EXHIBIT 2.6
FORBEARANCE AGREEMENT
THIS AGREEMENT dated as of August 1, 1997 is by and among FOOTHILL
CAPITAL CORPORATION, a California corporation, ("LENDER"), GLOBAL ONE
DISTRIBUTION & MERCHANDISING INC., a Delaware corporation, OSP PUBLISHING,
INC., a Delaware corporation, BEx CORP., a Delaware corporation, and XXXXX
XXXXXX STUDIOS, INC., a Delaware corporation (jointly and severally,
collectively and individually, "OBLIGOR").
RECITALS
Lender and Obligor are parties to an Amended and Restated Loan and
Security Agreement dated as of August 29, 1996 (as amended from time to time,
the "LOAN AGREEMENT"; capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Loan Agreement) providing for
certain loans by Lender to Obligor.
Obligor is in default of its obligations to Lender, including, without
limitation, the failure of Borrower to pay upon its occurrence, pursuant to
SECTION 2.5 the Loan Agreement, an Overadvance in respect of Obligations
outstanding under SECTION 2.2 and 2.3 of the Loan Agreement, and the creation
and continued existence of a lien with respect to Borrower's property and
assets in favor of Golden State Graphics Inc. in violation of the provisions
of SECTION 7.2 the Loan Agreement (collectively, the "EVENT OF DEFAULT").
This Event of Default AUTOMATICALLY (a) terminated Lender's commitment to
lend funds to Obligor and (b) caused all obligations of Obligor to Lender to
be due and payable. As a result of the Event of Default, the obligations of
Obligor under the Loan Agreement are now payable upon DEMAND by Lender.
Obligor has discussed with Lender its plan for the orderly and consensual
liquidation of the Collateral securing its obligations under the Loan
Agreement and the application of the proceeds of such orderly liquidation to
the repayment in full in cash of all its obligations to Lender. In that
connection, Obligor has requested Lender to (i) forbear from exercising its
rights and remedies with respect to the existing Event of Default (or
otherwise make a DEMAND) and (ii) to permit Senoral, Inc. to extend working
capital funding to Obligor on an interim basis to enable Obligor to attempt
to work out its problems. Lender is willing, subject to the terms and
conditions set forth herein (including without limitation the grant of
various waivers set forth below), to forbear and grant the foregoing request
as and to the extent herein provided.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and subject to the terms
and conditions of this Agreement, the parties agree as follows:
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SECTION 1. CONFIRMATION OF INDEBTEDNESS.
As of the date of this Agreement (as of the close of business on July 31,
1997), Obligor owes Lender $2,073,326.35 in principal, accrued and unpaid
interest of $32,940.01, and unpaid Foothill Expenses of approximately
$30,000. The total amount of Obligor's indebtedness and obligations to Lender
evidenced by and/or related to the Loan Agreement, the Term Note, the
Security Documents and each agreement and instrument executed in connection
therewith (collectively with this Agreement and any agreement or instrument
executed in connection herewith, and as the same have been or may hereafter
be amended and/or restated from time to time, the "LOAN DOCUMENTS"),
including without limitation principal, interest and fees and reasonable
expenses of counsel (including without limitation any interest and other
amounts which would accrue but for the provisions of the United Stated
Bankruptcy Code) is by the execution hereof by Obligor, ratified, confirmed
and approved by Obligor in all respects (the indebtedness and obligations
referred to in this sentence and all obligations of Obligor to Lender under
this Agreement, in each case whether now existing or hereafter arising and
whether incurred before or after the filing of a petition under the United
Stated Bankruptcy Code, are hereinafter referred to collectively as the
"OBLIGATIONS"). Obligor acknowledges and agrees that (a) the Obligations are
valid and binding obligations of Obligor, enforceable against Obligor in
accordance with their terms, and (b) the Obligations are due and payable in
full and Obligor is presently obligated to pay the amounts referred to in the
first sentence of this SECTION 1 and all of its other existing Obligations in
accordance with the terms of the Loan Documents, all without any further
demand, notice or claim. Without limiting the foregoing, Obligor
acknowledges and agrees that Lender has no forbearance obligation whatsoever
except as expressly provided in this Agreement. Obligor further acknowledges
and agrees that the value of the Collateral securing the Obligations is
substantially in excess of the amount of the Obligations.
SECTION 2. CONFIRMATION OF SECURITY AND EXISTING AGREEMENTS.
Obligor acknowledges, confirms and agrees that all of the Obligations are
and shall be secured by and entitled to the benefits of each of the Security
Documents and that the liens granted to Lender thereunder remain valid,
perfected and enforceable against Obligor and shall extend to all Collateral
(as defined below) acquired or arising and to Obligations whether incurred
before or after the filing of a petition under the United Stated Bankruptcy
Code. To the extent any Security Document does not currently provide that
the Obligations constitute "Obligations" and/or "Secured Obligations" for
purposes thereof, such Security Document is hereby amended to provide for the
same. Obligor acknowledges, confirms and agrees that, except as otherwise
provided in the Intercreditor Agreement attached as EXHIBIT A (as amended
from time to time, the "INTERCREDITOR AGREEMENT"), with respect to the
Creditor Collateral (as defined therein), Lender has and shall retain a first
priority perfected security interest in and lien on all of Obligor's
properties and assets, whether now existing or hereafter acquired or arising
and whether personal, real and/or mixed (collectively, the "COLLATERAL").
Obligor agrees to take, or cause to be taken, all actions requested by Lender
in order to create, maintain, renew and/or perfect Lender's security interest
in the Collateral.
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SECTION 3. NO PRESENT CLAIMS.
(a) Obligor acknowledges and agrees with Lender that: (i) it has no
claim or cause of action against Lender (or any of its directors, officers,
employees, agents, affiliates or attorneys); (ii) it has no offset right,
counterclaim or defense of any kind against any Obligations; and (iii) Lender
has heretofore properly performed and satisfied in a timely manner all of its
obligations to Obligor. Lender wishes (and Obligor agrees) to eliminate any
possibility that any past conditions, acts, omissions, events or
circumstances would impair or otherwise adversely affect any of Lender's
rights, interests, security and/or remedies. For and in consideration of the
agreements contained in this Agreement and other good and valuable
consideration, Obligor unconditionally and irrevocably releases, waives and
forever discharges Lender, together with its successors, assigns,
subsidiaries, affiliates, agents and attorneys (collectively, the "RELEASED
PARTIES"), from: (x) any and all liabilities, obligations, duties, promises
or indebtedness of any kind of the Released Parties to Obligor or any of them
and (y) all claims, offsets, causes of action, suits or defenses of any kind
whatsoever (if any), whether known or unknown, which Obligor or any of them
might otherwise have against the Released Parties or any of them, in either
case (x) or (y) on account of any condition, act, omission, event, contract,
liability, obligation, indebtedness, claim, cause of action, defense,
circumstance or matter of any kind which existed, arose or occurred at any
time prior to the execution of this Agreement or which could hereafter arise
as a result of the execution of (or the satisfaction of any condition to)
this Agreement or any of the other Loan Documents.
(b) Anything to the contrary contained herein notwithstanding, this
Agreement shall be construed as a waiver and release by Obligor of Lender and
its officers, directors, shareholders, agents, employees, servants, related
corporations, affiliates, partnerships, or other entities, whether controlled
by or related to Obligor, of any claims, rights, demands, injuries, debts,
damages, liabilities, breaches, accounts, contracts, agreements, promissory
notes, obligationes, causes of action, clams for relief, costs, expenses,
liens, things suspected or unsuspected, of every kind and nature which now
exist, and/or heretofore have existed in favor of Obligor against Lender.
