollar Rate Loans" shall mean any Loans or
portion thereof on which interest is payable based on the
Adjusted Eurodollar Rate in accordance with the terms
hereof.
"Interest Period" shall mean for any Eurodollar Rate
Loan, a period of approximately one (1), two (2), or three
(3) months duration as Debtor may elect, the exact duration
to be determined in accordance with the customary practice
in the applicable Eurodollar Rate market; provided, that,
Debtor may not elect an Interest Period which will end after
the last day of the then-current term of this Agreement.
"Interest Rate" shall mean, as to Prime Rate Loans,
the Prime Rate and, as to Eurodollar Rate Loans, a rate of
one and three quarters percent (1 3/4%) per annum in excess
of the Adjusted Eurodollar Rate (based on the Eurodollar
Rate applicable for the Interest Period selected by Debtor
as in effect three (3) Business Days after the date of
receipt by Lender of the request of Debtor for such
Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate
previously quoted to Debtor); provided that, the Interest
Rate shall mean the rate of two percent (2%) per annum in
excess of the Prime Rate as to Prime Rate Loans and the rate
of three and three quarters percent (3 3/4%) per annum in
excess of the Adjusted Eurodollar Rate as to Eurodollar Rate
Loans, at Lender's option, without notice, (a) for the
period on and after the date of termination or non-renewal
hereof, or the date of the occurrence of any Event of
Default or event which with notice or passage of time or
both would constitute an Event of Default, and for so long
as such Event of Default or other event is continuing as
determined by Lender and until such time as all Obligations
are indefeasibly paid in full (notwithstanding entry of any
judgment against Debtor) and (b) on the Revolving Loans at
any time outstanding in excess of the amounts available to
Debtor under Section 2 (whether or not such excess(es),
arise or are made with or without Lender's knowledge or
consent and whether made before or after an Event of
Default).
"Maximum Credit" shall mean the amount of $75,000,000.
"Prime Rate Loans" shall mean any Loans or portion
thereof on which interest is payable based on the Prime Rate
in accordance with the terms thereof.
"Reference Bank" shall mean CoreStates Bank, N.A., or
such other bank as Lender may from time to time designate.
"Settlement Agreement" shall mean that certain
Settlement and Release Agreement dated as of June 2, 1997
between Debtor and Xxxxxx and Companies, XxxXxxxx, Xxxxxxx
X. Xxxxxx, Xx., Xxxxx Xx Xxxxxx, Xxx Xxxx, Xxxxx Xxxx, X.X.
Xxxxxx'x Fun Factory, Xxxxxx International and XX Xxxxxx'x
Fun City, U.S.A.
1.2 The definition of "Eligible Accounts" set forth in
Section 1.1 of the Existing Agreement is hereby amended by deleting the
phrase "30 days" which appear in clause (c) of the third sentence
thereof and inserting the phrase "60 days" in their place.
1.3 The definition of Eligible Inventory set forth in
Section 1.1 of the Existing Agreement is hereby amended by amending and
restating clause (e) thereof to read as follows:
"(e) The Inventory is (i) at a location permitted
under Section 8.24 hereof or (ii) in transit to such a
location, Congress has a first priority perfected security
interest in such Inventory and Debtor has delivered to
Congress such documents or instruments, which shall be in
form and substance satisfactory to Congress, as are
necessary, appropriate or desirable to perfect or otherwise
protect Congress' interest in such Inventory."
1.4 Section 2.1 of the Existing Agreement is hereby amended
as follows:
(a) The words "seventy five percent (75%)" are
hereby deleted from the first sentence of Section 2.1 of the
Existing Agreement and the words "eighty percent (80%)" are
hereby inserted in their place.
(b) Clause (b) in the first sentence of
Section 2.1 of the Existing Agreement is hereby
amended and restated to read as "fifty percent
(50%) of the Value of Eligible Inventory".
(c) The dollar amount "$8,000,000" is
hereby deleted from the second sentence of
Section 2.1 of the Existing Agreement and the
dollar amount "$12,000,000" is hereby inserted
in its place.
1.5 Section 2.3 of the Existing Agreement is hereby amended
by deleting the dollar amount "$60,000,000" which appears therein and
inserting the dollar amount "$75,000,000" in its place.
1.6 Section 2.5 of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:
"2.5 Term of Agreement. This Agreement shall be
effective as of its date and shall continue in full force
and effect for a term ending on December 31, 2000, unless
sooner terminated pursuant to the terms hereof. Congress
shall have the right to terminate this Agreement immediately
at any time upon the occurrence of an Event of Default.
