SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
Commission file number 0-9008
ANDREWS GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 95-2683875
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification No.)
3200 WINDY HILL ROAD, SUITE 1100-WEST, ATLANTA, GEORGIA 30339
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (770) 955-0045
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No _
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant, by reference to the price at which the stock
was sold as of a specified date within 60 days prior to the date of filing:
None
The number of shares of Registrant's Common Stock, $1.00 par value,
outstanding as of March 29, 1996 was 1,000 and all common stock was indirectly
held by Mafco Holdings Inc.
Documents Incorporated by Reference
Portions of the definitive Proxy Statements for the 1996 annual meetings of
stockholders of New World Communications Group Incorporated and Marvel
Entertainment Group Inc. (which are to be filed pursuant to Regulation 14A not
later than April 29, 1996) are incorporated by reference in Part III of this
report.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Andrews Group Incorporated ("Andrews", together with its
subsidiaries, the "Company") was incorporated in 1984 and is the successor to
a corporation incorporated in 1971. The Company is an indirect wholly-owned
subsidiary of Mafco Holdings Inc. ("Mafco Holdings"). As of March 1, 1996, the
Company operates in the youth entertainment segment through its approximately
79% ownership interest in Marvel Entertainment Group, Inc. ("Marvel") and the
television broadcasting and production and distribution segments through its
approximately 42% ownership interest (83% voting interest) in New World
Communications Group Incorporated ("NWCG"), assuming conversion of NWCG Series
B Preferred Stock.
YOUTH ENTERTAINMENT
GENERAL
Marvel is a leading creator, publisher and distributor of youth
entertainment products for domestic and international markets based on action
adventure characters owned by Marvel, licenses from professional athletes,
sports teams and leagues and popular entertainment characters and properties
owned by third parties. Marvel also licenses its characters and other
properties for consumer products, television and film and advertising
promotions. Marvel's products include comic book and other publications,
sports and entertainment trading cards, children's activity stickers, toys,
adhesives, and confectionery products.
PUBLISHING
COMICS
Marvel is the largest creator and publisher of comic books and other
illustrated action and adventure material in North America and, through
Panini, Marvel publishes comic books in Italy and the United Kingdom. Marvel
has been publishing comic books since 1939 and has developed a roster of more
than 3,500 proprietary characters, including the following popular SUPER
HEROES: SPIDER-MAN; X-MEN (including WOLVERINE, NIGHTCRAWLER, COLOSSUS, STORM,
CYCLOPS, CABLE, PHOENIX, BISHOP and GAMBIT); CAPTAIN AMERICA; FANTASTIC FOUR
(including MR. FANTASTIC, HUMAN TORCH, INVISIBLE WOMAN and THING); INCREDIBLE
HULK; THOR; SILVER SURFER; DAREDEVIL; IRON MAN; DR. STRANGE and GHOST RIDER.
Marvel's SUPER HEROES exist in the "MARVEL UNIVERSE," a fictitious universe
which provides a unifying historical and contextual background for the
storylines. Marvel's titles feature classic Marvel SUPER HEROES, newly
developed Marvel characters and characters created by other entities and
licensed to Marvel, and, as a result of its 1994 acquisition of Malibu Comics
Entertainment, Inc. ("Malibu"), Malibu "ULTRAVERSE" characters. In 1995, net
publishing revenues constituted approximately 17.8% of Marvel's consolidated
net revenues.
MARKET
Marvel's primary target market for its comic books is young children
and teenagers in the 4 to 17 year old age group. There are two primary types
of purchasers of Marvel's comic books. One is the traditional purchaser who
buys comic books like any other magazine. The other audience is the
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reader-saver who purchases comic books, typically in a comic book specialty
store, and maintains them as part of a collection.
CREATIVE AND PRODUCTION PROCESS
Marvel's full-time editorial staff, consisting of one
editor-in-chief, two executive editors and approximately seventeen editors,
associate editors and assistant editors, oversees the quality and consistency
of the artwork and editorial copy and manages the production schedule of each
issue. The production of each issue requires the editors to coordinate over a
six or seven month period the activities of the writer, pencil artist,
letterer, inker, colorist, separator and the printer. The majority of this
work is performed outside of Marvel's premises.
The artists and writers include in-house artists as well as
freelancers who generally are paid on a per-page basis. They are also eligible
to receive incentives or royalties based on the net number of copies of the
comic books sold in which their work appears. Marvel has entered into
agreements with certain artists and writers under which such persons have
agreed to provide their services to Marvel on an exclusive basis, generally
for a period of one to three years.
The creative process begins with the development of a story line.
From the established story line, the writer develops the character's actions
and motivations into a plot. After the writer has developed the plot, the
penciler translates it into an action-filled pictorial sequence of events. The
penciled story is returned to the writer who adds dialogue, indicating where
the balloons and captions should be placed. The completed dialogue and artwork
are forwarded to the letterer who letters the dialogue and captions in the
balloons. Next, the inker enhances the pencil artist's work in order to give
the drawing three-dimensionality.
The artwork is sent to a color artist. Typically using only four
colors in varying shades, the color artist uses dyes to create over 100
different tones. This artwork is subcontracted to a color separator for the
production of separations which are sent as finished material to the printer.
Unaffiliated entities produce color separations and print all of Marvel's
comic books. Marvel currently uses several color separators and printers to
produce its comic books. With the acquisition of Malibu, Marvel gained the
capability to perform a limited number of color separations in-house.
DISTRIBUTION
Marvel's publications are primarily distributed through three
channels: (1) to comic book specialty stores on a nonreturnable basis (the
"direct market"), (2) through traditional retail outlets on a returnable basis
(the "retail returnable market") and (3) on a subscription sales basis.
Net publishing revenues were $147.7 million, $129.4 million and
$164.8 million for the years ended December 31, 1995, 1994 and 1993,
respectively.
For the year ended December 31, 1995, approximately 68.3% of Marvel's
net publishing revenues were derived from sales to the direct market. On July
1, 1995, Marvel discontinued sales through nine unaffiliated distributors and
began to distribute, through its Heroes World subsidiary, its publications
directly to approximately 5,000 comic book specialty stores in the United
States, Canada and the United Kingdom on an exclusive basis. Marvel believes
that controlling distribution to retail
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will expand Marvel products in comic book specialty stores and increase
sales of such products in such stores.
For the year ended December 31, 1995, approximately 20.1% of Marvel's
net publishing revenues were derived from sales to the retail returnable
market, of which 9.6% of net publishing revenues was through a single
unaffiliated distributor. The retail returnable market consists of
approximately 50,000 traditional periodical retailers such as newsstands,
convenience stores, drug stores, supermarkets, mass merchandisers and national
bookstore chains. The distributors sell Marvel's publications to wholesalers,
who in turn sell to the retail outlets. Marvel issues credit to these
distributors for unsold copies. Marvel believes it could obtain comparable
services from other distributors should such replacement become necessary or
desirable. Distribution to national bookstore chains is accomplished through a
separate distributor.
For the year ended December 31, 1995, approximately 5.3% of Marvel's
net publishing revenues were derived from subscription sales. Subscription
copies of Marvel's publications are mailed for Marvel by an unaffiliated
subscription fulfillment service.
For the year ended December 31, 1995, approximately 6.3% of Marvel's
net publishing revenues were derived from advertising sales. In most of
Marvel's comic publications, ten pages (three glossy cover pages and seven
inside pages) are allocated for advertising. The products advertised include
sports and entertainment trading cards, video games, role playing games,
movies, candy, cereals, toys, models and other consumer packaged goods. Marvel
permits advertisers to advertise in a broad range of Marvel's comic
publications which target specific groups of titles that have a younger or
older readership.
SPORTS AND ENTERTAINMENT TRADING CARDS; CHILDREN'S ACTIVITY STICKERS
In April 1995, Marvel acquired SkyBox and merged these operations
with the existing trading card operations of Fleer Corp. ("Fleer", and
together with SkyBox, "Fleer/ SkyBox"). Fleer/SkyBox is a leading marketer of
sports and entertainment trading cards. Fleer/SkyBox is best known for its
sports trading cards depicting professional athletes and sports teams,
including professional baseball, basketball, football and hockey players
competing in Major League Baseball, the National Basketball Association, the
National Football League and the National Hockey League. Sports trading cards
feature pictures of professional athletes and generally include statistical
and biographical information about the pictured athletes. Marvel's ability to
market, produce and sell its sports trading cards is dependent upon the
continual renewal of license agreements with the organizations representing
the players and owners of the baseball, basketball, football and hockey
players, leagues and teams. These licenses are non-exclusive and generally are
granted for a two to four year period. Marvel is required to make minimum
royalty payments under these agreements. In addition, Fleer/SkyBox
manufactures and distributes entertainment trading cards using Marvel's
classic SUPER HEROES characters as well as characters based on other licensed
properties, such as Walt Disney's Pocahontas, Time Warner's Batman Forever and
Paramount's Star Trek - Voyager. As more fully discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
Marvel's trading card operations were negatively impacted in 1995 by the
general contraction in the sports trading card market and the baseball, hockey
and basketball labor situations.
Panini is the largest manufacturer and distributor of sports and
entertainment sticker collections in Europe. Panini produces and distributes
stickers which are pictures on self-adhesive paper designed
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primarily to be incorporated in album collections. Panini maintains a
broad portfolio of licenses for characters or themes on which the stickers are
based. Panini's prominent position in the sticker industry has enabled it to
secure many desirable licenses, including exclusive and non-exclusive
agreements with many international sporting federations and with major
licensors such as Walt Disney, Time Warner and Mattel. Collections produced by
Panini feature professional athletes and teams in sports such as soccer
(primarily athletes and teams competing in the major European soccer leagues,
including those competing in the World Cup and European Cup competitions),
baseball, basketball and hockey; Walt Disney characters such as Pocahontas,
The Lion King, Aladdin, The Little Mermaid and Mickey Mouse; variety
characters and themes, such as Mattel's Barbie and Marvel's X-MEN; and other
characters popular in local European markets. Licenses generally are for a
term of one to three years and provide for minimum guaranteed royalty
payments. There have been significant improvements to self-adhesive stickers
in recent years with innovations such as the use of vinyl and foil paper and
textured surfaces.
Although there can be no assurance that, in the future, new licenses
for Marvel's sports and entertainment trading card and sticker licenses will
be granted to Marvel upon the expiration of the current licenses, Marvel
anticipates that it will obtain new licenses on acceptable terms to it. Marvel
considers its relationships with its licensors to be good.
Net sports and entertainment trading card and childrens' activity
sticker revenues were $358.3 million, $282.6 million and $200.1 million in
1995, 1994 and 1993, respectively.
MARKET
Marvel's sports and entertainment trading cards have marketing
categories and types of customer groups similar to those in the publishing
market. Panini sells its sticker collections primarily to children between the
ages of 4 and 14 in European markets. During the 1995 period, sales in Italy,
France, Germany and Spain accounted for a substantial majority of Panini's
childrens activity sticker collection net revenues.
PRODUCTION PROCESS
Photographs used for Marvel's sports trading cards are usually taken
by independent photographers under contract with Marvel or by the
organizations representing the respective leagues and their member teams.
Artwork used in Marvel's entertainment trading cards is created by in-house
and freelance artists some of whom create artwork for Marvel's comic books.
Design and coordination of the artwork is handled by Marvel's staff of
artists. Independent contractors print, cut, collate and wrap the trading
cards. Quality enhancements include dual-sided gloss coating and color
corrected photography. Additional enhancements of Fleer/SkyBox premium brand
cards utilize high-gloss ultraviolet coatings and gold foil stamping and super
premium brand cards utilize additional high-gloss clear plastic laminates and
gold foil stampings, heavier card stock and improved colorization.
Panini conducts in its facilities most of the manufacturing processes
required in the production of the sticker collections, including self-adhesive
paper production, film layout, printing and packaging of the finished product.
These manufacturing activities are supported by Marvel's editorial, art,
studio and photo lithography staff. Panini has separate production facilities
for stickers and self-adhesive paper, both of which are located in Modena,
Italy.
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DISTRIBUTION
During 1995, Marvel's sports and entertainment trading cards were
distributed through two channels: (1) to trading card specialty stores and (2)
through mass merchandisers, price clubs and newsstand retail outlets (the
"mass market"). As a result of market conditions, Marvel has revamped its
trading card business such that distribution of its trading card products will
be concentrated in trading card specialty stores and selected mass market
accounts. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations". Marvel's sports and entertainment trading cards are
distributed primarily in the United States and Canada. Marvel has commenced
international distribution of trading cards through Panini.
Sticker packs and collection albums are sold through newsstands,
confectioners and other retail locations. Panini sells primarily to national
and local distributors in each country where it markets products.
For the year ended December 31, 1995, approximately 41.2% of Marvel's
net sports and entertainment trading card revenues were derived from sales
through numerous unaffiliated distributors and through Heroes World to
specialty collectible shops. None of the unaffiliated distributors
individually represented a significant percentage of Marvel's net sports and
entertainment trading card revenues for 1995. There are approximately 9,500
specialty collectible shops which are primarily located in the United States
and Canada. Marvel believes that one or more of its existing distributors or
others could replace any of Marvel's other distributors should such
replacement become necessary or desirable.
For the year ended December 31, 1995, approximately 58.8% of Marvel's
net sports and entertainment trading card revenues were derived from sales to
the mass market.
For the year ended December 31, 1995, substantially all of Marvel's
children's activity sticker collection net revenues were derived from sales to
the retail returnable market, of which approximately 30.0% were through two
unaffiliated distributors.
TOYS
Marvel owns a 36.6% equity interest in Toy Biz representing 85.3% of
the total voting power. Toy Biz is a toy entertainment company that designs,
markets and distributes boys' and girls', infant/pre-school and activity toys,
in the United States and internationally, based on popular entertainment
properties, consumer brand names and proprietary designs. Marvel licenses to
Toy Biz more than 3,500 Marvel characters on an exclusive, royalty free
perpetual world wide basis for use in a broad range of toy based products. Toy
Biz seeks to capitalize on the popularity generated by the media exposure of
certain of Marvel's characters, such as X-MEN and SPIDER-MAN by emphasizing
those characters in its toy lines. In 1995, Toy Biz introduced a new line of
Marvel characters based upon Marvel's well-known GHOST RIDER comic book
series. For the year ended 1995, approximately 50% of Toy Biz net revenues
were derived from Marvel character related products. In the fall of 1994, Toy
Biz began to produce a line of dolls as well as infant and toddler learning
toys under the Gerber trademark. During 1995, Toy Biz entered into licensing
agreements with the Walt Disney Company to produce a range of tabletop pinball
games, MCA/Universal for its Hercules: The Legendary Journeys and Xena:
Princess Warrior to produce a line of action figures and Jim Henson
Productions for a line of plush items related to the Henson Muppets Treasure
Island motion picture.
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Toy Biz continues to develop a line of children's toys with a camping and
outdoor theme to be sold under the Coleman trademark. Coleman is an affiliate
of Marvel.
In addition to the foregoing in 1995, Toy Biz manufactured and
distributed its own proprietary products in various categories including: BABY
TUMBLES SURPRISE, BABY SO REAL, WILD `N WACKY PAINTER and POOCH, THE GOOD
PUPPY.
Toy Biz products are distributed to a large number of general and
specialty merchandisers and distributors, principally in the United States and
around the world. Toy Biz's principal customers are toy retailers and mass
merchandisers in the United States.
Toy Biz's net revenues for 1995, 1994 and 1993 were $196.4 million,
$156.5 million and $89.7 million, respectively. Prior to March of 1995, Marvel
reported Toy Biz operations under the equity basis and did not record Toy Biz
net revenues in its consolidated net revenues. In March of 1995, Marvel began
to consolidate Toy Biz operations and consolidated $180.2 million of net
revenues.