(c) Each Obligor acknowledges that Section 1542 of the Civil Code of
California Provides:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in
his favor at the time of executing a release,
which if known by him must have materially
affected his settlement with the debtor."
Each Obligor to this Agreement acknowledges that it may hereafter
discover facts in addition to or different from those which it know or
believes to be true with respect to the subject matter of the release given
hereby, but that it is its intention to, and it does hereby, fully, finally
and forever waive and all rights and defenses as set forth hereinabove.
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In furtherance of such intention, Obligor waives all rights granted to it
by Section 1542 of the Civil Code of California and acknowledges that the
release herein given shall be and remain in effect as a full and complete
general release as to the matters released herein, notwithstanding the
subsequent discovery or existence of any such additional or different facts.
SECTION 4. TERMINATION OF EXTENSION OF CREDIT.
(a) FACILITY. Subject to the terms and conditions set forth in this
Agreement, Obligor acknowledges, confirms and agrees that Lender's obligation
to make Advances or to extend new L/Cs or L/C Guaranties under the Loan
Agreement have been terminated as a result of the Event of Default. The
aggregate principal amount the Obligations of Obligor to Lender under the
Loan Agreement and the Loan Documents shall not be increased hereafter from
the present amount of the Obligations as set forth in SECTION 1 above.
(b) INTEREST. Notwithstanding the Event of Default, prior to a
Forbearance Event of Default (as defined below), the outstanding amount of
each of the Revolving Advances, L/Cs and L/C Guaranties, and the Term Loan
shall bear interest at the rates set forth in the Loan Documents. Upon the
occurrence and continuation of a Forbearance Event of Default, each of the
Revolving Advances, L/Cs and L/C Guaranties, and the Term Loan shall bear
interest at the Default Rate as set forth in the Loan Agreement. All
applicable fees shall be payable in the amounts and at the intervals set
forth in the Loan Documents.
(c) APPLICATION OF COLLATERAL PROCEEDS. Subject to the terms and
conditions of the Intercreditor Agreement and prior to the occurrence and
continuation of any Forbearance Event of Default, except as provided below,
all proceeds of the Collateral in which Lender has a first priority security
interest (whether pursuant to the lockbox arrangement established under the
Loan Agreement and the Security Documents or otherwise) will be applied
against Obligor's Obligations to Lender (in such order of priority as Lender
shall determine). Subject to the terms and conditions of the Intercreditor
Agreement and prior to the occurrence and continuation of any Forbearance
Event of Default, all proceeds of the Creditor Priority Collateral in which
Lender has a junior priority security interest which are to be applied
against Obligor's Obligations to Lender under the terms and conditions of the
Intercreditor Agreement shall be so applied (in such order of priority as
Lender shall determine). Prior to the occurrence and continuation of a
Forbearance Event of Default, Obligor may retain five percent (5%) of all
proceeds of Collateral until such time as the outstanding Obligations are
less than $1,500,000, ten percent (10%) of all proceeds of Collateral until
such time as the outstanding Obligations are less than $1,000,000, twenty
percent (20%) of all proceeds of Collateral until such time as the
outstanding Obligations are less than $500,000, and fifty percent (50%)
thereafter until such time as the Obligations have been repaid in full, in
each case to partially fund Obligor's costs of operations as set forth on the
projections attached hereto as EXHIBIT B.
SECTION 5. FORBEARANCE.
Subject to Obligor's compliance with the terms and conditions of this
Agreement and PROVIDED THAT no Forbearance Event of Default or any event
which with notice and/or the lapse
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of time would become a Forbearance Event of Default shall have occurred,
Lender shall forbear from enforcing its rights under the Loan Documents until
October 1, 1997. Obligor acknowledges and agrees that the provisions of this
SECTION 5 relate solely to Lender's agreement (subject to the terms and
conditions hereof) to forbear from exercising its existing rights and
remedies in respect of existing Events of Defaults under the Loan Documents
and are not, and shall in no way be deemed or construed as, a waiver by
Lender of such existing Events of Default or any Event of Default occurring
subsequent to the date hereof. Moreover, as indicated in SECTION 16 below,
Lender expressly reserves the right to take any and all actions it deems
advisable in order to protect its rights and interests in Obligor's
bankruptcy proceedings.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OBLIGOR.
In order to induce Lender to enter into this Agreement, Obligor
represents, covenants and warrants to Lender as follows:
(a) AUTHORITY. The execution and delivery by Obligor of this Agreement
and the performance of its obligations hereunder have been duly authorized by
all necessary action and do not and will not (i) violate any provision of any
law, rule, regulation, order, judgment, injunction, decree or determination
applicable to Obligor or of Obligor's charter or (ii) result in a breach of
or constitute a default under any agreement, lease or instrument to which
Obligor is a party or by which it may be bound or affected.
(b) BINDING OBLIGATION. This Agreement, the Loan Documents and each
other agreement executed by Obligor in connection herewith or therewith
constitute legal, valid and binding obligations of Obligor.
(c) LOAN DOCUMENTS. Obligor is in compliance in all material respects
with the covenants contained in the Loan Documents and the representations
and warranties in each of the Loan Documents (except those that expressly
relate to an earlier date) are true and correct in all material respects on
the date hereof. Without limiting the foregoing, Obligor's principal place
of business and chief executive offices are located at 0000 Xxxxxxxxx Xxxx,
Xxxx, Xxxxxxxxxx 00000-0000, and, except as disclosed in EXHIBIT C hereto,
Obligor has no other places of business and there are no other locations at
which any Collateral is located.
(d) NO APPROVAL. No authorization, consent, approval, license,
exemption or filing or registration with, any court or governmental
authorize, agency or instrumentality is or will be necessary to the valid
execution, delivery or performance by Obligor of this Agreement or any
documents executed pursuant hereto.
(e) SECURITY DOCUMENTS. Each document purporting to grant Lender a
security interest or lien in any of the assets of Obligor is effective to
grant to Lender a legal, valid, enforceable and perfected security interest
in all right, title and interest of Obligor in the Collateral described
therein; no action or filing is required in order to perfect Lender's
security interest.
(f) RECITALS. The statements contained in the recitals to this Agreement
are true and
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correct.
(g) PROJECTIONS The projections attached hereto as EXHIBIT B were
prepared in good faith and based on assumptions which Obligor believes are
reasonable.
SECTION 7. COVENANTS.
Until such time as Obligor shall have paid its Obligations to Lender in
full, Obligor covenants and agrees with Lender that Obligor shall comply with
(a) all of the terms and conditions contained in the Loan Documents and (b)
the following covenants:
(i) BORROWING BASE REPORTS. Obligor shall deliver Borrowing Base Reports
to Lender on a daily basis reflecting the current Collateral and the
current Creditor Priority Collateral.
(ii) COLLECTION REPORTS. Obligor shall deliver to Lender on a
[weekly/daily] basis reports of all collections in respect of the current
Collateral and the current Creditor Priority Collateral.
(iii) PERFORMANCE AGAINST PROJECTIONS. Obligor will not permit its net
collections of accounts for any period to be less then ninety percent (90%)
of the amounts reflected for such period in the projections attached hereto
as EXHIBIT B.