Debtor shall have the right to terminate this Agreement upon
not less than 30 days prior written notice to Congress by
indefeasibly paying to Congress all Obligations. Upon
expiration of the term of this Agreement, all Obligations
shall become due and payable, without demand or notice of
any kind. No termination of this Agreement, however, shall
relieve or discharge Debtor of its duties, obligations and
covenants hereunder until all Obligations have been paid in
full, and Congress' continuing security interest in the
Collateral shall remain in effect until such Obligations
have been fully discharged."
1.7 Section 2.6 of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:
"2.6 Early Termination. If Congress terminates this
Agreement (i) upon the occurrence of an Event of Default,
and Congress is repaid prior to September 30, 2000 or (ii)
at Debtor's request, and Congress is repaid prior to
September 30, 2000, in view of the impracticability and
extreme difficulty in ascertaining actual damages and by
mutual agreement of the parties as to a reasonable
calculation of Congress' lost profits as a result thereof,
Debtor hereby agrees that it shall pay to Congress, upon the
effective date of such termination, an early termination fee
in an amount equal to one percent (1.0%) of the Maximum
Credit, if such termination occurs prior to September 30,
2000; provided, however, that no such early termination fee
shall be payable hereunder if, Congress is fully repaid upon
the termination of this Agreement (i) with the proceeds
received by the Debtor of a sale of an equity interest in,
or equity securities of, Debtor or (ii) which occurs upon a
Change in Control. Such termination fee shall be presumed
to be the amount of damages sustained by said early
termination and Debtor agrees that it is reasonable under
the circumstances currently existing. The early termination
fee provided for in this Section 2.6 shall be deemed
included in the Obligations;"
1.8 Section 3.1 of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:
"3.1 Interest.
(a) Debtor shall pay to Congress interest on the
daily average outstanding principal amount of the Loans and,
to the extent permitted by applicable law, the other non-
contingent Obligations from and after the date when actually
paid by Lender, at the Interest Rate (with all Obligations
which are not Loans being treated as Prime Rate Loans solely
for this purpose). All interest accruing hereunder on and
after the date of any Event of Default or termination or
non-renewal hereof shall be payable on demand.
(b) Debtor may from time to time request that Prime
Rate Loans be converted to Eurodollar Rate Loans or that any
existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from Debtor shall specify the
amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth
below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions
contained herein, three (3) Business Days after receipt by
Lender of such a request from Debtor, such Prime Rate Loans
shall be converted to Eurodollar Rate Loans or such
Eurodollar Rate Loans shall continue, as the case may be,
provided, that, (i) no Event of Default, or event which with
notice or passage of time or both would constitute an Event
of Default exists or has occurred and is continuing, (ii) no
party hereto shall have sent any notice of termination or
non-renewal of this Agreement, (iii) Debtor shall have
complied with such customary procedures as are established
by Lender and specified by Lender to Debtor from time to
time for requests by Debtor for Eurodollar Rate Loans, (iv)
no more than four (4) Interest Periods may be in effect at
any one time, (v) the aggregate amount of the Eurodollar
Rate Loans must be in an amount not less than $5,000,000 or
an integral multiple of $1,000,000 in excess thereof, (vi)
the maximum amount of the Eurodollar Rate Loans at any time
requested by Debtor shall not exceed the amount equal to
eighty-five (85%) percent of the daily average of the
principal amount of the Revolving Loans which it is
anticipated will be outstanding during the applicable
Interest Period, as determined by Lender (but with no
obligation of Lender to make such Revolving Loans) and (vii)
Lender shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Lender through the
Reference Bank and can be readily determined as of the date
of the request for such Eurodollar Rate Loan by Debtor. Any
request by Debtor to convert Prime Rate Loans to Eurodollar
Rate Loans or to continue any existing Eurodollar Rate Loans
shall be irrevocable. Notwithstanding anything to the
contrary contained herein, Lender and Reference Bank shall
not be required to purchase United States Dollar deposits in
the London interbank market or other applicable Eurodollar
Rate market to fund any Eurodollar Rate Loans, but the
provisions hereof shall be deemed to apply as if Lender and
Reference Bank had purchased such deposits to fund the
Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically
convert to Prime Rate Loans upon the last day of the
applicable Interest Period, unless Lender has received and
approved a request to continue such Eurodollar Rate Loan at
least three (3) Business Days prior to such last day in
accordance with the terms hereof. Any Eurodollar Rate Loans
shall, at Lender's option, upon notice by Lender to Debtor,
convert to Prime Rate Loans in the event that (i) an Event
of Default or event which with the notice or passage of time
or both would constitute an Event of Default, shall exist,
(ii) this Agreement shall terminate or not be renewed, or
(iii) the aggregate principal amount of the Prime Rate Loans
which have previously been converted to Eurodollar Rate
Loans or existing Eurodollar Rate Loans continued, as the
case may be, at the beginning of an Interest Period shall at
any time during such Interest Period exceed either (A) the
aggregate principal amount of the Loans then outstanding, or
(B) the sum of the then outstanding principal amount of the
Revolving Loans then available to Debtor under Section 2
hereof. Debtor shall pay to Lender, upon demand by Lender
(or Lender may, at its option, charge any loan account of
Debtor) any amounts required to compensate Lender, the
Reference Bank or any participant with Lender for any loss
(including loss of anticipated profits), cost or expense
incurred by such person, as a result of the conversion of
Eurodollar Rate Loans to Prime Rate Loans pursuant to any of
the foregoing.