CONSUMER PRODUCTS, MEDIA AND ADVERTISING-PROMOTION LICENSING
Marvel's consumer products, media and advertising-promotion licensing
operations are organized in four areas: the licensing of its characters for
use with merchandise, promotions, publishing and television and film. Marvel
grants third parties the right to manufacture and sell consumer items
identified with Marvel characters. These licensees sell Marvel character based
products through their normal distribution channels and occasionally in comic
book stores. Marvel's characters appear on hundreds of items, including
apparel, gifts, toys and games, housewares and domestic items and consumer
packaged goods. Marvel generally receives a percentage of wholesale sales as a
royalty and an advance against royalties upon execution of a license
agreement. Marvel also licenses its characters for the production of
television programs and feature films.
During 1995, the number of licensed animated television series based
on Marvel characters increased. In addition to the X-MEN, which began in 1992,
Marvel now has three additional half-hour series based on THE FANTASTIC FOUR,
IRON MAN and SPIDER-MAN. In February, 1996 a made for television movie
GENERATION X aired. Marvel anticipates that this media exposure will increase
the popularity of the characters on which the series are based and thereby
benefit Marvel's various businesses.
Marvel also enters into publishing license agreements with
international publishers for the publication of comic and non-comic books
employing Marvel's titles and characters and/or third party titles and
characters in approximately 75 countries and 26 languages. Marvel receives a
percentage of the publishers' revenues as a royalty. Marvel also acts as an
agent for third party owners of characters seeking to obtain licensing
opportunities for their characters.
For the year ended December 31, 1995, the revenue from consumer
products, media and advertising-promotions licensing comprised 6.4% of
Marvel's consolidated net revenues.
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OTHER PRODUCTS
CONFECTIONERY
Fleer manufactures and markets an array of confectionery products.
Fleer's confectionery operation is best known for its DUBBLE BUBBLE and
RAZZLES gum products. Marvel believes that DUBBLE BUBBLE, with origins dating
back to 1928, was the first branded bubble gum sold in the United States.
Marvel distributes its confectionery products utilizing substantially the same
distribution channels as those used for sports and entertainment trading
cards.
ADHESIVES
Panini manufactures and distributes adhesives in Europe. Through its
Adespan Paper Division, Panini manufactures sheet and reel self-adhesive paper
which is sold to third parties primarily for production of stickers used in
labeling and packaging.
Net revenues from other products were $90.0 million, $52.3 million
and $24.1 million in 1995, 1994 and 1993, respectively.
LICENSES AND TRADEMARKS
Marvel believes that its roster of characters as well as its MARVEL
and MALIBU trade names represent its most valuable assets and that such roster
could not be easily reproduced. In addition, Marvel considers its FLEER, FLEER
ULTRA, FLAIR and SKYBOX trademarks to be of material importance to its trading
card business, its PANINI trademark to be of material importance to its
children's activity sticker business and its DUBBLE BUBBLE and RAZZLES
trademarks to be of material importance to its confectionery business. Marvel
currently conducts an active program of maintaining and protecting (i) its
principal trademarks, including the MARVEL trade name, and (ii) copyrights on
its characters and publications, in the United States and in 55 foreign
countries where such protection is available. Marvel's principal trademarks
have been registered in the United States.
EMPLOYEES
At March 4, 1996, Marvel employed approximately 1,625 persons of whom
approximately 850 were involved in the manufacturing or creative processes.
The number of employees include the employees of Toy Biz and employees from
the SkyBox acquisition in 1995. During the fourth quarter of 1995, in
connection with the restructuring of Marvel's publishing and confection
operations, 275 employees were terminated. Marvel also contracts for creative
work on an as-needed basis with approximately 630 freelance writers and
artists.
Certain of Marvel's manufacturing employees are represented by a
union pursuant to a collective bargaining agreement which expires in June
1996. In addition, the International Brotherhood of Teamsters filed a petition
with the National Labor Relations Board on February 9, 1996 seeking an
election to represent approximately 46 warehouse workers at a facility of
Heroes World Distribution, Inc. ("Heroes World") located in Long Island City,
New York. Heroes World moved to dismiss the petition on the grounds that it
plans to close the Long Island City facility by June 30, 1996. The Regional
Director denied the Heroes World motion and Heroes World has until April
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1, 1996 to appeal that denial. In the meantime, a representation election
has been tentatively scheduled for April 12, 1996.
Marvel believes that its relations with its employees are
satisfactory.
COMPETITION
The comic book and sports and entertainment trading card industries
are highly competitive. Marvel competes with over one hundred publishers in
the United States. There are numerous companies licensed to produce sports and
entertainment trading cards, other than entertainment trading cards based on
Marvel's characters, some of which sell their products only in regional or
niche markets. In addition, licenses may be granted to other companies to
produce sports and entertainment trading cards in the future, thus generating
greater competition.
Panini, as a leader in the development of the sticker industry,
enjoys a prominent position in each of the countries in which it operates. The
major competitors of Panini are generally regional companies. Marvel believes
that Panini's competitive advantages are its reputation for quality stickers,
its long standing relationship with licensors and its strong distribution
capabilities. Panini does, however, compete for the discretionary spending of
children with other forms of youth entertainment.
The toy industry is highly competitive, and Toy Biz competes with
several larger, better capitalized toy companies in the design and development
of new toys, the procurement of licenses and for adequate retail shelf space
for its products, as well as with respect to the improvement and expansion of
previously introduced products and product lines and the marketing and
distribution of its products. Toy Biz believes that its exclusive royalty free
perpetual worldwide license with Marvel, the industry reputation and ability
of Mr. Arad, the quality of its products and its overhead and operational
controls will enable Toy Biz to compete successfully.
Some of Marvel's competitors are part of integrated entertainment
companies and may have greater resources than Marvel. Marvel also faces
competition from other entertainment media, such as movies and video games,
but believes that it benefits from the low price of comic books, sports and
entertainment trading cards and children's activity sticker collections in
relation to such other products.
SEASONALITY
Marvel sells sports trading cards throughout the year in all major
sports. Sales of Marvel's sports trading cards peak at or near the beginning
and mid-point of the sports season to which the specific products relate. The
Company sells sports trading cards throughout the year in all major sports.
However, the baseball labor situation has resulted in lower sales of baseball
trading cards.
Sales of the entertainment related products tend to be less seasonal,
although sales of products related to a motion picture or animated series are
generally planned to begin at the time of first release or subsequent video
release in the case of a major motion picture. Sales of entertainment related
products are planned, where possible, to counterbalance the seasonality of
sports related product sales or event driven entertainment product sales
(e.g., a motion picture or animated series release).
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Sales of Marvel's sports and entertainment stickers in Europe are
generally concentrated in the first and fourth quarters, which timing
coincides with the related buying habits of children during the school year.
As a result of heavy retail demand for toy products during the
Christmas season, the toy industry generally is highly seasonal. Marvel's Toy
Biz subsidiary has experienced this seasonal pattern in its sales and
profitability. Sales of Toy Biz products are also affected by the timing and
continued popularity of media events such as the various animated series
depicting Marvel's characters currently airing.
The timing of events as discussed above as well as the continued
introduction of new events and related products can and will cause
fluctuations in quarterly revenues and earnings.
TELEVISION BROADCASTING AND TELEVISION PROGRAMMING PRODUCTION AND DISTRIBUTION
GENERAL
NWCG is a vertically integrated entertainment company which operates
primarily through its principal subsidiaries New World Television Incorporated
("NW Television"), NWC Acquisition Corporation ("NW Acquisition") and New
World Entertainment, Ltd. ("NW Entertainment").
BUSINESS STRATEGY
NWCG's overall business strategy is to enhance and utilize its status
as an integrated entertainment enterprise to capture a larger portion of the
advertising and syndication revenue generated by programming, lessen the
financial risk associated with the operation of the television programming and
broadcasting businesses as stand-alone enterprises, exert greater control over
the programming broadcast by its television stations and benefit from new
revenue streams generated by the entertainment industry. NWCG intends to
continue to emphasize programming tailored to targeted viewer preferences in
order to respond to the heightened competition for, and continued
fragmentation of, broadcast audiences.
During 1995 NWCG has expanded the scope and reach of its broadcast
properties through the acquisition of the Argyle Stations. Further, NWCG has
enhanced its production capabilities through the acquisition of certain assets
of Cannell Entertainment, Inc.
National broadcast television advertisers generally require programs
in which they purchase advertising time to have a minimum clearance of 75% to
80% of the total number of U.S. television households. NWCG's currently owned
broadcast stations, programming alliances with networks and internal
distribution and syndication efforts will improve NWCG's ability to obtain the
necessary clearance of its programming.
Affiliation with the Fox Network has enabled NWCG's broadcast
stations to air more local informational and news programming as well as NW
Entertainment programming and programming of others.
TELEVISION BROADCASTING OPERATIONS. NWCG's broadcasting operations
are conducted through NW Television and NW Acquisition. NWCG currently owns
and operates the following television stations: KDFW-TV (Dallas-Ft. Worth),
WJBK-TV (Detroit), WAGA-TV (Atlanta), WJW-
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TV (Cleveland), WTVT-TV (Tampa), KSAZ-TV (Phoenix), KTVI-TV (St. Louis),
KNSD-TV (San Diego), WITI-TV (Milwaukee), WDAF-TV (Kansas City), WVTM-TV
(Birmingham) and KTBC-TV (Austin) (collectively, the "Stations"). All of these
stations, other than KNSD-TV and WVTM-TV which are affiliated with NBC, have
entered into affiliation agreements with the Fox Network.
NWCG purchased certain debt and equity securities of Argyle
Television Holding Inc. ("Argyle" or the "Argyle Stations") for total
consideration of $750.4 million, including $100.0 million in cash paid for an
option in 1994 and assumption of debt of $283.6 million. Argyle controlled
four VHF television stations, KDFW-TV (Dallas, Texas), KTBC-TV (Austin,
Texas), KTVI-TV (St. Louis, Missouri) and WVTM-TV (Birmingham, Alabama). For
financial reporting purposes, the acquisition occurred on March 31, 1995. FCC
approval for change in control of the television stations occurred on April
14, 1995.
On March 31, 1995, NWCG granted to Fox Television Stations, Inc.
("Fox") an option to acquire both WGHP-TV and WBRC-TV for approximately $140.4
million, subject to certain adjustments, which included a non-refundable
payment by Fox of $100.0 million. NWCG contributed the stock of the
subsidiaries which own and operate WGHP-TV and WBRC-TV to a trust of which
NWCG is the beneficiary (the "Trust"). NWCG had no role in the management or
operation of the stations contributed to the Trust. Further, NWCG borrowed
approximately $40.4 million from Fox, secured by the beneficial interest in
the Trust and non-recourse to any other assets of NWCG. In July 1995 Fox
purchased WBRC-TV for $100.0 million under the terms of the purchase option.
The consideration for the purchase consisted of $74.1 million of the option
payment applied to the purchase price and a reduction of the note payable to
Fox. As of December 31, 1995, NWCG retained WGHP-TV in the Trust and had
corresponding non-recourse debt of $16.7 million. In the first quarter of
1996, Fox purchased WGHP-TV under the terms of the agreement and all of the
remaining non-recourse debt was extinguished.
NWCG believes that affiliation agreements such as with the Fox
Network and NBC are advantageous because they provide the stations with
competitive programming at a lower cost than would otherwise be available. In
addition, certain advertising time in these programs is made available for
sale to local and national advertisers.
NWCG has focused on research to determine viewer preferences in its
markets to develop programming which enhances the image of the Stations as
Fox/NBC affiliates and which focuses on identified local market and
demographic choices. These efforts, along with efforts to promote viewer
awareness of the Stations' network affiliations, generally have resulted in
improved audience viewing shares of targeted demographic groups. In connection
with the affiliation with Fox, the Stations are able to offer substantially
more locally produced programming. Further, the Stations will be used as a
base for distributing programming, giving NW Entertainment a greater ability
to develop and produce programming which has been pre-cleared for broadcast
not only to the households served by NWCG's stations but also by other
stations on a national basis through syndication arrangements.
TELEVISION PROGRAMMING PRODUCTION AND DISTRIBUTION OPERATIONS.
Through NW Entertainment and its subsidiary production companies, NWCG
develops, acquires, produces and distributes on a world wide basis (including,
under certain circumstances, for broadcast on NWCG's television stations),
movies of the week ("MOW's"), series, mini-series, soap operas and low-cost
programs, such as game shows, reality programming and talk shows, and animated
programming (including programs developed in conjunction with Marvel).
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NW Entertainment includes the operations of its subsidiaries Four
Star, a former producer of television programming with a library of program
titles, Moving Target Productions, Inc. and Cannell Entertainment, Inc.,
producers of television programming, and New World\Genesis ("NW Genesis"), an
independent domestic syndicator of television programming, New World Sales and
Marketing, Inc., a sales and marketing firm, and a 37.5% ownership interest
(with an option to increase this interest to 50%) in Guthy-Renker, a producer
of long-form advertising ("infomercials") and merchandiser of related
products.
INDUSTRY OVERVIEW. Television Broadcasting Industry Overview. The
United States television market, the largest in the world, is primarily served
by three distribution channels: (1) the networks; (2) independent commercial
television stations; and (3) cable television services (including pay cable).
ABC, CBS and NBC provide their affiliates with approximately 22 hours of prime
time programming per week, as well as with a substantial amount of programming
for other time periods, while Fox provides its affiliates with approximately
15 hours of prime time programming per week. Network affiliates of ABC, CBS
and NBC broadcast the networks' programming and national commercials in return
for payments by the networks. This relationship results in the network being
able to reach virtually all of the significant television markets in the
United States. Recently, United Paramount Network and Warner Brothers Network
have formed affiliation agreements with certain independent commercial
television stations to provide four to seven hours of prime-time programming
per week; both networks have announced programming expansion. Cable services
are generally classified as being in one of three categories: super stations
(such as Turner Broadcasting System), basic cable (advertiser-supported) and
pay cable networks (Showtime, HBO). The most successful cable networks each
can reach more than one-half of United States television households.
In the television industry, references to one rating point are to 1%
of the total television households in a station's television market, referred
to as Designated Market Area ("DMA"), and references to one share point are to
1% of the total television households in the DMA in which a television is in
use at that time.
Revenues of television stations are derived primarily from (i)
national spot advertising, which consists of advertising time sold to national
and regional advertisers; (ii) local advertising, which consists of
advertising time sold to local advertisers; and (iii) network compensation
payments, which are made by a network to an affiliated station in
consideration for its broadcasting of network commercial programs. Advertising
rates are related to the population and number of television receivers located
in the area served by a station and to the demographic characteristics of such
population as well as to the audience's acceptance of a station's programming
as reflected in surveys by independent rating services. Many national spot and
local advertising contracts are short-term and revenues from such contracts
are sensitive to changes in prevailing economic conditions.
According to Television Bureau of Advertising surveys, television
station advertising revenues declined 6.0% in 1991, reflecting the impact of
the Gulf War and continued economic recession. This was the industry's first
annual decline in revenue since the early 1970s when cigarette advertising on
television was banned. In 1992 and 1993, television advertising revenues
increased at a compound annual growth rate of approximately 5.5%, with a surge
to 13.6% in 1994, which included significant political and Olympic advertising
revenues.
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The slowdown in the growth of television industry advertising
revenues in recent years, compared to the period prior to 1986, which enjoyed
annual double-digit growth, is due to several factors. These include a general
decline in viewing shares garnered by over-the-air television stations due to
increased competition from alternative viewing sources, especially cable
television, the general economic slowdown and a resulting excess of available
advertising time in many television markets. Revenues of network affiliated
stations have been particularly affected by the increased programming choices
provided to viewers by cable television operators. The networks' decreased
market share has adversely impacted advertising revenues of affiliated
stations.
During the past several years, there has been growth in the number of
programming, entertainment and video distribution systems, such as cable
television, satellite master antenna systems, multipoint distribution
services, syndicated and pay television, pay-per-view interactive video,
direct broadcast satellite systems, local telephone companies' expansion into
multi-channel program distribution services and video cassette rentals. Many
of these alternative program sources have expanded their channel or
programming capacity. These additional program services compete with broadcast
television stations for viewing shares since the customer is offered more
viewing alternatives.