(iv) COLLECTION OF ACCOUNTS. Obligor shall take all commercially
reasonable actions to promptly collect all Accounts and to apply the
proceeds of Accounts to the repayment of the Obligation to Lender in
accordance with the Loan documents and the Intercreditor Agreement.
(v) SALE OF INVENTORY. Obligor shall take all commercially reasonable
action to promptly sell its existing Inventory and to apply the proceeds
of Inventory to the repayment of the Obligations to Lender in accordance
with the Loan documents and the Intercreditor Agreement, it being agreed
by the parties hereto that the sale of Inventory for a purchase price in
excess of such Inventory's book value to Senoral, Inc. shall be deemed a
commercially reasonable sale for all purposes of this Agreement.
SECTION 8. CONDITIONS PRECEDENT.
The obligations of Lender hereunder are subject to the satisfaction on or
prior to July 31, 1997 of the following conditions precedent, time being of the
essence hereof:
(a) As of the time of Lender's execution hereof Obligor shall be in
compliance with all the terms, covenants and warranties contained herein and
Lender shall have received a certificate signed by an officer of Obligor to
the foregoing effect.
(b) All corporate and legal proceedings and all instruments and
documents in connection herewith shall be satisfactory in form and substance
to Lender and its counsel and
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Lender shall have received all information and all documents and certificates
(corporate and other) which Lender may reasonably have requested in
connection herewith, such documents properly certified by proper corporate or
governmental authorities.
(c) Obligor, Lender and Senoral, Inc. shall have entered into an
Intercreditor Agreement in the form of EXHIBIT A attached hereto.
(d) Each Person which has previously executed a guaranty, pledge or
subordination agreement in favor of Lender shall have executed a combination
of such agreement in form and substance satisfactory to Lender and its
counsel.
(e) No event or circumstance shall have occurred which could have a
Material Adverse Effect. As used in this Agreement, the term "MATERIAL
ADVERSE EFFECT" shall mean the occurrence of any event or circumstance which
could have a material adverse effect on (x) the business, operations,
property, condition or assets of Obligor, (y) the ability of Obligor to
perform its obligations under this Agreement or any Loan Document or (i) the
validity or enforceability of this Agreement or any Loan Document or the
rights and remedies of Lender hereunder or thereunder.
SECTION 9. FORBEARANCE EVENTS OF DEFAULT AND REMEDIES.
Each of the following events (each a "FORBEARANCE EVENT OF DEFAULT" and
collectively the "FORBEARANCE EVENTS OF DEFAULT") shall constitute an Event
of Default under this Agreement and each of the Loan Documents (whether or
not such is an event of default therein):
(a) PAYMENT. Obligor fails to make any payment required to be made to
Lender under this Agreement or any Loan Documents; or
(b) REPRESENTATIONS. Any representation or warranty made by, or on
behalf of each Obligor in this Agreement or in any certificate or other
document delivered in connection herewith shall prove to have been untrue or
incorrect in any material respect; or
(c) COVENANTS. Obligor shall fail to fully perform or comply with any
term, covenant or provisions of this Agreement (including without limitation
those under SECTION 7); or
(d) BANKRUPTCY. Obligor shall become insolvent or fail to pay its debts
as they mature, or Obligor shall be adjudicated as bankrupt or insolvent, or
any case or proceeding shall be commenced by or against Obligor in bankruptcy
or liquidation or for its reorganization or readjustment of the indebtedness
of Obligor under any applicable bankruptcy or insolvency laws, or any
receiver, administrator, liquidator or trustee or similar official shall be
appointed for any Obligor or any of its property, or Obligor shall make an
assignment for the benefit of creditors, or any similar event shall take
place with respect to Obligor, or Obligor shall sell all or a substantial
part of its assets, whether in a single transaction or a series of
transactions, or any event shall take place in the bankruptcy resulting from
the filing of the petition which could have a Material Adverse Effect; or
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(e) LOAN DOCUMENTS. There shall have occurred any Event of Default
under or as defined in any of the Loan Documents (OTHER THAN the Event of
Default referred to in the recitals to this Agreement); or
(f) INTERCREDITOR AGREEMENT. Senoral, Inc. or Obligor shall take any
action in violation of the Intercreditor Agreement, as amended, or Golden
State Graphics, Inc. or any other affiliate of Senoral, Inc. shall take any
enforcement action against Obligor or;
(g) SUBORDINATED DEBT. Except as provided herein or in the
Subordination Agreement, as amended, Obligor shall make any payment in
respect of Subordinated Debt.
SECTION 10. REMEDIES.
On and after the occurrence of any Forbearance Event of Default and in
each case without any demand, presentment, notice and/or other action of any
nature by Lender (all of which are hereby expressly waived by each Obligor),
(a) all Obligations shall be immediately due and payable and Lender shall be
immediately and permanently relieved of its forbearance Obligations set forth
in SECTION 5 or otherwise; (b) Lender may proceed to enforce its rights under
and in respect of this Agreement and the Loan Documents; and (c) Lender shall
be free to avail itself of all other rights and remedies available under
applicable law. The failure of Lender or its delay to exercise any remedy
after any particular Forbearance Event of Default shall not appear as a
waiver of any remedy in that or in any subsequent instance, or otherwise
prejudice the rights of Lender.
SECTION 11. FURTHER ASSURANCE.
Each Obligor agrees to take any action and to execute and deliver any
additional documents which Lender may reasonably request in order to obtain
and enjoy the full rights and benefits granted to Lender by the Loan
Documents or this Agreement.
SECTION 12. WAIVERS BY OBLIGOR: BANKRUPTCY MATTERS.
(a) WAIVER OF JURY TRIAL. OBLIGOR HEREBY WAIVES ANY RIGHTS THAT IT/HE
MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIMS ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW WHICH CANNOT BE WAIVED,
OBLIGOR HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION
TO, ACTUAL DAMAGES.
(b) GUARANTY. OBLIGOR HEREBY WAIVES ANY RIGHT IT MAY HAVE, UNDER
Section 105 OF BANKRUPTCY CODE OR OTHERWISE, TO ENJOIN ANY ATTEMPT BY
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LENDER TO ENFORCE OR COLLECT ON ANY GUARANTY FROM ANY GUARANTOR.
(c) ACKNOWLEDGEMENTS. Obligor hereby (i) certifies that no
representative, agent, or attorney of Lender has represented, expressly or
otherwise, that Lender would not, in the event of litigation, seek to enforce
the foregoing waivers (or any other waivers or other provisions contained in
this Agreement or in any of the Loan Documents) and (ii) acknowledges that
Lender has been induced to enter into this Agreement by, among other things,
the waivers, agreements and certifications set forth herein.
SECTION 13. FEES.
Obligor agrees to pay all reasonable expenses, fees and disbursements of
counsel for Lender which Lender has incurred or may hereafter incur in
connection with Obligor's defaults under the Loan Agreement, the preparation
of this Agreement, the Loan Documents and all other documents related hereto
and thereto (including any amendment, consent or waiver hereunder or
thereunder) and the transactions contemplated hereby or thereby or the
enforcement of the rights of Lender hereunder or under the Loan Documents in
the event of a default hereunder or thereunder or any "workout" of their
obligations to Lender. All such expenses, fees and disbursements shall
constitute Obligations" and shall be secured by the Collateral.
SECTION 14. SET-OFFS.
If any Forbearance Event of Default occurs, any Indebtedness from Lender
to Obligor may, without regard to the value or adequacy of the Collateral, be
offset and applied toward the payment of any Indebtedness from Obligor to
Lender, whether or not such Indebtedness, or any part thereof, shall then be
due.
