EXHIBIT 10.24
INTER-CREDITOR AGREEMENT, DATED JUNE 28, 1996,
BY AND BETWEEN THE COMPANY, LESLIE FRIEDLAND,
DANIEL LESNICK AND THE MOORE TRUST
INTER-CREDITOR AGREEMENT
THIS INTER-CREDITOR AGREEMENT ("Agreement") is made as of the 28th day of
July 1996, by and among The Howard and Helene Moore Living Trust dated June 28,
1991 ("Moore Trust"), Leslie Friedland ("Friedland"), Daniel Lesnick ("Lesnick")
and Janex Corporation, a New Jersey corporation ("Janex"), with reference to the
following facts:
A. The Moore Trust has entered into a Revolving Credit Agreement, dated
April 19, 1996, with Janex (formerly known as MJL Marketing, Inc.), under the
terms of which the Moore Trust is obligated to loan up to $900,000 to Janex,
during the term of the Revolving Loan Agreement.
B. Pursuant to the Revolving Credit Agreement, the Moore Trust has been
granted a security interest in all of the assets of Janex, subordinate to the
lien of Janex's primary bank lender.
C. Janex is obligated to pay the principal sum of $280,000 to Friedland,
pursuant to the terms of a $560,000 Promissory Note made by Janex in favor of
Friedland, dated October 6, 1993 (the "Friedland Note").
D. Janex is obligated to pay the principal sum of $220,000 (not all of
which is presently due) to Lesnick, pursuant to the terms of a $440,000
Promissory Note made by Janex in favor of Lesnick, dated October 6, 1993 (the
"Lesnick Note").
E. Friedland and Lesnick are willing to extend the due date on their
respective notes to February 1, 1998, provided that they are given security for
their notes.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises of the parties set forth below, the parties agree as follows:
1. Moore Security Interest. On April 19, 1996 the Moore Trust and Janex
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entered into a Security Agreement, in order to secure Janex's obligations under
the Revolving Credit Agreement. A copy of said Security Agreement is attached
hereto as Exhibit "A."
2. Friedland Security Interest. On October 6, 1993, Friedland and Janex
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entered into a Security Agreement, in order to secure the Friedland Note. A copy
of said Security Agreement is attached hereto as Exhibit "B."
3. Lesnick Security Interest. On October 6, 1993, Lesnick and Janex
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entered into a Security Agreement, in order to secure the Friedland Note, a copy
of said Security Agreement is attached hereto as Exhibit "C."
4. No Previous Perfection of Security Interest by Friedland and Lesnick.
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To the knowledge of Friedland and Lesnick, their security interest was not
perfected by the filing of a UCC-1 Financing Statement in any state.
5. Perfection of Security Interests. The Moore Trust has perfected its
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security interest by filing a UCC-1 Financing Statement in the State of
California on June 20, 1996. Friedland and Lesnick each intend to file a UCC-1
Financing Statement in the State of California, in order to perfect their
respective security interests.
6. Agreement Between Parties As to Priority. The Moore Trust, Friedland
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and Lesnick agree that as between them, their respective security interests in
and to the proceeds received from any recovery on the collateral securing their
various debt instruments, shall be apportioned in the same proportion as the
amount owed by Janex to each of them at the time the proceeds are distributed,
regardless of which security interest is foreclosed upon. For example, if the
Moore Trust is owed $900,000, Friedland is owed $280,000 and Lesnick is owed
$220,000, then the net proceeds of any foreclosure would be divided, 900/1400 to
the Moore Trust, 280/1400 to Friedland and 220/1400 to Lesnick.
7. Curing of Default. In the event of a default with respect to secured
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debt owed by the Company to Moore, Friedland or Lesnick, any one of such persons
is permitted to cure the default, with the amount paid being added to the
secured debt owed to the party or parties curing the default.
8. No Invalidity of Security Interest. In the event a security interest
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of a party is invalid for any reason, such invalidity shall not affect the
validity of any other party's security interest.