Several other new technologies in their developmental stages are
expected to provide competitive video program services, including "wireless
cable" and digital video compression, which may enable many video distribution
media to substantially increase channel capacity. At this time, it cannot be
determined what impact these developing technologies will have on the
television broadcast industry.
Television Production/Distribution Industry Overview. The United
States television production/distribution industry serves the largest
television programming market in the world, consisting of the principal
broadcast networks, their affiliates, independent television stations, cable
and direct satellite-delivered television. Growing international broadcasting,
cable and direct satellite-delivered television markets offer further
opportunities for the exploitation of television programming. While growth in
the United States television industry has slowed in recent years (see --
"Television Broadcasting Industry Overview"), the international television
industry is experiencing dynamic growth fueled by the onset of new television
distribution systems outside of the United States. European television is the
most striking example of this growth in programming outlets. Over the last ten
years, governments have privatized television systems in Italy, France, Norway
and Spain. Industry analysts predict a continued strong international demand
for United States programming. In the last three years, European pay
television has grown to over three million subscribers. These systems have had
the effect of raising programming prices by contributing to the overall
competitiveness in the market. Pay television is now beginning in other
countries, including Japan.
In the United States, ABC, CBS and NBC currently order or produce
approximately 22 hours of prime time programming and approximately 30 hours of
daytime programming each week. In addition, other networks such as Fox and the
start-up networks, UPN and WB, require primetime programming. Prime time
programming generally consists of half-hour series (usually situation
comedies), reality shows, hour-length series and long-form programming.
Long-form programming can be divided into two categories based on length: MOWs
(films of three hours or less) and mini-series (dramatic epics of four hours
or more).
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Suppliers of television programming include the production divisions
or affiliated companies of the networks, major film studios, station owners,
advertising agencies and independent production companies. The largest
suppliers of network programming, the major film studios, generally
concentrate on series and feature film production because of the potential of
greater revenues. As a result, independent production companies such as NW
Entertainment can take advantage of the absence of major studio involvement in
long form programming. Moreover, production costs and other financial risks of
long-form programming are generally lower than theatrical motion pictures and
series.
Generally, a production company will license to a network or sponsor
the right to broadcast a program twice for a license fee equal to 70% to 90%
of the program's budgeted production cost (the remaining 10% to 30% is
referred to as the "production deficit"); although the financial arrangements
for license fees are evolving due to the entry of networks into production and
distribution. The production company generally retains all other rights to the
program and will usually license limited rights to foreign broadcasters,
enabling the production company to recoup all, or a portion, of the budgeted
production deficit. A production order sets forth the principal terms for a
license of NW Entertainment's product to a network and specifies the license
fee to be paid and the conditions to be met for payment. Production orders are
typically contingent on the producer's obtaining certain approvals from the
network, such as script, principal cast and director, prior to commencement of
principal photography. The delivery date is typically expressed in terms of
periods of time measured from the commencement of principal photography.
After the initial network licensing period, the program is available
for cable and syndication in the United States ("off-network programming").
Syndication is the process of furnishing programming directly to stations as
opposed to the network system for distribution to its affiliated stations.
Producers/syndicators earn license fees for distributing programs
based on granting local television stations the right to broadcast a
particular program. Originally, syndication fees were collected on a cash-only
basis whereby the station paid the producer/syndicator a cash license fee for
the right to run a show. However, since the early 1980s stations have become
strapped for cash in the wake of higher interest costs, more competition and
lower network compensation. As a result, syndication agreements have
increasingly emphasized "barter" contracts or a combination of cash and
barter.
Under barter sales, which have increasingly become the industry
standard, the syndicator is paid as advertising time is sold and episodes are
aired. The value of this advertising time varies based upon viewer rating
points (as determined by the A.C. Nielsen Company) of the specific program in
which the advertising time is aired. The chief advantage to the barter system
is that it provides stations with a new source of funds for programming by
using its valuable advertising units as currency. The increasing emphasis on
barter transactions has helped fuel the increasing demand for syndicated
programs.
First-run programs have become increasingly attractive to television
stations because their contracts typically require only a one-year commitment
as compared with a three to five-year commitment for off-network reruns
programming. In addition, greater viewer demand for television programming in
general and heightened competition among television and cable channels has
increased the demand for original programming outside the networks' standard
offerings. Furthermore, the advent of barter sales has enabled stations to
more efficiently purchase quality programming without
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committing to large up-front license fees. In contrast to off-network,
first-run programming provides stations with fresh, original programs.
Based on their play on network in prime time, off-network programs
have traditionally been the higher profile programs of syndication. Network
programs prior to being syndicated are produced for weekly airings (usually 22
episodes a year). In syndication, off-network series are scheduled on a strip
basis (Monday through Friday), requiring the production of a minimum of 66
episodes (equivalent to about a three-year run on network).
Animation programs have traditionally aired in syndication on
independent stations in both afternoon and early morning time periods and on
network television Saturday mornings. Shows of this genre are expensive to
produce, typically costing in excess of $250,000 per half hour. Animation has
fewer new episodes produced each new season compared to a first-run strip
because cartoons can be repeated more heavily than adult programming.
Successful animation generally has a long life and, thus, the relatively high
initial cost is amortized over an extended period.
BROADCASTING. The Stations. NWCG currently owns and operates twelve
Stations. Data presented below regarding television ratings and market share
data are based on published industry data for November 1995.
KDFW-TV, Dallas-Ft. Worth, Texas. KDFW-TV, channel 4, a VHF station
affiliated with Fox, commenced broadcasting in 1949. Dallas is the 8th largest
U.S. television market, serving 1,821,900 television households.
WJBK-TV, Detroit, Michigan. WJBK-TV, channel 2, a VHF station affiliated
with Fox, commenced broadcasting in 1948. Detroit is the 9th largest U.S.
television market, serving 1,736,910 television households.
WAGA-TV, Atlanta, Georgia. WAGA-TV, channel 5, a VHF station affiliated
with Fox, commenced broadcasting in 1949. Atlanta is the 10th largest U.S.
television market, serving 1,583,520 television households.
WJW-TV, Cleveland, Ohio. WJW-TV, channel 8, a VHF station affiliated with
Fox, commenced broadcasting in 1949. Cleveland is the 13th largest U.S.
television market, serving 1,452,090 television households.
WTVT-TV, Tampa-St. Petersburg, Florida. WTVT-TV, channel 13, a VHF
station affiliated with Fox, commenced broadcasting in 1955. Tampa-St.
Petersburg is the 15th largest U.S. television market, serving 1,395,480
television households.
KSAZ-TV, Phoenix, Arizona. KSAZ-TV channel 10, a VHF station affiliated
with Fox, commenced broadcasting in 1953. Phoenix is the 17th largest U.S.
television market, serving 1,169,530 television households.
KTVI-TV, St. Louis, Missouri. KTVI-TV, channel 2, a VHF station
affiliated with Fox, commenced broadcasting in 1957. St. Louis is the 20th
largest U.S. television market, serving 1,108,480 television households.
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KNSD-TV, San Diego, California. KNSD-TV channel 39, a UHF station
affiliated with NBC, commenced broadcasting in 1965. San Diego is the 27th
largest U.S. television market, serving 909,420 television households.
WITI-TV, Milwaukee, Wisconsin. WITI-TV, channel 6, a VHF station
affiliated with Fox, commenced broadcasting in 1956. Milwaukee is the 31st
largest U.S. television market, serving 782,810 television households.
WDAF-TV, Kansas City, Missouri. WDAF-TV, channel 4, a VHF station
affiliated with Fox, commenced broadcasting in 1949. Kansas City is the 32nd
largest U.S. television market, serving 779,630 television households.
WVTM-TV, Birmingham, Alabama. WVTM-TV, channel 13, a VHF station
affiliated with NBC, commenced broadcasting in 1949. Birmingham is the 51st
largest U.S. television market, serving 524,780 television households.
KTBC-TV, Austin, Texas. KTBC-TV, channel 7, a VHF station affiliated with
Fox, commenced broadcasting in 1952 . Austin is the 64th largest U.S.
television market, serving 417,090 television households.
Network Affiliation. All of the Stations are affiliated with national
television networks, ten with Fox and two with NBC. These network affiliation
agreements require an affiliate to carry a significant amount of
network-provided programming, and the networks undertake to supply a certain
amount of programming to the affiliate. Management believes that network
affiliation is advantageous because it provides the Stations with competitive
programming at lower cost than would otherwise be available. In addition,
certain advertising time in these programs is made available to the Stations
for sale to local and national advertisers. Management believes that an
affiliated Station's competitive position in its market is somewhat affected
by the competitive strength of its network, but network strength does not
necessarily determine an individual Station's audience or its financial
performance. Local programming, particularly local news coverage, community
involvement and promotion are important competitive factors. NWCG anticipates
that network affiliations will continue to be advantageous and that networks
will remain highly competitive with each other and with other programming
sources.
KNSD-TV and WVTM-TV are affiliated with NBC under agreements having
an initial ten-year term ending in 2005. Thereafter, NWCG and NBC may extend
the terms for additional five-year periods.
KDFW-TV, WJBK-TV, WAGA-TV, WJW-TV, WTVT-TV, KSAZ-TV, KTVI-TV,
WITI-TV, WDAF-TV and KTBC-TV, are affiliated with Fox under agreements having
initial ten-year terms ending in 2004 and 2005. Thereafter, NWCG and Fox may
extend the terms for additional five-year periods.
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The table below lists the twelve Stations and sets forth certain data
with respect to each Station:
<TABLE>
<CAPTION>
ORIGINAL
COMMERCIAL DATE OF % OF
NATIONAL TV ACQUISITION TOTAL
MARKET TV HOMES STATIONS IN OR U.S. TV
MARKET STATION(1) NETWORK SIZE(2) IN DMA(2) MARKET(2) INVESTMENT HOMES
------ ---------- ------- ------- --------- --------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Dallas-Ft. Worth, TX KDFW Fox 8 1,821,900 12 3/95 1.901
Detroit, MI WJBK Fox 9 1,736,910 7 10/87 1.813
Atlanta, GA WAGA Fox 10 1,583,520 9 10/87 1.652
Cleveland, OH WJW Fox 13 1,452,090 9 10/87 1.515
Tampa-St. Petersburg, FL WTVT Fox 15 1,395,480 8 5/93 1.456
Phoenix, AZ KSAZ Fox 17 1,169,530 11 9/94 1.220
St. Louis, MO KTVI Fox 20 1,108,480 7 3/95 1.157
San Diego, CA KNSD NBC 27 909,420 6 10/87 .949
Milwaukee, WI WITI Fox 31 782,810 9 12/87 .817
Kansas City, MO WDAF Fox 32 779,630 6 9/94 .814
Birmingham, AL WVTM NBC 51 524,780 4 3/95 .556
Austin, TX KTBC Fox 64 417,090 5 3/95 .418
</TABLE>
- -------------
(1) All of the Stations operate on VHF channels (channels 2 through 13)
except for KNSD-TV which operates on channel 39.
(2) Source: A.C. Nielsen Company, November 1995.
PRODUCTION AND DISTRIBUTION. General. The production and distribution
segment produces, acquires and distributes television programming in the
United States and international markets. NW Entertainment focuses on
developing high quality programming with recognized performers and broad
domestic and international appeal. NW Entertainment maintains many
relationships with foreign media companies (including Television Francaise 1,
Radio Televisione Italiana and RTL, which operate their businesses primarily
in France, Italy and Germany, respectively), with which it engages in
pre-sales of foreign rights. NW Entertainment also acquires and distributes
programming produced by other production companies.
NW Entertainment is the successor to a California corporation
initially organized in December 1982 as Epic Productions, Inc., and began
operations in February 1983 after acquiring the name "New World Entertainment"
and certain distribution assets from New World Pictures, Inc. NW Entertainment
was acquired by Andrews in June 1989. Prior to 1989, NW Entertainment was an
international developer, producer and distributor of theatrical motion
pictures and an international marketer and distributor of home video products.
In December 1989, NW Entertainment sold all film rights, other than United
States television rights, in the majority of pictures comprising its
theatrical and home video libraries. In addition, as part of the same
transaction, NW Entertainment sold the worldwide video rights to certain
titles in its television library. NW Entertainment retained all rights to five
feature-length films which it has sold or licensed to third parties.
In 1991, NW Entertainment sold its then existing prime time network
television production business to a third party. In that transaction, such
third party agreed to assume NW Entertainment's executory obligations with
respect to certain contracts with employees and term producers and certain
development projects and television series.
From 1991 to 1993, NW Entertainment concentrated on international
co-productions and production for cable of long-form programming.
International co-productions include "Paradise
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Beach" (Australia), "A Fine Romance" (France, U.K.), "Queenie" (U.K.) and
"Secrets" (France, Germany and Italy).
Currently, NW Entertainment's business strategy is (i) to develop
animated programming, both in conjunction with Marvel and through NW
Entertainment's internal resources for the domestic and international markets,
(ii) to develop relatively low-cost programs, such as game shows, reality
programming and talk shows that meet the needs of NWCG's stations and are
suitable for syndication, (iii) to produce a selected number of projects each
year for prime time airing on Fox and one of the other networks, (iv) to
utilize NW Genesis' domestic distribution capabilities to increase revenues
from NW Entertainment's production efforts and extensive library and (v) to
produce programming for broadcast on NWCG's stations, on the Fox and NBC owned
and operated stations, on cable networks and, for certain programming, for
inclusion in the Fox Network lineup, and to thereby develop an inventory of
programming which may be successfully sold in the domestic and foreign
syndication markets.
Programming. The production of television programming involves the
development of a concept based on a creative or literary property into a
television script, the selection of talent, the filming or taping of the
programming, and the post-production work necessary to create a finished
product. NW Entertainment's projects are originated by its own staff,
originated from development deals with independent contractors or brought to
NW Entertainment by persons who are not affiliated with NW Entertainment. If a
concept is appealing, NW Entertainment will present it to a prospective
licensee (including its affiliated stations), one of the television networks,
a cable television network or a prospective co-production partner. In the
alternative, NW Entertainment might develop a concept for distribution for
first-run syndication through NW Genesis. In some cases, a prospective
licensee might request NW Entertainment to develop a concept for a particular
time period or type of audience. If a concept is accepted for further
development, the prospective licensee or partner would usually commission and
pay for all or a portion of the cost of a script prior to committing itself to
the full scale production of a program. Prior to approval of a script by the
licensee or partner, a license fee or financial commitment would be agreed
upon and pre-production activities would be undertaken.
NW Entertainment's library includes "Santa Barbara," "The Wonder
Years," and "Zorro." Other programs created or distributed by NW Entertainment
include network soap operas "Paradise Beach," and "The Bold and The
Beautiful." Other past successes include the mini-series "Op Center", "Elvis &
Me" and "In a Child's Name," and the series "Judith Krantz's Secrets."
NW Entertainment has numerous projects in development and is
continuously considering new projects for potential exploitation. Projects
currently under development and/or production include the first-run NBC
co-production, "Access Hollywood", first-run strip "Loveline", first-run
weekly "Two", four network productions, "Generation X", "Second Noah",
"Strange Luck", and "Profit", as well as "Pacific Drive" for international
distribution. "Silk Stalkings" and "Weekly World News" are currently being
produced for the USA cable network. Also under active development are
additional series pilots and selected scripts for MOWs featuring Marvel
characters.
NW Entertainment has created two related operating areas geared
towards animated family entertainment: Marvel Films and New World Animation
("Animation"). Marvel Films produces animated films utilizing properties
licensed to it from Marvel Entertainment. Marvel Films is under contract to
provide "Spiderman", which airs exclusively on Fox and is a top rated
children's show since its debut and produced the "Marvel Action Universe"
featuring "Iron Man", "Fantastic Four" and
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"The Biker Mice from Mars". Further, NWCG is currently developing "Hulk"
for UPN and "Silver Surfer" for Fox. See Item 13, "Certain Relationships and
Related Transactions -- Certain Other Relationships."