SECTION 15. NOTICES.
All notices, consents, requests, approvals, instructions and other
communications provided for herein and/or the Loan Documents shall be in
writing and validly given or made when delivered personally or mailed by
registered or certified mail, or sent by overnight courier, or by facsimile
transmission (when confirmation of receipt thereof is received) to the party
entitled or required to receive the same at the addresses set forth in the
Loan Agreement, or at such other address as any party hereto may subsequently
furnish in writing to the other
SECTION 16. NO WAIVERS.
Except to the extent Lender has agreed to forbear pursuant to this
Agreement, Lender may enforce its rights to the fullest extent permitted
under this Agreement, the other Loan Documents and/or applicable law.
Neither this Agreement nor the compliance of Lender herewith shall be deemed
or construed to be a waiver of any right or remedy to which Lender may now or
hereafter be entitled against Obligor, except to the extent herein otherwise
explicitly provided. Except to the extent herein otherwise explicitly
provided, the provisions of the Loan Documents and all related agreements
shall continue in full force and effect. Without limiting the foregoing,
Lender
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expressly reserves the right to take any and all actions it deems advisable
to protect its rights and interests (whether or not a Forbearance Event of
Default shall have occurred) and nothing contained herein shall limit or in
any way derogate from such right. The parties agree that, except to the
extent herein otherwise explicitly provided, the provisions of the Loan
Documents shall continue in full force and effect. The failure of Lender to
insist upon the strict performance of any term, condition or other provision
hereof or to exercise any right or remedy hereunder shall not constitute a
waiver by Lender of any such term, condition or other provision or Event of
Default or Forbearance Event of Default in connection therewith; and any
waiver of any such term, condition or other provision of any such Event of
Default or Forbearance Event of Default shall not affect or alter this
Agreement or the other Loan Documents, and each and every term, condition and
other provision of this Agreement and the other Loan Documents shall, in such
event, continue in full force and effect and shall be operative with respect
to any other then existing or subsequent Event of Default or Forbearance
Event of Default in connection therewith.
SECTION 17. MISCELLANEOUS.
(a) COUNTERPARTS. SUCCESSORS. GOVERNING LAW. This Agreement may be
executed in multiple counterparts, each of which shall be considered an
original but all of which shall constitute one and the same agreement. One
or more counterparts may be delivered via telecopier; any such telecopied
counterpart shall have the same force and effect as an original counterpart
hereof. The Agreement shall be binding and inure to the benefit of each of
the parties hereto, and their respective successors, heirs, legal
representatives and assigns PROVIDED THAT Obligor may not assign its rights
and obligations without Lender's prior written consent. This Agreement is
solely for the purpose, and shall have the sole effect, of defining the
relative rights and obligations of the parties hereto and may not be relied
upon or enforced by any person not a party hereto; no Person shall have
third-party beneficiary rights hereunder.
This Agreement shall be construed in accordance with and governed by the
internal laws of the State of California (without giving effect to conflicts
of laws principles). In addition to the extent that it may lawfully do so,
each Obligor hereby consents to service of process, and to be sued, in
California and consents to the jurisdiction of the courts of California and
the U.S. District Court for the Central District of California, as well as to
the jurisdiction of all courts to which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding arising out
of any of its obligations hereunder or under the Loan Documents or with
respect to the transactions contemplated hereby or thereby, and expressly
waives any and all objections it may have as to venue in any such courts.
Each Obligor further agrees that a summons and complaint commencing an action
or proceeding in any of such courts shall be properly served and shall confer
personal jurisdiction if served personally or by certified mail to it at its
address provided in SECTION 15 or as otherwise provided under the laws of
California or the jurisdiction in which suit is brought.
(b) AMENDMENTS AND WAIVERS. Any term of this Agreement or of the Loan
Documents may be amended and the observance of any term of this Agreement may
be waived only with the written consent of each party hereto.
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(c) CONSTRUCTION. The parties acknowledge and agree that this Agreement
shall not be construed in favor of one party more than the other(s) based
upon which party drafted (or caused to be drafted) the same. Headings
contained herein are included for convenience of reference only and shall not
constitute a part or to affect the meaning or interpretation of this
Agreement. This Agreement sets forth the entire understanding of the parties
with respect to its subject matter and supersedes all other negotiations,
understandings and representations made by and among such parties. No course
of dealing, course of performance, trade usage or parole evidence of any
nature shall be used to supplement or modify any terms of this Agreement.
(d) SURVIVAL OF REPRESENTATIONS. All representations and warranties
made herein and/or in certificates delivered pursuant hereto by Obligor shall
survive the execution and delivery hereof, and shall continue in full force
and effect with respect to the date as of which made so long as any
Obligation is outstanding.
(e) STATUTE OF LIMITATIONS: TIME OF ESSENCE. Any statute of limitations
applicable to any remedy of Lender under the Loan Documents or any applicable
law shall be suspended and tolled. Time shall be of the essence with respect
to each and every undertaking and obligation of Obligor set forth herein.
(f) SPECIFIC PERFORMANCE. Obligor stipulates that Lender's remedies at
law, in the event of any default or threatened default by Obligor in the
performance of or compliance with any of the terms and provisions of this
Agreement on its part to be observed or performed, are not and will not be
adequate, and that such terms may be specifically enforced by a decree for
the specific performance of any agreement contained herein or therein or by
an injunction against a violation of any of the terms or provisions hereof,
thereof or otherwise.
(g) SEVERABILITY. The unenforceability of any provision of this
Agreement shall not affect the validity, binding effect and enforceability of
any other provision or provisions of this Agreement; PROVIDED, HOWEVER, that
if any provision of this Agreement is declared unenforceable against any
Obligor for any reason by any court or governmental body having jurisdiction,
all agreements, consents and waivers of Lender set forth herein shall, at the
option of Lender, be deemed null and void AB INITIO, and Lender shall, at its
election, be restored to the position it would have occupied, with all rights
available to it as though such agreements, consents and waivers had never
been made.
(h) INDEMNIFICATION. In addition to any indemnification obligations
contained in any of the Loan Documents, Obligor agrees to indemnify Lender
and hold Lender and each of the Released Parties harmless from and against
any and all claims, damages, losses, liabilities, judgments and expenses
(including without limitation all reasonable counsel fees and expenses and
litigation expenses) which Lender may incur or which may be asserted against
it in connection with or arising out of any investigation, litigation or
proceeding which arises out of the transactions contemplated hereby or by the
Loan Documents (or any action or inaction by Lender hereunder or thereunder)
or which otherwise involves Obligor or any shareholder or any affiliate of
Obligor, whether or not Lender is party thereto, other than claims, damages,
losses, liabilities or judgments with respect to any matter as to which
Lender shall have been finally adjudicated
11
(i) not to have acted in good faith or (ii) to have acted in a grossly
negligent manner.
The provisions of this paragraph shall survive payment of all Obligations to
Lender.
(i) ARMS-LENGTH TRANSACTION. Obligor recognizes, stipulates and agrees
that Lender's actions and relationships with the parties hereto including,
but not limited to, those relationships created or referenced by or in this
Agreement, have been and constitute arms-length commercial transactions, that
such actions and relationships shall at all times in the future continue to
constitute arms-length commercial transactions and that Lender shall not at
any time act, be obligated to act, or otherwise be construed or interpreted
as acting as or being the agent, employee or fiduciary of Obligor.