(d) Interest shall be payable by Debtor to Lender
monthly in arrears not later than the first day of each
calendar month and shall be calculated on the basis of a
three hundred sixty (360) day year and actual days elapsed.
The interest rate on non-contingent Obligations (other than
Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in
such Prime Rate is announced based on the Prime Rate in
effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest
payable by Debtor to Lender exceed the maximum amount or the
rate permitted under any applicable law or regulation, and
if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto."
1.9 Section 3.2 of the Existing Agreement is hereby amended
and restated in its entirety to read as follows:
"3.2 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary
contained herein, all Eurodollar Rate Loans shall, upon
notice by Lender to Debtor, convert to Prime Rate Loans in
the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof)
shall either (A) make it unlawful for Lender, Reference Bank
or any participant to make or maintain Eurodollar Rate Loans
or to comply with the terms hereof in connection with the
Eurodollar Rate Loans, by an amount deemed by Lender to be
material, or (B) shall result in the increase in the costs
to Lender, Reference Bank or any participant of making or
maintaining any Eurodollar Rate Loans or (C) reduce the
amounts received or receivable by Lender in respect thereof,
by an amount deemed by Lender to be material or (ii) the
cost to Lender, Reference Bank or any participant of making
or maintaining any Eurodollar Rate Loans shall otherwise
increase by an amount deemed by Lender to be material.
Debtor shall pay to Lender, upon demand by Lender (or Lender
may, at its option, charge any loan account of Debtor) any
amounts required to compensate Lender, the Reference Bank or
any participant with Lender for any loss (including loss of
anticipated profits), cost or expense incurred by such
person as a result of the foregoing, including, without
limitation, any such loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain the
Eurodollar Rate Loans or any portion thereof. A certificate
of Lender setting forth the basis for the determination of
such amount necessary to compensate Lender as aforesaid
shall be delivered to Debtor.
(b) If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Lender other than on
the last day of the applicable Interest Period (whether
pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of
collections under Section 6.3 or any other payments made
with the proceeds of Collateral, Debtor shall pay to Lender
upon demand by Lender (or Lender may, at its option, charge
any loan account of Debtor) any amounts required to
compensate Lender, the Reference Bank or any participant
with Lender for any additional loss (including loss of
anticipated profits), cost or expense incurred by such
person as a result of such prepayment or payment, including,
without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof."
1.10 Section 3.4 of the Existing Agreement is hereby
amended and restated in its entirety to read as follow:
"3.4 Unused Line Fee. If the average outstanding
daily principal balance of the sum of all Revolving Loans
plus Letter of Credit Outstandings in any calendar month
shall be less than the Maximum Credit, Debtor shall pay to
Congress in arrears on or before the tenth (10th) day of the
next succeeding calendar month an unused line fee equal to
one quarter of one percent (0.25%) per annum upon the
difference between (A) the average outstanding daily
principal balance of all such Revolving Loans plus Letter of
Credit Outstandings in respect of such month and (B) the
applicable base amount for such month as set forth below:
Base
Period
Amount
January 1, 1998 through September 30, 1998 $25,000,000
October 1, 1998 and thereafter $50,000,000
1.11 Section 3.6 of the Existing Agreement is hereby
amended and restated in its entirety to read as follows:
"3.6 Amendment Closing Fees. Debtor shall pay to
Lender as a closing fee for Amendment No. 4 to this
Agreement the amount of $750,000, which shall be fully
earned as of and payable on the effective date of that
Amendment."
1.12 Section 8.22(b) of the Existing Agreement is hereby
amended by deleting the dollar amount "$1,000,000" which appears therein
and inserting the dollar amount "$2,500,000" in its place.
1.13 The Existing Agreement is amended by adding a new
Section 8.26 which shall read as follows:
"8.26 Title Insurance On or prior to December 31,
1997, Debtor shall deliver to Congress a fully paid lender's
policy of title insurance, in form and substance
satisfactory to Congress, with respect to Debtor's
headquarters building and related real property.
1.14 Schedules. Schedules 1.1(b), 7.2, 7.6, 7.9, 7.11(b),
7.14(b), 7.15, 8.6, 8.8 and 9.1(b)(ii) to the Existing Agreement are
hereby amended and restated to read in their entirety as Schedules
1.1(b), 7.2, 7.6, 7.9, 7.11(b), 7.14(b), 7.15, 8.6, 8.8 and 9.1(b)(ii)
hereto.