NW Entertainment's library includes approximately 100 titles,
representing more than 2,000 hours of programming, including those described
below. Management believes that this library represents substantial value. The
following table sets forth information concerning selected programs included
in NW Entertainment's library:
<TABLE>
<CAPTION>
HIGHLIGHTS OF NW ENTERTAINMENT'S LIBRARY
SERIES NETWORK SEASONS IN PRODUCTION CAST
- ------ ------- --------------------- ----
<S> <C> <C> <C>
The Wonder Years ABC 1987-1993 Fred Savage
Tour of Duty CBS 1987-1990 Terence Knox, Carl Weathers
Crime Story NBC 1986-1988 Dennis Farina, Anthony Dennison
Sledge Hammer NBC 1986-1988 David Rasche
Zorro Family Channel 1989-1992 Duncan Regehr, Efrem Zimbalist, Jr.
Judith Krantz's Secrets Syndicated 1991-1992 David Birney, Peggy Lipton
StrangeLuck Fox 1995-Present D.B. Sweeney
Weekly World News USA 1995-Present Edwin Newman
Second Noah ABC 1995-Present Daniel Hugh Kelly, Betsy Brantley
Profit Fox 1995-Present Andrian Pasdar
Silk Stalkings USA 1995-Present Nick Kokotokis, Tyler Layton
The Commish ABC 1995-Present Michael Chiklis, Theresa Saldana
SOAP OPERAS NETWORK SEASONS IN PRODUCTION CAST
- ----------- ------- --------------------- ----
Santa Barbara NBC 1984-1993 A. Martinez, Marcy Walker
The Bold and The Beautiful CBS 1987-Present Ronn Moss
Paradise Beach Syndicated 1993-1994 Matt Lattanzi
Pacific Drive Syndicated 1995-Present Lloyd Morris, Melissa Trautz
ANIMATION NETWORK SEASONS IN PRODUCTION EPISODES PRODUCED
- --------- ------- --------------------- -----------------
Spiderman Fox 1994-Present 78 1/2-hour episodes
Biker Mice From Mars Syndicated 1993-1995 65 1/2-hour episodes
Incredible Hulk Syndicated 1987 13 1/2-hour episodes
Fantastic Four Syndicated 1987 13 1/2-hour episodes
Robocop Syndicated 1987 12 1/2-hour episodes
Marvel Action Universe Syndicated 1993-1995 52 1/2-hour episodes
</TABLE>
NW Entertainment leases production facilities, for which there has
been an adequate supply to meet its needs. NW Entertainment, through its
production subsidiaries, meets its personnel needs by retaining directors,
actors, technicians and other specialized personnel on a per production,
periodic or a per diem basis. Successful television production is dependent
upon the talents of persons that sometimes are difficult to replace. However,
there has always been an adequate supply of personnel to meet NW
Entertainment's needs. The writers, directors and actors retained may be hired
pursuant to
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the agreements between the Alliance of Motion Picture and Television
Producers ("AMPTP") and each of the Writers Guild of America ("WGA") (which
expires on May 1, 1998), the Directors Guild of America ("DGA") (which expires
on June 30, 1996), the Screen Actors Guild ("SAG") (which expires on June 30,
1998) and the American Federation of Television and Radio Artists ("AARA")
(which expires on November 15, 1997). In addition, NW Entertainment's
production subsidiary companies utilize members of the International Alliance
of Theatrical Stage Employees ("IATSE") (which has an agreement which expires
on July 31, 1996). There have been labor disruptions in the past (the most
recent being the strike by the WGA in the Spring and Summer of 1988), none of
which has materially affected NW Entertainment, although any future work
interruptions could hinder NW Entertainment's activities and may have a
material adverse effect on NW Entertainment.
NW Genesis
NW Genesis is a leading syndicator of television programming in the
United States. It distributes first-run programming and syndicates off-network
programs to a wide range of commercial and public television stations, as well
as cable channels. Providing programming in various formats, program lengths
and time slots, NW Genesis has one of the broader product offerings in the
television syndication business. The acquisition of NW Genesis has
substantially increased NWCG's United States domestic distribution
capabilities.
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The chart below sets forth summary information about NW Genesis'
current and previously syndicated programs.
<TABLE>
<CAPTION>
NW GENESIS' LIBRARY
TARGET MARKET
CURRENTLY SYNDICATED PROGRAMS FIRST SEASON PROGRAM TYPES (CURRENT/FUTURE)
- ----------------------------- ------------ ------------- ----------------
<S> <C> <C> <C>
Real Stories of the Highway Patrol 1992-93 First-run strip Commercial/Cable
Biker Mice From Mars 1993-94 First-run strip animation Commercial/Cable
Marvel Action Universe 1994-95 First-run weekly animation Commercial/Cable
Top Cops 1994-95 Off-network strip Commercial/Cable
Tales From the Crypt 1995-96 Off-cable weekly Commercial
Juvenile Justice 1995-96 First-run weekly Commercial/Cable
Reality Check 1995-96 FCC children show Commercial/Cable
The Mark Walberg Show 1995-96 Talk show Commercial/Cable
U.S. Customs Classified 1995-96 First-run weekly Commercial/Cable
Emergency Call 1991-92 First-run weekly Commercial/Cable
FUTURE SYNDICATED PROGRAMS TARGET MARKET
(CURRENTLY BEING MARKETED) FIRST SEASON PROGRAM TYPES (CURRENT/FUTURE)
- -------------------------- ------------ ------------- ----------------
Loveline 1996-97 First-run strip Commercial/Cable
Two 1996-97 First-run weekly Commercial/Cable
Access: Hollywood 1996-97 First-run strip Commercial/Cable
PREVIOUSLY SYNDICATED PROGRAMS YEARS PROGRAM TYPES TARGET MARKET(S)
- ------------------------------ ----- ------------- ----------------
The Best of National Geographic 1986-87 Specials Commercial/PBS
Adventures, Journeys & Archives 1992-93 First-run strip PBS/Cable
The Byron Allen Show 1988-91 First-run weekly Commercial
Guilty or Innocent 1985 First-run strip Commercial
Sale of the Century 1984-86 First-run strip Commercial
Classic Country 1983-90 Off-syndication weekly Commercial/PBS
World War II: GI Diary 1983-88 Off-syndication weekly Commercial/PBS
Wilderness Alive 1983-88 Off-syndication specials Commercial/PBS
Wild World of Animals 1983-88 Off-syndication strip Commercial/PBS
The Africans 1983-88 Off-syndication specials Commercial/PBS
Life Around Us 1983-88 Off-syndication specials Commercial/PBS
The Whoopi Goldberg Show 1992-93 First-run strip Commercial/Cable
Infatuation 1992-93 First-run strip Commercial/Cable
Grudge Match 1991-92 First-run weekly Commercial/Cable
Highway to Heaven 1989-93 Off-network strip Commercial/Cable
The Great Escape 1988-89 First-run weekly Commercial/Cable
The Judge 1986-93 First-run strip Commercial/Cable
Paradise Beach 1993 First-run strip Commercial/Cable
</TABLE>
Cannell Entertainment, Inc.
NWCG acquired Cannell Entertainment, Inc. ("Cannell") in July 1995.
In connection with this acquisition, NWCG acquired distribution rights to the
extensive Cannell library of television programming, the wardrobe and
properties of the Cannell Studio in Canada, and the production capabilities of
Cannell personnel.
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Guthy-Renker
Guthy-Renker is engaged in marketing various products through
long-form television advertisements. NW Entertainment currently owns a 37.5%
interest in Guthy-Renker, and holds a three-year option to increase its
ownership interest to 50% (expiring November 1996). The acquisition of this
interest by NW Entertainment has enhanced NWCG's ability to capture the
growing source of revenues represented by direct response television
marketing.
New World Sales and Marketing
New World Sales and Marketing ("NW Sales and Marketing") is an
in-house advertising representation firm which replaces the outside
advertising representation firms previously used by NWCG to sell national
advertising. NW Sales and Marketing contacts potential national advertisers
directly to sell advertising time for NWCG and to sell barter inventory
generated by the production segment. NWCG believes that an in-house
advertising representation firm dedicated solely to serving its interests
enhances its ability to participate in national advertising because it enables
NWCG to structure advertising packages that are more closely customized to
individual advertisers' needs in an environment that is characterized by
increasingly fragmented viewership and advertising markets.
COMPETITION
Each of NWCG's business segments competes in its particular market;
further, the integrated company competes with other integrated entertainment
companies such as Paramount/Viacom, Disney, Gannett Company and 20th
Century-Fox.
Broadcasting. The television broadcasting industry is highly
competitive. Each of the Stations competes in its local market against other
local television broadcasting stations. The Stations also face competition
from other programming, entertainment and video distribution systems. See "--
Television Broadcasting Industry Overview." Many of the Stations' competitors
are substantially larger and have significantly greater resources than NWCG.
In addition, NWCG's broadcasting segment faces competition from other
advertising supported media such as newspapers, magazines, radio, and
billboards and faces competition for television viewers' leisure time from
other leisure time activities, such as sporting events, concerts and live
theater. The full extent to which such other video distribution systems,
advertising-supported media and other leisure time alternatives will compete
with the business of NWCG may not be known for several years and there can be
no assurance that the development of such alternative media and leisure
activities will not materially adversely affect the business and financial
condition of NWCG in the future.
Finally, the structure of the television industry continues to evolve
at a rapid pace as market participants respond to technological developments
that foster the creation of new product delivery systems and new relationships
among programmers, distributors and broadcasters. The recent spate of mergers
and other business combinations has created an environment of uncertainty as
to the future nature of the media business and NWCG's probable competition. It
is clear, however, that several competitors of NWCG have similar strategies of
creating a vertically integrated programming, distribution and transmitting
company. There can be no assurance that NWCG will be able to compete in the
future media and telecommunication environment.
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Each of the Stations is believed to compete satisfactorily within its
market with respect to technical facilities, programming, promotion and
marketing.
Production/Distribution. Competition in the television
production/distribution business is intense. Major competitors primarily
include divisions of large television and film studios such as Columbia
Pictures Television, Inc., Paramount/Viacom, 20th Century-Fox Film Corp.,
Disney and Warner Brothers, Inc. as well as numerous independent producers
such as Carsey-Warner Productions and Aaron Spelling Productions, dedicated
television distributors such as Group W, King World Productions, Inc., Gannett
Company, Tribune Company and the networks. Many television syndicators also
compete with these and other syndicators for the sale of advertising time.
Many of these competitors are substantially larger and have significantly
greater resources than NWCG.
There are approximately 40 companies that provide syndicated
television programming. NW Genesis' management believes that NW Genesis
competes primarily with at least nine of these companies: Paramount/Viacom,
Fox, Warner Brothers, Disney, Group W, Gannett Company, Tribune, Columbia and
King World. NW Genesis has cleared programs in all different dayparts (i.e.,
daytime, early fringe, access, late-night, weekend), and has been involved in
almost all program categories (i.e., reality, off-network, game, relationship,
talk, animation, specials), thereby having offered a variety of programs
comparable to every other television syndicator in the business.
In addition, the elimination of the financial interest and network
syndication rules, established by the Federal Communications Commission (the
"FCC"), allows television networks to acquire financial interests in
programming and to engage in program syndication. These changes could decrease
the market for syndicated programming and increase competition in the
television production/distribution business.
NW Entertainment focuses its efforts in certain key areas in which
management believes it has achieved a competitive advantage such as low-cost
production (e.g., soap operas, reality shows, talk shows and low-cost
acquisitions) and long-running non-prime time series. NW Entertainment has
also, under the direction of Brandon Tartikoff, entered the prime time
production business on a limited basis. Competition in these segments is
principally on the basis of commercial viability, customer relationships,
price and ratings success.
NWCG owns, through Four Star, a large library of low-budget
theatrical features and 1950s and 1960s television series and has been able to
market these products internationally on a high-volume, low-cost basis.
Competition in this segment is very limited in that the few libraries of this
size which exist are generally owned by large studios more interested in
currently produced products. Management of Four Star believes that Four Star's
competitive advantage arises from Four Star's ability to focus NWCG's efforts
on the maximization of value from its existing library without the need to
focus on current production.
HISTORY OF NWCG
NWCG was incorporated in Delaware on November 18, 1993 in order to
effectuate the transactions contemplated by an Agreement and Plan of
Reorganization and Merger, dated as of November 23, 1993 (as amended, the
"Agreement"), by and among NW Television, Andrews, NWCG and SCI Merger Sub
Incorporated ("Merger Sub"). The basic features of the Agreement were as
follows:
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1. NW Television formed a wholly owned subsidiary, SCI Subsidiary
Corporation ("SCI Subsidiary").
2. SCI Subsidiary formed NWCG as a wholly owned subsidiary.
3. NWCG formed Merger Sub as a wholly owned subsidiary.
4. On March 7, 1994, Merger Sub was merged with and into NW
Television (the "Merger"), with NW Television being the
Surviving Corporation. In the Merger, all of the then
outstanding shares of common stock, $.01 par value ("NW
Television Common Stock") were converted into a like
number of shares of NWCG's Class B Common Stock, $.01 par
value ("Class B Common Stock"). In addition, the holders
of NW Television's Class A Warrants, exercise price $.01
("Existing $.01 Warrants") and NW Television's Class B
Warrants, exercise price $8.47 ("$8.47 Warrants" and
together with the Existing $.01 Warrants, the "Existing
Warrants"), as a result of the Merger have the right to
acquire and receive, upon the exercise thereof, in lieu of
the shares of NW Television Common Stock immediately
theretofore acquirable and receivable upon the exercise of
the Existing Warrants, a like number of shares of Class B
Common Stock.
NWCG purchased all of the capital stock of NW Entertainment and Four
Star International, Inc. ("Four Star") and entered into a Non-Competition
Agreement (the "Non-Competition Agreement") and an Indemnification Agreement
(the "Indemnification Agreement") with Andrews (as such agreements are
contemplated by the Agreement), in exchange for the issuance by NWCG to
Andrews of 25,383,707 shares of Class B Common Stock (the "NW Entertainment
Transaction") on March 9, 1994. On March 17, 1994 NWCG entered into an
exchange agreement (the "NW Genesis Agreement"), pursuant to which NWCG
exchanged 2,035,486 shares of Class B Common Stock and certain other
consideration for the 50% of the capital stock of NW Genesis Entertainment,
Inc. ("NW Genesis") not owned by Four Star and a note made by Four Star in the
principal amount of approximately $2.2 million (the "NW Genesis Transaction").
Four Star previously owned the other 50% of the equity of NW Genesis and
accordingly NWCG currently beneficially owns 100% of NW Genesis. In November
1993, Andrews acquired a 37.5% ownership interest in Guthy-Renker Corporation
("Guthy-Renker") and a three-year option to increase its interest to 50%. The
purchase price was $7 million in cash paid to Guthy-Renker shareholders and a
note from Andrews in an original amount of $18 million issued to Guthy-Renker
(the "Guthy-Renker Note"). On March 16, 1994, NW Entertainment acquired the
entire interest of Andrews in Guthy-Renker, by incurring a $7 million payable
to Andrews and assuming Andrews' obligations under the Guthy-Renker Note
(including reimbursing Andrews for the funds already pre-paid under the
Guthy-Renker Note) (the "Guthy-Renker Transaction"). NW Acquisition was formed
by NWCG in 1993 to acquire broadcast television stations.
In March 1994, NWCG completed an equity offering ("Rights Offering")
pursuant to which each holder of record, other than Andrews, of NWCG's Class B
Common Stock or of NW Television's "Existing $.01 Warrants", on March 9, 1994
was entitled, in accordance with NWCG's Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") and the Reorganization
Agreement, to subscribe for 1.90732627 shares of Class B Common Stock (or,
under certain circumstances, Class A Warrants, Series 2 of NWCG, exercise
price $.01 per share (the "New
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$.01 Warrants"), together with such shares of Class B Common Stock (the
"Offered Shares"), for each share of Class B Common Stock or of Existing $.01
Warrants owned by such record holders as of the close of business on the
relevant record date. The Rights Offering, which expired on March 31, 1994,
was made pursuant to a registration statement filed with the Securities and
Exchange Commission.