(j) NEGOTIATIONS/COUNSEL Obligor stipulates and agrees that this
Agreement is the product of and results from lengthy arms-length negotiations
among the parties and that neither Lender nor any other party has exerted or
attempted to exert improper or unlawful pressure or has in any way attempted
to induce, through threats or otherwise, the execution or delivery of this
Agreement. Without in any way limiting the foregoing, each of the parties
hereto stipulates and agrees that at all times during the course of the
negotiations surrounding the execution and delivery of this Agreement, they
have, to the extent deemed necessary or advisable in their sole discretion,
been advised and assisted by competent counsel of their own choosing, that
such counsel has been present and participated in the negotiations
surrounding this Agreement and that they have been fully advised by such
counsel of the effect of each term, condition, provision and stipulation
contained herein.
(k) RESERVATION. The parties acknowledge that certain additional
individuals have guaranteed, in whole or in part, Obligor's obligations to
Lender. The failure of such additional individuals to execute this Agreement
does not constitute a waiver of Lender's rights and remedies with respect to
such individuals, which Lender expressly reserves and may execute at any time.
[Remainder of page intentionally left blank.]
12
IN WITNESS WHEREOF, Lender and Obligor have executed this Agreement as
of the day and year first above written.
FOOTHILL CAPITAL CORPORATION,
a California corporation,
By: /s/ XXXXXX XXXXXXXXX
------------------------------------
Title: Vice President
---------------------------------
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.,
a Delaware corporation
By: /s/ XXXXXX XXXXXXX
-------------------------------------
Title: President
-----------------------------------
OSP PUBLISHING, INC.,
a Delaware corporation
By: /s/ XXXXXX XXXXXXX
-------------------------------------
Title: President
-----------------------------------
BEx CORP.,
a Delaware corporation
By: /s/ XXXXXX XXXXXXX
-------------------------------------
Title: President
-----------------------------------
XXXXX XXXXXX STUDIOS, INC.,
a Delaware corporation
By: /s/ XXXXXX XXXXXXX
-------------------------------------
Title: President
-----------------------------------
13
EXHIBIT A
INTERCREDITOR AGREEMENT
14
EXHIBIT A
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this "Agreement"), dated as of August 1,
1997, is entered into between Creditor and Foothill and is acknowledged and
consented to by Obligor.
W I T N E S S E T H :
WHEREAS, Obligor and Foothill have previously entered into the Loan
Agreement and various other related documents, instruments, or agreements
(collectively, the "Foothill Agreements");
WHEREAS, to secure the obligations owed to Foothill under the Foothill
Agreements, Obligor has granted to Foothill security interests in and liens
on the Collateral;
WHEREAS, Obligor has entered, or intends to enter, into that certain
Secured Promissory Note (Including Multiple Advance Option), dated as of
August 1, 1997 (including the schedules attached thereto) and other related
documents in favor of Creditor (collectively, the "Creditor Agreements");
WHEREAS, Creditor and Foothill desire to agree to the relative priority
of their security interests in and liens on the Collateral and certain other
rights, priorities, and interests.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration,
Creditor and Foothill hereby agree as follows, and Obligor hereby
acknowledges and consents to the following:
18. DEFINITIONS; CONSTRUCTION.
(a) DEFINITIONS. As used herein (including the recitals and preamble
hereto), the following initially capitalized terms shall have the indicated
definitions:
"ACCOUNTS" means all present and future (a) "accounts" (as defined in the
UCC) of Obligor, and (b) other rights to payment of Obligor arising from any
sale or lease of goods, the sale or lease of General Intangibles, or the
provision of services, or from any agreement relating to same, including in
each instance any related claims on guaranties or against providers of credit
support, irrespective of whether any of the foregoing are evidenced by an
instrument or chattel paper, and irrespective of whether any of the
1
foregoing are secured, together with all merchandise returned to or reclaimed
by such Obligor relating to any of the foregoing.
"AGREEMENT" means this Intercreditor Agreement, as it may be amended,
supplemented, or modified from time to time in accordance with the provisions
hereof.
"ASSET" means any interest of Obligor in any kind of property or asset,
whether real, personal, or mixed real and personal, or whether tangible or
intangible.
"BANKRUPTCY CODE" means the federal bankruptcy law of the United States
as from time to time in effect, currently as Title 11 of the United States
Code. Section references to current sections of the Bankruptcy Code shall
refer to comparable sections of any revised version thereof if section
numbering is changed.
"BOOKS AND RECORDS" means all of Obligor's books and records including:
ledgers; records indicating, summarizing, or evidencing Obligor's assets or
liabilities, or the Collateral; all information relating to Obligor's
business operations or financial condition; and all computer programs, disc
or tape files (including switch tape), printouts, runs, or other computer
prepared information, and those items of equipment that contain or store such
information.
"BUSINESS DAY" means any day, other than a Saturday or Sunday, that
commercial banks in general are open for the transaction of commercial
banking business in Los Angeles, California.
"CLAIMANTS" means Foothill or Creditor.
"CLAIMS" means the Foothill Claim or the Creditor Claim.
"COLLATERAL" means any and all Assets, whether tangible or intangible, in
which Obligor now or hereafter has any right, title, or interest, and in
which either or both of Foothill or Creditor from time to time has or may
have any lien or security interest, consisting of the following: (1) the
Accounts, (2) the Books and Records, (3) the Equipment, (4) the General
Intangibles, (5) the Inventory, (6) the Negotiable Collateral, (7) the Money,
and (8) the Proceeds.
"CREDIT DOCUMENTS" means the Foothill Agreements and the Creditor
Agreements.
"CREDITOR" means Senoral, Inc.
2
"CREDITOR AGREEMENTS" has the meaning ascribed to such term in the
recitals to this Agreement, and shall include any future amendments,
modifications, extensions, supplements, restatements, or replacements of any
of the Creditor Agreements.
"CREDITOR CLAIM" means any and all present and future "claims" (used in
its broadest sense, as contemplated by and defined in Section 101(5) of the
Bankruptcy Code, but without regard to whether such claim would be disallowed
under the Bankruptcy Code) of Creditor now or hereafter arising or existing
under or relating to the Creditor Agreements, whether joint, several, or
joint and several, whether fixed or indeterminate, due or not yet due,
contingent or non-contingent, matured or unmatured, liquidated or
unliquidated, or disputed or undisputed, and whether arising under contract,
in tort, by law, or otherwise, and including all credit advanced or extended
to or for the benefit of Obligor at any time (including any indebtedness
arising pursuant to debtor-in-possession financing arrangements or pursuant
to financing arrangements entered into in connection with the confirmation of
a plan of reorganization under Chapter 11 of the Bankruptcy Code), any
interest or fees thereon (including interest or fees that accrue after the
filing of a petition by or against Obligor under the Bankruptcy Code,
irrespective of whether allowable under the Bankruptcy Code), any costs of
Enforcement Actions, including reasonable attorneys fees and costs, and any
prepayment or termination premiums.
"CREDITOR PRIORITY COLLATERAL" means the New Accounts and the New
Inventory and identifiable Proceeds thereof to the extent that such Proceeds
have not been commingled with the Proceeds of the Collateral.
"ENFORCEMENT ACTION" means, with respect to any Claimant and any Claim
thereof and with respect to any Asset of Obligor or any Collateral in which
such Claimant has or claims a security interest or lien (including consensual
liens, attachment liens, statutory liens, and judgment liens), any action,
whether judicial or nonjudicial, to assert, collect, or enforce such Claim or
any portion thereof, or to repossess, recover, collect, offset, recoup, give
notification to third parties with respect to, sell, dispose of, foreclose
upon, give notice of sale, disposition, or foreclosure with respect to,
retain in satisfaction of debt, or obtain equitable or injunctive relief with
respect to, such Asset or Collateral.
