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EXHIBIT 10.1
WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT
This Waiver and Second Amendment to Credit Agreement, dated as of
August 14, 1995 (the "Agreement") is among Stuart Entertainment, Inc., a
Delaware corporation (the "U.S. Company"), Bingo Press & Specialty Limited
(formerly known as 1089350 Ontario Inc.), an Ontario corporation (the "Canadian
Company"), Bank of America National Trust and Savings Association, as U.S.
Agent, Bank of America Illinois, as U.S. Lender, and Bank of America Canada, as
Canadian Agent and Canadian Lender.
W I T N E S S E T H:
WHEREAS, the U.S. Company, the Canadian Company, the U.S. Agent, the
U.S. Lender, the Canadian Agent and the Canadian Lender are parties to that
certain Credit Agreement dated as of December 13, 1994 (as amended, the "Credit
Agreement") and to certain other documents executed in connection with the
Credit Agreement;
WHEREAS, the U.S. Company and the Canadian Company have requested
certain waivers and amendments and the U.S. Lender and Canadian Lender have
agreed to such waivers and amendments as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein shall have the meanings given to such terms in the Credit Agreement.
2. WAIVER. Subject to the conditions to effectiveness set forth
in Section 4 below, the Lenders hereby waive any Event of Default arising under
Section 8.01(c) solely as a result of (a) a breach of Section 7.14 of the
Credit Agreement as of March 31, 1995 and (b) a breach of Section 7.17 of the
Credit Agreement for the period ending on March 31, 1995. The foregoing waiver
shall not constitute a waiver of any other Event of Default now or hereafter
existing, including any Event of Default arising under Section 8.01(c) as a
result of a (i) breach of Section 7.14 for any date after March 31, 1995 or
(ii) a breach of Section 7.17 for any period ending after March 31, 1995.
3. AMENDMENT TO THE CREDIT AGREEMENT. Subject to the conditions
to effectiveness set forth in Section 4 below:
(a) A new defined term "Adjusted EBITDA Losses" is hereby
added to Section 1.01 of the Credit Agreement immediately prior to the
defined term "Adjusted Restructuring Costs" as follows:
"Adjusted EBITDA Losses" means (i) losses of up to One Million
Six Hundred Thousand U.S. Dollars (U.S. $1,600,000) incurred by the
U.S. Company, on a consolidated basis, during fiscal year 1995 (and
affecting fiscal year 1995 consolidated
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earnings of the U.S. Company) as a result of the operations of the
Companies in the United Kingdom and (ii) losses of up to Four Hundred
Eighty-Nine Thousand U.S. Dollars (U.S. $489,000) incurred by the U.S.
Company, on a consolidated basis, during fiscal year 1994 (and
affecting fiscal year 1995 consolidated earnings of the U.S. Company)
as a result of purchase accounting on the finished goods inventory of
the Canadian Company at the date of the acquisition by the U.S.
Company of the Canadian Company.
(b) The pricing grid and the first sentence following the
pricing grid in the definition of "Applicable Margin" set forth in
Section 1.01 of the Credit Agreement are amended and restated in their
entirety as follows:
Applicable
Margin for
Applicable Base Rate/ Applicable Applicable Applicable
Margin for Canadian Margin for Margin for Margin for
Leverage Offshore Base Rate BA Rate Letter of Non-Use
Ratio Rate Loans Loans Loans Credit Fee Fee
----- ---------- ----- ----- ---------- ---
Less than or 1.000% 0% 1.000% 1.000% .250%
equal to
1.50:1.0
Greater than 1.500 .250 1.500 1.500 .250
1.50:1.0 but
less than or
equal to
2.00:1.0
Greater than 1.750 .500 1.750 1.750 .375
2.00:1.0 but
less than or
equal to
2.75:1.0
Greater than 2.000 .750 2.000 2.000 .375
2.75:1.0 but
less than or
equal to
3.25:1.0
Greater than 2.500 1.250 2.500 2.500 .500
3.25:1.0
The initial Applicable Margin for Offshore Rate Loans shall be 2.50%,
the initial Applicable Margin for Base Rate Loans and Canadian Base Rate Loans
shall be 1.25%, the initial Applicable Margin for BA Rate Loans shall be 2.50%,
the initial Applicable Margin for the Letter of Credit fee shall be 2.50% and
the initial Applicable Margin for the non- use fee
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shall be 0.50%, and each initial Applicable Margin shall remain in effect until
the delivery of a Compliance Certificate with respect to the fiscal year ending
December 31, 1995.
(c) The definition of "Fixed Charge Ratio" set forth in
Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
"Fixed Charge Ratio" means, for any period the ratio of (a) the
difference of (i) EBITDA for such period, less (ii) the consolidated
Capital Expenditures of the U.S. Company for such period; to (b) the
sum of (i) Consolidated Net Interest Expense for such period, plus
(ii) taxes paid in cash by the U.S. Company and its Subsidiaries
during such period, plus (iii) scheduled principal payments of the
consolidated Indebtedness of the U.S. Company during such period
(including principal payments made to Stuart by the U.S. Company under
the Stock Purchase Agreement); provided, that for any period ending in
fiscal year 1995, Fixed Charge Ratio means, for any such period, the
ratio of (a) the sum of (i) EBITDA for such period, plus, (ii)
Adjusted EBITDA Losses for such period, less (iii) the consolidated
Capital Expenditures of the U.S. Company for such period; to (b) the
sum of (i) Consolidated Net Interest Expense for such period, plus
(ii) taxes paid in cash by the U.S. Company and its Subsidiaries
during such period, plus (iii) principal payments of the U.S. Company
under the Term Note from U.S. Company to U.S. Lenders scheduled to be
paid during such period, plus (iv) principal payments of the Canadian
Company under the Term Note from the Canadian Company to Canadian
Lenders scheduled to be paid during such period, plus (v) principal
payments made to Stuart by the U.S. Company under the Stock Purchase
Agreement; provided further, that for any period ending in fiscal year
1996, Fixed Charge Ratio means, for any such period, the ratio of (a)
the difference of (i) EBITDA for such period, less (ii) the
consolidated Capital Expenditures of the U.S. Company during such
period; to (b) the sum of (i) Consolidated Net Interest Expense for
such period, plus (ii) taxes paid in cash by the U.S. Company and its
Subsidiaries during such period, plus (iii) principal payments of the
U.S. Company under the Term Note from U.S. Company to U.S. Lenders
scheduled to be paid during such period, plus (iv) principal payments
of the Canadian Company under the Term Note from the Canadian Company
to Canadian Lenders scheduled to be paid during such period, plus (v)
fifty percent (50%) of scheduled principal payments of the
consolidated Indebtedness of the U.S. Company during such period
(excluding principal payments made to Stuart by the U.S. Company under
the Stock Purchase Agreement and payments scheduled to be made under
the Term Notes), plus (vi) principal payments made to Stuart by the
U.S. Company under the Stock Purchase Agreement.
(d) The definition of "Interest Coverage Ratio" set forth
in Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
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"Interest Coverage Ratio" means, for any period, the ratio of (a)
EBITDA for such period; to (b) Consolidated Net Interest Expense for
such period; provided, that for any period ending in fiscal year 1995,
Interest Coverage Ratio means, for any such period, the ratio of (a)
the sum of (i) EBITDA for such period, plus (ii) Adjusted EBITDA
Losses for such period; to (b) Consolidated Net Interest Expense for
such period.
(e) The definition of "Leverage Ratio" set forth in
Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
"Leverage Ratio" means, for any 12-month period, the ratio of (a)
total consolidated Indebtedness of the U.S. Company outstanding on the
last day of such period (excluding the Indebtedness described in
clause (c) of the definition of "Indebtedness," to the extent of the
undrawn face amount of letters of credit, clause (g) of the definition
of "Indebtedness," clause (h) of the definition of "Indebtedness," to
the extent it applies to Indebtedness of another Person and clause (i)
of the definition of "Indebtedness," to the extent it applies to
Contingent Obligations permitted under Section 7.08(e) but only with
respect to those obligations in connection with the leasing and
similar arrangements described in Section 7.08(e) that are no more
than 30 days past due); to (b) the EBITDA for such period; provided,
that for the twelve month periods ending on June 30, 1995, September
30, 1995, and December 31, 1995, Leverage Ratio means the ratio of (a)
total consolidated Indebtedness of the U.S. Company outstanding on
the last day of such period (excluding the Indebtedness described in
clause (c) of the definition of "Indebtedness," to the extent of the
undrawn face amount of letters of credit, clause (g) of the definition
of "Indebtedness," clause (h) of the definition of "Indebtedness," to
the extent it applies to Indebtedness of another Person and clause (i)
of the definition of "Indebtedness," to the extent it applies to
Contingent Obligations permitted under Section 7.08(e) but only with
respect to those obligations in connection with the leasing and
similar arrangements described in Section 7.08(e) that are no more
than 30 days past due); to (b) EBITDA plus Adjusted EBITDA Losses for
the period from January 1, 1995 through the last day of such period,
multiplied by the "Multiple" (as defined below). For purposes hereof,
"Multiple" means, with respect to the Leverage Ratio for the period
ending June 30, 1995, 2.0, with respect to the Leverage Ratio for the
period ending September 30, 1995, 1.33, and with respect to the
Leverage Ratio for the period ending December 31, 1995, 1.0.
(f) Clause (c) of Section 7.11 of the Credit Agreement is
amended and restated in its entirety as follows:
"(c) Capital Leases; provided, that the aggregate
principal amount of consolidated Capital Lease Obligations of the U.S.
Company and its Subsidiaries outstanding shall not exceed (i) Ten
Million U.S. Dollars (U.S. $10,000,000) at
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any time during the fiscal years ending December 31, 1995 and December
31, 1996 and (ii) Twelve Million U.S. Dollars (U.S. $12,000,000)
during any fiscal year of U.S. Company ending after December 31,
1996."
(g) Section 7.13 of the Credit Agreement is amended and
restated in its entirety as follows:
"7.13 CAPITAL EXPENDITURES. The U.S. Company and its
consolidated Subsidiaries shall not make Capital Expenditures during
any period set forth below, or commit to make Capital Expenditures
during any such period, in an amount exceeding the amount set forth
below with respect to such period; provided, that to the extent that
the amount set forth below for any period exceeds the Capital
Expenditures of the U.S. Company and its consolidated Subsidiaries for
such period, the U.S. Company and its consolidated Subsidiaries may
make, or commit to make, Capital Expenditures in the following period
set forth below in an amount equal to the sum of the amount set forth
below for such following period and the lesser of (A) the amount of
such excess and (B) Two Million U.S. Dollars (U.S. $2,000,000):
Period Amount
------ ------
From January 1, 1995 through December 31, 1995 U.S. $4,500,000
For the fiscal year ending December 31, 1996 and for each
fiscal year thereafter U.S. $5,000,000
(h) Section 7.14 of the Credit Agreement is amended and
restated in its entirety as follows:
"7.14 NET WORTH. Net Worth at any time during any period set
forth below shall not be less than the applicable minimum amount set
forth below opposite such period:
Minimum Net
Period Worth
------ -----
From January 1, 1995 through December 30, 1996 U.S. $30,000,000
From December 31, 1996 through December 30, 1997 U.S. $33,000,000
From December 31, 1997 through December 30, 1998 U.S. $37,000,000
From December 31, 1998 through December 30, 1999 U.S. $40,000,000