FEDERAL REGULATION OF TELEVISION BROADCASTING
Television broadcasting is subject to the jurisdiction of the FCC
under the Communications Act of 1934, as amended (the "Communications Act").
The Communications Act prohibits the operation of television broadcasting
stations except under a license issued by the FCC and empowers the FCC, among
other things, to issue, revoke and modify broadcasting licenses, determine the
locations of stations, regulate the equipment used by stations, adopt
regulations to carry out the provisions of the Communications Act and impose
penalties for violation of such regulations. The Communications Act prohibits
the assignment of a license or the transfer of control of a licensee without
prior approval of the FCC.
On February 8, 1996 the President signed into law The
Telecommunications Act of 1996 (the "1996 Act"), which substantially modifies
the Communications Act of 1934. The 1996 Act makes many fundamental changes to
telecommunications regulation, and the following discussion of the 1996 Act
and the Communications Act is not intended to be exhaustive. Many of the
changes in law and regulation adopted as part of the 1996 Act must be
implemented by the FCC action. Many of these changes will require notice and
comment rulemaking proceedings before being implemented. NWCG cannot predict
the full legal scope or the business and competitive impact of these changes.
License Grant and Renewal. The 1996 Act extends the maximum license
term for television stations from five years to eight years and requires the
FCC to renew a license if it finds that (i) the station has served the public
interest, convenience and necessity; (ii) there have been no serious
violations of either the Communications Act or the FCC's rules and regulations
by the licensee; and (iii) there have been no other violations which taken
together would constitute a pattern of abuse. The FCC retains discretion under
the 1996 Act to renew the license of any station for a period of less than
eight years if, in its judgment, "the public interest, convenience, or
necessity" would be served by such action.
Based on the current five year license terms, the main station
licenses of NWCG's television stations will expire as follows: WTVT-TV,
Tampa-St. Petersburg -- February 1, 1997; WAGA-TV, Atlanta and WVTM-TV,
Birmingham -- April 1, 1997; WJBK-TV, Detroit and WJW-TV, Cleveland -- October
1, 1997; WITI-TV, Milwaukee -- December 1, 1997; WDAF-TV, Kansas City and
KTVI-TV, St. Louis -- February 1, 1998; KDFW-TV, Dallas and KTBC-TV Austin --
August 1, 1998; KSAZ-TV, Phoenix -- October 1, 1998; KNSD-TV, San Diego --
December 1, 1998. Each of these expiration dates is based on the maximum
five-year license terms authorized under the Communications Act. Although the
1996 Act extends the maximum license term for television stations to eight
years, it is uncertain whether the FCC will automatically extend existing
license terms. NWCG is not aware of any facts or circumstances that would
prevent the renewal of the licenses for the Stations at the end of the
respective license terms. The 1996 Act provides that licenses continue in
effect until the FCC acts upon the renewal application and any petition for
rehearing.
Multiple Ownership Restrictions. FCC rules limit the ability of
individuals and entities to own or have an ownership interest above a certain
level (an "attributable" interest) in broadcast stations, as
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<PAGE>
well as other mass media entities. The 1996 Act has eliminated the FCC's
prior limit of 12 television stations owned nationally and has increased the
limit of aggregate audience reach of co-owned television stations from 25% to
35% of United States households. NWCG currently owns, through subsidiaries, 12
television stations covering approximately 14% of the United States.
FCC rules currently allow an individual or entity to have an
attributable interest in only one television station in a particular market.
In addition, FCC rules prohibit an individual or entity from having an
attributable interest in a television station and a radio station, daily
newspaper, or cable television system that is located in the same area served
by the television station. The 1996 Act requires the FCC to conduct a
rulemaking proceeding to determine whether to retain, modify, or eliminate its
limitations on the number of television stations that a person or entity may
own, operate, or control within the same television market. The 1996 Act also
requires the FCC to extend to the top 50 markets its policy of waiving the
TV/radio cross-ownership restriction (the so-called "one-to-a-market rule")
under certain circumstances.
Proposals pending before the FCC even prior to the 1996 Act could
substantially alter the FCC's local ownership restrictions. In one rulemaking
proceeding, the FCC suggests narrowing the geographic scope of the local
television cross-ownership rule (the so-called "duopoly rule") and possibly
permitting two-station combinations in certain markets. In the same
proceeding, the FCC also proposes to eliminate the TV/radio cross-ownership
restriction. The 1996 Act and any additional relaxation of the FCC's ownership
rules may increase the level of competition in one or more of the markets in
which the Stations are located.
The FCC is also seeking comment on issues related to local marketing
agreements entered into by television stations. Local marketing agreements
(LMAs) typically provide for one broadcast station to broker time on another
television station in the same market, allowing one broadcaster to program and
sell advertising time on a station that it would not be allowed to own under
the existing duopoly restriction. The 1996 Act expressly approves LMAs that
predate enactment of the Act and expressly does not prohibit the origination,
continuation, or renewal of any LMA that is in compliance with the regulations
of the FCC. NWCG cannot predict whether the FCC policies regarding LMAs will
change or what effect any such changes may have on NWCG. NWCG is party to a
local market agreement.
The Prime Time Access Rule and the Financial Interest and Syndication
Rule. The FCC has eliminated the prime time access rule ("PTAR"), effective
August 30, 1996. PTAR limits the ability of stations affiliated with ABC, CBS,
or NBC to broadcast network programming (including syndicated programming
previously broadcast over a network) during prime time hours. The elimination
of PTAR could increase the amount of network and off-network programming
broadcast by affiliates of ABC, NBC or CBS. While NWCG is unable to predict
the effects of such changes, potential effects include, among others, (i)
increased competition for syndicated network programming that previously was
unavailable for broadcast by network affiliates during prime time; (ii)
decreased competition among ABC, CBS, and NBC affiliates for "first run" prime
time syndicated programming; and (iii) an increased supply of "first run"
prime time syndicated programming.
Effective September 21, 1995, the FCC repealed its remaining
financial interest and syndication ("fin/syn") rules. Adopted in 1970, the
fin/syn rules severely restricted the ability of ABC, CBS and NBC to obtain
financial interests in, or to participate in syndication of, prime-time
entertainment programming for airing during the networks' evening schedules.
NWCG is unable to
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<PAGE>
predict the ultimate impact of the elimination of PTAR and the fin/syn
rules on its television production, syndication, and broadcast operations.
Content Regulation. The 1996 Act authorizes the FCC to set up an
advisory committee to recommend a system for rating video programming that
contains "sexual, violent, or other indecent material" and allows the FCC to
require distributors of video programming to transmit electronically the
ratings of programs which have been rated. By February 7, 1998, most new
television sets sold must include a feature enabling viewers to block the
display of programs carrying such ratings. NWCG cannot predict how these
requirements might be implemented or what effect they may have on NWCG's
business.
Children's Television. On April 7, 1995 the FCC initiated a Notice of
Proposed Rule Making ("NPRM") proposing changes to its regulation of
television programming targeted to children, which it regulates under the
Children's Television Act of 1990. The NPRM proposes changes to the FCC's
children's television rules, the most significant of which is a proposed
requirement that television stations broadcast a weekly minimum amount of
programming specifically designed to meet the educational and informational
needs of children. NWCG cannot predict whether any changes in the FCC's
regulation of children's programming will be adopted or what effect such
changes might have on its operations.
Distribution of Video Services by Telephone Companies. The 1996 Act
allows local telephone companies to provide multichannel program distribution
services within their telephone service areas and in competition with cable
television systems. Local telephone companies serving most or all of the
markets in which NWCG operates television stations have indicated that they
intend to enter the video distribution market. Before the 1996 Act, under
prior court and FCC rulings, certain local telephone companies had announced
or had initiated multichannel video distribution market trials. NWCG cannot
predict the impact of these developments.
Advanced Television Service. The FCC has proposed the adoption of
rules for implementing digital advanced television ("ATV") service in the
United States. Implementation of digital ATV will improve the technical
quality of television signals and will provide broadcasters the flexibility to
offer new services, including high-definition television ("HDTV") and data
broadcasting.
Before ATV services can be implemented the FCC must determine the
eligibility for ATV licenses, adopt a table of ATV allotments, assign ATV
licenses, and adopt ATV service rules. The FCC is actively considering some of
these issues in a pending rulemaking proceeding and has announced its
intention to initiate two related proceedings. It has tentatively proposed to
assign all existing television licensees and permittees a second channel on
which to provide ATV simultaneously with their existing service. After a
period of years (the 1992 proposal was for 15 years although that period of
time is under review in the pending FCC proceeding) broadcasters would be
required to cease operations on one of the two channels. The FCC is
considering whether, after these channels are surrendered, some or all
broadcasters should be required to change broadcast channels to accommodate
the "re-packing" of the surrendered broadcast channels into contiguous blocks.
The 1996 Act imposes certain conditions on the FCC's implementation
of ATV service. Among other requirements, the FCC must (i) limit the initial
eligibility for such licenses to existing television broadcast licensees or
permittees; (ii) allow ATV licensees to offer ancillary and
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<PAGE>
supplementary services; (iii) charge appropriate fees to broadcasters
that supply ancillary and supplementary services for which the broadcaster
derive certain non-advertising revenues; and (iv) recover at an unspecified
time either the ATV license or the original license (the "NTSC" license) held
by the broadcaster. These requirements are generally consistent with the FCC's
tentative proposals.
The broadcast channels on which NWCG's stations are licensed consist
of discreet blocks of the electromagnetic spectrum, which is controlled by the
federal government. Certain members of Congress have announced their intention
to hold hearings on federal spectrum policy and to pursue legislation that
would establish a national spectrum policy. Among the issues expected to be
considered should such hearings occur is whether broadcast licensees should be
required to compensate the government for channels used in the transition to
ATV operations. Methods of compensation that have been discussed include,
among others, the assessment of "spectrum fees" and a requirement that the FCC
award ATV channels through a competitive bidding (auction) process. The FCC
currently lacks authority to auction ATV licenses.
Conversion to ATV operations could reduce a station's geographical
coverage area but most stations are expected to replicate or exceed their
existing service areas. Equipment and other costs associated with the ATV
transition, including the necessity of temporary dual-mode operations, will
impose some near-term financial costs on television stations providing the
service. The potential also exists for new sources of revenue to be derived
from ATV. Although NWCG believes the FCC will authorize ATV, NWCG cannot
predict when or under what conditions the authorization might be given,
whether, or the amount, broadcasters will be required to pay direct
compensation to the government as a condition of transitioning to ATV
operations, when NTSC broadcasting might cease, or the overall effect the
transition to ATV might have on NWCG's business.
Network Rules. On March 7, 1995 the FCC found two of its so-called
"network rules" to be obsolete and repealed them. The "network station
ownership" rule prohibited network ownership of television broadcast stations
in certain circumstances. The "secondary affiliation" rule limited the ability
of certain types of stations to affiliate with more than one network. NWCG
does not expect the elimination of these rules to have a substantial impact on
its business.
Other Pending FCC Proceedings. In 1995 the FCC issued NPRMs proposing
to modify or eliminate most of its remaining rules governing the broadcast
network-affiliate relationship. The network-affiliate rules were originally
intended to limit networks' ability to control programming aired by affiliates
or to set station advertising rates and to reduce barriers to entry by new
networks. These proceedings are pending. The dual network rule, which
generally prevents a single entity from owning more than one broadcast
television network, is among the rules under consideration in these
proceedings. However, the 1996 Act substantially relaxed the dual network rule
by providing that an entity may own more than one television network; however,
no two national television networks in existence on February 8, 1996 may merge
or be acquired by the same party. NWCG is unable to predict how or when the
FCC proceedings will be resolved or how those proceedings or the relaxation of
the dual network rule may affect NWCG's business.
EMPLOYEES
As of December 31, 1995, NWCG had approximately 2,700 employees, 550
of whom belonged to collective bargaining units. Collective bargaining
agreements covering approximately 35 employees are open as of December 31,
1995 and collective bargaining agreements covering
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approximately 340 employees are due for renewal in 1996. NWCG believes its
relationships with its employees are satisfactory.
INFLATION
In general, the Company's businesses are affected by inflation and
the effects of inflation may be experienced by the Company in future periods.
Management believes, however, that such effect has not been significant to the
Company during the past three years.
ITEM 2. PROPERTIES
The principal offices of NWCG, NW Television and NW Acquisition,
which are leased by NW Television, are located at 3200 Windy Hill Road, Suite
1100-West, Atlanta, Georgia 30339, telephone (770) 955-0045. The broadcasting
segment's other principal facilities are as follows:
<TABLE>
<CAPTION>
LOCATION OWNERSHIP USE
-------- --------- ---
<S> <C> <C>
Dallas, TX (KDFW-TV) Owned Office and Studio
Dallas, TX (KDFW-TV) Co-owned Tower
Southfield, MI (WJBK-TV) Owned Office, Studio and Tower
Atlanta, GA (WAGA-TV) Owned Office, Studio and Tower
Cleveland, OH (WJW-TV) Owned Office and Studio
Parma, OH (WJW-TV) Owned Tower
Tampa, FL (WTVT-TV) Owned Office and Studio
Riverview, FL (WTVT-TV) Owned Tower
St. Petersburg, FL (WTVT-TV) Leased Office -- News bureau
Phoenix, AZ (KSAZ-TV) Owned Office, Studio and Tower
St. Louis, MO (KTVI-TV) Owned Office and Studio
Sappington, MO (KTVI-TV) Owned Tower
San Diego, CA (KNSD-TV) Owned Office and Studio
Spring Valley, CA (KNSD-TV) Owned Tower
Milwaukee, WI (WITI-TV) Owned Office and Studio
Shorewood, WI (WITI-TV) Owned Tower
Kansas City, MO (WDAF-TV) Owned Office, Studio and Tower
Birmingham, AL (WVTM-TV) Owned Office, Studio and Tower
Austin, TX (KTBC-TV) Owned Office, Studio and Tower
</TABLE>
The principal executive offices of NW Entertainment, which are leased
from an affiliate of Andrews Group, are located at 1440 South Sepulveda
Boulevard, Los Angeles, California 90025, telephone (310) 444-8100.
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Marvel has the following principal properties:
<TABLE>
<CAPTION>
LOCATION OWNERSHIP USE
-------- --------- ---
<S> <C> <C>
Walldorf, Germany Owned Manufacturing/Warehouse/Office
Terrsella, Spain Owned Warehouse
Paris, France Owned Warehouse/Office
Modena, Italy Owned Office
Modena, Italy Owned Manufacturing
Modena, Italy Owned Warehouse
Modena, Italy Owned Manufacturing/Office
New York, NY Leased Office
Mt. Laurel, NJ Leased Office
Parsippany, NJ Leased Office
Durham, NC Leased Office
London, England Leased Office
Leeds, England Leased Warehouse/Office
Yuma, Arizona Leased Warehouse/Office
Englewood, NJ Leased Warehouse/Office
Byhalia, MS Leased Manufacturing/Warehouse/Office
New Hyde Park, NY Leased Manufacturing/Warehouse/Office
Long Island City, NY Leased Warehouse
Puyallup, WA Leased Warehouse
</TABLE>
Additional office and warehouse space is leased by Marvel in several
locations in the United States and in Europe. The leases expire through 2005
and provide for aggregate monthly rentals of approximately $.5 million,
subject to escalation clauses.
Management believes that its properties are currently adequate and
suitable to conduct its business and will remain so in the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
On March 9, 1995, a complaint, purporting to be a class action, was
filed against SkyBox, certain of SkyBox's officers and directors and Marvel in
the Court of Chancery in the State of Delaware in and for New Castle County,
entitled Strougo v. Lorber, et al., C.A. No. 14107 ("Strougo"). The complaint
generally alleges that SkyBox and certain of its officers and directors
breached their fiduciary duties by accepting the cash tender offer and the
merger at an unfair and inadequate price, failing to consider other potential
purchasers in a manner designed to obtain the highest possible price for
SkyBox's stockholders and not acting in the best interest of stockholders. The
complaint also alleges that Marvel aided and abetted the breaches of fiduciary
duty committed by the other defendants named in the complaint. The complaint
seeks preliminary and permanent injunctions against consummation of the
merger, damages, costs and experts' fees and expenses.