"EQUIPMENT" means all of Obligor's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, vehicles, tools, parts, dies, jigs, goods (other than consumer
goods or farm products), and any interest in any of the foregoing, wherever
located, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located; PROVIDED, HOWEVER, that Equipment shall not include any Collateral
consisting of Inventory or Books and Records.
"FOOTHILL" means Foothill Capital Corporation, a California corporation.
3
"FOOTHILL AGREEMENTS" has the meaning ascribed to such term in the
recitals to this Agreement, and shall include any future amendments,
modifications, extensions, supplements, restatements, or replacements of any
of the Foothill Agreements.
"FOOTHILL CLAIM" means any and all present and future "claims" (used in
its broadest sense, as contemplated by and defined in Section 101(5) of the
Bankruptcy Code, but without regard to whether such claim would be disallowed
under the Bankruptcy Code) of Foothill now or hereafter arising or existing
under or relating to the Foothill Agreements, whether joint, several, or
joint and several, whether fixed or indeterminate, due or not yet due,
contingent or non-contingent, matured or unmatured, liquidated or
unliquidated, or disputed or undisputed, whether under a guaranty or a letter
of credit, and whether arising under contract, in tort, by law, or otherwise,
and including all credit advanced or extended to or for the benefit of
Obligor at any time (including any indebtedness arising pursuant to
debtor-in-possession financing arrangements or pursuant to financing
arrangements entered into in connection with the confirmation of a plan of
reorganization under Chapter 11 of the Bankruptcy Code), any interest or fees
thereon (including interest or fees that accrue after the filing of a
petition by or against Obligor under the Bankruptcy Code, irrespective of
whether allowable under the Bankruptcy Code), any costs of Enforcement
Actions, including reasonable attorneys fees and costs, and any prepayment or
termination premiums; it being the parties' understanding and agreement that
Foothill and Obligor may increase the then extant maximum aggregate principal
amount of credit advanced to or extended for the benefit of Obligor
outstanding at any time, so long as, at the time of any proposed increase, no
event of default shall have occurred and be continuing under the Creditor
Agreements.
"GENERAL INTANGIBLES" means all present and future (1) general
intangibles and other intangible personal property (including choses or
things in action, liens, or other rights arising by operation of law, whether
by virtue of common law, statutory law, or regulatory law) of Obligor, (2)
deposit accounts and rights of Obligor arising under or related to any
contract, including royalty or licensing agreements, (3) intellectual
property rights of Obligor, including copyrights, patents, trademarks, trade
names, logos, service marks, licenses, drawings, purchase orders, customer
lists, route lists, infringement claims, computer programs, computer discs,
computer tapes, literature, and reports, (4) claims of Obligor for tax
refunds, insurance premium refunds, and refunds relating to overfunding of
benefit plans, (5) plans, blueprints, drawings, specifications, designs, and
trade secrets of Obligor, and (6) Books and Records of Obligor, whether
maintained on paper, as computerized records, or otherwise; PROVIDED,
HOWEVER, that General Intangibles shall not include any Collateral consisting
of Accounts or Negotiable Collateral.
"INVENTORY" means all present and future rights, title, and interest of
Obligor with respect to, wherever located (a) any inventory, including goods
held for sale or lease or to be furnished under a contract of service, (b)
raw materials, work in process, and finished goods, (c) any models, molds,
and masters, (d) packing and shipping materials, and (e)
4
any documents of title representing any of the above, in each case acquired
by Obligor before August 1, 1997.
"INVESTMENT PROPERTY" shall have the meaning ascribed to such term in
Division 9 of the UCC.
"LOAN AGREEMENT" means that certain Amended and Restated Loan and
Security Agreement, dated as of August 29, 1996, between Foothill and
Obligor, and shall include any future amendments, modifications, extensions,
supplements, restatements, or replacements thereof.
"MIXED ACCOUNT DEBTORS" has the meaning ascribed to such term in SECTION
2(b) of this Agreement.
"MONEY" means all present and future cash, coins, currency, or any other
medium of exchange that is treated as the equivalent of cash (but not
including Negotiable Collateral or deposit accounts), including foreign
currency of any of Obligor.
"NEGOTIABLE COLLATERAL" means all present and future letters of credit,
notes, drafts, instruments, documents, Investment Property, personal property
leases (wherein Obligor is the lessor), and chattel paper of Obligor.
"NEW ACCOUNTS" means all present and future (a) "accounts" (as defined in
the UCC) of Obligor, and (b) other rights to payment of Obligor arising from
any sale or lease of New Inventory or from any agreement relating to same,
including in each instance any related claims on guaranties or against
providers of credit support of such New Accounts, irrespective of whether any
of the foregoing are evidenced by an instrument or chattel paper, and
irrespective of whether any of the foregoing are secured, together with all
merchandise returned to or reclaimed by such Obligor relating to any of the
foregoing.
"NEW INVENTORY" means all present and future rights, title, and interest
of Obligor with respect to, wherever located (a) any inventory, including
goods held for sale or lease or to be furnished under a contract of service,
(b) raw materials, work in process, and finished goods, (c) any models,
molds, and masters, (d) packing and shipping materials, and (e) any documents
of title representing any of the above, in each case acquired by Obligor on
or after August 1, 1997.
"OBLIGOR" means, jointly and severally, individually and collectively,
Global One Distribution & Merchandising Inc., a Delaware corporation, OSP
Publishing, Inc., a Delaware corporation, BEx Corp., a Delaware corporation,
and Xxxxx Xxxxxx Studios, Inc., a Delaware corporation.
5
"PROCEEDS" means, when used with respect to any of the Collateral, all
present and future "proceeds" (as defined in the UCC) of such Collateral,
irrespective of whether received by Obligor, and shall include insurance
proceeds arising from or relating to Collateral, rents received or receivable
from the lease of goods, and dividends or other distributions paid or payable
with respect to shares of capital stock.
"UCC" means the Uniform Commercial Code in effect in the State of
California, except with respect to the perfection of any security interest,
in which case the term "UCC" shall refer to the Uniform Commercial Code of
the jurisdiction that, under Section 9103 of the California Uniform
Commercial Code, governs the perfection of the security interest.
(b) CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural, the part includes the whole, the terms "include,"
"includes," and "including" are not limiting (the parties hereto agreeing
that the rule of EJUSDEM GENERIS shall not be applicable to limit a general
statement, which is followed by or referable to an enumeration of specific
matters, to matters similar to the matters specifically mentioned), and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or". The words "hereof," "herein," "hereby,"
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section
references are to this Agreement unless otherwise specified. Any terms used
in this Agreement which are defined in the UCC shall be construed and defined
as set forth in the UCC unless otherwise defined herein. All of the
schedules and exhibits attached to this Agreement shall be deemed
incorporated herein by reference.
2. LIEN PRIORITIES. The date, manner, or order of perfection of the
security interests or liens granted to or in favor of Foothill or Creditor
notwithstanding, and any contrary provisions of the UCC, or any applicable
law or decision notwithstanding, and the provisions of the Foothill
Agreements or the Creditor Agreements notwithstanding, and irrespective of
whether Foothill or Creditor at any time holds possession of any of the
Collateral, the following, as between Foothill and Creditor, shall be the
relative priority of the security interests and liens of Foothill and (if
any) of Creditor in and to the Collateral:
(a) Creditor shall have a first priority security interest in the
Creditor Priority Collateral to the extent of the Creditor Claims, and
Foothill shall have a second priority security interest in the Creditor
Priority Collateral to the extent of the Foothill Claims.
(b) Foothill shall have a first priority security interest in all
Collateral other than the Creditor Priority Collateral, and Creditor shall
not have any security interest whatsoever in any Collateral other than the
Creditor Priority Collateral to the extent of the Creditor Claims. Creditor
hereby acknowledges that, pursuant to the Foothill Agreements,
6
no security interest in favor of Creditor shall be permitted to exist on any
Collateral other than the Creditor Priority Collateral.
In the event that Creditor obtains the rights of a holder in
due course of a negotiable instrument that is Collateral, then Section 9309
of the UCC shall not provide Creditor with priority in such negotiable
instrument. The provisions of Section 9309 of the UCC notwithstanding, the
relative priority of the security interests and liens of Claimants with
respect to any portion of the Collateral in which any Claimant obtains the
rights of a holder in due course shall be determined by the priorities set
forth in this section.
3. DISTRIBUTION OF PROCEEDS OF COLLATERAL. As between Foothill and
Creditor, all Proceeds of Collateral, and all amounts resulting from any
sale, exchange, disposition, or collection of any Collateral by any Claimant,
shall be distributed as follows:
a. Except as provided below, all realizations upon the Creditor
Priority Collateral shall be applied to the Creditor Claims. After the
Creditor Claims are paid or otherwise satisfied in full, any remaining
realizations upon the Creditor Priority Collateral shall be applied to the
Foothill Claims until they are paid or otherwise satisfied in full.
b. All realizations on Creditor Priority Collateral received from an
Account Debtor which is an Account Debtor with respect to both Accounts
constituting Collateral and New Accounts constituting Creditor Priority
Collateral ("Mixed Account Debtors") shall be applied to the Foothill
Claims and to the Creditor Priority Claims in the same percentage as each
bears to the total of Foothill Claims and Creditor Priority Claims.
c. All realizations upon any Collateral other than the Creditor
Priority Collateral shall be applied to the Foothill Claims.
d. After all of the Claims have been paid or otherwise satisfied in
full, the balance of realizations upon Collateral, if any, shall be paid to
Obligor or as otherwise required by applicable law.
Subsection a. and b. of this SECTION 3 are applicable with respect to any
item of Collateral only to the extent that both Creditor and Foothill
concurrently have a security interest in or lien on such Collateral. Nothing
herein shall require either Claimant to have or hold a security interest in
or lien on Collateral that it does not wish to have or hold.
4. LIMITATION ON ENFORCEMENT ACTIONS.
7
a. Any provision in the Creditor Agreements to the contrary
notwithstanding, without the prior written consent of Foothill, Creditor
shall not take any Enforcement Action unless and until such time as the
Foothill Claims are paid in full.
b. Foothill may, at its option, take any Enforcement Action it
deems appropriate with respect to any Collateral other than the Creditor
Priority Collateral.
c. Until the Creditor Claims have been paid or satisfied in full,
Foothill shall not take any Enforcement Action against the Creditor Priority
Collateral without first obtaining the prior written consent of Creditor.
Should Foothill receive the proceeds of any Creditor Priority Collateral in
violation of the terms hereof, Foothill immediately shall remit such proceeds
to Creditor.
d. Should Creditor obtain or hold any security interest in any
Collateral other than the Creditor Priority Collateral or identifiable
proceeds thereof in violation of the terms hereof, Creditor immediately shall
terminate such security interest and remit such cash proceeds to Foothill.
5. OPTION TO PURCHASE/PREPAY FOOTHILL CLAIMS.
a. Upon Foothill's election to take any Enforcement Action it
deems appropriate with respect to any Collateral other than the Creditor
Priority Collateral pursuant to SECTION 4(b) hereof, Creditor shall have the
right, but not the obligation, either to (i) prepay the then outstanding
amount of the Foothill Claims and obtain a release of Foothill's liens and
security interests in and to the Collateral, or (ii) purchase and obtain, by
assignment, the Foothill Claims and the related liens and security interests
in and to the Creditor Priority Collateral. If Creditor elects to prepay or
purchase such Claims, the prepayment amount or purchase price, as applicable,
payable by Creditor would be equal to the outstanding principal balance of
such Claims, all accrued and unpaid interest thereon, and all unpaid fees and
expenses chargeable by Foothill to Obligor under the Foothill Agreements; it
being the agreement of the parties that there shall be no discount or premium
involved in any such prepayment or purchase. If Creditor elects to purchase
such Claims, the only representations that Foothill would make in connection
with such an assignment would be its free and clear ownership of the Claims
and the amount thereof.
6. EXERCISE OF REMEDIES. Foothill may exercise its discretion with respect
to exercising or refraining from exercising any of its rights and remedies
under the Foothill Agreements or from taking or refraining from taking any
Enforcement Action. Creditor agrees that Foothill shall not incur any
liability to Creditor for taking or refraining from taking any action with
respect to any Collateral other than the Creditor Priority Collateral, so
long as Foothill complies with the express provisions of this Agreement.
8
7. UCC NOTICES. In the event that any Claimant shall be required by the UCC
or any other applicable law to give any notice to the other Claimant, such
notice shall be given in accordance with the notice provisions hereof, and 5
Business Days notice shall be conclusively deemed to be commercially
reasonable.
8. INDEPENDENT CREDIT INVESTIGATIONS. No Claimant, nor any of its
respective directors, officers, agents, or employees, shall be responsible to
any other Claimant or to any other person or entity for Obligor's solvency,
creditworthiness, financial condition, or ability to repay any of the Claims
or for the accuracy of any recitals, statements, representations, or
warranties of Obligor, oral or written, or for the validity, sufficiency,
enforceability, or perfection of the Claims or the Credit Documents, or any
security interests or liens granted by Obligor to any Claimant in connection
therewith. Each Claimant has entered into its respective financing
agreements with Obligor based upon its own independent investigation, and
makes no warranty or representation to the other Claimant, nor does it rely
upon any representation of the other Claimant with respect to matters
identified or referred to in this paragraph.
9. PERFECTION OF POSSESSORY SECURITY INTERESTS. For the limited purpose of
perfecting the security interests or liens of the Claimants in those types or
items of Collateral in which a security interest or lien may be perfected by
possession, each Claimant hereby appoints the other as its bailee for the
limited purpose of possessing on its behalf any such Collateral that may come
into the possession of such other Claimant from time to time, and each
Claimant agrees to act as the other's bailee for such limited purpose of
perfecting the other's security interest or lien by possession through a
bailee, provided that neither Claimant shall incur any liability to the other
Claimant by virtue of acting as the other's bailee hereunder, and either
Claimant may relinquish to the other Claimant possession of any Collateral in
its possession without the consent of the other Claimant, and without
incurring liability to the other Claimant.
10. APPLICABILITY OF PRIORITIES. The priorities provided for herein with
respect to security interests and liens are applicable only to the extent
that such security interests and liens are enforceable and have not been
avoided; if a security interest or lien is judicially determined to be
unenforceable or is judicially avoided with respect to one or more Claims or
any part thereof, the priorities provided for herein shall not be available
to such security interest or lien to the extent that it is avoided or
determined to be unenforceable. The foregoing notwithstanding, each party
covenants and agrees for the benefit of each other party that it shall not
challenge, attack, or seek to avoid any security interest or lien to the
extent that it secures any Claim.