9. Subordination to Bank Lending. Notwithstanding anything contained in
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this Agreement, Friedland and Lesnick agree to subordinate each of their
security interests to that of Janex's primary bank lender ("Bank"), pertaining
to financing from the Bank not to exceed $1,000,000, on usual and customary
terms, and to execute and deliver, from time to time, such instruments or
documents as may be required to effectuate such subordination.
10. Payments on Secured Debt. If Janex decides to make a principal
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payment on any of the secured debt referred to herein, it shall divide the
payment between the Moore Trust, Friedland and Lesnick, in proportion to the
then outstanding principal balance owing on their respective secured debts. For
example, if Friedland is owed $400,000, Lesnick is owed $220,000 and the Moore
Trust is owed $500,000, a payment of $100,000 by Janex would be divided $35,714
to Friedland, $19,643 to Lesnick and $44,643 to the Moore Trust. However,
Friedland and Lesnick
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acknowledge that funds loaned to Janex by the Moore Trust are on a revolving
loan basis. Accordingly, to the extent that any principal payments are made to
Friedland and/or Lesnick prior to February 1, 1998, Friedland and Lesnick agree
to re-loan any such principal payments to Janex upon demand made prior to
February 1, 1998, with the amount of the funds so loaned by each of them to
Janex added back to the amount owing under their respective secured notes.
11. Arbitration. Any controversy or claim between the parties hereto
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involving the interpretation, breach or enforcement of any provision of this
Agreement, shall be settled by arbitration conducted in Los Angeles County,
California, in accordance with, and by an arbitrator appointed pursuant to, the
Rules of the American Arbitration Association then in effect, and judgment upon
the award rendered pursuant thereto may be entered in any court of competent
jurisdiction. The arbitration award shall be final and binding upon the parties
hereto, and all rights or remedies of the parties hereto to the contrary are
expressly waived. The arbitrator or arbitrators shall be empowered to grant any
provisional relief or equitable relief (including, without limitation, temporary
or permanent restraining orders or injunctions) provided for under the
California Code of Civil Procedure or otherwise under California law. Section
1283.05 of the California Code of Civil Procedure shall be applicable to any
arbitration. The costs of conducting the arbitration proceeding shall be borne
by the losing party or in such proportions as the arbitrator decides.
12. Agreement of Janex to Provide Information. Janex agrees upon demand
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from any party hereto, to provide a schedule of the amount owed to each such
party, that is secured by Exhibits A, B or C.
13. Miscellaneous.
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(a) Interpretation. The captions by which the Paragraphs of this
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Agreement are identified and the captions under which certain subject matter is
placed are for convenience only and shall have no effect upon the interpretation
of this Agreement. This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the parties causing
this Agreement to be drafted.
(b) No Assignment; Binding Effect. Neither this Agreement nor any
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interest herein may be assigned to any person without the prior written consent
of all other parties. Subject to the foregoing restriction on assignment, this
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
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(c) Severability. If any term, provision, covenant or restriction
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contained in this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants or restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(d) Governing Law. This Agreement shall be governed by and construed
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in accordance with the internal laws of the State of California.
(e) Attorney's Fees. If any party commences any suit or action,
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including but not limited to any arbitration, arising out of or connected with
this Agreement then the prevailing party(ies) shall recover his or its
reasonable attorneys' fees from the non-prevailing party(ies).
(f) Amendment. This Agreement may only be amended by a writing signed
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by the parties hereto.
(g) Counterparts. This Agreement may be signed in one or more
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counterparts each of which shall be deemed an original and all of which together
shall be one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement which shall be
effective as of the date first set forth above.
The Howard and Helene Moore
Living Trust dated June 28, 1991 JANEX CORPORATION
By: /s/ HOWARD MOORE By: /s/ SHELDON F. MORICK
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Howard Moore, Trustee Sheldon F. Morick,
Chief Executive
Officer
By:
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Trustee
/s/ LESLIE FRIEDLAND
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Leslie Friedland, individually
/s/ DANIEL LESNICK
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Daniel Lesnick, individually
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