On March 16, 1995, a complaint, purporting to be a class action was
filed against SkyBox and certain of SkyBox's officers and directors in the
Court of Chancery in the State of Delaware in and for New Castle County,
entitled Krim and Gerber v. SkyBox International Inc., et al., C.A. No. 14127.
The complaint generally makes allegations similar to those contained in the
Strougo complaint and seeks similar injunctive and other relief.
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Marvel and two of its officers, William C. Bevins and Terry C.
Stewart, are named as defendants in a purported class action entitled Brian
Barry SEP IRA v. Marvel Entertainment Group, Inc., pending in the United
States District Court for the Southern District of New York. The complaint
seeks unspecified damages on behalf of a proposed class of purchasers of
Marvel's common stock from April 11, 1994 to December 31, 1994 for alleged
violations of Sections 10 (b) and 20 (a) of the Securities Exchange Act of
1934, as amended, as well as Rule 10b-5 promulgated thereunder. Plaintiff
alleges that the defendants, through their own statements and those of
analysts, artifically inflated the price of common stock by creating earnings
expectations which Marvel did not meet. Plaintiff also contends that the
defendants failed to timely disclose softness in the publishing and sports
trading card markets which led to Marvel's not attaining its purported
earnings target. Plaintiff claims that the individual defendants, because of
their corporate positions, are liable under the securities laws as control
persons of Marvel. The defendants moved to dismiss the complaint in its
entirety on February 23, 1996. Marvel believes the plaintiff's case is
meritless and plans to vigorously defend this matter.
On March 10, 1994, Steven Cooperman commenced an action, on behalf of
himself and purportedly derivatively on behalf of SCI Television, Inc. (or its
purported successor corporation, NWCG) and as a class action, against certain
of the officers and directors of NWCG, certain of their respective affiliates
and certain of their advisors, asserting, among other things, breaches of
fiduciary duty, unjust enrichment, constructive fraud and abuse of control in
connection with the transactions contemplated by the Agreement (the "Action").
The Action is entitled Steven Cooperman, On Behalf of Himself and Derivatively
on Behalf of SCI Television, Inc., a Delaware corporation (or its successor
corporation, SCI Parent Corporation to be re-named New World Communications
Group, Inc.) v. Ronald O. Perelman, et al., and SCI Television, Inc., a
Delaware corporation (or its successor corporation, SCI Parent Corporation to
be re-named New World Communications Group, Inc.), Case No. BC100359 (Superior
Court of the State of California, County of Los Angeles). The Action sought
equitable relief and damages. Settlement of this litigation has been reached
and preliminarily approved by the Court. Under the terms of the settlement,
NWCG will issue 2 million warrants for the purchase of NWCG stock at the
market price on the day of issue. The warrants will be exercisable over a
90-day period, 5 years from the date of issue. There was also a payment of
cash consideration, the majority of which was expensed in 1994. In addition,
as part of the settlement, Andrews will contribute the stock of L.C. Holdings,
a company with an educational film library, to NWCG. When the securities are
issued, the fair value of the securities will be reflected in NWCG's common
stockholders' equity with a corresponding reduction to additional
paid-in-capital.
In February 1989, Robert Eckstein, et al. brought an action for
violation of Federal securities laws against NW Entertainment and other
parties (the "Eckstein Action"). In October 1988, Ralph Majeski, et al.
brought an action for fraud, misrepresentation, breaches of contract and
fiduciary duty and pendent state law claims against NW Entertainment and other
parties (the "Majeski Action"). Classes were certified in both actions. In
March 1992, the court granted a motion for summary judgment and dismissed both
the Eckstein Action and the Majeski Action. Plaintiffs in the Majeski Action
filed a motion for reconsideration, which was denied by the District Court on
June 2, 1992. Notices of Appeal were filed in both actions.
The plaintiffs in the Majeski action filed a lawsuit in the Circuit
Court of Milwaukee County, Wisconsin on March 8, 1993 (the "Majeski State
Court Action"). The Majeski State Court Action
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alleges essentially the same pendent state law claims that had been asserted
in the federal Majeski Action.
On August 20, 1993, the Court of Appeals for the Seventh Circuit
vacated the district court judgments and remanded the cases to the district
court for further proceedings. On November 18, 1993 the defendants filed a
Petition for Writ of Certiorari with the United States Supreme Court, seeking
review of the Court of Appeals Order. The defendant's petition was denied on
or about January 18, 1994.
In November 1993, both the Eckstein and Majeski plaintiffs filed
motions seeking leave to amend the complaints. The defendants did not oppose
the Eckstein plaintiffs' motion because those plaintiffs' did not add new
claims or assert new theories. The Majeski plaintiffs' motion seeks to amend
their Section 10(b) and breach of fiduciary duty claims, add a claim for
treble damages under the Racketeer Influenced and Corrupt Organizations Act,
18 U.S.C. ss.ss. 1961-68 and delete certain common law claims and pursue them
in a separate proceeding. The defendants filed papers opposing the Majeski
plaintiffs' proposed amendments. A hearing on the foregoing motions was held
on January 26, 1994. On January 27, 1994 the Court granted the Eckstein
plaintiffs' motion to amend and took the Majeski plaintiff's motion to amend
under consideration. The Majeski State Court Action was voluntarily dismissed
by the plaintiffs.
In February 1994, the defendants filed motions for summary judgment
in both actions. On August 31, 1994, the court denied the Majeski plaintiffs'
motion to amend their first amended complaint, granted the defendants' motions
for summary judgment in both the Eckstein and Majeski Actions and dismissed
both actions with prejudice. The Eckstein plaintiffs filed a motion for
reconsideration on September 15, 1994, which was denied by the court on
October 28, 1994. Both the Eckstein and Majeski Actions were appealed by the
plantiffs to the United States Court of Appeals for the Seventh Circuit. Oral
argument for these appeals was held on April 17, 1995. On June 26, 1995, the
Court of Appeals affirmed the judgments of the District Court in favor of the
defendants. On July 10, 1995, the Eckstein plaintiffs filed a petition for
rehearing and suggestion of rehearing en banc. The petition was denied by the
Court of Appeals on July 21, 1995. Neither the Eckstein or Majeski plaintiffs
sought review of the Seventh Circuit's decision in the Supreme Court.
On July 27, 1995, the district court entered a final order taxing
costs against the Majeski plaintiffs in favor of the defendants in the sum of
$86,693.34. The Court of Appeals for the Seventh Circuit affirmed that
decision, in an unpublished order, on January 24, 1996, and issued its mandate
on February 15, 1996. The Majeski plaintiff's time to file a petition for writ
of certiorari in the Supreme Court has not yet expired.
On or about July 6, 1995, the Majeski plaintiffs filed a purported
class action lawsuit in the Circuit Court for Milwaukee County, Wisconsin,
entitled Ralph Majeski, et al. v. Balcor Entertainment Company Ltd., et al.,
Case No. 95CV006579 (the "Second Majeski State Court Action"). The Second
Majeski State Court Action is based on allegations similar to those in the
Federal Court Majeski Action, and seeks similar relief. The complaint alleges
claims based on state law asserting, among other things, breach of fiduciary
duties, negligent and intentional misrepresentation and deceit, breach of
contract, and a derivative claim on behalf of another defendant, Balcor Film
Investors, and its successor. On October 23, 1995, plaintiffs filed an amended
complaint, which made only minor, technical changes. On November 2, 1995, the
court entered its order, without objection from the defendants, certifying the
plaintiff-class and directing that notice be sent to
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all class members. NW Entertainment filed a motion to dismiss the complaint
for lack of personal jurisdiction.
On November 16, 1995, plaintiffs filed a Second Amended Complaint
adding as a defendant the most recently appointed co-trustee of the BFI Trust.
The newly-named defendant, joined by all other defendants, thereafter removed
the case to United States District Court. On November 20, 1995, the District
Court granted plaintiff's motion to remand and returned the case to the
Circuit Court, Milwaukee County, State of Wisconsin. The New World defendants
have now renewed their motion to dismiss for lack of personal jurisdiction in
the state court in response to the Second Amended Complaint. No hearing date
has yet been scheduled for the motion.
The Company and its subsidiaries are also parties to various other
litigation, some of which are in the process of being settled. The Company
believes that it is unlikely that the outcome of all pending litigation in the
aggregate will have a material adverse effect on the consolidated financial
condition of the Company and its subsidiaries taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no submission of matters to a vote of security holders in
the fourth fiscal quarter.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock does not have a public market.
As of March 29, 1996, the number of shareholders of record of common
stock was one.
See Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations for a discussion of dividend
limitations.
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected historical financial
data of the Company at and for each of the years in the five year period ended
December 31, 1995. The information set forth below has been derived from
audited financial statements and should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto and
"Item 7 - Management's Discussion And Analysis Of Financial Condition And
Results Of Operations" of this Report.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------
(Dollars in millions) 1995(a) 1994(a) 1993(a) 1992 1991(b)
------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Net revenues $1,434.3 $911.7 $665.7 $393.2 $304.6
Loss before extraordinary item and
cumulative effect of accounting change (235.6) (13.7) (42.9) (53.3) (163.2)
At end of period:
Total assets 4,264.7 $3,229.2 1,980.9 632.7 317.0
Debt and redeemable preferred stock 3,383.0 2,650.8 1,892.4 689.6 431.8
</TABLE>
(a) See Footnote 2 to the Consolidated Financial Statements for a
discussion of acquisitions and dispositions of businesses during
these years.
(b) Includes valuation adjustments of $125.1 in 1991. Includes a gain on
the sale of a portion of the Company's interest in Marvel of $57.6
in 1991.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
RESULTS OF OPERATIONS
General
The Company operates in the youth entertainment segment through its
approximately 79% ownership in Marvel. Marvel is a leading creator, publisher
and distributor of youth entertainment products for domestic and international
markets based on action adventure characters owned by Marvel and on
professional athletes, sports teams and leagues and popular entertainment
characters and properties owned by others. Marvel also licenses its characters
and properties for consumer products, television and film and advertising
promotions. Marvel's products include comic book and other publications,
sports and entertainment trading cards, children's activity stickers, toys,
adhesives and confectionery products.
The Company operates in the broadcasting and production and
distribution segments through its approximately 42% ownership interest (83%
voting interest) in NWCG, assuming conversion of NWCG Series B Preferred
Stock. NWCG operates twelve broadcast stations, a filmed entertainment
production and distribution business, which distribute product both
domestically and internationally, and filmed entertainment libraries.
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Results of Marvel
Over the past five years, Marvel has diversified into a broadly based
youth entertainment company. As a result, an increasing portion of Marvel's
net revenues have been derived from businesses other than comic book
publishing. For example, in 1991, net revenues from publishing were
approximately 86% of Marvel's total net revenues as compared to approximately
17.8% in 1995. Marvel's business has been augmented by the manufacture,
marketing and distribution of sports and entertainment trading cards and
children's activity stickers and the licensing of Marvel's characters for
consumer products, television and film, advertising promotions and toys.
Although Marvel's consolidated net revenues have increased as a result of
diversification, certain changes in market conditions associated with its
publishing and trading card operations adversely affected Marvel's net
revenues and operating results in 1995.
Marvel believes that, in 1993, Marvel and the overall comic book
direct market (i.e., comic book specialty stores) experienced an unusual
increase in revenues due in large part to speculative purchases of comic
books. Lower speculative purchases resulted in a decline in overall direct
market comic book publishing revenues, including those of Marvel, for 1994 as
compared to 1993, and to a lesser extent, for 1995 as compared to 1994.
Marvel has undertaken several strategic actions which it believes
will have the long-term effect of bolstering its publishing business. Marvel
is eliminating unprofitable and marginally profitable titles to create a
strong line-up comprising Marvel's most popular and most profitable titles;
focusing its comic books more on editorial content and less on physical
product features and enhancements; and streamlining operations through
introduction of new technology and consolidation of facilities. Combined with
the reduction in titles, these measures will reduce editorial, production,
distribution, manufacturing and administrative overhead expense. In addition,
the focus on editorial content rather than physical features will bring about
reductions in manufacturing costs. Marvel believes these actions, together
with the exclusive distribution by Heroes World of Marvel's comic books to the
direct market, which commenced July 1995, will improve future operating
results of Marvel's publishing business.
For 1994 and 1995, Marvel believes that there was a general
contraction in the sports trading card market, related in part to lower
speculative purchases. This contraction was compounded by the baseball, hockey
and basketball labor situations, which adversely affected sports trading card
sales and returns for those periods. Although Major League Baseball resumed in
April 1995, there still is no collective bargaining agreement in effect
between the owners and players, and the level of fan interest has not returned
to the levels experienced prior to the 1994 strike. Consistent with decreased
fan interest, Marvel believes that the labor situations in professional sports
have resulted in decreased trading card consumer interest and therefore,
generally decreased levels of consumer purchases of all trading cards.
Accordingly, Marvel believes that the overall trading card industry has been
negatively affected, causing Marvel to experience lower sales, higher returns,
and higher inventory obsolescence during the nine months ended September 30,
1995, including an increase in reserves in the second quarter of approximately
$40.0 for trading card returns and inventory obsolescence.
During the fourth quarter, these conditions resulted in Marvel and
the trading card industry in general continuing to experience lower sales and
higher returns, primarily related to distribution channels other than trading
card specialty stores. Marvel has revamped its trading card business such that
distribution of sports trading card products will be concentrated in trading
card specialty stores and selected mass market accounts. In connection
therewith, Marvel increased reserves as of December 31,
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1995 by an additional amount of approximately $70.0, principally for product
returns from the points of distribution eliminated and for the obsolescence of
certain 1995 inventory. As a result of this change in strategy, Fleer/SkyBox
is focusing its sales efforts on those retailers and distributors with strong
performance histories. Marvel believes that these distribution channels, with
their focused customer base and proven efficiencies, should allow Fleer/SkyBox
to realize an improvement in operating income in the future.
Also as part of the revamping of Fleer, operational overhead has been
reduced through the closure of Fleer's Philadelphia facility, which had been
used for confections and trading card manufacturing. The confections operation
has been consolidated at Fleer's Byhalia, Mississippi plant and all of the
trading card manufacturing has been outsourced. The Company anticipates
additional reductions in future operating expenses of Fleer/SkyBox due to the
concentration of sales activities to trading card specialty stores and
selected mass market accounts.
As a result of Marvel's restructuring activities, Marvel reflected in
results of operations for 1995 an additional $25.0 charge related to
severance, consolidation and closure of facilities, and other costs associated
with its publishing, confections and trading card business.
With these actions, Marvel has simplified and refocused its
publishing and trading card operations by concentrating on the strongest
elements of the businesses, delivering popular products to a motivated
customer base and using the most efficient channels of distribution. Marvel
believes that these actions will position the Company for an improvement in
the operating performance of these businesses for 1996.
Marvel expects that there will continue to be year to year
fluctuations in the net revenues and profitability of its individual
businesses. However, Marvel believes that its continued diversification into a
broad based youth entertainment company will help to mitigate the effects of
such fluctuations on overall net revenues and profitability.
Year Ended December 31, 1995 Compared With Year Ended December 31, 1994
The Company's net revenues in 1995 were $1,434.3 compared with $911.7
in 1994. Revenues in 1995 include $829.3 from the Company's youth
entertainment segment and $605.0 from the Company's broadcasting and
production and distribution segments. Revenues in 1994 include $514.8 from the
Company's youth entertainment segment and $396.9 from the Company's
broadcasting and production and distribution segments.
This increase reflects a $75.6 increase in trading card and sticker
net revenues, mainly attributable to the full year impact of Panini, which was
acquired in August 1994, and the acquisition of SkyBox in April 1995. This
increase was partially offset by a general decline in demand for trading cards
as well as the higher provisions for returns in 1995. In March 1995, Marvel
began to consolidate Toy Biz. For 1995, Marvel consolidated revenues of $180.2
related to Toy Biz. Previously, Marvel reported the results of Toy Biz under
the equity basis and did not include Toy Biz revenues in its consolidated net
revenues. Toy Biz revenues for the full year ended 1995 was $196.4 as compared
to $156.5 in 1994. The increase in net publishing revenues of $18.3 was due to
the full year impact of Heroes World, Malibu Comics and Marvel Family
Publishing, partially offset by a reduction in sales due to lower speculative
purchases. Primarily as a result of a full year impact of adhesives, other
product revenues increased by $37.7 in 1995. Licensing revenues increased by
$2.7
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<PAGE>
in 1995. Licensing revenues will vary depending on the volume and extent
of licensing agreements entered into during any particular financial period.
Net revenue in the broadcasting and production and distribution
segments increased $208.1 in 1995 over 1994. The increase in broadcasting
revenue of $74.6 reflects an increase of $129.7 for the two stations acquired
in September of 1994 from CitiCasters and the four stations acquired on March
31, 1995 from Argyle, a decrease of $16.9 for NW Television's six original
stations owned for both periods and a decrease of $38.2 reflecting the sale of
WSBK-TV (Boston) in March of 1995. NWCG had expected the conversion to Fox to
result in an initial decline in revenues. The decrease in revenue for NW
Television's six original stations reflects a temporary reduction of revenue
due to the conversion to Fox, a softening of national and local revenues in
the third and fourth quarters of 1995 and higher revenues in 1994, a year with
significant political revenue and in which the majority of the stations
broadcast the 1994 Winter Olympics. Production and distribution revenue
increased $133.5 or greater than 100% primarily due to increases in domestic
syndication, network and foreign syndication revenues, production activity and
the continued exploitation of NWCG's library.
Direct costs for 1995 and 1994 relates to the youth entertainment
segment ($538.3 and $275.3, respectively) and to the broadcasting and
production and distribution segments ($362.1 and $234.1, respectively). The
youth entertainment segment's direct costs as a percentage of sales was 65% in
1995 and 53% in 1994. The increase in direct costs as a percentage of net
revenues reflects Marvel's increased provisions for returns and product
obsolescence for the trading card business. Excluding the results of the
trading card operation for 1995 and 1994, the operating results of Marvel's
other businesses generated direct costs as a percentage of net revenues of
42%. Marvel believes that the actions taken in the trading card and publishing
operations will position Marvel for lower direct costs as a percentage of net
revenues in future consolidated results. Broadcasting direct costs increased
by $31.8, due to the acquisition of the Argyle and CitiCasters stations, an
increase in direct costs for NW Television's original six stations due to
higher staffing levels to support the increase in locally produced programming
partially offset by the sale of WSBK-TV (Boston) in March of 1995. Production
and distribution direct costs increased due to substantially greater
production activity in 1995 and higher overhead to support the production
activity. Both of NWCG's business segments incurred operating expenses
associated with NWCG's conversion of certain broadcast stations to the Fox
network, which allows the broadcast stations to provide more locally-produced
programming.
Selling, general and administrative ("SG&A") expenses in 1995
increased by $147.5 to $402.0. The youth entertainment segment's SG&A expenses
increased from $119.9 to $231.8. The increase of $111.9 was mainly
attributable to the full year impact of children's sports and entertainment
activity sticker collections, adhesives and the acquisition of SkyBox sports
and entertainment trading cards in 1995, the consolidation of Toy Biz's
results, increased corporate overhead to support the expansion of Marvel and
the effects of the strategic actions taken by Marvel in its publishing
business. As a percentage of net revenues, the youth entertainment segment's
SG&A expenses were approximately 28% in 1995 and 23% in 1994. This percentage
increase was attributable to Marvel's increased return provisions for the
trading card business which decreased net revenues, higher SG&A expense as a
percentage of net revenues for the publishing operation, in part due to the
distribution of comic books through Heroes World, and other factors. Marvel
believes that the actions taken in the trading card and publishing operations
will position Marvel for a lower percentage in future consolidated results.
The broadcasting and production and distribution segments' SG&A expenses were
$136.1 and $105.5 in 1995 and 1994, respectively. The increase in broadcasting
SG&A expenses was primarily due to the acquisition of the Argyle and
CitiCasters
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<PAGE>
stations, an increase in expenses for NW Television's original six
stations due to higher staffing levels to support the increase in locally
produced programming and increased promotional and advertising activities
partially offset by the sale of WSBK-TV (Boston) in March of 1995. The
increase in the production and distribution SG&A expenses primarily reflects
the start-up of the sales and marketing firm in May of 1994 and higher
overhead to support the substantially greater production activity in 1995.
Both of NWCG's business segments incurred operating expenses associated NWCG's
conversion of certain broadcast stations to the Fox network, which allows the
broadcast stations to provide more locally-produced programming. Also included
in SG&A expenses are $34.1 and $29.1 of corporate overhead expenses in 1995
and 1994, respectively. The increase was primarily due to an increase in
compensation expense.
During the fourth quarter of 1995, Marvel recorded a $25.0
restructuring charge, which primarily represents the costs related to the
consolidation and closure of facilities, severance related to terminated
employees and other costs associated with its publishing, trading card and
confectionery businesses.
Amortization of goodwill and intangibles increased to $68.3 in 1995
from $46.1 in 1994 primarily due to the acquisition of Panini, SkyBox,
broadcast television stations and the consolidation of Toy Biz.
Interest expense increased to $304.9 in 1995 from $206.4 in 1994
primarily due to the issuance in 1994 of notes by Marvel Holdings III Inc.
("Holdings III") and NWCG Holdings Inc. ("NWCG Holdings"), borrowings under
the bank credit agreement of Marvel IV Holdings Inc. ("Marvel IV"), borrowings
used for the acquisitions of Panini, SkyBox, broadcast television stations and
to fund increased production activity.
Interest and net investment income increased to $45.8 in 1995 from
$19.3 in 1994 primarily due to an increase in interest income on loans to
affiliates.
Amortization of debt issuance costs and other increased from 1994 to
1995 primarily due to amortization of financing costs related to increased
borrowings.
The Company recorded a net gain of $48.0 in 1995 which was primarily
due to the sale of the Boston Station and the Toy Biz IPO. The Company
recorded a gain of $86.8 in 1994 in connection with the sale by NWCG of
16,318,811 shares of common stock in a rights offering and the sale of the
NWCG Series B Preferred Stock to Fox.
The provision for income taxes was $40.2 and $28.0 in 1995 and 1994,
respectively. The 1995 and 1994 federal income tax provisions relate primarily
to the earnings of subsidiaries which file separate tax returns. NWCG's income
tax expense in 1995 resulted primarily from the recognition of income taxes on
the sale of WSBK. The liability associated with these taxes will be offset by
utilization of NW Television's pre-bankruptcy plan effective date net
operating losses. The utilization has been reflected as a reduction of excess
reorganization value. As a result of Marvel's losses, Marvel will be filing
for an income tax refund of approximately $25.0 and expects to receive this
refund during the second half of 1996. During the second quarter of 1994,
Andrews' ownership of Marvel was reduced below 80% resulting in a
deconsolidation for tax purposes. The Company has not recorded a benefit for
its separate company loss for the period subsequent to deconsolidation. During
1995, Marvel recorded a federal tax benefit which is partially offset against
a federal tax provision
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<PAGE>
recorded at Toy Biz. The 1995 and 1994 provisions for income taxes also
includes state and foreign income taxes of Marvel and NWCG.
The minority interest in loss (income) of subsidiaries represents the
minority shareholders' interest in the net income (loss) of Marvel, Toy Biz
since the Toy Biz IPO and NWCG.
Equity in net income of investees represents Marvel's interest in Toy
Biz prior to the Toy Biz IPO, NWCG's 37.5% interest in Guthy-Renker and NWCG's
portion of Genesis' net loss prior to the acquisition of the remaining 50% of
Genesis.
The Company recorded a $3.3 extraordinary loss, net of taxes of $2.1,
which represents a write-off of deferred financing costs associated with the
term loan portion of Marvel's Amended and Restated Credit Agreement.
Year Ended December 31, 1994 Compared With Year Ended December 31, 1993
The Company's net revenues in 1994 were $911.7 compared with $665.7
in 1993. Revenues in 1994 include $514.8 from the Company's youth
entertainment segment and $396.9 from the Company's broadcasting and
production and distribution segments. Revenues in 1993 include $419.3 from the
Company's youth entertainment segment and $246.4 from the Company's
broadcasting and production and distribution segments.
The increase in youth entertainment revenues reflects an $82.5
increase in picture card and sticker revenues, an increase of $20.2 from
licensing revenues and an increase of $28.2 from other product revenues,
partially offset by a $35.4 decrease in net publishing revenues. Net revenues
from picture cards and stickers were $282.6 and $200.1 in the 1994 and 1993
periods, respectively. The increase in picture card and sticker revenues was
attributable to the addition of entertainment picture card commencing January
1, 1994, and the addition of sports and entertainment children's activity
sticker collections commencing September 1, 1994, which more than offset a
significant decrease in sports picture cards net revenues as a result of the
contraction in the sports picture card market as well as the ongoing baseball
strike and shortened hockey season. The increase in licensing revenues
principally reflects the recognition of non-refundable minimum guarantees
pursuant to an increased number of products and merchandising licensing
agreements entered into during the year. Licensing revenues will vary
depending on the volume and extent of licensing agreements entered into during
any particular financial period. The significant decrease in net publishing
was mainly attributable to lower net unit volume due to lower speculative
purchases, partially offset by Marvel's European publishing operation as well
as the addition of Malibu and Marvel Family Publishing.
Net revenue in the broadcasting and production and distribution
segments increased $150.5 or 61.1% in 1994 over 1993. The increase in
television broadcasting revenue of $137.2 results primarily from the inclusion
of NWTV for the full 1994 period and the inclusion of NW Acquisition since
September 1994. Production and distribution revenue increased $13.3 or 16.3%
primarily due to increases in foreign syndication revenues.
Direct costs for 1994 and 1993 relates to the youth entertainment
segment ($275.3 and $218.6, respectively) and to the broadcasting and
production and distribution segments ($234.1 and $162.8, respectively). The
youth entertainment segment's direct costs as a percentage of sales was 53% in
1994 and 52% in 1993. Direct costs as a percentage of net revenues reflects
the higher direct costs as
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<PAGE>
a percentage of net revenues for publishing and sports picture cards,
partially offset by lower direct costs as a percentage of net revenues from
entertainment picture cards and increased licensing revenues. Direct costs for
the broadcasting segment increased primarily due to the inclusion of NWTV for
the full 1994 year and the inclusion of NW Acquisition since September 1994.
The increase in direct costs for the production and distribution segments
reflects increased production activity in 1994 and the increase in overhead
costs in contemplation of greater activity in 1995. Production and
distribution operating expenses include film cost amortization and writedowns
of film costs to reflect management's plans for programming. Both of NWCG's
business segments experienced expenses associated with NWCG's conversion of
certain broadcast Stations to the Fox network, which allows the broadcast
stations to provide more locally-produced programming.
Selling, general and administrative ("SG&A") expenses in 1994
increased by $108.7 to $254.5. The youth entertainment segment's SG&A expenses
increased from $87.7 to $119.9. The increase of $32.2 was mainly attributable
to the addition of the entertainment picture cards business commencing January
1, 1994, the addition of sports and entertainment children's activity sticker
collections and adhesives and increased corporate overhead to support the
expansion of Marvel. As a percentage of net revenues, the youth entertainment
segment's SG&A expenses were approximately 23% in 1994 and 21% in 1993. The
broadcasting and production and distribution segments' SG&A expenses were
$105.5 and $47.6 in 1994 and 1993, respectively. The increase in the
broadcasting segment primarily reflects the inclusion of NWTV for the full
1994 period and the inclusion of NW Acquisition since September 1994. The
increase in the production and distribution segment primarily reflects
increased SG&A expenses to support increased production activity in 1994, the
start-up of the sales and marketing operation and the increase in overhead
costs in contemplation of greater activity in 1995. Both of NWCG's business
segments experienced expenses associated NWCG's conversion of certain
broadcast stations to the Fox network, which allows the broadcast stations to
provide more locally-produced programming. Also included in SG&A expenses are
$29.1 and $10.5 of corporate overhead expenses in 1994 and 1993, respectively.
The increase is mainly due to the inclusion of NWTV for the full 1994 year,
the inclusion of NW Acquisition since September 1994, and increased
headquarters costs, management fees, and professional fees. Included in 1994
corporate expenses are $6.5 in settlement costs and other expenses related to
an NWCG shareholder class action lawsuit (See Item 3, Legal Proceedings).
Amortization of goodwill and intangibles increased to $46.1 in 1994
from $30.1 in 1993 primarily due to the inclusion of NWTV for the full 1994
period, the inclusion of NW Acquisition since September 1994, the amortization
of goodwill in connection with the purchase of shares of Marvel common stock
in 1993 and 1994 and amortization of goodwill in connection with the
acquisition of Panini.
Interest expense increased to $206.4 in 1994 from $125.1 in 1993
primarily due to interest expense on the notes issued in 1993 and 1994 by
Marvel Holdings Inc. ("Marvel Holdings"), Marvel (Parent) Holdings Inc.,
("Parent Holdings"), Holdings III, and NWCG Holdings, the inclusion of NWTV
for the full 1994 period, borrowings under the bank credit agreement of Marvel
IV and the increased borrowings associated with the Panini Acquisition
partially offset by a reduction in NW Entertainment's debt levels and a
reduction in loans from affiliates.
The gain on the sale of interest in NWCG represents the excess of the
Company's carrying value of NWCG over the Company's historical book value
primarily as a result of NWCG's issuance of convertible preferred stock and,
in the first quarter of 1994, the NWCG Offering.
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The provision for income taxes was $28.0 and $22.3 in 1994 and 1993,
respectively. The 1994 federal income tax provision relates primarily to the
earnings of subsidiaries which file separate tax returns. During the second
quarter of 1994, Andrews Group's ownership of Marvel was reduced below 80%
resulting in a deconsolidation for tax purposes. The Company has not recorded
a benefit for its separate company loss for the period subsequent to
deconsolidation. In addition, no provision was recorded on the gain on the
sale of the interest in NWCG as the deferred tax liability was offset by a
previously unrecorded deferred tax asset related to the excess of tax bases
over book bases in the Company's investment in NWCG. The 1994 provision for
income taxes also includes state and foreign income taxes of Marvel and NWCG.
The provision for income taxes in 1993 related primarily to federal income
taxes of Marvel for the period prior to the Tender Offer, federal income taxes
of NWTV, state and local taxes of Marvel and NWTV as well as, foreign income
taxes of NW Entertainment and Marvel.
The minority interest in loss (income) of subsidiaries represents the
minority shareholders' interest in the net (loss) income of Marvel and NWCG.
Equity in net income of investees represents Marvel's interest in Toy
Biz, NWCG's 37.5% interest in Guthy-Renker and NWCG's portion of Genesis' net
loss prior to the acquisition of the remaining 50% of Genesis.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
For a description of outstanding indebtedness, see Note 9 to the
Consolidated Financial Statements.
(a) Marvel
Marvel's capital expenditures, including product development and
package design costs, were $42.5, $4.2 and $3.1 for the years ended December
31, 1995, 1994 and 1993, respectively. The significant increase in 1995 was
primarily attributable to the expansion of Panini's adhesives facility, which
was financed principally through a non-recourse loan in the local currency of
that business, and the consolidation of Toy Biz. Capital expenditures,
including product development and package design costs are projected to
approximate $30.0 for the year ending December 31, 1996, primarily related to
Toy Biz.
Marvel's cash flows from operating activities will be affected in
1996 from the payment of accruals established as part of the $25.0
restructuring charge, as more fully described in Note 18 to Consolidated
Financial Statements. The charge of approximately $70.0 to increase reserves
in the trading card operation in the fourth quarter, similar to the charge of
approximately $40.0 to increase reserves in the second quarter, in large part
reflected allowances against assets or accruals which will be satisfied other
than through future cash disbursements.