11. WAIVER OF RIGHT TO REQUIRE MARSHALING. Each Claimant hereby expressly
waives any right that it otherwise might have to require the other Claimant
to marshal Assets or to resort to Collateral in any particular order or
manner, whether provided for by common
9
law or statute. No Claimant shall be required to enforce any guaranty or any
security interest or lien given by Obligor as a condition precedent or
concurrent to the taking of any Enforcement Action.
12. TERMINATION. This Agreement is a continuing agreement, and, unless both
Claimants have specifically consented in writing to its earlier termination,
this Agreement shall remain in full force and effect in all respects until
the earlier of (a) such time as the Foothill Claims are paid in full,
Foothill has no further commitment to extend credit facilities to any of the
Obligor, and Foothill has released or terminated its security interests and
liens in the Collateral, or (b) such time as the Creditor Claims are paid in
full, Creditor has no further commitment to extend credit facilities to any
of the Obligor, and Creditor has released or terminated its security
interests and liens in the Collateral.
13. EFFECT OF BANKRUPTCY. This Agreement shall be and remain enforceable
notwithstanding any bankruptcy or other insolvency proceeding by or against
Obligor or any other Obligor and shall apply with full force and effect to
any indebtedness arising pursuant to debtor-in-possession financing
arrangements or pursuant to financing arrangements entered into in connection
with the confirmation of a plan of reorganization under Chapter 11 of the
Bankruptcy Code.
14. NOTICES. All notices hereunder shall be effective upon receipt, shall be
in writing, and shall be sent by U.S. mail, Federal Express overnight courier
(or the equivalent), hand delivery by a reputable and reliable professional
courier service, mailgram, telefacsimile, telegram, or telex as follows:
If to Foothill: FOOTHILL CAPITAL CORPORATION
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
with a copy to: XXXXXXX, PHLEGER & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
If to Creditor: SENORAL, INC.
0000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
10
with a copy to: SNIPPER, XXXXXX & MARKOFF
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Esq.
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given
to the other. The failure to send a copy of notice to the individuals who
are shown above as being required to receive copies shall not invalidate or
otherwise affect the validity of a notice that is otherwise effectively
given. All notices or demands sent in accordance with this section shall be
deemed received on the earlier of the date of actual receipt or five (5)
Business Days after the deposit thereof in the mail.
15. NO BENEFIT TO THIRD PARTIES. The terms and provisions of this Agreement
shall be for the sole benefit of Foothill and Creditor and their respective
successors and assigns, and no other person (including Obligor), firm,
entity, or corporation shall have any right, benefit, priority, or interest
under, or because of this Agreement.
16. GOVERNING LAW. This Agreement and all matters related hereto shall be
governed as to validity, interpretation, enforcement, and effect by the laws
of the State of California.
17. FURTHER ASSURANCES. The parties hereto agree to execute and deliver such
other documents and to take such action as reasonably may be required to
carry out the purposes and intent of this Agreement, including the execution
of releases and termination statements.
18. ATTORNEYS FEES. If any legal action or proceeding is brought by any
party hereto to enforce or construe a provision of this Agreement, each party
in such action or proceeding, irrespective of whether such action or
proceeding is settled or prosecuted to final judgment, shall pay its own
attorneys fees and costs.
19. MODIFICATIONS IN WRITING. No amendment, modification, supplement,
termination, consent, or waiver of or to any provision of this Agreement nor
any consent to any departure herefrom shall in any event be effective unless
the same shall be in writing and signed by or on behalf of the Claimants.
Any waiver of any provision of this Agreement, or any consent to any
departure from the terms of any provisions of this Agreement, shall be
effective only in the specific instance and for the specific purpose for
which given.
20. WAIVERS; FAILURE OR DELAY. No failure or delay on the part of either
Claimant in the exercise of any power, right, remedy, or privilege under this
Agreement shall impair such power, right, remedy, or privilege or shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such power, right, or privilege preclude any other or further exercise of any
other power, right, or privilege. The waiver of any such right,
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power, remedy, or privilege with respect to particular facts and
circumstances shall not be deemed to be a waiver with respect to other facts
and circumstances.
21. HEADINGS. Section headings used in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement for any
purpose or affect the construction of this Agreement.
22. SEVERABILITY OF PROVISIONS. Any provision of this Agreement which is
illegal, invalid, prohibited, or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such illegality,
invalidity, prohibition, or unenforceability without invalidating or
impairing the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
23. COMPLETE AND INTEGRATED AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and is intended as a
complete and integrated statement of the terms and conditions of their
agreement. This Agreement shall not be modified except in a writing signed
by the party to be charged, and may not be modified by conduct or oral
agreements.
24. SUCCESSORS AND ASSIGNS. This Agreement is binding upon and inures to the
benefit of the successors and assigns of each Claimant. Each Claimant agrees
to maintain a copy of this Agreement together with its copies of the Credit
Documents relating to its Claims. Each Claimant expressly reserves its right
to transfer or assign its Claims, in whole or in part, together with its
rights hereunder, provided that, prior to transferring or assigning any
interest in its Claims to any person or entity, each Claimant shall disclose
to such person or entity the existence and contents of this Agreement, shall
provide to such person or entity a complete and legible copy hereof, and
shall advise such person or entity that such Claimant's interests in the
Collateral is subject to the terms hereof. In the event that the Claims of
either Claimant are refinanced with a creditor other than that Claimant, the
other Claimant agrees, upon request of such refinancing creditor, to execute
and deliver to such refinancing creditor an intercreditor agreement
containing the same or substantially the same terms and conditions as are set
forth in this Agreement.
25. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
admissible into evidence, and all of which together shall be deemed to be a
single instrument. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of a manually
executed counterpart of this Agreement. Any party delivering an executed
counterpart of this Agreement by telefacsimile shall also deliver a manually
executed counterpart of this Agreement but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement.
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IN WITNESS WHEREOF, Creditor and Foothill have executed this Agreement
as of the day and year first above written.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By:_________________________________
Title:_______________________________
SENORAL, INC.,
a California Corporation
By:_________________________________
Title:_______________________________
By executing this acknowledgment, consent, and agreement to be bound, each
undersigned Obligor acknowledges and consents to the foregoing agreement and
agrees to be bound by the provisions thereof. Each undersigned Obligor
further agrees that the terms of the foregoing agreement shall not give such
Obligor any substantive rights vis-a-vis Creditor or Foothill. If Creditor,
on the one hand, or Foothill, on the other hand, shall enforce its rights or
remedies in violation of the terms of the foregoing agreement, such Obligor
shall not have the right to assert such violation as a defense against
Creditor or Foothill, as applicable, or assert such violation as a
counterclaim or basis for set-off or recoupment.
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.,
a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
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OSP PUBLISHING, INC.,
a Delaware corporation
By
-------------------------------------
Title:
---------------------------------
BEx CORP.,
a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
XXXXX XXXXXX STUDIOS, INC.,
a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
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EXHIBIT B
OBLIGOR'S PROJECTIONS
[See Attached.]
15
EXHIBIT C
OBLIGOR'S OTHER LOCATIONS WHERE COLLATERAL IS LOCATED
No locations other than corporate offices/warehouse at 0000 Xxxxxxxxx Xxxx,
Xxxx, XX 00000.
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