From December 31, 1999 and at all times thereafter U.S. $45,000,000
(i) Section 7.15 of the Credit Agreement is amended and
restated in its entirety as follows:
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"7.15 LEVERAGE RATIO. The Leverage Ratio, as determined for
any 12-month period ending on a date set forth below, shall not exceed
the ratio set forth below opposite such date:
Maximum Leverage
Period Ratio
------ -----
June 30, 1995, September 30, 1995, December 31, 1995 and March
31, 1996 3.75
June 30, 1996 and September 30, 1996 3.50
December 31, 1996, March 31, 1997, June 30, 1997 and September
31, 1997 3.25
December 31, 1997, March 31, 1998, June 30, 1998 and September
30, 1998 3.00
December 31, 1998 and the last day of each fiscal quarter
thereafter 2.75"
(j) Section 7.16 of the Credit Agreement is amended and
restated as follows:
"7.16 FIXED CHARGE RATIO. The Fixed Charge Ratio for any
period set forth below shall not be less than the ratio set forth
below opposite such period:
Minimum Fixed
Date Charge Coverage
---- ----------------
For the periods beginning on January 1, 1995 and ending on March
31, 1995, June 30, 1995 and September 30, 1995
1.00
For the twelve-month periods ending on December 31, 1995 and on
the last day of each fiscal quarter thereafter until and
including September 30, 1998 1.00
For the twelve-month periods ending on December 31, 1998, March
31, 1999, June 30, 1999 and September 30, 1999
1.10
For the twelve-month periods ending on December 31, 1999 and on
the last day of each fiscal quarter thereafter
1.15"
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(k) Section 7.17 of the Credit Agreement is amended and
restated in its entirety as follows:
"7.17 INTEREST COVERAGE RATIO. The Interest Coverage Ratio for any
period set forth below shall not be less than the ratio set forth
below opposite such period:
Minimum Interest
Date Coverage
---- --------
For the periods beginning on January 1, 1995 and ending on June
30, 1995 and September 30, 1995 2.25
For the twelve-month periods ending on December 31, 1995, March
31, 1996, June 30, 1996 and September 30, 1996 2.50
For the twelve-month periods ending on December 31, 1996, March
31, 1997, June 30, 1997 and September 30, 1997 2.75
For the twelve-month periods ending on December 31, 1997, March
31, 1998, June 30, 1998 and September 30, 1998
3.25
For the twelve-month periods ending on December 31, 1998 and on
the last day of each fiscal quarter thereafter 3.50"
(l) A new Section 7.23 is hereby added to the Credit
Agreement as follows:
"7.23 MINIMUM EBITDA. EBITDA for any period set forth below shall
not be less than the amount set forth below opposite such period:
Date Minimum
---- EBITDA
------
For the twelve-month period ending on December 31, 1995, March
31, 1996, June 30, 1996 and September 30, 1996 U.S. $11,000,000
For the twelve-month periods ending on December 31, 1996, March
31, 1997, June 30, 1997 and September 30, 1997 U.S. $13,000,000
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Minimum
Date EBITDA
---- ------
For the twelve-month periods ending on December 31, 1997, March
31, 1998, June 30, 1998 and September 30, 1998 U.S. $14,000,000
For the twelve-month periods ending on December 31, 1998, March
31, 1999, June 30, 1999 and September 30, 1999 U.S. $15,000,00
For the twelve-month periods ending on December 31, 1999 and on
the last day of each fiscal quarter thereafter U.S. $16,000,000"
(m) A new Section 7.24 is hereby added to the Credit
Agreement as follows:
"7.24 LIMITATION ON PURCHASE PRICE ADJUSTMENT PAYMENT UNDER
STOCK PURCHASE AGREEMENT. Such Company shall not, and shall not
suffer or permit any of its Subsidiaries to, make the purchase price
adjustment payment set forth in Section 3.4 of the Stock Purchase
Agreement (which payment, as of August 14, 1995, is in the maximum
principal amount of U.S. $711,000) unless prior to giving effect to
such payment (i) the Leverage Ratio set forth in the most recent
Compliance Certificate is less than 2.50 and (ii) the Aggregate
Revolving Commitment exceeds the aggregate amount of Revolving Loans
plus the aggregate face amount of all undrawn Letters of Credit (with
the amount of all Revolving Loans to the Canadian Company and Letters
of Credit issued for the account of the Canadian Company expressed in
U.S. Dollars at the Current Exchange Rate) by at least Five Million
U.S. Dollars (U.S. $5,000,000).
4. AMENDMENT FEE; CONDITIONS TO EFFECTIVENESS. The Companies
shall pay to U.S. Agent, for the sole account of BAI, an amendment fee of U.S.
$200,000 (which fee shall be fully earned as of the date hereof), U.S. $50,000
of which shall be payable on the date hereof and U.S. $150,000 of which shall
be payable on or before October 2, 1995. The waivers and amendments described
herein shall be effective retroactively as of June 30, 1995, upon (i) payment
by the Companies to U.S. Agent, for the sole account of BAI, of the U.S.
$50,000 portion of the amendment fee of U.S. $200,000, and (ii) delivery of
this fully executed Agreement to each Agent.
5. OTHER AGREEMENTS. The Companies agree to reimburse Chase
Manhattan Bank, N.A. and its Affiliates for all reasonable attorneys' fees up
to U.S. $7,500 incurred by them in connection with reviewing the Loan Documents
and obtaining an assignment of an interest in the Loans. The Companies agree
that the failure to pay any portion of the amendment fee described in Section 4
above when due shall constitute an Event of Default.
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6. NO WAIVER OF PAST DEFAULTS. Nothing contained herein shall be
deemed to constitute a waiver of any Event of Default that may heretofore or
hereafter occur or have occurred and be continuing, or to modify any provision
of the Credit Agreement except as expressly provided herein.
7. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter
into this Agreement, each Company represents and warrants to Lenders that the
execution, delivery and performance by such Company of this Agreement are
within its corporate powers, have been duly authorized by all necessary
corporate action (including, without limitation, shareholder approval), have
received all necessary governmental approval (if any shall be required), and do
not and will not contravene or conflict with any provision of law applicable to
such Company, the Organization Documents of such Company, or any order,
judgment or decree of any court or other agency of government or any
Contractual Obligation binding upon such Company; and the Credit Agreement as
amended as of the date hereof is the legal, valid and binding obligation of
such Company enforceable against such Company in accordance with its terms.
8. MISCELLANEOUS.
(a) Captions. Section captions used in this Agreement
are for convenience only, and shall not affect the construction of
this Agreement.
(b) Governing Law. This Agreement shall be a contract
made under and governed by the laws of the State of Illinois, without
regard to conflict of laws principles. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under such 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 Agreement.
(c) Counterparts. This Agreement 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.
(d) Successors and Assigns. This Agreement shall be
binding upon the Companies, Agents and Lenders and their respective
successors and assigns, and shall inure to the sole benefit of the
Companies, Agents and Lenders and the successors and assigns of the
Companies, Agents and Lenders.
(e) References. Any reference to the Credit Agreement
contained in any notice, request, certificate, or other document
executed concurrently with or after the execution and delivery of this
Agreement shall be deemed to include this Agreement unless the context
shall otherwise require.
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(f) Continued Effectiveness. Notwithstanding anything
contained herein, the terms of this Agreement are not intended to and
do not serve to effect a novation as to the Credit Agreement. The
parties hereby expressly do not intend to extinguish the Credit
Agreement. Instead, it is the express intention of the parties hereto
to reaffirm the indebtedness created under the Credit Agreement and
secured by the Collateral. The Credit Agreement is amended hereby and
each of the Loan Documents remain in full force and effect.
(g) Costs, Expenses and Taxes. Each Company affirms and
acknowledges that Section 10.04 of the Credit Agreement applies to
this Agreement and the transactions and agreements and documents
contemplated hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
STUART ENTERTAINMENT, INC.
By
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Title:
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BINGO PRESS & SPECIALTY LIMITED
By
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Title:
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as U.S. Agent
By
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Title:
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BANK OF AMERICA ILLINOIS, as U.S. Lender
By
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Title:
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BANK OF AMERICA CANADA, as Canadian
Agent
By
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Title:
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BANK OF AMERICA CANADA, as Canadian
Lender
By
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Title:
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