2. Effective Date of this Amendment. This Amendment shall
be deemed effective the later of (i) January 1, 1998 or (ii) the date
when each of the following conditions have been satisfied:
(a) each of the parties to this Amendment shall have
executed and delivered to each other counterparts hereto;
(b) Congress shall have received the following
documents, in form and substance acceptable to Congress and
its counsel:
(i) a certificate of the Secretary of Debtor,
dated as of the date hereof certifying, among other
things, (a) the names and true signatures of the
officers of Debtor authorized to execute this
Amendment and the Amended and Restated Revolving Note;
(b) that attached thereto is a true and complete copy
of the Articles of Incorporation and the by-laws of
Debtor as in effect of the date of such certification;
and (c) that attached thereto is a true and complete
copy of the resolutions of Debtor's Board of Directors
approving and authorizing the execution and delivery
of this Amendment and the Amended Restated Revolving
Note;
(ii) a title commitment for $10,000,000 of
title insurance with respect to Debtor's headquarters
building;
(iii) the Amended and Restated Revolving Credit
Note (the "Amended and Restated Revolving Note") to
reflect the increase in the Maximum Credit;
(iv) the Opinion of counsel to the Debtor;
(c) Debtor shall have entered into an agreement with
Xxxxx Licensing Ltd., to allow Debtor to manufacture and
sell small scale versions of the characters, replicas of
vehicles and other related paraphernalia from the second
Star Wars Trilogy films (the first of which is currently due
for release in 1999); and
(d) Congress shall have received an updated
appraisal, in form and substance acceptable to Congress and
its counsel in their sole discretion, of Debtor's Inventory.
3. Absence of Waiver or Setoff.
3.1. No Waiver. Congress and Debtor agree that the
amendments set forth in Section 1 hereof shall be limited precisely as
written and except as expressly set forth in Section 1 of this
Amendment, shall not be deemed to be a consent to any waiver or
modification of any other term or condition of the Existing Agreement,
the Loan Agreement or any Loan Document.
3.2. Acknowledgment of Liabilities. Debtor hereby
acknowledges and agrees that there is no defense, setoff or counterclaim
of any kind, nature or description to the Obligations or the payment
thereof when due.
4. Representations. Debtor hereby represents and warrants
to Congress that:
(i) Debtor is a corporation duly organized, validly
existing, and in good standing under the laws of the state
of its incorporation;
(ii) the execution, delivery and performance of each
of this Amendment and the Amended and Restated Revolving
Note by Debtor are within its corporate powers and have been
duly authorized by all necessary corporate action;
(iii) each of this Amendment and the Amended and
Restated Revolving Note is a legal, valid, and binding
obligation of Debtor, enforceable against Debtor in
accordance with its terms; and
(iv) the Settlement Agreement has been duly executed
and delivered and constitutes the valid and binding
obligation of each of the parties thereto, enforceable in
accordance with its terms, and the Debtor has duly performed
all of its obligations thereunder and is in full compliance
therewith.
5. References in Other Documents. References to the
Existing Agreement in any Loan Document shall be deemed to include a
reference to the Loan Agreement, whether or not reference is made to
this Amendment.
6. Miscellaneous.
(i) Debtor acknowledges its obligation under the
Existing Agreement to pay, and specifically agrees to pay on
demand, any and all costs or expenses of Congress (including
costs of counsel) in connection with the execution of this
Amendment regardless of whether the conditions to
effectiveness shall be satisfied.
(ii) Section headings used in this Amendment are for
convenience of reference only and shall not affect the
construction of this Amendment.
(iii) This Amendment may be executed in any number of
counterparts and by the different parties on separate
counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together
constitute but one and the same agreement.
(iv) This Amendment shall be a contract made under
and governed by the laws of the State of Illinois, without
giving effect to principles of conflicts of laws.
(v) All obligations of Debtor and rights of Congress
that are expressed herein, shall be in addition to and not
in limitation of those provided by applicable law.
(vi) Whenever possible, each provision of this
Amendment shall be interpreted in such manner as to be
effective and valid under applicable law; but if any
provision of this Amendment shall be prohibited by or
invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Amendment.
(vii) This Amendment shall be binding upon Debtor and
Congress and their respective successors and assigns, and
shall inure to the benefit of Debtor and Congress and the
successors and assigns of Congress.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
GALOOB TOYS, INC.
(f/k/a Xxxxx Xxxxxx Toys, Inc.)
a Delaware corporation
By:
Name:
Title:
CONGRESS FINANCIAL CORPORATION
(CENTRAL)
By:
Name:
Title:
