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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
(PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934)
September 28, 1997
(Date of Report (Date of Earliest Event Reported))
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2741 95-4578632
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation or Code Number)
organization)
5548 Lindbergh Lane
Bell, California 90201-6410
(213) 980-4300
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
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ITEM 5. OTHER EVENTS
As a result of an immediate need for cash infusions, since August 1997,
Global One Distribution & Merchandising Inc. ("Global One") and its
subsidiaries (collectively, the "Company") entered into various transactions.
Effective August 1, 1997, the Company entered into a Stock Purchase and Loan
Agreement (the "Agreement") with Joseph C. Angard, the Company's former
Chairman of the Board and Chief Executive Officer and formerly a 35.7%
stockholder ("Angard"), and Miller, Johnson & Kuehn, Incorporated, the
Company's placement agent in connection with its private placement of common
stock, $.01 par value (the "Common Stock"), effected as of August 1996
("Miller Johnson"). The Agreement provides for, among other things: (i) the
immediate resignation of Angard from his offices with and as a director of
the Company and, upon consummation of the transactions contemplated by the
Agreement, the termination of Angard's employment agreement with the Company,
(ii) Miller Johnson acting as placement agent for the "best efforts" sale and
purchase of 2,000,000 shares of the Company's Common Stock owned by Angard
for $0.50 per share in a private placement (the "Private Placement"), (iii)
Angard's loan of $900,000 to the Company at an interest rate of prime plus 2%
secured by certain of the Company's receivables, (iv) Angard's surrender of
920,000 shares of Common Stock to the Company and (v) the Company's 10-year
option to purchase up to 970,000 shares of Common Stock held by Angard at a
purchase price of $1.00 per share.
As of September 3, 1997, Angard had sold 1,646,100 shares in the Private
Placement and loaned $780,000 to the Company. It is expected that, within the
next few weeks, Angard will sell an additional 353,900 shares and loan the
remaining net proceeds of $120,000 from the Private Placement. Following
consummation of the transaction, Angard will own 1,723,192 shares of Common
Stock (or 14.3% of the outstanding Common Stock) and options to purchase
199,998 and 100,002 shares at exercise prices of $1.65 and $1.50,
respectively.
Effective August 1, 1997, the Company entered into an agreement (the
"Forbearance Agreement") with its lender, Foothill Capital Corporation
("Foothill"), whereby Foothill agreed to not enforce certain of its remedies
available as a result of the Company's default under its line of credit until
October 1, 1997. In connection with the Forbearance Agreement, on August 28,
1997, Senoral, Inc., a creditor of the Company ("Senoral"), purchased
Foothill's rights under the line of credit for approximately $342,000.
Effective September 11, 1997, Senoral began advancing funds to the Company
under the line of credit. As of October 7, 1997, the amount outstanding under
the line of credit was approximately $1,728,197.
Senoral is controlled by Alan Saloner who owns 250,000 shares of Common Stock
(or 1.9% of the outstanding Common Stock).
On April 25, 1997, pursuant to a Secured Promissory Note (the "Note"), the
Company agreed to pay Golden State Graphics ("Golden State") $584,361.54 for
printing services from Golden
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State, together with interest of $20,864.73. The Note was payable in monthly
installments based on certain invoiced amounts, with payments between $15,000
and $25,000 per month. The Note bore interest at the rate of 10% per annum.
The loan was repaid in full on September 15, 1997, in part, with a portion of
the proceeds from Angard's loan to the Company.
Global One is in the process of finalizing a Loan and Security Agreement with
Safcor, Inc., a company affiliated with Alan Saloner, providing for a
six-month loan of $800,000 to Global One bearing interest at the rate of 3%
over prime and secured by the Company's accounts receivable. The loan
agreement is expected to be finalized and funds advanced thereunder in the
near future.
The Company is currently in default under the Senoral loan. As of October 7,
1997, the outstanding balance under the Senoral loan is approximately
$1,728,197 which is subject to, as to a portion of the collateral securing
the Senoral loan, the senior debt of approximately $736,629 which is owed to
Angard. Senoral is in the process of foreclosing against OSP's assets. A
notice of public sale of OSP's assets (scheduled for October 8, 1997) was
published on or about September 28, 1997. The book value of OSP's assets at
August 31, 1997 was as follows:
ASSETS AS OF AUGUST 31, 1997 OSP PUBLISHING
- ---------------------------- --------------
CURRENT ASSETS
Cash $ (608,700)
Accounts Receivable-trade 2,589,856
Inventories 1,027,064
Royalty Advances 477,088
Deferred Income Taxes 1,089,248
Prepaid and Other Current Assets 102,873
-----------
Total Current Assets 4,677,428
PROPERTY & EQUIPMENT (net) 885,122
INTERCOMPANY ACCOUNTS (2,097,038)
DEPOSITS 172,197
GOODWILL/OTHER ASSETS (net) 6,505
-----------
TOTAL ASSETS $ 3,644,215
-----------
-----------
Management believes that, in any transfer, certain of OSP's assets would not
receive full value or that certain assets are non-transferable or could not
in any event, be sold or transferred. To the extent satisfactory proceeds are
realized from the sale of OSP's assets, the Company will no longer be
indebted to Senoral. The Company contemplates that, following the
foreclosure, it will attempt to repurchase the inventory and furniture,
fixtures and equipment. If the Company is unable to repurchase such assets,
operations of the Company will be severely restricted, if not entirely
ceased. Management believes that, once relieved of OSP's indebtedness, it
will be more able to obtain bank financing. It is likely that certain
creditors of OSP may seek relief against Global One for OSP's indebtedness.
Management intends to strongly oppose any such claims.
While the Company has taken the steps described above to obtain financing to
enable it to continue operations, the Company's cash needs remain severe.
The Company has been unable to pay various creditors, and, since August 1,
1997, Global One and/or its subsidiaries have been served with a number of
lawsuits. As of September 30, 1997, the Company had claims aggregating
approximately $946,000 in unpaid invoices in addition to certain other
matters involving unspecified amounts. Management believes that most of the
indebtedness belongs to OSP.
In addition, Robert Yamasaki, the holder of the Company's $1.5 million
aggregate principle amount of subordinated debentures, has also filed a suit
against the Company and OSP alleging breach of contract and fraud and
requesting, among other things, acceleration of the debentures, an injunction
against Global One and OSP prohibiting the transfer of certain assets and
total relief of approximately $3.4 million. The Company plans to strongly
defend against the lawsuit and plans to assert a number of defenses,
including that certain of the debt has already been paid, the indebtedness is
the sole obligation of OSP and a contractual restriction upon Mr. Yamasaki's
bringing of the lawsuit.
In connection with the various transactions, the Company has undergone
several management changes. Effective August 1, 1997, George J. Vrabeck,
formerly the President and Chief Operating Officer of the Company, replaced
Mr. Angard as the Chairman of the Board and Chief Executive Officer. In
connection with Mr. Angard's resignation, Mr. Angard was retained
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as a consultant to the Company for 39 months commencing August 1, 1997 for
aggregate payment of $210,000 plus certain health benefits and Mr. Angard's
stock options described above were accelerated.
Effective September 3, 1997, George J. Vrabeck resigned as the Company's
Chief Executive Officer. Mr. Vrabeck was replaced by Douglass E. Coy, a
crisis manager for the Company since May 1997. It is anticipated that Mr.
Coy will serve as the CEO on an interim basis only. Coy & Associates Inc.
("CAI"), of which Mr. Coy is the principal, has a month-to-month engagement
agreement with the Company pursuant to which CAI is paid $20,000 per month
and receives options to purchase 50,000 shares of Common Stock at $.50 per
share per month (not to exceed 12 months). Mr. Vrabeck continues to be a
member of the Company's Board of Directors. The terms of Mr. Vrabeck's
severance, if any, have not yet been finalized.
In addition, effective September 3, 1997, Mr. Righeimer, the Company's
Executive Vice President and CFO was elected to the Board of Directors and
resigned as the Company's Secretary, and Kevin Cvengros, the Company's
Corporate Controller, was elected as the new Secretary.
The Company continues to seek alternative sources of financing, including
lines of credit and investment capital. However, there can be no assurances
that the Company will be able to obtain such other financing. In the event
that the Company is unable to obtain financing in the near future, the
Company may be required to seek relief pursuant to a restructuring of the
Company.
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ITEM 7. EXHIBITS
Exhibit No. Description Page No.
2.1 Stock Purchase and Loan Agreement by and between
Joseph and Susan Angard, Miller, Johnson & Kuehn,
Inc. and Global One
2.2 Selling Agency Agreement among Joseph and Susan
Angard, Miller Johnson & Kuehn Incorporated and
Global One
2.3 First Amendment to Selling Agency Agreement among
Joseph and Susan Angard, Miller Johnson & Kuehn
Incorporated and Global One
2.4 Form of Subscription Agreement and Letter of
Investment Intent (including registration rights
provision)
2.5 Grant of Security Interest to Joseph and Susan
Angard
2.6 Forbearance Agreement among Foothill Capital
Corporation, Global One, OSP, BEx Corp. and Kelly
Russell Studios, Inc.
2.7 Purchase and Sale Agreement between Senoral, Inc.
and Foothill Capital Corporation
2.8 Letter Agreement between George Vrabeck and
Foothill Capital Corporation
2.9 Letter Agreement between William Righeimer and
Foothill Capital Corporation
2.10 Security Agreement dated April 25, 1997 between
Global One, OSP and Golden State Graphics
2.11 Secured Promissory Note dated April 25, 1997
in favor of Golden State Graphics
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SIGNATURES
Under the requirements of the Securities Exchange Act of 1934, Global One
Distribution & Merchandising Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: October 6, 1997
GLOBAL ONE DISTRIBUTION
& MERCHANDISING INC.
By: /s/ DOUGLASS E. COY
---------------------------------
Douglass E. Coy
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EXHIBIT 2.1
STOCK PURCHASE AND LOAN AGREEMENT
---------------------------------
This Agreement is made the 1st of August, 1997, between Joseph and Susan
Angard ("Angards" & "Seller"), Miller, Johnson & Kuehn, Inc. ("Miller Johnson" &
"Buyer"), and Global One Distribution & Merchandising Inc. ("Global One" &
"Borrower").
WHEREAS Angard wishes to sell certain shares of stock in Global One, to
return certain shares of Global One to Global One, and to discontinue active
participation in the affairs of Global One; and
WHEREAS Global One is in need of short-term financing; and
WHEREAS Miller Johnson wishes to act as agent to facilitate sales and
purchases of stock in Global One;
NOW, THEREFORE, it is hereby agreed:
1. PURCHASE OF STOCK. Miller Johnson will act as selling agent to sell,
on a best efforts basis, two million shares of common no par value
stock in Global One ("Stock") held by Angard at a purchase price of
fifty cents ($.50) per share pursuant to an Agency Agreement between the
parties. The transfer of such shares shall be made on the Date of
Closing. On the Date of Closing, Miller Johnson shall pay Angard One
Hundred Thousand Dollars ($100,000.00) in cash. The remaining Nine
Hundred Thousand Dollars ($900,000.00) shall paid to Angard by advancing
it to Global One or Global One's subsidiary, OSP Publishing ("OSP")
pursuant to the terms of Section 10, in satisfaction of Angard's
obligation to loan moneys under Section 8. Until advanced to Global
One or OSP under Section 10 (and therefor deemed paid by Miller Johnson
to Angard), such amounts shall be secured by the Stock.
2. RESIGNATION. Joseph Angard shall resign from Global One's Board of
Directors and his position as an officer and employee of Global One,
simultaneously with execution hereof.
3. TERMINATION OF EMPLOYMENT AGREEMENT. Joseph Angard's Employment
Agreement dated August 28, 1996 is terminated. Global One shall pay
Joseph Angard all salary accrued through the Closing Date under
Employment Agreement and all expenses previously incurred by Joseph
Angard on behalf of Global One on the Closing Date. Global One shall
pay Joseph Angard six weeks accrued vacation pay six months after the
date of Closing. Global One shall also fully cooperate with Angard
regarding his 401(K) investment plan.
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4. ANGARD RELEASE. Effective as of the Date of Closing, Angard hereby
releases, acquits and forever discharges Global One and Miller Johnson,
their affiliates, directors, officers, shareholders, employees, and
agents from any and all claims, liabilities, demands actions or causes
of actions of any kind, nature or description whatsoever whether arising
at law or in equity, or upon contract or tort, or under any state or
federal law or otherwise, which Angard may have had, may now have or
made claim to have, or may in the future have or claim to have,
howsoever arising or acquired, against the Global One and Miller Johnson
or their affiliates for or by reason of any act, omission, matter cause
or thing whatsoever arising from the beginning of time to and including
the date hereof, whether such claims, liabilities, demands, actions, or
causes of action are matured or unmatured, known or unknown, existing or
not existing, asserted or unasserted, presently haled or acquired in the
future, liquidated or unliquidated, or absolute or contingent.
In connection with the foregoing release, Angard hereby waives all
rights and benefits which may be afforded to them by or under
California Civil Code Section 1542, and further acknowledges that if
Angard hereafter discovers any facts different from or in addition to
those which Angard now knows or believes to be true with respect to any
of the claimed or other matters so released, then Angard's foregoing
release nonetheless shall be and remain effective in all respects.
Angard acknowledges that Section 1542 of the California Civil Code
provides as follows"
"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
the release, which if known by him, must have materially affected his
settlement with the debtor."
Angard represent and warrant that they have not assigned, transferred or
hypothecated or set over to any person or entity any interest in any
of the claims that are the subject if this release.
5. GLOBAL ONE AND MILLER JOHNSON RELEASE. Effective as of the Date of
Closing Global One and Miller Johnson release, acquit and forever
discharge Angard from any and all claims, liabilities, demands, actions
or causes of actions of any kind, nature or description whatsoever,
whether arising at law or in equity, or upon contract or tort, or under
any state or federal law or otherwise, which the Global One or Miller
Johnson, or their affiliates, and to the fullest extent permitted by
law, their respective officers, directors and shareholders, may have
had, may now have or made claim to have, or may in the future have or
claim to have, howsoever arising or acquired, against Angard for or by
reason of any act, omission, matter, cause or thing whatsoever arising
from the beginning of time to and including the date hereof, whether
such claims, liabilities, demands, actions or causes of action are
matured or unmatured, known or unknown, existing or not existing,
asserted or unasserted, presently held or acquired in the future,
liquidated or unliquidated, or absolute or contingent.
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In connection with the foregoing release Global One and Miller Johnson
hereby waive all rights and benefits which may be afforded them by or under
California Civil Code Section 1542, and further acknowledges that if Global
One and/or Miller Johnson hereafter discovers any facts different from or
in addition to those which Global One and/or Miller Johnson now know or
believe to be true with respect to any of the claims or other matters so
released, then Global One and Miller Johnson's foregoing release
nonetheless shall be and remain effective in all respects. Global One and
Miller Johnson acknowledges that Section 1542 of the California Civil Code
provide as follows:
"A general release does not extend to claims which the creditor does
not know suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
Global One and Miller Johnson represent and warrant that they have not
assigned, transferred or hypothecated or set over to any person or entity
any interest in any of the claims that are subject if this release.
6. INDEMNIFICATION. Global One hereby agrees to save, defend, indemnify
and hold harmless Angard against any and all claims, liabilities,
demands, losses, damages, actions and causes of action, including
expenses, costs and reasonable attorneys fees which Angard at any time
may sustain or incur in connection with carrying out his duties as an
officer, director, shareholder, employee, or consultant of Global One or
its affiliates, whether arising before or after the date of this
Agreement, and including without limitation against any debts or
obligations of Global One and that certain obligation of OSP to
Innotrend, Inc. that Angard has personally guaranteed. Angard will not
discuss this indemnification agreement to any creditor of Global One or
its affiliates.
7. RETIREMENT OF STOCK. Angard shall return to Global One 920,000 shares
of Stock to Global One, which stock shall be retired on the Date of
Closing.
8. LOAN AND ESCROW. Angard shall lend Nine Hundred Thousand Dollars
($900,000.00) to Global One or OSP at an interest rate of two percent
(2%) above the prime rate established by Bank of America per annum.
9. SECURITY INTEREST. Angard shall be granted a first priority security
interest in certain identified accounts receivable of the borrower
("Collateral"), which Collateral shall have a total face value of
$1,125,000, as such Collateral is created. Global One and OSP shall
provide such documentation of said security interest as shall be
required by Angard.
10. PAYMENT TO GLOBAL ONE. Global One and OSP shall receive from Miller
Johnson, on behalf of Angard, eighty percent (80%) of the face amount of
the Collateral of Global One and/or OSP, as such Collateral is
identified and pledged to Angard as required by
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Section 9. Such advances shall be deemed to be payments by Miller Johnson
to Angard to the provider of the Collateral under Section 8.
11. REPAYMENT. Repayment to Angard of its loan to Global One shall be made
from the proceeds of the Collateral as that are collected by Global One.
Repayment in full shall be made within 120 days of the date of this
Agreement. All accounts receivable which are Collateral for the loan
shall be received by Global One in trust for Angard and turned over to
Angard promptly.
12. CONSULTING AGREEMENT. Joseph Angard, or an entity controlled by Joseph
Angard, shall provided consulting services to Global One with respect to
the licensing of Global One's products, meeting with Global One
licensees as necessary, devoting a reasonable amount of time, up to 40
hours per month, for a period of three months from the date of this
Agreement.
13. For the services described in A above, Joseph Angard shall receive
payment of:
A. Ten Thousand Dollars ($10,000.00) per month for three months
following the date of this Agreement;
B. Five Thousand Dollars ($5,000.00) per month for thirty-six (36)
months commencing the fourth (4th) month following the date of
this agreement;
C. Reimbursement of Joseph Angard's reasonable expenses as defined
as deductible by the IRS code and within company policy incurred
in the performance of his consulting duties under this Agreement,
to be approved in advance by Global;
D. Angard shall receive health insurance coverage from Global One
for a period of from the date of this Agreement until thirty-nine
months following the date of this Agreement.
14. CONFIDENTIALITY. Angard recognizes that their positions with the
Global One and/or its affiliates are ones of the highest trust and
confidence by reason of Angard's access to and contact with trade
secrets and confidential and proprietary information of the Company.
Angard agrees to use his best efforts and exercise utmost diligence to
protect and safeguard the trade secrets and confidential and proprietary
information of the Company, including, but not limited to, any
information concerning the company's business, finances, investments,
performance, productions, works in progress or professional
relationships, and further agrees that they will not, during the
duration of this Agreement or thereafter, disclosure, disseminate or
distribute, any such trade secrets or confidential and proprietary
information of the Global One and/or its affiliates, directly or
indirectly, either for Angard's own benefit or the benefit of another,
except as is required in the
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course of Joseph Angard's consultations on behalf of Global One. The
foregoing shall not apply to information which becomes public other than
as a result of a prohibited act of Angard. All confidential information
relating to the business of the Company, whether prepared by Angard or
otherwise coming into their possession, shall remain the exclusive
property of Global One and shall not, except in the furtherance of the
business of the Company, be removed from the premises of the Global One
and/or its affiliates under any circumstances without the prior written
consent to of Global One. The obligations of Angard pursuant to this
paragraph shall survive a termination of the Angard's employment and
Consulting Agreement and this Agreement.
15. OWNERSHIP AND AUTHORITY OF WORK. Joseph Angard acknowledges and agrees
that Global One and/or its affiliates are and shall be the owner and
author throughout the universe of all right, title, and interest in and
to any and all creative work or materials upon which the Angard perform
services through the date of the termination of Joseph Angard's
employment agreement, hereunder (a "Work"), as the author of a work made
for hire and otherwise as the context hereof demands. All elements of
each Work prepared by Joseph Angard prior to the date of Joseph Angard's
termination of employment with Global One will at all times belong
solely and exclusively to Global One and/or its affiliates for use in
any manner or media now known or hereafter devised, throughout the
universe in perpetuity. Each Work shall include, but may not be limited
to, any and all materials, ideas, or other artistic, creative and
literary property created or developed by the Joseph Angard pursuant to
his services (whether alone or in conjunction with any other person), or
which the Angard may have disclosed to Global One during the term of
employment or consultation with Global One and/or its affiliates.
Global One shall have the exclusive right to copyright same in the name
of the Global One as an author of a Work made for hire and to exercise
throughout the universe all rights of the copyright proprietor
thereunder. To the extent that any Work is deemed not a work made for
hire, Joseph Angard hereby assigns to the Global One and all rights in
such Work, including but not limited to all copyrights therein and
thereto and all renewals and extensions throughout this universe and you
grant to the Global One a power of attorney, irrevocable and coupled
with an interest to apply for and obtain in your name all such
copyrights, renewals and extensions thereof. Global One may use and
authorize others to use Joseph Angard's likeness, and biographical
materials on a nonexclusive basis for program publicity, institutional
promotional purposes and any other exploitation of a Work through any
media now known or hereafter devised. For purposes of this Agreement,
each Work shall be deemed to be a work for hire pursuant to 17 U.S.C.
Section 101(2), and all authorship and ownership rights to each Work
shall belong to Global One pursuant to 17 U.S.C. Section 201(b).
16. COVENANT NOT TO COMPLETE. Joseph Angard agrees that, for a period of
one year, they shall not compete, either as a manufacturer, distributor,
sales agent, or in any other capacity, alone or with any entity, in
competition with the posters or matted prints of the type sold by Global
One and its affiliates. The geographical area subject to this provision
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shall be the United States of America, which is the current marketing
area served by Global One and/or its affiliates.
17. STOCK OPTIONS. Joseph Angard shall retain his stock options, which
shall be fully vested and exercisable for a period of 5 years from and
after the termination of Angard's employment agreement.
18. OPTION TO BUY STOCK. Global One shall have an option to require Angard
to sell up to Nine Hundred Seventy Thousand (970,000) shares of Stock at
a purchase price of One Dollar ($1.00) per share on or before, at any
time, each July 31 of the ten years following the date of this agreement
and shall forfeit such option for Ninety Seven Thousand (97,000) shares
each year that Global One does not exercise the option. The number of
shares subject to the option shall be adjusted downward proportionately
in the event of any reverse stock split of Global One's shares. The
option shall terminate in its entirety in the event that Global One
shall fail to timely perform its obligations under Sections 1 and/or
11, and does not do so within six months after written notice of such
failure from Angard.
19. CLOSING. The closing of this Agreement will be subject to the receipt
of all regulatory approvals, if any, and consents of Foothill Capital
and SAFCOR. Despite the foregoing, the Closing shall occur no later than
August 15, 1997, at the offices of Global One. If the closing does not
occur by such date because of the failure of Miller Johnson to perform
under this Agreement, Angard may revoke this Agreement.
20. PARAGRAPH HEADINGS. Paragraph and other headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
21. COUNTERPART EXECUTION. This Agreement may be executed in one or more
counterparts, each of which shall constitute but one and the same
instrument.
22. SEVERABILITY. Should any porion of this Agreement be determined to be
illegal or unenforceable, all other provisions nevertheless remain
effective.
23. INFORMATION TO SHAREHOLDERS. Miller Johnson agrees to inform all
shareholders of Global One with whom Miller Johnson has a relationship
or solicited for investment that this Agreement is intended to satisfy
all claims that Global One or its shareholders may have against Angard
and that Miller Johnson believe this settlement is a fair settlement of
such claims.
24. PRIOR UNDERSTANDING. This Agreement contains the entire agreement
between the to this agreement with respect to the subject matter hereof,
is intended as a final expression of such parties' agreement with
respect to such terms as are included in the Agreement, are
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intended as a complete and exclusive statement of the terms of such
Agreement, and supersedes all negotiations, stipulations,
understandings, agreements, representations and warranties, if any, with
respect to such subject matter, which precede or accompany the execution
of this Agreement.
25. ATTORNEYS AND ACCOUNTANT FEES. Miller Johnson and Global One shall pay
the reasonable attorneys fees and accounting fees and related costs
incurred by Angard in connection with the negotiation, execution and
performance of this Agreement up to the amount of $5,000.
26. FILES, FURNITURE AND ARTWORK. Angard shall have the right to retain all
furniture, equipment, files, art and other items in his office that are
his personal property as of the date of this Agreement, along with all
other items set forth in Exhibit A attached hereto.
Executed to be effective on August 1, 1997.
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
By: /s/ GEORGE VRABECK Date: August 1, 1997
----------------------------------- --------------------
George Vrabeck
Its President
MILLER, JOHNSON & KUEHN, INC.
By: /s/ DAVID B. JOHNSON Date: August 1, 1997
----------------------------------- --------------------
Its: Executive Vice President
SUSAN ANGARD
/s/ SUSAN ANGARD
- -----------------------------------
Individually
JOSEPH ANGARD
/s/ JOSEPH ANGARD
- -----------------------------------
Individually
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EXHIBIT A
JOSEPH ANGARD - PERSONAL ASSETS TO RETAIN
1. In Joe's Office
1- leather couch
4- matching leather chairs
1- metal credenza
1- side table
1- metal executive desk
1- cactus and metal pot
1- leafy green plant
1- framed Timothy Leary wall art
2- "angst" and "easy" wall art pieces
1- framed Knitting Cat wall art
1- tuba
1- Dragma and Hipesoj "Joseph Angard" framed wall art
1- framed Kim "Baseball player" wall art
1- framed Kim "Dancing pair" wall art
1- antique credenza
1- assorted personal photos and frames
1- vinyl Mickey Mouse executive chair
1- stereo system and speakers
2- iron and wood stools
1- executive Meridian phone
1- polycon speaker phone system
1- wood space ships wall art/saturn and dartboards
2. Mirapolsky- "Ideas Is Money" Wall Art (in executive hall)
3. Steel swedish gym on wall (in executive Hall)
4. 2- framed "Howdy doody" pieces of wall art (in executive hall)
5. 1- Indigo Edge black and white "Man In Top Hat"
6. 1- "James Brown Singing In Microphone" wall art
7. Mirapolsky - "Fear No Art" yellow and red
8. In Ricardo's office:
4 pieces of framed wall art including
2- "Galloping Stallions"
1- "Outdoor Corridor"
1- "Outdoor of Home/Blue Shudders"
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9. In Production Department: "Fear No Art" Mirapolsky - Blue and Pink and
"Tamara De Lempicha "Woman Driving Car"
10. In Chuck McGuys Office: "Fear No Art" in Salmon, Purple and Neon Green
11. Hawaiian white framed art - Jennifer Marx
12. French Bread Rack: 4 tier (In Chuck McGuys office)
4 glass shelves
13. 1- lateral file beige (in Speedway office)
14. 1- 4 drawer grey file cabinet
15. 1- white chair in lobby
16. 1- hanging mobile in lobby with Blue x's
17. 1- DC Comics John Dismukes Batman art in Production Dept.
18. 1- arm desk chair
19. 1- Pine Book case in Casey's Office
20. 1- Apple Macintosh Computer and Monitor, mouse and Modem and CD Rom (in art
department)
21. 1- Laser Printer, macintosh compatible (in art department)
22. 1-scanner
23. Currently Stationed in Lou Modica's old office - art department
2- vertical black shelves with 6 levels
1- black credenza and workstation computer desk and wing
1- executive office chair
24. Art Department
1- Macintosh Computer Power mac with at least 32 meg RAM, 1 gigabyte hard
drive
1- 17" monitor with additional VRAM to support thousands of colors -
compatible for macintosh
1- 28.8 speed modem
1- zip drive
1- CD drive
1- syquest drive
1- mac keyboard and mouse
1- software package - adobe photoshop 4.0
1- software package - adobe illustrator 6.0
1- software package Quark Express
1- software package Adobe Streamline
1- Hewlet Packard laser printer
1- scanner
1- font CD
1- norton utilities software package, suitcase 2.1.4
9
<PAGE>
EXHIBIT 2.2
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
SELLING AGENCY AGREEMENT
2,000,000 SHARES HELD BY JOSEPH AND SUSAN ANGARD
Miller Johnson & Kuehn Incorporated Minneapolis, Minnesota
5500 Wayzata Boulevard August 11, 1997
Suite 800 - 8th Floor
Minneapolis, MN 55416
Gentlemen:
The undersigned, Joseph and Susan Angard (the "Seller") and Global One
Distribution & Merchandising Inc., a Delaware corporation (the "Company") hereby
confirm their agreement with you (the "Selling Agent") as follows:
1. DESCRIPTION OF OFFERING.
The Seller proposes to offer and sell to private investors through
you, as its exclusive agent (the "Offering"), up to 2,000,000 shares of
the Company's Common Stock, no par value per share (the "Securities"), at
a price of $.52.5 per share.
2. APPOINTMENT OF AGENT.
On the basis of the warranties, representations and agreements of the
parties hereto, the Seller hereby appoints the Selling Agent, and the
Selling Agent hereby accepts such appointment, to act as the Seller's
exclusive agent in connection with the offer and sale of the Securities to
private investors, on a best efforts basis. The Selling Agent will use its
best efforts to sell the Securities, but there is no commitment by the
Selling Agent to purchase or sell all or any of the Securities. The
Selling Agent may utilize the services of sub-agents.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Selling Agent as follows:
(i) The Company has prepared a Disclosure Package consisting of
the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, a draft of the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1997 and a "Recent
Developments" description (all of which, together with any
supplements or amendments thereto is herein defined as the
"Disclosure Package") with respect to the Securities in
conformity with
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applicable requirements of the Securities Act of
1933, as amended (the "Act") and the rules and regulations
adopted under the Act (the "Rules and Regulations").
(ii) As of the commencement date of the Offering and until and as
of the date of any Closing (as hereinafter defined), the
Disclosure Package will (i) contain all material statements which
are required to be made therein in accordance with the Act and
the Rules and Regulations; (ii) in all material respects conform
to the applicable requirements of the Act and of the Rules and
Regulations; and (iii) not include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(iii) The financial statements (including all related schedules
and notes) set forth in the Disclosure Package fairly represent
the financial condition and results of operations of the Company
as of the dates and for the periods indicated; and such
statements will have been prepared in accordance with generally
accepted accounting principles consistently applied throughout
the periods indicated.
(iv) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and
conduct its business, as described in the Disclosure Package.
(v) The Company is duly qualified to do business as a foreign
corporation and is in good standing in all states or
jurisdictions in which the ownership or lease of its property or
the conduct of its business requires such qualification and the
failure to be so qualified would have a materially adverse effect
on the Company's business.
(vi) The Company has full legal power, right and authority to
enter into this Agreement. This Agreement has been duly
authorized, executed and delivered on behalf of the Company and
it is the valid and binding obligation of the Company subject,
as to enforcement, to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights
of creditors generally, to the exercise of judicial discretion
as to the availability of equitable remedies such as specific
performance and injunction and subject, as to enforcement of the
indemnification provisions, to limitations under applicable
securities laws.
(vii) Except as is set forth in the Disclosure Package, the
Company has all licenses, certificates, permits and other
approvals from governmental
2
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authorities necessary for the conduct of its business as it is
currently being carried on and as is described in the Disclosure
Package, except those which would not have a material adverse
effect or the Company if not obtained.
(viii) Since the respective dates as of which information is given
in the Disclosure Package and other than as herein or therein
contemplated (i) the Company has not incurred any material
liabilities or obligations, contingent or otherwise, not in the
ordinary course of business, (ii) the Company has not paid or
declared any dividend or other distribution with respect to its
outstanding capital stock, (iii) there has not been any change
in the capital stock or any material increase in the long-term
debt of the Company, or any issuance of shares of capital stock
of the Company or of options, warrants, or rights to purchase
capital stock of the Company, (iv) no material loss or damage
(whether or not insured) to the property of the Company has been
sustained, (v) no legal or governmental proceeding, domestic or
foreign, affecting the Company or the transactions contemplated
by this Agreement has been instituted or threatened, and (vi)
there has not been any material adverse change in the business,
condition (financial and other) or properties of the Company.
(ix) Neither the Seller nor the Company is in breach, default or
violation of, and the consummation of the transactions herein
contemplated will not result in any breach of, any of the terms
or conditions of, or constitute a default or violation under,
(i) with respect to the Company, the Certificate of Incorporation
or By-Laws of the Company, (ii) except as disclosed in the
Disclosure Package, any material indenture, agreement or other
instrument to which the Company or the Seller is now a party, or
(iii) any law or any order, rule or regulation applicable to the
Company or the Seller of any court or of any federal or state
regulatory body or administrative agency having jurisdiction
over the Company or the Seller or any of their property, except
such breaches, defaults or violations which would not have a
material adverse effect on the Company.
(x) No approval, authorization, consent or order of any
governmental or public board or body, other than in connection
with or in compliance with the provisions of the Act and the
securities laws of various jurisdictions, is legally required
for the sale of the Securities by the Company.
(xi) The Securities are validly issued, fully paid and
non-assessable.
(xii) Other than as contemplated by this Agreement, the Company
has not incurred any liability for any finder's or broker's fee
or agent's commission
3
<PAGE>
in connection with the execution and delivery of this Agreement
of the consummation of the transactions contemplated hereby.
The Seller represents and warrants to the Selling Agent as follows:
(xiii) The Seller has full legal power, right and capacity to
enter into this Agreement. This Agreement has been duly executed
and delivered on behalf of the Seller it is the valid and binding
obligation of the Seller subject, as to enforcement, to
applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the rights of creditors generally, to
the exercise of judicial discretion as to the availability of
equitable remedies such as specific performance and injunction
and subject, as to enforcement of the indemnification provisions,
to limitations under applicable securities laws.
(xiv) The Seller owns the Securities free and clear of any lien,
claim or encumbrance and purchasers of the Securities will
receive all right, title and interest in the Securities free
and clear of any lien, claim or encumbrance.
(xv) Other than as contemplated by this Agreement, the Seller
has not incurred any liability for any finder's or broker's fee
or agent's commission in connection with the execution and
delivery of this Agreement of the consummation of the
transactions contemplated hereby.
4. FURTHER AGREEMENTS OF THE COMPANY.
The Company covenants and agrees as follows:
(a) The Company will promptly deliver to the Selling Agent and its
counsel copies of the Disclosure Package and each amendment or
supplement thereto. The Selling Agent is authorized on behalf of
the Company and the Seller to use and distribute copies of the
Disclosure Package in connection with the sale of the Securities
as, and to the extent, permitted by Federal and applicable state
securities laws.
(b) Until the Closing (as defined herein), or earlier termination of
this Agreement, if any event relating to or affecting the Company, or
of which the Company shall be advised in writing by the Selling Agent,
shall occur as a result of which it is necessary, in the opinion of
counsel for the Company or the Selling Agent, to supplement or amend
the Disclosure Package in order to make the Disclosure Package not
misleading in light of the circumstances existing at the time it is
delivered to a purchaser of the Securities, the Company will promptly
prepare an amended or supplemented Disclosure Package (in form
satisfactory to counsel for the Selling Agent) so that the amended or
supplemented Disclosure Package will not
4
<PAGE>
contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances existing at the time the Disclosure
Package is delivered to such purchaser, not misleading.
(c) The Company shall pay, or cause to be paid, all expenses incident
to the performance of its obligations under this Agreement, including
all expenses incident to the delivery of the Securities; the fees and
expenses of counsel and accountants for the Company; and the cost of
all blue sky filings. At each Closing, the Company shall also pay
the actual hourly fees and expenses of counsel to the Selling Agent
in connection with this transaction and any previously billed fees of
counsel to Selling Agent. Such fees and expenses shall be deducted
from the net proceeds to be wired to Company pursuant to this
Agreement. The payment of such fees and expenses shall not be
conditioned upon the sale of any Securities.
(d) For a period of three years from the date hereof, the Company
will furnish to the Selling Agent (i) within 90 days after the end
of each fiscal year, a copy of the Company's audited financial
statements, together with a report thereon of its independent public
accountants, and (ii) within 45 days after the end of each of the
first three quarters of each fiscal year, quarterly financial
statements of the Company, such financial statements to consist of
a balance sheet as of the end of each such year or quarter, a
statement of income for such year or quarter and, if prepared by the
Company, a statement of changes in shareholders' equity and cash flow.
(e) The Company shall grant to purchasers of the Securities the
registration rights described on Exhibit A attached hereto.
5. OFFERING PERIOD.
Subject to applicable law, the Selling Agent shall commence the offer
and sale of the Securities to private investors on or as soon as is
reasonably practicable following the date hereof and, unless otherwise
terminated hereunder, shall continue to offer and sell the Securities to
private investors until the earlier of (i) the date on which all of the
Securities are sold, (ii) September 30, 1997, unless extended up to 30
additional days by mutual agreement of the Seller and Selling Agent; or
(iii) on such date as the Selling Agent terminates its obligations under
this Agreement as provided in Section 10 hereof. "Termination Date," as
used herein, shall refer to the date on which the offering is terminated
in accordance with the preceding sentence.
5
<PAGE>
6. DELIVERY; PAYMENT AND CLOSING.
(a) On or about August 30, 1997, a closing shall be held at the
offices of Leonard, Street and Deinard, Professional Association,
Minneapolis, Minnesota, unless some other time, date and place is
mutually agreed upon by the Company, the Seller and the Selling Agent
(the "Closing").
(b) All checks and other funds received in subscription for the
Securities shall be held by Selling Agent until the Closing of the
sale of such Securities. The parties acknowledge that at the Closing
$900,000 from the proceeds of the sale of the Securities (less any
fees or expenses payable by the Company hereunder) shall be wired to
the Company on behalf of the Seller to fund that certain loan
referred to in Section 7(a) hereof. Proceeds equal to $100,000
shall be wired to the Seller at the Closing.
7. CONDITIONS TO CLOSING.
The obligation of the Selling Agent to close the Offering shall be
conditioned upon the satisfaction of the following:
(a) The Seller shall have agreed to loan to the Company $900,000
pursuant to the terms of the Stock Purchase and Loan Agreement dated
as of August 1, 1997 by and between the Company, the Seller and MJK
(the "Loan Agreement") and the Company's promissory note dated of
even date herewith.
(b) The Seller shall have delivered 920,000 shares to the Company
for cancellation pursuant to the terms of the Loan Agreement.
(c) All other obligations of Seller and the Company under the Loan
Agreement and this Agreement shall have been performed.
(d) The receipt by the Selling Agent and the transfer agent of the
Company of a legal opinion of counsel to the Company, covering the
matters set forth on Exhibit B attached hereto.
(e) The receipt by Selling Agent of such other documents and
certificates as the Selling Agent may reasonably request.
8. SALES COMMISSIONS.
Except as otherwise provided herein, at each Closing, and conditioned
thereon, the Selling Agent shall receive from the Seller 4.77% ($.02.5 per
share) of the gross proceeds
6
<PAGE>
received from the sale of the Securities at such Closing as a commission
for acting as agent for the sale thereof. The commissions shall be payable
to or upon the order of the Selling Agent in immediately available
Minneapolis funds and shall be deducted from the proceeds wired to Seller
at the Closing.
9. INDEMNIFICATION.
The Company shall indemnify and hold harmless the Selling Agent, and
each person who controls (as such term is defined by Rule 405 under the
Act) the Selling Agent within the meaning of the Act, against any losses,
claims, damages or liabilities, joint and several, to which the Selling
Agent or such controlling persons may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Disclosure Package, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Selling Agent
and each such controlling person for any legal or other expenses reasonably
incurred by such Selling Agent or such controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action, as incurred. This indemnity agreement will be in addition to any
liability which the Company and the Seller may otherwise have.
10. TERMINATION.
The Selling Agent shall have the right to terminate its obligations
under this Agreement by giving the Company and the Seller notice as
hereinafter specified at any time on or prior to the Closing if the
Company or the Seller shall have failed, refused or been unable, at or
prior to the Closing, to perform any agreement on its part to be performed;
if there shall have been a breach of any warranty or representation
contained herein, or because any other conditions of the Selling Agent's
obligations set forth herein are not fulfilled. Subject to the provisions
of Section 4 hereof, any such termination shall be without liability of
any party to any other party.
11. REPRESENTATIONS AND AGREEMENTS TO SURVIVE.
The respective covenants, agreements, representations and warranties
of the Company, the Seller and the Selling Agent hereunder, as set forth
in, or made pursuant to this Agreement, shall remain in full force and
effect regardless of any investigation made by or on behalf of any such
party or any of its directors or officers or any controlling person, and
shall survive delivery of and payment for the Securities; and the
indemnification agreements contained in Section 9 shall also survive
any termination of this Agreement.
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<PAGE>
12. NOTICES.
Except as otherwise expressly provided in this Agreement or duly
noticed hereunder, all notices and other communications hereunder shall be
in writing and, if given to the Selling Agent, shall be mailed, delivered
or telegraphed and confirmed to Miller Johnson & Kuehn Incorporated, 5500
Wayzata Boulevard, Suite 800-8th Floor, Minneapolis, Minnesota 55416, with
a copy to its counsel, Leonard, Street and Deinard, 150 South Fifth Street,
Suite 2300, Minneapolis, Minnesota 55402, Attention: John C. Kuehn or, if
given to the Company, shall be mailed, delivered or telegraphed and
confirmed to Global One Distribution & Merchandising Inc., 5548 Lindbergh
Lane, Bell California 90201.
13. MISCELLANEOUS.
This Agreement shall inure to the benefit of and be binding upon the
successors of the Selling Agent, the Seller and of the Company. Nothing
expressed or mentioned in this Agreement is intended or shall be construed
to give any person or corporation, other than the parties hereto and
their successors, and the controlling persons and directors and officers
referred to in Section 9 hereof, any legal or equitable right, remedy or
claim under or in respect to this Agreement or any provision hereof. The
term "successors" shall not include any purchaser of the Securities merely
by reason of such purchase. No subrogee of a benefited party shall be
entitled to any benefits hereunder.
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<PAGE>
If the foregoing expresses our agreement with you, kindly confirm by signing
the acceptance on the enclosed counterpart hereof and return the same to us,
whereupon this letter and your acceptance shall become and constitute a binding
agreement between the Company and the Selling Agent in accordance with its
terms.
Very truly yours,
GLOBAL ONE DISTRIBUTION
& MERCHANDISING INC.
By: /s/GEORGE VRABECK
---------------------------------------
George Vrabeck, Chief Executive Officer
THE SELLER
/s/ JOSEPH ANGARD
----------------------------------------
Joseph Angard
/s/ SUSAN ANGARD
----------------------------------------
Susan Angard
The terms set forth in the foregoing Selling Agency Agreement between Global One
Distribution & Merchandising Inc., Joseph and Susan Angard and Miller Johnson &
Kuehn Incorporated are hereby accepted and confirmed.
MILLER JOHNSON & KUEHN INCORPORATED
By: /s/ DAVID B. JOHNSON
--------------------
David B. Johnson, Executive Vice President
9
<PAGE>
EXHIBIT A
MATTERS TO BE COVERED IN OPINION OF COUNSEL TO THE COMPANY
(1) The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Delaware; has the requisite corporate
power to own, lease and operate its properties and conduct its business as
described in the Disclosure Package.
(2) The Company has the corporate power to enter into the Selling Agency
Agreement, and the Selling Agency Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the Company
(3) The transfer and sale of the Shares pursuant to the Selling Agency
Agreement is exempt from the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended.
10
<PAGE>
EXHIBIT 2.3
FIRST AMENDMENT TO SELLING AGENCY AGREEMENT
BETWEEN
JOSEPH AND SUSAN ANGARD,
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
AND
MILLER, JOHNSON & KUEHN, INCORPORATED
The undersigned, Joseph and Susan Angard (the "Angards"), Global One
Distribution & Merchandising Inc. (the "Company") and Miller, Johnson & Kuehn,
Incorporated ("MJK") hereby acknowledge and agree that the Selling Agency
Agreement by and between them, dated August 11, 1997 (the "Agency Agreement") is
hereby amended as follows:
1. Section 6(b) of the Agency Agreement is hereby amended to provide for
a partial closing by adding the following sentence to the end of such
subsection.
"In the event that a partial Closing is held on less than all of the
Securities to be sold hereunder, the parties agree that the proceeds of any such
partial Closing shall be delivered by wiring one tenth of such proceeds to the
Seller and nine-tenths of such proceeds to the Company."
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
Selling Agency Agreement to be executed as of August 25, 1997.
GLOBAL ONE DISTRIBUTION &
MERCHANDISING INC.
By: /s/ GEORGE VRABECK
------------------------------------
Its: President
MILLER, JOHNSON & KUEHN,
INCORPORATED
By: /s/ DAVID B. JOHNSON
-------------------------------------
Its: Executive Vice President
/s/ JOSEPH ANGARD
-------------------------------------
Joseph Angard
<PAGE>
EXHIBIT 2.4
IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING
SIGNIFICANT REPRESENTATIONS ARE
CALLED FOR HEREIN
SUBSCRIPTION AGREEMENT
AND
LETTER OF INVESTMENT INTENT
Joseph and Susan Angard Miller, Johnson & Kuehn, Incorporated
Global One Distribution & Merchandising, 5500 Wayzata Boulevard, Suite 800
Inc. Minneapolis, MN 55416
5548 Lindbergh Lane
Bell, CA 90201
Gentlemen:
The undersigned investor ("Investor") hereby tenders this subscription
and applies for the purchase of ______________ shares of common stock, $.01
par value (the "Shares") of Global One Distribution & Merchandising Inc., a
Delaware corporation (the "Company") from Joseph and Susan Angard
(collectively, "Angard"). The subscription price for each Share is $.52.5.
The aggregate subscription price, in the amount of $__________, is delivered
herewith. By execution below, the undersigned acknowledges that the Company,
Angard and Miller, Johnson & Kuehn, Incorporated, as selling agent ("MJK")
are relying upon the accuracy and completeness of the representations
contained herein in complying with their obligations under applicable
securities laws.
1. The undersigned acknowledges and represents as follows:
(a) That the undersigned is a current shareholder of the Company
and has received, carefully reviewed and is familiar with the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996, its draft Quarterly Report on Form 10-Q for
its quarter ended June 30, 1997 and the information entitled
"Recent Developments" dated August 11, 1997;
(b) That the undersigned is in a financial position to hold the
Shares for an indefinite period of time and is able to
withstand a complete loss of its investment in the Shares;
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<PAGE>
(c) That the undersigned has substantial experience in evaluating
and investing in private placement transactions of securities
in companies similar to the Company, so that it is capable of
evaluating the merits and risks of its investment in the Company
and has the capacity to protect its own interests;
(d) That the undersigned is purchasing for its own account, for
investment, without a view to distribution;
(e) That the undersigned acknowledges that the undersigned is a
current shareholder of the Company and has made its own
investigation of the Company, its business, personnel and
prospects; has had an opportunity to discuss the Company's
business, management and financial affairs with directors,
officers and management of the Company;
(f) That the undersigned has such knowledge and experience in
financial and business matters that it is capable of evaluating
the merits and risks of the prospective investment in the Shares
and has the net worth to undertake such risks;
(g) That the undersigned believes that the investment in the Shares
is suitable for it based upon its investment objectives and
financial needs, and the undersigned has adequate means for
providing for its current financial needs and contingencies
and has no need for liquidity of investment with respect to
the Shares;
(h) That the undersigned recognizes that the Shares as an investment
involve a high degree of risk including, but not limited to,
the risk of economic losses from operations of the Company and
the total loss of its investment;
(i) That the undersigned realizes that (1) the Shares are being
purchased in a private sale, and that the shares are restricted
securities, (2) the purchaser of the Shares must bear the
economic risk of investment for an indefinite period of time
because the Shares have not been registered under the Securities
Act of 1933 (the "Act") and, therefore, cannot be sold unless
they are subsequently registered under the said Act or an
exemption from such registration is available and (3)
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<PAGE>
the transferability of the Shares is restricted and (A) requires
conformity with the restrictions contained in paragraph 2 below,
and (B) will be further restricted by a legend placed on the
certificate(s) representing the Shares stating that they have
not been registered under the Act and referencing the
restrictions on transferability; and
(j) That the undersigned is not relying on any representations,
warranties or information provided by MJK and the undersigned
acknowledges and understands that a commission will be paid
to MJK by the undersigned and by Angard in this transaction.
2. The undersigned has been advised that the Shares are not being
registered under the Act or relevant state securities laws but are being
offered and sold pursuant to exemptions from such laws and that reliance upon
such exemptions by Angard, the Company and MJK is predicated in part on the
undersigned's representations as contained herein. The undersigned
represents and warrants that the Shares are being purchased for its own
account and for investment and without the intention of reselling or
redistributing the same, that it has made no agreement with others regarding
any of such Shares and that its financial condition is such that it is not
likely that it will be necessary to dispose of any of the Shares in the
foreseeable future. The undersigned is aware that, in the view of the
Securities and Exchange Commission, a purchase of securities with an intent
to resell any of the same by reason of any foreseeable specific contingency
or anticipated change in market value, or any change in the condition of the
Company, or in connection with a contemplated liquidation or settlement of
any loan obtained for the acquisition of the securities and for which the
securities were pledged as security, would represent an intent inconsistent
with the representations set forth above. The undersigned further represents
and agrees that if, contrary to its foregoing intentions, it should later
desire to dispose of or transfer any of the Shares in any manner, it shall
not do so without first obtaining (1) the opinion of counsel reasonably
acceptable to the Company that such proposed disposition or transfer lawfully
may be made without the registration of such Securities pursuant to the Act,
as then amended, and applicable state securities laws, or (2) such
registration.
3. The undersigned represents and warrants that, if an individual, it is a
bona fide resident of, and is domiciled in, the State of ______________, and,
if an entity, that its executive offices are located in the State of
______________, and that the Shares are being purchased by it in its name
solely for its own beneficial interest and not as nominee for, or on behalf
of, or for the beneficial interest of, or with the intention to transfer to,
any other person, trust or organization.
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<PAGE>
The undersigned agrees to furnish any additional information which the
Company deems necessary in order to verify the answers set forth below.
4. The undersigned understands that the representations contained below are
made for the purpose of qualifying it as an "accredited investor" as that
term is defined in Regulation D of the General Rules and Regulations under
the Act and for the purpose of inducing a sale of securities to it. The
undersigned hereby represents that the statement or statements initialed
below are true and correct in all respects. The undersigned understands that
a false representation may constitute a violation of law, and that any person
who suffers damage as a result of a false representation may have a claim
against the undersigned for damages.
(a) Accredited INDIVIDUAL investors must initial one or both of the
following statements:
_____ (1) I certify that I am an accredited investor because I
had individual income (exclusive of any income
attributable to my spouse) of more than $200,000 in each
of the most recent two years or joint income with my
spouse of more than $300,000 in each of such years and I
reasonably expect to have such an income in excess of
such amounts for the current year.
_____ (2) I certify that I am an accredited investor because I
have an individual net worth, or my spouse and I have a
combined individual net worth, in excess of one million
dollars. For purposes of this Subscription Agreement
"individual net worth" means the excess of total assets
at fair market value, including home and personal
property, over total liabilities.
(b) Accredited PARTNERSHIPS, CORPORATIONS or OTHER ENTITIES must
initial one or more of the following statements:
_____ (1) The undersigned hereby certifies that all of the
beneficial equity owners of the undersigned qualify as
accredited individual investors under items 1 or 2 above.
(Investors attempting to qualify under this item must
complete the Certificate of Signatory to this
Subscription Agreement and Letter of Investment Intent
and each equity owner must complete a separate copy of
this Agreement and Letter);
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<PAGE>
_____ (2) The undersigned is a bank or savings and loan
association as defined in Sections 3(a)(2) and
3(a)(5)(A), respectively, of the Act acting either in its
individual or fiduciary capacity.
_____ (3) The undersigned is an insurance company as defined
in Section 2(13) of the Act.
_____ (4) The undersigned is an investment company registered
under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of
that Act.
_____ (5) The undersigned is a Small Business Investment
Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
_____ (6) The undersigned is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974 AND either (check one or more, as
applicable):
_____ (a) the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which
is either a bank, savings and loan association, insurance
company, or registered investment adviser; or
_____ (b) the employee benefit plan has total assets
in excess of $5,000,000; or
_____ (c) the plan is a self-directed plan with
investment decisions made solely by persons who are
"Accredited Investors" as defined under the Act.
_____ (7) The undersigned is a private business development
company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
_____ (8) The undersigned has total assets in excess of
$5,000,000, was not formed for the specific purpose of
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acquiring Shares AND is one or more of the following
(check one or more, as appropriate):
_____ (a) an organization described in Section 501(c)(3)
of the Internal Revenue Code; or
_____ (b) a corporation; or
_____ (c) a Massachusetts or similar business trust; or
_____ (d) a partnership.
_____ (9) The undersigned is a trust with total assets
exceeding $5,000,000, which was not formed for the
specific purpose of acquiring Shares and whose purchase
is directed by a person who has such knowledge and
experience in financial and business matters that he or
she is capable of evaluating the merits and risks of the
investment in the Shares.
5. The undersigned, if other than an individual, makes the following
additional representation:
(a) this Agreement has been duly authorized by all necessary action
on the part of the undersigned, has been duly executed by an
authorized officer or representative of the undersigned, and is a
legal, valid and binding obligation of the undersigned enforceable
in accordance with its terms.
6. REGISTRATION RIGHTS. The Company hereby grants the Investor the
registration rights covering the Shares set forth in Exhibit A attached hereto.
7. MANNER IN WHICH TITLE IS TO BE HELD. (check one)
(a) _____ Individual Ownership
(b) _____ Community Property
(c) _____ Joint Tenant with Right of Survivorship
(both parties must sign)
(d) _____ Partnership
(e) _____ Tenants in Common
(f) _____ Corporation
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(g) _____ Trust
(h) _____ Other
* * * * * * * *
Dated: ________________, 1997
INDIVIDUAL INVESTORS ENTITY INVESTORS
Name(s) Typed or Printed: Name Typed or Printed:
______________________________ ______________________________
Address to Which Correspondence Should
______________________________ be Directed
Signature (All record holders
should sign) ______________________________
______________________________
Address to Which Correspondence Should
be Directed City, State and Zip Code
______________________________ ______________________________
______________________________ Tax Identification or Social Security
Number:
City, State and Zip Code
______________________________
______________________________
Tax Identification or Social Security
Number:
______________________________
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GRANT OF REGISTRATION RIGHTS
The Company hereby grants the Investors registration rights with respect
to the Shares as are set forth in Exhibit A attached hereto.
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.
By____________________________________________
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CERTIFICATE OF SIGNATORY
(*To be completed if Shares are being subscribed
for by an entity)
I, ____________________________________, the _______________
__________________ of ___________________________________________ (the
"Entity"), hereby certify that I am empowered and duly authorized by the
Entity to execute and carry out the terms of the Subscription Agreement and
Letter of Investment Intent and to purchase the Shares, and certify further
that the Subscription Agreement and Letter of Investment Intent has been duly
and validly executed on behalf of the Entity and constitutes a legal and
binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ____ day of ______________,
1997.
___________________________________
Signature
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EXHIBIT A
GRANT OF REGISTRATION RIGHTS
1. DEMAND REGISTRATION.
On one occasion only, upon request by the holders of 50% or more of the
Shares, the Company will promptly take all necessary steps, at the option of
such holders, to register or qualify the sale of such Shares by the holders
thereof under the Securities Act of 1933 (and, upon the request of such
holders, under Rule 415 thereunder) and such state laws as such holders may
reasonably request; provided that such request must be made after December
31, 1997.
2. REGISTRATION - GENERAL PROVISIONS.
(a) Whenever the Company is required to effect the registration of
Shares under the Act, the Company will:
(i) Prepare and file with the Commission a registration
statement with respect to such securities, and use its best efforts
to cause such registration statement to become and remain effective
for three (3) years, until all Shares have been sold or all Shares
are eligible for resale under Rule 144 of the Act without any
restriction on the number of Shares which may be sold whichever is
shorter;
(ii) prepare and file with the Commission such amendments to
such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective for the period required by Section 2(a)(i)
above;
(iii) provide Investors' counsel with reasonable
opportunities to review and comment on, and otherwise participate
in, the preparation of such registration statement;
(iv) furnish to the Investors participating in such
registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as the Investors and underwriters may reasonably request
in order to facilitate the public offering of such securities;
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(v) use its best efforts to register or qualify the
securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as any such
Investor may reasonably request, except that the Company shall not
for any purpose be required to execute a general consent to service
of process (which shall not include a "Uniform Consent to Service
of Process" or other similar consent to service of process which
relates only to actions or proceedings arising out of or in
connection with the sale of securities, or out of a violation of
the laws of the jurisdiction requesting such consent) or to qualify
to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified;
(vi) notify the Investors, promptly after it shall receive
notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part
of such registration statement has been filed;
(vii) notify the Investors promptly of any request by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(viii) prepare and file with the Commission, promptly upon
the request of any Investor, any amendments or supplements to such
registration statement or prospectus which, in the opinion of
counsel for such Investor (and concurred in by counsel for the
Company), is required under the Act or the rules and regulations
thereunder in connection with the distribution of the Shares by
such Investor;
(ix) prepare and promptly file with the Commission and
promptly notify the Investors of the filing of such amendment or
supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time
when a prospectus relating to such securities is required to be
delivered under the Act, any event shall have occurred as the
result of which any such prospectus or any other prospectus as then
in effect would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made,
not misleading;
(x) advise the Investors, and the Investors' counsel, if any,
promptly after it shall receive notice or obtain knowledge thereof,
of the issuance of
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any stop order by the Commission suspending the effectiveness of
such registration statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued;
(xi) not file any amendment or supplement to such
registration statement or prospectus to which a majority in
interest of the Investors shall have reasonably objected on the
grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Act or the rules and
regulations thereunder, after having been furnished with a copy
thereof at least five business days prior to the filing thereof,
unless in the opinion of counsel for the Company the filing of such
amendment or supplement is reasonably necessary to protect the
Company from any liabilities under any applicable federal or state
law and such filing will not violate applicable law; and
(xii) at the request of any such Investor, furnish on the
effective date of the registration statement and, if such
registration includes an underwritten public offering, at the
closing provided for in the underwriting agreement: (i) opinions,
dated such respective dates, of the counsel representing the
Company for the purposes of such registration, addressed to the
underwriters, if any, and to the Investor or Investors making such
request, covering such matters as such underwriters may reasonably
request; and (ii) letters, dated such respective dates, from the
independent certified public accountants of the Company, addressed
to the underwriters, if any, and to the Investor or Investors
making such request, covering such matters as such underwriters may
reasonably request, in which letter such accountants shall state
(without limiting the generality of the foregoing) that they are
independent certified public accountants within the meaning of the
Act and that in the opinion of such accountants the financial
statements and other financial data of the Company included in the
registration statement or the prospectus or any amendment or
supplement thereto comply in all material respects with the
applicable accounting requirements of the Act.
(b) The Company shall pay all Registration Expenses (as defined below)
in connection with the inclusion of Shares in any Registration Statement, or
application to register or qualify Shares under state securities laws, filed
by the Company hereunder, other than as set forth herein. For purposes of
this Agreement, the term "Registration Expenses" means the filing fees
payable to the SEC, any state agency and the National Association of
Securities Dealers, Inc.; the fees and expenses of the Company's legal
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counsel and independent certified public accountants in connection with the
preparation and filing of the Registration Statement (and all amendments and
supplements thereto) with the SEC; and all expenses relating to the printing
of the Registration Statement, prospectuses and various agreements executed
in connection with the Registration Statement. Notwithstanding the
foregoing, the Investor will pay the fees and expenses of any legal counsel
Investor may engage, as well as the Investor's proportionate share of any
custodian fees or commission, discounts or expense allowances which may be
payable to any underwriter.
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EXHIBIT 2.5
August 18, 1997
Mr. Joseph Angard
Mrs. Susan Angard
122 Westwind Mall
Marina del Rey, CA 90292
RE: SECURITY INTEREST
Dear Mr. & Mrs. Angard:
Global One Distribution & Merchandising Inc., O.S.P. Publishing, Inc., BEx,
Corp. and Kelly Russell Sports, Inc. (collectively, the "Grantors"), hereby
grant to Susan and Joseph Angard (collectively, the "Angards"), a security
interest in all New Accounts and New Inventory (as such terms are defined in
that certain Intercreditor Agreement, dated as of August 1, 1997 between the
Angards and Foothill Capital Corporation) to secure all obligations of the
Grantors to the Angards with respect to the nine-hundred thousand dollar
($900,000.00) loan being made by the Angards to the Grantors.
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC. O.S.P. PUBLISHING, INC.
By: /s/ GEORGE VRABECK By: /s/ GEORGE VRABECK
---------------------- ------------------------
Its: President Its: President
---------------------- ------------------------
BEx, CORP. KELLY RUSSELL SPORTS, INC.
By: /s/ GEORGE VRABECK By: /s/ GEORGE VRABECK
---------------------- ------------------------
Its: President Its: President
---------------------- ------------------------
<PAGE>
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 KELLY
RUSSEL 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 5548 Lindbergh Lane,
Bell, California 90201-6410, 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
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(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.]
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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/ THOMAS SIGURDSON
------------------------------------
Title: Vice President
---------------------------------
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.,
a Delaware corporation
By: /s/ GEORGE VRABECK
-------------------------------------
Title: President
-----------------------------------
OSP PUBLISHING, INC.,
a Delaware corporation
By: /s/ GEORGE VRABECK
-------------------------------------
Title: President
-----------------------------------
BEx CORP.,
a Delaware corporation
By: /s/ GEORGE VRABECK
-------------------------------------
Title: President
-----------------------------------
KELLY RUSSEL STUDIOS, INC.,
a Delaware corporation
By: /s/ GEORGE VRABECK
-------------------------------------
Title: President
-----------------------------------
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EXHIBIT A
INTERCREDITOR AGREEMENT
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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
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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.
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"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.
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"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)
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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 Kelly Russel Studios, Inc., a Delaware corporation.
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"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,
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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.
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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
<PAGE>
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
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<PAGE>
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
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025
Attn: Business Finance Division Manager
with a copy to: BROBECK, PHLEGER & HARRISON LLP
550 South Hope Street
Los Angeles, California 90071
Attn: John Francis Hilson, Esq.
If to Creditor: SENORAL, INC.
8474 Commerce Avenue, Suite B
San Diego, California 92121
Attn: Alan Saloner
10
<PAGE>
with a copy to: SNIPPER, WAINER & MARKOFF
2029 Century Park East, Suite 1690
Los Angeles, California 90067
Attn: Maurice Wainer, 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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<PAGE>
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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<PAGE>
OSP PUBLISHING, INC.,
a Delaware corporation
By
-------------------------------------
Title:
---------------------------------
BEx CORP.,
a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
KELLY RUSSEL STUDIOS, INC.,
a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
14
<PAGE>
EXHIBIT B
OBLIGOR'S PROJECTIONS
[See Attached.]
15
<PAGE>
EXHIBIT C
OBLIGOR'S OTHER LOCATIONS WHERE COLLATERAL IS LOCATED
No locations other than corporate offices/warehouse at 5548 Lindbergh Lane,
Bell, CA 90201.
16
<PAGE>
EXHIBIT 2.7
- ------------------------------------------------------------------------------
PURCHASE AND SALE AGREEMENT
between
FOOTHILL CAPITAL CORPORATION
and
SENORAL, INC.
Dated as of
August 1, 1997
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; INTERPRETATION. . . . . . . . . . . . . . . . . . . 2
(a) Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. ASSIGNMENT AND ASSUMPTION. . . . . . . . . . . . . . . . . . . . 4
(a) Assignment and Assumption . . . . . . . . . . . . . . . . . . . . . 4
(b) Excluded Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. PAYMENT OF THE PURCHASE PRICE AND DELIVERY OF THE CREDIT
DOCUMENTS AND THE TRANSFER DOCUMENTS . . . . . . . . . . . . . 4
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 5
(a) Mutual Representations and Warranties Regarding This Agreement . . . . . 5
(b) Representations and Warranties of Seller. . . . . . . . . . . . . . 5
(c) Representations and Warranties of Buyer . . . . . . . . . . . . . . 6
(d) Survival of Representations And Warranties. . . . . . . . . . . . . 7
SECTION 5. COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Cooperation and Reasonable Efforts. . . . . . . . . . . . . . . . . 7
(b) Payments Received by Seller . . . . . . . . . . . . . . . . . . . . 7
(c) Buyer not to act in Seller's Name . . . . . . . . . . . . . . . . . 7
SECTION 6. ACKNOWLEDGMENTS OF BUYER . . . . . . . . . . . . . . . . . . . . 8
(a) Non-Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 7. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 8. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 9. NO WAIVER; CUMULATIVE REMEDIES . . . . . . . . . . . . . . . . . 9
SECTION 10. COSTS AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 11. NO THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . . . . . 9
SECTION 12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 10
i
<PAGE>
TABLE OF CONTENTS
(Continued)
PAGE
SECTION 13. ENTIRE AGREEMENT; AMENDMENT . . . . . . . . . . . . . . . . . . 10
(a) Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 14. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 15. SCHEDULES AND EXHIBITS. . . . . . . . . . . . . . . . . . . . . 10
SECTION 16. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 17. BUYER'S INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . 10
ii
<PAGE>
Schedules and Exhibits
Schedule 1 Credit Agreements, Other Credit Documents, and Specification
of Assigned Amounts
Schedule 2 Information Relating to Seller and Buyer
iii
<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of
August 1, 1997, is made between FOOTHILL CAPITAL CORPORATION, a California
corporation (herein, together with its successors, called "Seller"), and
SENORAL, INC., a California corporation (herein, together with its
successors, called "Buyer").
RECITALS
Seller is party to, as an original lender or as a successor or
assignee of a prior lender, or the holder of, those certain credit documents,
agreements, and notes more fully described in SCHEDULE 1 (such credit
documents, agreements, and notes, collectively and individually, the "Credit
Agreements") with Global One Distribution & Merchandising Inc., a Delaware
corporation ("Global"), OSP Publishing, Inc., a Delaware corporation ("OSP"),
BEx Corp., a Delaware corporation ("BEx"), and Kelly Russel Studios, Inc., a
Delaware corporation ("KR"). Global, OSP, BEx, and KR are referred to herein
collectively and individually, and jointly and severally, as "Borrower."
Seller is also a party to, or the holder or beneficiary of certain
security agreements, subordination agreements, guaranties, intercreditor
agreements, and other documents and agreements with or relating to Borrower
or various other parties more fully described in SCHEDULE 1 (such security
agreements, subordination agreements, guaranties, intercreditor agreements,
and other documents and agreements, collectively and individually, the "Other
Credit Documents").
Pursuant to the Credit Agreements, certain loans and other
extensions of credit have been made by Seller to, and other indebtedness to
Seller has arisen with respect to, the Borrower (the principal amount
thereof, the "Loans").
On the terms and conditions set forth below, Buyer desires to
acquire for its own account from Seller, and Seller desires to transfer to
Buyer, by assignment in accordance with the provisions of this Agreement,
without direct or indirect recourse to Seller in regard to the Loans,
Seller's interest in all of the aggregate outstanding principal amount of the
Loans and accrued and unpaid interest and fees with respect thereto and the
Credit Documents as provided below. Buyer shall assume as of the Closing
Date Seller's obligations under the Credit Agreements and the other Credit
Documents that arise or are due to be performed on or after the Closing Date.
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Accordingly, for valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
(a) CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"AGREEMENT" means this Purchase and Sale Agreement.
"ASSIGNED AMOUNT" has the meaning set forth in SECTION 2(a).
"ASSIGNMENT" means the assignment by Seller, without recourse, of
the Assigned Amount and the related acceptance and assumption by Buyer
effected as provided in this Agreement.
"BANKING DAY" means a day other than a Saturday or Sunday on which
commercial banks are open for business in Los Angeles, California.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as
amended and recodified from time to time.
"BORROWER" means Global, OSP, BEx, and KR, and each of them,
collectively and individually, and jointly and severally.
"BEx" has the meaning ascribed thereto in the recitals to this
Agreement.
"BUYER" has the meaning ascribed thereto in the recitals to this
Agreement.
"claim" has the meaning set forth in Section 101 of the Bankruptcy
Code.
"CLOSING" means the time on the Closing Date when the Assignment
transaction is consummated.
"CLOSING DATE" means October 1, 1997, or such other date upon which
the parties may mutually agree in writing.
"COLLATERAL" means all property described in the Credit Documents,
or any of them, as collateral or security for the Assigned Amount or any part
thereof, or for any guaranty thereof or secondary obligation with respect
thereto.
"CREDIT AGREEMENTS" has the meaning set forth in the Recitals.
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<PAGE>
"CREDIT DOCUMENTS" means the Credit Agreements together with the
Other Credit Documents, collectively and individually.
"DOLLARS" and the sign "$" each means lawful money of the United
States of America.
"GLOBAL" has the meaning ascribed thereto in the recitals to this
Agreement.
"KR" has the meaning ascribed thereto in the recitals to this
Agreement.
"LOANS" has the meaning set forth in the Recitals.
"OSP" has the meaning ascribed thereto in the recitals to this
Agreement.
"PERSON" means an individual, corporation, partnership, joint
venture, trust, unincorporated organization or any other entity of whatever
nature.
"REFERENCE RATE" means the variable rate of interest, per annum,
most recently publicly announced by Norwest Bank Minnesota, National
Association, or any successor thereto, as its "reference rate," "base rate,"
"prime rate," or the equivalent, irrespective of whether such publicly
announced rate is the best rate available from such financial institution.
Each change in the rate of interest shall become effective on the date each
Reference Rate change is publicly announced by such bank, or any successor
thereto.
"REPRESENTATIVE" means, as to any Person, such Person's affiliates
and its and their respective officers, principals, directors, employees,
advisors, counsel, and agents.
"RETAINED RIGHTS" has the meaning set forth in SECTIONS 2(b).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" has the meaning ascribed thereto in the recitals to this
Agreement.
"SENORAL SUBORDINATION AGREEMENT" means any subordination agreement
entered into between Foothill and Buyer or any affiliate of Buyer.
"TRANSFER DOCUMENTS" means this Agreement, UCC assignment
statements, assignments of certificates of title, short form assignment
agreements, and any other assignment-related documents reasonably requested
by Buyer to be executed by Seller to the order of Buyer in order to
effectuate the Assignment.
3
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(b) INTERPRETATION. In this Agreement, except to the extent the
context otherwise requires: (i) any reference in this Agreement to a
Section, a Schedule, or an Exhibit is a reference to a section hereof, a
schedule hereto, or an exhibit hereto, respectively, and to a subsection
hereto or a clause is, unless otherwise stated, a reference to a subsection
or a clause of the Section or subsection in which the reference appears; (ii)
the words "hereof," "herein," "hereto," "hereunder" and the like mean and
refer to this Agreement as a whole and not merely to the specific Article,
Section, subsection, paragraph, or clause in which the respective word
appears; (iii) the meaning of defined terms shall be equally applicable to
both the singular and plural forms of the terms defined; (iv) the term
"including" is not used with limitation as to the referenced matters; and (v)
the captions and headings are for convenience of reference only and shall not
affect the construction of this Agreement.
SECTION 2. ASSIGNMENT AND ASSUMPTION.
(a) ASSIGNMENT AND ASSUMPTION. Subject to and upon the terms and
conditions stated in this Agreement, Seller agrees to sell, assign and
transfer to Buyer, without direct or indirect recourse or retained liability
of any kind, and Buyer agrees to purchase from Seller, on the Closing Date:
(i) all of Seller's right, title, and interest in the Loans in the principal
amounts set forth on SCHEDULE 1; and (ii) the amount of any unpaid interest
accrued thereon in the amounts set forth on SCHEDULE 1 and any accrued and
unpaid fees, if any, with respect to such Loans in the amounts set forth on
SCHEDULE 1 (such principal, interest, and fees so sold being collectively
called herein the "Assigned Amount"); together with (iii) all of Seller's
rights and remedies under the Credit Documents and with respect to all
Collateral for such Assigned Amounts. Buyer hereby agrees, for its own
account and risk, to accept such Assignment and to assume, comply with, and
perform, on and after the Closing Date, all of Seller's duties, liabilities,
obligations, and responsibilities of every type or nature whatsoever and
howsoever arising or due to be performed on or after the Closing Date under
or as a result of the Credit Documents subject to such Assignment. As of and
after the Closing Date, Buyer shall be bound as a party to the Credit
Documents and by the obligations of Seller thereunder to the fullest extent
permitted under the applicable Credit Documents.
(b) EXCLUDED RIGHTS. The following rights and claims
(collectively, the "Retained Rights") shall belong to and be retained by
Seller: (i) any rights, interests, and claims under any of the Credit
Documents in the nature of indemnity, warranty, reimbursement, or the like
relating to actual out-of-pocket payments by or on behalf of Seller after the
Closing Date, including claims for the reimbursement of losses, settlements,
satisfaction of judgments, costs and attorney's fees on account of actions,
omissions, events, or conditions occurring prior to or after the Closing
Date; provided that this clause (i) shall not prejudice any concurrent rights
of Buyer as transferee under any Credit Document; (ii) to the extent provided
in the Credit Documents, any accrued and unpaid interest on amounts payable
to Seller described in clause (i); and (iii) any rights, interests, and
claims of Seller arising as a result of any requirement that Seller repay,
4
<PAGE>
turnover, or disgorge any amount on account of any payment, proceeds, or
other amounts received by Seller and applied to the repayment of the Loans
prior to the Closing Date.
SECTION 3. PAYMENT OF THE PURCHASE PRICE AND DELIVERY OF THE CREDIT
DOCUMENTS AND THE TRANSFER DOCUMENTS.
The purchase price for the Assignment hereunder shall be the
Assigned Amount. Such purchase price shall be paid by Buyer to Seller in
immediately available funds not later than 1:00 p.m. (California time) on the
Closing Date. On the Closing Date, immediately upon the payment of the
purchase price by Buyer to Seller, Seller shall deliver to Buyer the Credit
Documents and the Transfer Documents.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
(a) MUTUAL REPRESENTATIONS AND WARRANTIES REGARDING THIS AGREEMENT.
Each of Seller and Buyer represents and warrants to the other that, as of the
Closing Date:
(i) it has all requisite power and authority to execute and
deliver this Agreement and the other Transfer Documents and to perform its
respective obligations hereunder and thereunder;
(ii) its execution and delivery of this Agreement and the other
Transfer Documents, and the performance of its respective obligations
hereunder and thereunder, have been authorized by all necessary corporate
action and do not violate any laws or orders by which it is bound or require
any consents of third parties; and
(iii) each of this Agreement and the other Transfer
Documents constitutes its legal, valid and binding obligation, enforceable
against it in accordance with the terms thereof, except as enforceability may
be limited by the Bankruptcy Code or by other applicable insolvency,
reorganization, moratorium, or other similar laws affecting the enforcement
of creditor rights or remedies generally.
(b) REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Buyer that, as of the Closing Date:
(i) the Assigned Amount constitutes the total indebtedness
with respect to the Loans owed by Borrower to Seller as of the Closing Date;
(ii) Seller owns the Loans; Seller's interest in the Loans and
the Credit Documents is free and clear of liens, charges, and encumbrances;
and Seller has not granted any participation in the Loans to any Person;
5
<PAGE>
(iii) Except for the Senoral Subordination Agreement, the
Assigned Amount is not subject to any contractual subordination entered into
by or on behalf of Seller by which Seller's claim is subordinated (PROVIDED
that no warranty is hereby given as to the priority of any lien or security
interest);
(iv) based on a diligent review of its files relating to the
Loans, and to the best of Seller's information and belief, complete and
accurate copies of the Credit Documents have been delivered to Buyer
(including any effective amendments or modifications thereof, if any); and
(v) the Loans and Credit Documents are not considered by the
parties to be securities within the meaning of any State or Federal
securities laws, including the Securities Act (and nothing herein shall be
deemed to imply any contrary characterization), based in part on the
representations of Buyer herein.
(c) REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller that, as of the Closing Date:
(i) Buyer has conducted an independent investigation of the
Borrower with respect to the Loans and has reviewed the Credit Documents
submitted to it and is not relying on Seller (except as to the accuracy of
Seller's express representations herein);
(ii) although the Loans and Credit Documents are not considered
by the parties to be securities within the meaning of any State or Federal
securities laws, including the Securities Act (and nothing herein shall be
deemed to imply any contrary characterization), the Loans and Credit
Documents have not been registered as securities, and no registration under
the Securities Act or any other law or regulation is contemplated by the
parties. Without implying that the Assigned Amount or Credit Documents are
securities, because Buyer acknowledges that the Assigned Amount and Credit
Documents are not securities, Buyer (A) acknowledges that the Assigned Amount
and Credit Documents have not been, and will not be, registered under the
Securities Act or otherwise pursuant to any securities laws or regulations;
and (B) represents that Buyer is and, as of the Closing Date will be, an
"accredited investor" within the meaning of Regulation D under the Securities
Act, and will hold the Loans and Credit Documents for its own account and not
with a view to any distribution or other disposition which would require
registration under the Securities Act of 1933, as amended; and
(iii) the purchase effected hereunder is exclusively for
its own account;
(iv) Except as provided in SECTION 5(a), Buyer is not relying
on any continuing cooperation or assistance from Seller after the Closing
Date with respect to the Loans, and Buyer assumes the risk of non-cooperation
of third parties;
6
<PAGE>
(v) Buyer is a "United States Person" within the meaning
of Paragraph 7701(a)(30) of the Internal Revenue Code of 1986, as amended; and
(vi) Buyer has not engaged or dealt with any broker, agent, or
finder in connection with the transaction contemplated by this Agreement in
such a manner as to give rise to a claim for a brokerage commission or
finder's fee that could become a liability of Seller or that could give such
a broker, agent, or finder a legal basis for enjoining the consummation of
the transaction contemplated by this Agreement or asserting any interest in
the Loans or the Collateral.
(d) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The foregoing
representations and warranties of Seller and Buyer shall survive the
execution and delivery of this Agreement and consummation of the transactions
contemplated hereby for a period of two (2) years. Except as expressed
herein or in the Transfer Documents, there shall be no other representations,
warranties, agreements, or other obligations by Seller to Buyer or by Buyer
to Seller, whether express or implied besides those contained herein. Seller
understands that Buyer's representations and warranties in this Agreement are
exclusive, and that Buyer does not make any other representations or
warranties, whether express or implied in this integrated Agreement. Buyer
understands that Seller's representations and warranties in this Agreement
are exclusive, and that Seller does not make any other representations or
warranties, whether expressed or implied in this integrated Agreement.
SECTION 5. COVENANTS.
(a) COOPERATION AND REASONABLE EFFORTS. Each of Seller and Buyer
hereby agrees (i) to use its respective reasonable efforts and to cooperate
with the other to obtain or effect any necessary or desirable consents,
approvals, and notices in connection with the assignment of the Assigned
Amount and the Collateral from Seller to Buyer, and (ii) to execute and
deliver all such further agreements, instruments, notices, certificates,
documents and assurances and to perform such acts, as shall be reasonably
required to effectuate the purposes of this Agreement; PROVIDED that any
action by Seller shall be at the sole expense of Buyer and Seller shall not
be required to incur any liability or to subject itself to any recourse as a
result of performing this SECTION 5(a). Buyer understands that and accepts
the risk that, notwithstanding the reasonable cooperation of Seller, third
parties may be uncooperative or may refuse to give requested consents.
(b) PAYMENTS RECEIVED BY SELLER. If any amount of principal,
interest, fees or other amount in respect of the Assigned Amount is received
or recovered by Seller, Seller shall promptly make payment of such amount to
Buyer after receipt thereof. However, Seller has no obligation to transfer
uncollected funds to Buyer, apart from tender of any checks or items duly
endorsed by Seller. In addition, nothing herein shall require Seller to make
any payment on a day which is not a Banking Day or after the time on any
Banking Day after which it is not reasonably
7
<PAGE>
possible to wire transfer funds to Buyer's bank in the ordinary course.
Seller shall cooperate with Buyer to minimize any delay in payment of any
amount payable to Buyer under this Agreement.
(c) BUYER NOT TO ACT IN SELLER'S NAME. Buyer shall not institute
or take any action (including, without limitation, any judicial action or
proceeding) in the name of Seller or any subsidiary of Seller, provided that
Buyer may advise Borrower and third parties of the assignment of the Loans
and Credit Documents and that Buyer is the assignee of Seller with respect
thereto. From and after the Closing Date, Buyer shall not mislead Borrower as
to Buyer's identity and shall not fail to disclose to Borrower that Buyer has
become the owner of the Loans and the assignee of the Credit Documents.
SECTION 6. ACKNOWLEDGMENTS OF BUYER.
(a) NON-RELIANCE. Buyer acknowledges and confirms to Seller that
Buyer has itself been, and will continue to be, independently and without
reliance on Seller, based on such documents and information as it has deemed
appropriate (including review of Credit Documents and financial information
with respect to Borrower), solely responsible for making its own independent
appraisal of and investigations into the Borrower, and other Persons with
respect to the Credit Documents and its own credit analysis and decision to
enter into the Transfer Documents and to consummate the Assignment. Buyer
also acknowledges and agrees, except as set forth in SECTION 4, that Seller
has made no representation or warranty to Buyer with respect to, and Buyer
has not relied upon and will not hereafter rely upon Seller regarding (among
other things and without implying any other representations or warranties),
and, apart from any liability of Seller to Buyer for any breach of any
express provision of this Agreement or as otherwise expressly provided herein
or in any Transfer Document, Seller shall not directly or indirectly have,
suffer or incur any liability whatsoever to Buyer or any of its
Representatives or any of its respective successors or assigns on account of,
or as a consequence of: (i) the execution, legality, validity,
enforceability, genuineness, sufficiency, value, or collectability of the
Assigned Amount, or the Credit Documents or the value, perfection, validity,
or enforceability of any Collateral, including any inability or failure for
any reason whatsoever to be able to enforce any Credit Document or other
obligation or Collateral acquired by Buyer from Seller, including on account
of any defense or offset, on account of any acts or omissions of Seller
before the Closing Date; (ii) any loss, impairment, or other adverse effect
with respect to the Assigned Amount or any other obligation owing in
connection with any of the Credit Documents or the Loans or any Collateral,
whether or not related to any acts or omissions of Seller or any other Person
at any time before the Closing Date, including as a result of any offset or
defense of any kind whatsoever, whether or not resulting from any conduct of
Seller or any of its Representatives, from the operation of any provision of
the Bankruptcy Code, or otherwise; (iii) the creditworthiness, financial
condition, other condition, affairs, status, or nature of the Borrower, or
any other Person; or (iv) any representations, warranties, or statements made
in, or in connection with, the Credit Documents by any Person (other than any
representation, warranty, or statement made by Seller in this Agreement or
the other Transfer Documents), or any
8
<PAGE>
information provided by Seller (other than as expressly provided in this
Agreement or any Schedule hereto, or in any other Transfer Document),
Borrower, or any other Person under or in connection with any Credit Document
or the transactions therein contemplated.
SECTION 7. PAYMENTS.
All payments hereunder shall be made on a Banking Day, without
setoff, deduction, or counterclaim, and in Dollars and immediately available
funds, to the accounts designated by each party on SCHEDULE 2 or to such
other account as either party may designate by written notice to the other
party.
SECTION 8. NOTICES.
All notices and other communications provided for hereunder or under
the other Transfer Documents shall, unless otherwise stated herein, be in
writing (including by facsimile) and shall be mailed, sent or delivered at or
to the address or facsimile number of the respective party or parties set
forth on SCHEDULE 2, or at or to such other address or facsimile number as
such party or parties shall have designated in a written notice to the other
party or parties. All such notices and communications shall be effective (i)
if delivered by hand, upon delivery; and (ii) if sent by mail or facsimile,
upon receipt.
SECTION 9. NO WAIVER; CUMULATIVE REMEDIES.
No failure on the part of Seller or Buyer to exercise, and no delay
in exercising, any right, remedy, power, or privilege hereunder or under any
other Transfer Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, remedy, power, or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power, or privilege. The rights and remedies under this
Agreement and the other Transfer Documents are cumulative and not exclusive
of any rights, remedies, powers, and privileges that may otherwise be
available to Seller or Buyer.
SECTION 10. COSTS AND EXPENSES.
Seller and Buyer shall each absorb its own costs and expenses
(including fees and disbursements of counsel) in connection with the
negotiation, preparation, and execution of this Agreement and the other
Transfer Documents. In the event of any legal action to enforce or construe
any provision of this Agreement, the nonprevailing party or parties thereto
shall pay to the prevailing party the reasonable costs and expenses
(including court costs and attorneys' fees) actually incurred by such
prevailing party therein. Should any such amount not be paid on demand,
interest shall accrue thereon at the Reference Rate.
SECTION 11. NO THIRD PARTY BENEFICIARIES.
9
<PAGE>
The representations and warranties of Seller and Buyer in this
Agreement and the other Transfer Documents are made only by Seller to Buyer
personally and by Buyer to Seller personally and are not assignable by Buyer
or by Seller, and are not subject to enforcement by any other Person. This
Agreement and the other Transfer Documents are entered into for the sole
protection and benefit of the parties hereto and their respective successors
and assigns, and no other Person shall be a direct or indirect beneficiary
of, or shall have any direct or indirect cause of action or claim in
connection with, this Agreement and the other Transfer Documents.
SECTION 12. GOVERNING LAW.
THIS AGREEMENT AND THE OTHER TRANSFER DOCUMENTS SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA,
UNITED STATES.
SECTION 13. ENTIRE AGREEMENT; AMENDMENT.
(a) ENTIRE AGREEMENT. This Agreement and the other Transfer
Documents constitute the entire agreement of Seller and Buyer with respect to
the matters set forth herein and supersede and any and all prior drafts,
agreements, commitments, discussions and understandings, oral or written,
with respect hereto or to any Transfer Document.
(b) AMENDMENTS. This Agreement may not be modified, amended or
otherwise altered except by a writing signed by Seller and Buyer.
SECTION 14. SEVERABILITY.
Whenever possible, each provision of this Agreement and the other
Transfer Documents shall be interpreted in such manner as to be effective and
valid under all applicable laws and regulations. If, however, any provision
of this Agreement or any such other Transfer Document shall be prohibited by
or invalid under any such law or regulation in any jurisdiction, such
provision shall, as to such jurisdiction, be deemed modified to the minimum
extent necessary in order to conform to the requirements of such law or
regulation, or, if for any reason such provision is not deemed so modified,
shall be ineffective and invalid only to the extent of such prohibition or
invalidity, without affecting the remaining provisions of this Agreement and
the other Transfer Documents or the validity or effectiveness of such
provision in any other jurisdiction.
SECTION 15. SCHEDULES AND EXHIBITS.
All Schedules and Exhibits to this Agreement shall be deemed to be
an integral part hereof.
10
<PAGE>
SECTION 16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement.
SECTION 17. BUYER'S INDEMNITIES.
Buyer hereby agrees to indemnify and hold Seller and its agents,
affiliates, controlling persons, officers, directors, and employees
(collectively, the "Seller Indemnitees") harmless from and against any and
all Liabilities that are incurred by Seller Indemnitees or any of them, to
the extent caused by, resulting from, or related to (i) Buyer's breach of any
of its representations, warranties, covenants, or agreements set forth in
this Agreement, or (ii) Buyer's failure to comply with or perform any of the
duties, obligations, or responsibilities assumed by it pursuant to SECTION
2(a) of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ THOMAS SIGURDSON
----------------------------------------
Title: Vice President
-------------------------------------
SENORAL, INC.,
a California corporation
By: /s/ ALAN SALONER
-----------------------------------------
Title: President
---------------------------------------
11
<PAGE>
CONSENT AND ESTOPPEL BY BORROWER
Borrower hereby acknowledges and agrees that: (i) it has received a copy
of, reviewed, and is familiar with the contents of, the foregoing Purchase
and Sale Agreement dated as of August 1, 1997, between Foothill Capital
Corporation, as Seller, and Senoral, Inc., as Buyer (the "Purchase and Sale
Agreement"); (ii) all terms used herein have the meaning ascribed thereto in
the Purchase and Sale Agreement unless otherwise defined herein; (iii) the
purchase of the Assigned Amount by Buyer from Seller shall occur as of
October 1, 1997 (the "Closing Date"); (iv) SCHEDULE 1 of the Purchase and
Sale Agreement accurately and correctly describes the Credit Documents and
does not omit any documents or agreements that should be listed thereon, nor
does it fail to include any amendments or modifications relating thereto
(other than those being entered into between the undersigned and Buyer
following the purchase by Buyer of the Loans); and (v) the Assigned Amount
represents the correct amount owed by Borrower as of the Closing Date with
respect to the Loans, and accrued and unpaid interest and fees with respect
thereto, and Borrower has no defenses, offsets, counterclaims, or deductions
with respect to the Assigned Amount, or, if any such items may have existed,
they are hereby waived for the benefit of Buyer and to induce Buyer to
purchase the Loans.
GLOBAL ONE DISTRIBUTION & MERCHANDISING INC.,
a Delaware corporation
By: /s/ GEORGE VRABECK
-----------------------------------------
Title: President
--------------------------------------
OSP PUBLISHING, INC.,
a Delaware corporation
By: /s/ GEORGE VRABECK
-----------------------------------------
Title: President
--------------------------------------
12
<PAGE>
BEx CORP.,
a Delaware corporation
By: /s/ GEORGE VRABECK
-----------------------------------------
Title: President
-------------------------------------
KELLY RUSSEL STUDIOS, INC.,
a Delaware corporation
By: /s/ GEORGE VRABECK
------------------------------------------
Title: President
---------------------------------------
13
<PAGE>
SCHEDULE 1
CREDIT AGREEMENTS, OTHER CREDIT DOCUMENTS,
AND SPECIFICATION OF ASSIGNED AMOUNTS
A. Schedule of Documents
1. Disbursement of Proceeds
2. Amendments and Letter Agreements
3. Amended and Restated Secured Term Loan Note in the original principal
amount of $500,000
4. Amended and Restated Loan and Security Agreement
5. Pledge Security Agreement
6. Amended and Restated Collateral Assignment of Patents and Trademarks
(Security Agreement)
7. Collateral Documents with respect to $500,000 Treasury bill
a. Limited Recourse Continuing Guaranty of Richman Bry, Jr.
b. Pledge and Security Agreement of Richard Bry, Jr.
8. Tri-Party Depository Agreement by City National Bank
a. Button Exchange, Ltd., Account #001-073907
b. OSP Publishing, Inc., Account #001-073893
9. Deposit Account Security Interest Notification Letter (City National
Bank - OSP Acct. #001-672185, BEx Acct. 001-984241)
10. Opinion of Counsel
11. Warranties and Representations of Officers
12. Certified Copy of Corporate Resolution To Borrow And to Grant A
Security Interest
13. Certificate of Secretary
14
<PAGE>
14. Articles of Organization of Borrower
15. Delaware Good Standing Certificates
16. Certificates of Merger and Related Documents
17. Bylaws of Borrower
18. California Franchise Tax Board Certificate
19. Limited Continuing Guaranties from
a. Joseph C. Angard
b. Michael Malm
20. Real Property Waiver And Consent
21. Waiver and Consent by Real Property Owner(s) for address of:
a. MISSING 5548 Lindbergh Lane, Bell, CA 90201
b. 6841 North Rochester Road, Rochester, MI 48307 UNRECORDED
COPY UNSIGNED BY FCC
c. MISSING 200 West Diversion Street, Suite G-11, Rochester, MI
48307
22. Amended and Restated Subordination Agreement with Robert Yamasaki
23. Amended and Restated Intercreditor and Subordination Agreement
24. Release and Payoff Letter for City National Bank
25. Tombston Authorization
B. Assigned Amounts
<TABLE>
<CAPTION>
A. B. C. A.+ B.+ C.=
<S> <C> <C> <C> <C>
Loan Principal Accrued and Accrued and Assigned Amount
Loan Description Amount Unpaid Interest Unpaid Costs,
Fees, Expenses &
LC Collateral*
====================================================================================================
Revolving and $254,508.49 $14,141.35 $73,530.42* $342,180.26
Term Facilities
</TABLE>
15
<PAGE>
*Estimated, subject to subsequent adjustment
16
<PAGE>
SCHEDULE 2
INFORMATION RELATING TO SELLER AND BUYER
1. SELLER INFORMATION
NOTICES: Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025
Attn.: Business Finance Manager
Facsimile: (310) 479-9788
PAYMENTS: The Chase Manhattan Bank
ABA # 021-000-021
ACCT. NO. 323-266193
PAYEE: Foothill Capital Corporation
RE:
2. BUYER INFORMATION
NOTICES: Senoral, Inc.
8474 Commerce Avenue, Suite B
San Pedro, California 92121
Attn.: Alan Saloner
Facsimile: (619) 549-3815
PAYMENTS: Union Bank
ABA # 122-000-496
ACCT. NO. 0051363935
PAYEE: Senoral, Inc.
RE:
17
<PAGE>
EXHIBIT 2.8
August 1, 1997
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025
Ladies and Gentlemen:
The undersigned is the President of OSP Publishing, Inc.("OSP"), a
Delaware corporation ("Borrower"). In order to induce you (the "Lender") to
enter into that certain Forbearance Agreement between Borrower, Global One
Distribution & Merchandising, Inc., ("Global One"), BEx Corp. ("BEx"), Kelly
Russell Studios, Inc. ("KR, and together with Global One and BEx, the
"Obligors") and you of even date herewith (the "Forbearance Agreement"),
providing for the orderly liquidation of your collateral securing Borrower's
and Obligor's Obligations to you under that certain Amended and Restated Loan
and Security Agreement dated August 29, 1996 (the "Loan Agreement"), the
undersigned hereby agrees with Lender to furnish support to Lender in one or
more of the following respects, in each case if and to the extent requested
by Lender and not in contravention of any fiduciary obligations then owing by
the undersigned to the Borrower or to any creditor of Borrower other than
Lender as a matter of law or pursuant to the order of any court then having
jurisdiction over the undersigned:
1. the undersigned will participate in the formulation of a plan of
disposition for any property of the Borrower or any Obligor then standing
as Collateral to Lender for any credit then or thereafter extended by the
Lender to the Obligors and upon such terms as the undersigned believes to
be best designed to maximize the proceeds obtainable from such disposition,
in order to repay the Obligations of the Obligors to the Lender arising
from such credit extensions and will cause Borrower and each Obligor party
thereto to execute against that plan, including, but not limited to, the
orderly collection Accounts and the sale of Inventory, modifying and
revising it with Lender's consent as any modification or revision appears
to be desirable;
2. the undersigned will assist Lender in reconstructing records of Borrower
and each Obligor concerning such credit extensions, collateral and
collateral dispositions and/or assuring that Borrower and each Obligor
maintain such records as Lender may request;
3. the undersigned will, on behalf of and for the Borrower and each Obligor,
execute and deliver such necessary applications, instruments and documents,
and make such necessary amendments to such applications, instruments and
documents, and do or cause to be done all such other acts and things, as
may be reasonably necessary to Lender in order to secure any approval or
consent of, or make any registration, declaration or filing with or obtain
any exemption from any governmental agency or regulatory body, in a timely
manner, if
1
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in Lender's opinion it is necessary or advisable to secure any such
approval, license, permit or consent, to make such registration,
declaration or filing or to obtain such exemption with respect to any of
the foregoing activities; and
4. the undersigned will take such other actions as Lender may reasonably
request to furnish support to Lender in the collection of the obligations
of the Obligors to the Lender.
To effect the foregoing, the undersigned will, subject only to any
of the aforedescribed fiduciary obligations, act as Lender's agent or
representative or, if Lender elects, as the agent or representative of
Borrower and each Obligor, for a period of up to six (6) months on up to a
full-time basis, with such duties as Lender may require of the undersigned;
provided, however, that, during such period, the undersigned shall not have
any authority to bind Lender, except to the extent, if any, granted in
writing by Lender. The undersigned understands that the services of the
undersigned hereunder as the agent or representative of Lender or Borrower
and each Obligor shall be entirely at Lender's option, and Lender may or may
not, in its discretion, require the undersigned to provide such services. In
addition, Lender shall have the right, at any time or from time to time, to
terminate or limit the activities of the undersigned hereunder. The
undersigned further understands that, to the extent that Lender requires such
services of the undersigned hereunder, Lender will either pay the undersigned
or arrange for the undersigned to be paid at the rate of One Hundred Fifty
Dollars ($150) per hour for the time and duties performed.
The undersigned hereby agrees to save you harmless and indemnify you
from and against all loss, damage or injury which you may in any manner
sustain in whole or in part by reasons of any fraud, deceit or criminal act
committed by the undersigned or by any employee of Borrower or any Obligor at
the express direction of the undersigned, or by your reliance on any
intentionally and materially false, erroneous, misleading, inaccurate,
incorrect or incomplete information furnished to you by the undersigned or by
any employee of Borrower or any Obligor at the express direction of the
undersigned.
This Agreement shall be governed by and construed in accordance with
the internal laws (as opposed to the conflicts of law provisions) of the
State of California.
This Agreement shall inure to the benefit of you and your successors
and assigns. Capitalized terms not otherwise defined herein shall have the
meaning as ascribed to such terms in the Loan Agreement.
Very truly yours,
/s/ GEORGE VRABECK
----------------------------------
George Vrabeck
2
<PAGE>
EXHIBIT 2.9
August 1, 1997
Foothill Capital Corporation
11111 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025
Ladies and Gentlemen:
The undersigned is the Chief Financial Officer of Global One
Distribution & Merchandising Inc. ("OSP"), a Delaware corporation
("Borrower"). In order to induce you (the "Lender") to enter into that
certain Forbearance Agreement between Borrower, Global One Distribution &
Merchandising, Inc., ("Global One"), BEx Corp. ("BEx"), Kelly Russell
Studios, Inc. ("KR, and together with Global One and BEx, the "Obligors") and
you of even date herewith (the "Forbearance Agreement"), providing for the
orderly liquidation of your collateral securing Borrower's and Obligor's
Obligations to you under that certain Amended and Restated Loan and Security
Agreement dated August 29, 1996 (the "Loan Agreement"), the undersigned
hereby agrees with Lender to furnish support to Lender in one or more of the
following respects, in each case if and to the extent requested by Lender and
not in contravention of any fiduciary obligations then owing by the
undersigned to the Borrower or to any creditor of Borrower other than Lender
as a matter of law or pursuant to the order of any court then having
jurisdiction over the undersigned:
1. the undersigned will participate in the formulation of a plan of
disposition for any property of the Borrower or any Obligor then standing
as Collateral to Lender for any credit then or thereafter extended by the
Lender to the Obligors and upon such terms as the undersigned believes to
be best designed to maximize the proceeds obtainable from such disposition,
in order to repay the Obligations of the Obligors to the Lender arising
from such credit extensions and will cause Borrower and each Obligor party
thereto to execute against that plan, including, but not limited to, the
orderly collection Accounts and the sale of Inventory, modifying and
revising it with Lender's consent as any modification or revision appears
to be desirable;
2. the undersigned will assist Lender in reconstructing records of Borrower
and each Obligor concerning such credit extensions, collateral and
collateral dispositions and/or assuring that Borrower and each Obligor
maintain such records as Lender may request;
3. the undersigned will, on behalf of and for the Borrower and each Obligor,
execute and deliver such necessary applications, instruments and documents,
and make such necessary amendments to such applications, instruments and
documents, and do or cause to be done all such other acts and things, as
may be reasonably necessary to Lender in order to secure any approval or
consent of, or make any registration, declaration or filing with or obtain
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any exemption from any governmental agency or regulatory body, in a timely
manner, if in Lender's opinion it is necessary or advisable to secure any
such approval, license, permit or consent, to make such registration,
declaration or filing or to obtain such exemption with respect to any of
the foregoing activities; and
4. the undersigned will take such other actions as Lender may reasonably
request to furnish support to Lender in the collection of the obligations
of the Obligors to the Lender.
To effect the foregoing, the undersigned will, subject only to any
of the aforedescribed fiduciary obligations, act as Lender's agent or
representative or, if Lender elects, as the agent or representative of
Borrower and each Obligor, for a period of up to six (6) months on up to a
full-time basis, with such duties as Lender may require of the undersigned;
provided, however, that, during such period, the undersigned shall not have
any authority to bind Lender, except to the extent, if any, granted in
writing by Lender. The undersigned understands that the services of the
undersigned hereunder as the agent or representative of Lender or Borrower
and each Obligor shall be entirely at Lender's option, and Lender may or may
not, in its discretion, require the undersigned to provide such services. In
addition, Lender shall have the right, at any time or from time to time, to
terminate or limit the activities of the undersigned hereunder. The
undersigned further understands that, to the extent that Lender requires such
services of the undersigned hereunder, Lender will either pay the undersigned
or arrange for the undersigned to be paid at the rate of One Hundred Dollars
($100) per hour for the time and duties performed.
The undersigned hereby agrees to save you harmless and indemnify you
from and against all loss, damage or injury which you may in any manner
sustain in whole or in part by reasons of any fraud, deceit or criminal act
committed by the undersigned or by any employee of Borrower or any Obligor at
the express direction of the undersigned, or by your reliance on any
intentionally and materially false, erroneous, misleading, inaccurate,
incorrect or incomplete information furnished to you by the undersigned or by
any employee of Borrower or any Obligor at the express direction of the
undersigned.
This Agreement shall be governed by and construed in accordance with
the internal laws (as opposed to the conflicts of law provisions) of the
State of California.
This Agreement shall inure to the benefit of you and your successors
and assigns. Capitalized terms not otherwise defined herein shall have the
meaning as ascribed to such terms in the Loan Agreement.
Very truly yours,
/s/ WILLIAM J. RIGHEIMER
---------------------------------
William J. Righeimer
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EXHIBIT 2.10
SECURITY AGREEMENT
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, OSP
PUBLISHING INC. and GLOBAL ONE DISTRIBUTION & MERCHANDISING INC. (hereinafter
"Debtors"), and GOLDEN STATE GRAPHICS INC. (hereinafter "Secured Party"),
agree this 25th day of April, 1997, as follows:
1. WARRANTIES OF DEBTORS:
(a) Debtors are corporations with their principal place of business
located at 5548 Lindbergh Lane, Bell, California.
(b) Debtors own the collateral, free from all prior liens and
security interest, except as disclosed to and accepted by Secured
Party, Exhibit "A" hereto.
2. SECURITY INTEREST:
Debtors hereby grant to Secured Party continuing security interests
in the following property, wherever located, now owned or hereafter acquired,
and all proceeds, products, additions, accessions, substitutions,
replacements, parts, accessories and returns thereof or thereto or used in
conjunction therewith (hereinafter referred to collectively as "Collateral"),
to secure the payment of Debtors' indebtedness to Security Party represented
by the Secured Promissory Note dated April 25, 1997, as well as future goods
and services provided, whether promissory note, trade acceptance, open
account, guarantee or otherwise, arising after this Agreement or any other
future agreement between the parties, together with interest on and renewals
and extensions of time of said obligations (hereinafter referred to as
"Indebtedness") until the Secured Promissory Note above is paid in full. The
security interest is junior to the security interest on Exhibit A, as well as
to any replacement financing therefor the amount owed to Foothill as of April
25, 1997.
(a) All present and future deposit accounts, accounts contracts,
contract rights, instruments, documents, chattel paper, open
accounts receivable, book debts, notes, general intangibles,
choses in action, tax refunds, and insurance proceeds, any
other obligations or indebtedness owed to Debtors from
whatever source arising; all rights of Debtors to receive any
payments in the money or kin; all guaranties of the foregoing
and security therefor; all of the right, title and interest of
Debtors in and with respect to the goods, services, or other
property that gave rise to or that secure any of the foregoing
and insurance proceeds relating thereto, and all the rights of
Debtors as an unpaid seller of goods and services, including,
but not limited to, the rights of stoppage in transit,
replevin, reclamation and resale, and all of the foregoing,
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whether now owned or existing or hereafter created or acquired;
(b) All goods, merchandise, and other personal property now owned or
hereafter acquired by Debtors that is held for sale or lease, or
are furnished or to be furnished under any contract of service or
are raw materials, work-in-progress, supplies, or materials used
or consumed in Debtors' business wherever located, and all
products thereof, and all substitutions, replacements, additions,
or accessions therefor and thereto:
(c) All machinery, equipment, furniture and fixtures now owned or
hereafter acquired by Debtors, and used or acquired for use in
the business of Debtors, together with all accessions thereto and
all substitutions and replacements thereof and parts therefor;
(d) All cash or non-cash proceeds of any of the foregoing, including
insurance proceeds; and
(e) All ledger sheets, files, records, documents, and instruments
(including, but not limited to, computer programs, tapes, and
related electronic data processing software) evidencing an
interest in or relating to the above.
(f) All patents, patent applications, copyrights, royalties and
licenses.
(g) All Goodwill, names, service marks, drawings, trademarks,
blueprints, trade names, trade search and customer lists.
(h) Printing plates.
(i) Any and all contract rights and/or agreements and/or licenses
from all sources pursuant to which Debtors have the right and
authority to market and sell posters and/or buttons.
3. COVENANTS OF DEBTORS:
Debtors shall:
(a) Give Secured Party prior written notice if Debtors change its
name or change the form under which its business is operated.
(b) Promptly pay all taxes and assessments with respect to the
Collateral or its use or operation.
(c) Allow Secured Party to inspect and inventory this Collateral and
Debtors'
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books and records at any reasonable time and wherever located.
(d) Keep its books and records at its principal place of business.
(e) Deliver to Secured Party an annual financial statement within
sixty (60) days from the end if its fiscal or calendar year, and
in addition, upon Secured Party's request made at any time and
from time to time a current financial statement.
(f) Not merge or conolidate or acquire all or substantially all of
the stock or business or assets of any other person, corporation,
or business organization without prior written notification to
Secured Party.
(g) Notify Secured Party within three (3) days if Debtors become
involved in any claims, litigation, or other legal proceedings
before any court, tribunal, or governmental body in which any
potential recovery against Debtors may exceed $25,000.00.
(h) Maintain adequate insurance at all times with respect to the
Collateral against risks of fire and theft and including extended
coverage, and containing such terms and in such form and written
by such companies as may be satisfactory to Secured Party; such
insurance to be payable to Secured Party and Debtors as their
interests may appear. All such policies of insurance shall
provide that Secured Party shall receive at least thirty (30)
days prior to written notice of material change or cancellation,
and Debtors' shall furnish Secured Party with a Certificate of
Insurance or a copy of each Insurance policy within thirty (30)
days from the date of this Agreement.
4. DEFAULT:
Debtors shall be in default under this Agreement upon the
happening of any one of the following events:
(a) Failure to pay any indebtedness owed to Secured Party when due,
or failure to comply with Paragraph 3(e) and (g).
(b) Failure to perform one or more of the obligations set forth in
this Security Agreement or any Promissory Note or any other
agreement with or in favor of Secured Party.
(c) When any warranty, covenant, or representation made to Secured
Party in this Agreement or in any financial statement or
information is false when made or furnished.
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(d) Loss, theft, damage, destruction, levy or seizure of any portion
of the Collateral, unless the Collateral subject to such loss,
theft, damage, or destruction is either covered by insurance, or
replaced by property (which also is subject to the security
interest granted here) or equal value, or the levy is released or
dissolved within 15 days.
(e) Dissolution, termination of existence, cessation of business,
insolvency, inability to pay its debts as they mature,
appointment of a receiver of any part of the property of Debtors,
assignment for the benefit of creditors of Debtors, commencement
of any proceeding under bankruptcy or insolvency law of which
Debtors is the subject, or transfer of a substantial portion of
the property of Debtors.
5. SECURED PARTY'S REMEDIES:
Upon Debtors' default as set forth above, Secured Party, at its
option, following written notice of default to Debtors, and the elapse of 20
days without cure of said default by Debtor, may do any one or more of the
following:
(a) Declare all indebtedness immediately due and payable and interest
shall accrue on the indebtedness at the rate of ten percent (10%)
per annum or the maximum rate permitted by law, whichever is
less, unless another rate of interest is provided for with
respect thereto.
(b) Immediately take possession of the Collateral wherever it may be
found, and Debtor hereby authorizes and gives Secured Party the
right to enter upon the locations wherever the Collateral may be
found and remove the Collateral.
(c) Sell the Collateral at public or private sale, with or without
having the Collateral at the place of sale, on such terms and in
such manner as Secured Party may determine in compliance with the
applicable Uniform Commercial Code (hereinafter referred to as
Commercial Code), and Secured Party may purchase at the sale.
Debtors agree that reasonable notification of the time and place
of sale shall be five (5) days. Secured Party may exercise any
and all remedies under the Commercial Code, and shall have the
right to apply the proceeds of sale against the indebtedness in
any manner Secured Party in it discretion may direct. If the sum
realized from any disposition of Collateral is not sufficient to
pay all indebtedness, Debtors agree to pay Secured Party any
deficiency.
(d) Upon demand by Secured party, Debtors shall deliver to Secured
Party the proceeds of any sale or other disposition of
Collateral, and Secured Party may notify any or all account
debtors of Debtors that Secured Party has a security
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interest and may require the remittance of all sums directly to
Secured Party. Secured Party may endorse the name of Debtors on
any check, notes, or other documents received in payment of any
account.
(e) Secured Party shall have the right to enforce one or more
remedies under this Agreement and any other agreement it may
have, successively or concurrently, and any such action shall not
estop or prevent Secured Party from pursuing any further remedies
that it may have by this Agreement, or any other agreement, or by
law.
(f) Debtors will reimburse Secured Party for all expenses incurred in
taking, holding, and preparing the Collateral for sale, and in
arranging for the sale, including but not limited to, reasonable
attorneys' fees, legal expenses, and collection agency fees
incurred by Secured Party in connection with the exercise of any
right or remedy pursuant to the terms of this Security Agreement
and in collecting the indebtedness. All such expenses shall be
secured by this Security Agreement and shall be included in the
term "indebtedness" as it is used in this Agreement.
(g) Accelerate and declare all or any part of the "Indebtedness" as
the term is used in this Agreement to be immediately due, payable
and performable notwithstanding any deferred or installment
payments allowed by any instrument evidencing or relating to any
indebtedness.
6. GENERAL PROVISIONS:
(a) Debtors shall join with Secured Party in executing one or more
Financing Statement(s) pursuant to the Commercial Code.
(b) No waiver by Secured Party of any default shall operate as a
waiver of any other default of the same default on a future
occasion.
(c) All notices provided for herein shall be validly given if in
writing and delivered personally, or if mailed by registered or
certified mail to the person entitled to receive the same at the
following addresses:
IF TO THE SECURED PARTY: GOLDEN STATE GRAPHICS INC.
------------- 14403 South Main Street
Gardena, CA 90248
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IF TO THE DEBTORS: OSP PUBLISHING INC. and
------- GLOBAL ONE DISTRIBUTION
& MERCHANDISING INC.
5548 Lindbergh Lane
Bell, CA 90248
(d) Where Debtors are corporations or partnerships, it is not
necessary for Secured Party to inquire into the power of Debtors
or the officers, directors, partners or agents acting or
purporting to act on their behalf.
(e) Should any provision of this Agreement be invalid, void, or
unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect so long as the
essential purposes of this Agreement are not materially altered.
(f) This Agreement shall bind and inure to the benefit of the heirs,
legal representatives, successors, and assigns of the parties
hereto.
(g) A carbon, photographic or other reproduction of this Security
Agreement or any financing statement shall be sufficient as a
financing statement pursuant to the Uniform Commercial Code.
(h) This Agreement shall be construed and enforced under the laws of
California.
(i) That this Agreement has been entered into and is to be performed
in the County of Los Angeles, State of California, and any action
brought hereunder shall be brought in said County and State at
the option of and in the sole discretion of Secured Party.
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Executed as of the date first given above.
OSP PUBLISHING INC.
Debtor
/s/ MICHAEL MALM
- ---------------------------------------
Signature
PRESIDENT
- ---------------------------------------
Print Name and Title
GLOBAL ONE DISTRIBUTION &
MERCHANDISING INC.
Debtors
/s/ GEORGE J. VRABECK
- ---------------------------------------
Signature
PRESIDENT
- ---------------------------------------
Print Name and Title
GOLDEN STATE GRAPHICS INC.
Secured Party
/s/ ALAN KATZ
- ---------------------------------------
Signature
PRESIDENT
- ---------------------------------------
Print Name and Title
7
<PAGE>
EXHIBIT A
Amended and Restated Loan and Security Agreement
Dated August 29, 1996
8
<PAGE>
EXHIBIT 2.11
SECURED PROMISSORY NOTE
Los Angeles, California
$584,361.54 April 25, 1997
FOR VALUE RECEIVED, the undersigned ("Makers") promises to pay to the
order of GOLDEN STATE GRAPHICS, INC. ("Payee") at 14403 South Main Street,
Gardena, California 90248, or at such other address as the holder of this
Note shall direct, the principal sum of Five Hundred Eighty-Four Thousand
Three Hundred Sixty-One Dollars and Fifty-Four Cents ($584,361.54) plus
accrued interest through April 18, 1997 of Twenty Thousand Eight Hundred
Sixty-Four Dollars and Seventy-Three Cents ($20,864.73) as hereinafter
provided, commencing on June 1, 1997 and continuing on the same date of each
succeeding month until the entire remaining unpaid principal balance of this
Note, plus any and all accrued and unpaid interest, shall be due and payable.
The principal and the aggregate of the interest thereon shall be payable
in monthly installments consisting of twenty percent (20%) of the amount of
each monthly invoice, commencing with the invoice for goods and services
provided in May 1997, from Payee to Maker, provided, however, that each
monthly payment shall be not less that Fifteen Thousand Dollars ($15,000.00)
nor more than Twenty-Five Thousand Dollars ($25,000.00). Monthly invoices
for goods and services provided after April 25, 1997 by payee to makers shall
be paid according to terms in addition to the minimum payments provided for
in this note. Payments will be credited first toward interest and then
towards a reduction of Principal owing under this Note until all amounts
owing under this Note are paid in full. This Note shall bear interest on the
unpaid principal balance hereof from time to time outstanding at a rate equal
to ten percent (10%) per annum. Principal of and interest on this Note shall
be payable in lawful money of the United States of America.
In the event any payment due under this Note is not paid in full when
due, or if any other default or event of default occurs hereunder, under the
Security Agreement or under any other present or future instrument, document,
or agreement between Makers and Payee (collectively "Events of Default"),
Payee may give Maker written notice of default, which if not cured by Maker
within 20 days of receipt of notice of default, and at Payee's option, at any
time thereafter, declare the entire unpaid principal balance of this Note
plus all accrued interest to be immediately due and payable, without notice
or demand. The acceptance of any installment of principal or interest by
Payee after the time when it becomes due as herein specified shall not be
held to establish a custom, or to waive any rights of Payee to enforce
payment when due of any further installments or any other rights, nor shall
any failure or delay to exercise any rights be held to waive the same.
All payments hereunder are to be applied first to costs and fees referred
to hereunder, second to the payment of accrued interest and the remaining
balance to the payment of principal. Any principal prepayment hereunder
shall be applied against principal payments in the inverse order of maturity.
Payee shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments hereunder.
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Makers agree to pay all costs and expenses (including without limitation
attorney's fees) incurred by Payee in connection with or related to this
Note, or its enforcement, whether or not suit be brought. Makers hereby waive
presentment, demand for payment, notice of dishonor, notice of nonpayment,
protest, acceptance, performance, default or enforcement of this Note.
This note is secured by the Security Agreement and all other present and
future Security Agreements between Makers and Payee. Nothing herein shall be
deemed to limit any of the terms or provisions of the Security Agreement or
any other present or future document, instrument or agreement, between Makers
and Payee, and all of Payee's rights and remedies hereunder and thereunder
are cumulative.
In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.
No waiver or modification of any of the terms or provisions of this Note
shall be valid or binding unless set forth in a writing signed by a duly
authorized officer of Payee, and then only to the extent therein specifically
set forth. If more than one person executes this Note, their obligations
hereunder shall be joint and several.
This Note is payable in, and shall be governed by the laws of, the State
of California.
OSP PUBLISHING, INC.
/s/ JOSEPH C. ANGARD
-----------------------------------
President
/s/ WALTER M. LACHER
-----------------------------------
Secretary
GLOBAL ONE DISTRIBUTION &
MERCHANDISING INC.
/s/ GEORGE J. VRABECK
-----------------------------------
President
/s/ WALTER M. LACHER
-----------------------------------
Secretary
2