In April 1995, Marvel entered into a $350.0 term loan agreement with
a syndicate of banks, the Co-Agents and Chemical Bank, as administrative agent
(the "U.S. Term Loan Agreement"). Marvel borrowed $350.0 under the U.S. Term
Loan Agreement to finance the SkyBox Acquisition, refinance the term loan
portion of Marvel's Amended and Restated Credit Agreement dated as of
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August 30, 1994, as amended, and for general corporate purposes. Borrowings
under the U.S. Term Loan Agreement are repayable in six semi-annual
installments beginning August 31, 1999.
Loans under the U.S. Term Loan Agreement bear interest at a rate per
annum equal to the Eurodollar Rate (as defined in the U.S. Term Loan
Agreement), plus the Applicable Margin (as defined in this paragraph), or the
Alternate Base Rate (as defined in the U.S. Term Loan Agreement). Eurodollar
Rate Loans will, at the option of Fleer, have interest periods of one, two,
three or six months. Applicable Margin means (a) with respect to Eurodollar
Rate loans, 2% to 2 1/2% through the first Anniversary Date (as defined in the
U.S. Term Loan Agreement) and 1 1/8% to 2 1/2% thereafter, to be determined
based on Marvel's financial performance and (b) with respect to Alternate Base
Rate loans, 1% to 1 1/2% through the first Anniversary Date and 1/8 of 1% to 1
1/2% thereafter, to be determined based on Marvel's financial performance. The
interest rate on Eurodollar Rate Loans at March 4, 1996, was approximately 7
13/16% to 8 1/8%, depending upon the length of the relevant interest period.
Interest on Alternate Base Rate Loans is payable quarterly in arrears, and
interest on Eurodollar Rate Loans is payable at the end of the applicable
interest period, except that if the interest period is six months, interest is
payable ninety days after the commencement of the interest period and at the
end of the interest period.
In connection with the U.S. Term Loan Agreement, Marvel also entered
into an amendment to the existing Amended and Restated Credit Agreement which,
among other things, permitted Marvel to incur the indebtedness under the U.S.
Term Loan Agreement. Pursuant to this amendment, the Applicable Margin under
the existing Amended and Restated Credit Agreement for Alternate Base Rate
loans will range from 0% to 1% and for Eurodollar Rate loans will range from
5/8 of 1% to 2%, in each case depending on the Company's financial
performance. The interest rate on Eurodollar Rate Loans, at March 4, 1996 was
approximately 7 5/16% to 7 13/16% per annum, depending upon the length of the
relevant interest period. The proceeds of loans incurred under the revolving
credit portion of the Amended and Restated Credit Agreement may be used for
general corporate purposes of Marvel and for investments within an aggregate
limit. Portions of the Amended and Restated Credit Agreement will mature on
September 1, 1999, 2000 and 2001.
On August 30, 1994, Marvel, Marvel Italia (now Panini S.p.A.) and
Instituto Bancario San Paolo Di Torino S.p.A. (the "Lender"), entered into a
term loan and guarantee agreement (the "Term Loan Agreement") providing for a
term loan credit facility of Italian Lire 244.5 billion (approximately $154.0,
based on exchange rates in effect on the date of acquisition) (the "Term Loan
Facility"). Marvel Italia borrowed Italian Lire 244.5 billion under the Term
Loan Agreement, and Marvel borrowed additional funds under its Amended and
Restated Credit Agreement to finance the purchase of Panini and to pay certain
fees and expenses related to the acquisition.
On September 30, 1994, Marvel paid Italian Lire 15.0 billion
(approximately $9.4, based on exchange rates in effect on September 30, 1994)
as a voluntary reduction of the principal balance under the Term Loan
Agreement. In addition, during 1995 Marvel paid Italian Lire 8.2 billion
(approximately $5.0) due under the Term Loan Facility and, on February 28,
1996 Marvel paid Italian Lire 4.1 billion (approximately $2.5) due. The
remaining amount outstanding under the Term Loan Facility is repayable in 11
increasing semi-annual installments, with the next payment of Italian Lire 4.1
billion due August 31, 1996.
The Term Loan Facility bears interest at a rate per annum equal to
the Eurocurrency Rate (as defined in the Term Loan Agreement) or, in certain
limited circumstances, the Negotiated Rate (as
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<PAGE>
defined in the Term Loan Agreement), in each case plus the Applicable Margin
(as defined in this paragraph). Eurocurrency Rate Loans have, at the option of
Panini, interest periods of one, two, three or six months. Applicable Margin
means (a) with respect to Eurocurrency Loans, 5/8 of 1% to 2%, to be
determined based on Marvel's financial performance and (b) with respect to
Negotiated Rate Loans, 1%. The interest rate on Eurocurrency Rate Loans at
March 4, 1996, was approximately 12 1/16%. Interest on Negotiated Rate Loans
is payable quarterly in arrears and interest on Eurocurrency Rate Loans is
payable at the end of the applicable interest period, except that if the
interest period is six months, interest is payable ninety days after the
commencement of the interest period and at the end of the interest period.
The U.S. Term Loan Agreement (through incorporation by reference to
the Amended and Restated Credit Agreement), the Amended and Restated Credit
Agreement and the Term Loan Agreement include various restrictive covenants
prohibiting Marvel from, among other things, incurring additional
indebtedness, with certain limited exceptions, and making dividend, redemption
and certain other payments on its capital stock. The U.S. Term Loan Agreement,
the Amended and Restated Credit Agreement and the Term Loan Agreement also
contain certain customary financial covenants and events of default for
financings of this type, including a change of ownership covenant of more than
25% of the voting shares of Marvel. Mandatory prepayments are required to be
made out of net proceeds from sales of assets by Marvel, with certain
exceptions, and from certain excess cash flow (as defined in the Amended and
Restated Credit Agreement).
During March 1996, Marvel amended its credit agreements with its
lenders providing for, among other things, an additional $25.0 revolving
credit facility which will expire on December 31, 1996. This revolving credit
facility is pari passu to the loans extended by the banks pursuant to Marvel's
existing loan agreements.
Marvel also secured all of its bank loans with the domestic assets of Marvel.
At March 4, 1996, Marvel's outstanding bank indebtedness was $585.8.
At March 2, 1996, an aggregate of 78.0 million shares, or 76.7%, of
common stock of Marvel were pledged to secure indebtedness or letters of
credit of subsidiaries of Mafco Holdings, including Marvel Holdings, Parent
Holdings, Holdings III and Four Star Holdings Inc. In addition, 2.9 million
shares of Marvel common stock are subject to a negative pledge under the terms
of the Marvel Holdings Notes Indenture. The indentures governing this
indebtedness contain various covenants relating to Marvel, including certain
limitations on Marvel's indebtedness.
On March 2, 1995, Toy Biz completed an initial public offering (the
"Toy Biz IPO") in which it issued and sold 2,750,000 shares of class A common
stock at $18.00 per share. Avi Arad, a principal stockholder of Toy Biz, also
sold 700,000 shares of class A common stock owned by him in the Toy Biz IPO.
The net proceeds of approximately $44.1 to Toy Biz, after deducting
commissions and offering expenses, were used to pay outstanding amounts due
under subordinated notes held by Marvel and the sole stockholder of the
predecessor to Toy Biz and for working capital and general corporate purposes.
In conjunction with the Toy Biz IPO, Marvel's equity ownership was reduced to
approximately 36.6%, and its voting control increased to approximately 85.3%.
In conjunction with the Toy Biz IPO, Toy Biz entered into a three
year $30.0 revolving line of credit with a syndicate of banks for which
Chemical Bank serves as administrative agent. Substantially all of the assets
of Toy Biz have been pledged to secure borrowings under the Toy Biz credit
facility.
43
<PAGE>
Borrowings under the Toy Biz credit facility bear interest at either Chemical
Bank's alternate base rate or at the Eurodollar rate plus the applicable
margin. The applicable margin is 1% unless Toy Biz meets specific financial
operating levels, in which case the applicable margin decreases to 3/4 of 1%.
The Toy Biz credit facility requires Toy Biz to pay a commitment fee of 3/8 of
1% per annum on the average daily unused portion of the credit facility.
The Toy Biz credit facility, as amended, contains various financial
covenants, as well as restrictions, on the incurrence of new indebtedness,
prepaying or amending subordinated debt, acquisitions and similar investments,
the sale or transfer of assets, capital expenditures, limitations on
restricted payments, dividends, issuing guarantees and creating liens. The Toy
Biz credit facility also requires an annual reduction commencing January 1,
1996 of outstanding borrowings to zero for a period of 45 consecutive days
commencing during the first six months of the calendar year. In addition, the
Toy Biz credit facility requires that (a) Marvel continue to control a
majority of the voting power of Toy Biz and (b) the exclusive, royalty free
perpetual worldwide license agreement between Toy Biz and the Company remain
in effect.
A subsidiary of Marvel entered into a joint venture with a third
party to operate Marvel themed restaurants. Marvel has committed to provide up
to $36.0 to the joint venture to fund the restaurants over the next three
years.
Marvel anticipates that borrowings under its various credit
agreements will be paid from internally generated funds of Marvel or from
other sources, which may include the sale of debt securities of Marvel.
Management also anticipates that internally generated funds, as well as
proceeds from borrowings under the Amended and Restated Credit Agreement and
the Toy Biz credit facility or any amendment thereto, will be sufficient to
meet working capital and capital expenditure requirements.
(b) NWCG
At December 31, 1995, NWCG had total debt outstanding of
approximately $1,008.5 of which approximately $32.1 is due in 1996. As of
December 31, 1995, NWCG had limited additional borrowing capacity under its
borrowing facilities. Although the current borrowing and capital level is
adequate to meet NWCG's current operational needs, significant expansion of
its broadcasting or production segments will require additional funding.
To service the currently outstanding debt, NWCG plans to utilize
broadcasting and production operating cash flow. NWCG believes that operating
cash flow will be sufficient to satisfy current requirements for operating,
investing and financing activities of NWCG, including debt service prior to
final maturity. In order to meet principal payments upon the final maturity of
its various debt facilities outstanding, the earliest of which occurs in 1998,
NWCG will be required to adopt one or more alternatives, such as refinancing
or restructuring its indebtedness, selling material assets or operations or
seeking additional capital contributions. NWCG currently anticipates that any
other necessary financing may be obtained through restructuring or refinancing
outstanding capitalization or possibly, through additional equity or debt
financings or additional bank credit arrangements. There can be no assurance
that any of such actions could be effected on satisfactory terms, that they
would enable NWCG to continue to satisfy NWCG's capital requirements or that
they would be permitted by the terms of existing or future debt agreements.
Should such additional sources of financing be needed to
44
<PAGE>
fund acquisitions or operations and not be obtainable, NWCG's liquidity would
be severely adversely affected.
In the first quarter of 1996, approximately $16.7 of debt was
liquidated through the dissolution of the trust which held the assets of
WGHP-TV (Greensboro-Highpoint) and WBRC-TV (Birmingham).
NWCG's capital budget for 1996 of approximately $30 will be used
primarily in the broadcasting segment to support the news gathering and
reporting operations.
(c) Corporate and other subsidiaries
On December 15, 1995, Marvel IV entered into an amended and restated
credit agreement (the "Second Amended Marvel IV Credit Agreement") which
provides for a $305.0 term loan facility and $125.0 revolving credit facility.
The revolving credit facility matures on September 1, 1997. The term loan
facility matures on September 1, 1997 with scheduled quarterly payments of
$10.0 from March 1, 1996 through and including June 1, 1997 and a final
payment of $245.0 on September 1, 1997. Borrowings outstanding under the
Second Amended Marvel IV Credit Agreement bear interest, as appropriate for
the type of advance, at either (i) the Base Rate (as defined) plus a margin of
2.25%-3.00% or (ii) the Eurodollar Rate (as defined) plus a margin of
4.00-5.50%. The margin varies based upon the sum of the aggregate amount of
outstanding borrowings plus the aggregate unused commitments. Marvel IV's
obligations are guaranteed by certain affiliates of the Company and the Second
Amended Marvel IV Credit Agreement contains customary affirmative and negative
covenants and events of default. As of December 31, 1995, Marvel IV borrowed
$305.0 and $68.0 under the term and revolving credit facilities, respectively.
Borrowings outstanding as of December 31, 1995 bore interest at a rate of
11.3%.
The Company anticipates that collections of loans to affiliates and
borrowings from affiliates will be used to repay a substantial portion of the
borrowings under the Second Amended Marvel IV Credit Agreement (including the
scheduled maturities due in 1996).
Holdings III is a holding company with no business operations or
sources of income of its own. Holdings III does not expect that distributions,
if any, from Parent Holdings will be sufficient to pay interest on the 9 1/8%
Senior Secured Notes due 1998 ("Holdings III Notes") or the principal amount
of the Holdings III Notes at maturity or, upon the occurrence of an event of
default, to redeem the Holdings III Notes or to repurchase the Holdings III
Notes upon a change of control or a tax deconsolidation event. Among other
things, Holdings III's ability to participate in any dividends or
distributions by Marvel will be limited to its approximately 79% indirect
ownership interest in the outstanding shares of Marvel common stock. Marvel's
credit facilities, the Marvel Holdings indenture and the Parent Holdings
indenture restrict the ability of Marvel, Marvel Holdings and Parent Holdings
to pay dividends and other distributions. Moreover, Holdings III currently
expects that all of the earnings and cash flow of Marvel will be retained for
use in Marvel's business, including repayment of Marvel's indebtedness.
Through 1995 Holdings III's principal source of cash to pay interest
on the Holdings III Notes was payments from Marvel under a tax sharing
agreement. During 1995 and through March 28, 1996, Holdings III received $6.5
of capital contributions to pay interest on the Holdings III Notes. Holdings
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<PAGE>
III expects to receive additional capital contributions to pay the remaining
interest for 1996 on the Holdings III Notes.
Holdings III currently anticipates that in order to pay the principal
amount of the Holdings III Notes at maturity, to redeem the Holdings III Notes
or to repurchase the Holdings III Notes upon a change of control or a tax
deconsolidation event, Holdings III will be required to adopt one or more
alternatives, such as borrowing funds, selling its equity securities or equity
securities of Parent Holdings or seeking capital contributions or loans from
Mafco Holdings or other affiliates. None of the affiliates of Holdings III are
required to make any capital contributions or other payments to Holdings III
with respect to Holdings III's obligations (including interest payments) on
the Holdings III Notes, and, except for the non-recourse guaranty of Parent
Holdings the obligations of Holdings III with respect to the Holdings III
Notes are not guaranteed by any affiliate of Holdings III or any other person.
There can be no assurance that any of such actions could be effected on
satisfactory terms, that any of the foregoing actions would enable Holdings
III to make any of the foregoing payments on the Holdings III Notes or that
any of such actions would be permitted by the terms of the indenture for the
Holdings III Notes, the Marvel Holdings indenture, the Parent Holdings
indenture, Marvel's credit facilities or the debt instruments of the
subsidiaries of Holdings III then in effect.
Parent Holdings is a holding company with no business operations or
source of income of its own. In order for Parent Holdings to pay the 11 7/8%
Senior Secured Discount Notes due 1998 ("Parent Notes") at maturity or
otherwise, it will be required to adopt one or more alternatives, such as
borrowings funds, selling its equity securities or equity securities of
Marvel, or seeking capital contributions or loans from Mafco Holdings or other
affiliates. There can be no assurance that any of such actions could be
effected on satisfactory terms, that any of the foregoing actions would enable
Parent Holdings to make any of the foregoing payments on the Parent Notes or
that any of such actions would be permitted by the terms of the indenture,
Marvel's credit facilities or the debt instruments of the subsidiaries of
Parent Holdings then in effect.
Marvel Holdings is a holding company with no business operations or
source of income of its own. In order for Marvel Holdings to be able to pay
the 11 1/4% Senior Secured Discount Notes due 1998 ("Marvel Holdings Notes")
at maturity or otherwise, it will be required to adopt one or more
alternatives, such as borrowing funds, selling its equity securities or equity
securities of Marvel, or seeking capital contributions or loans from Mafco
Holdings or other affiliates. There can be no assurance that any of such
actions could be effected on satisfactory terms, that any of the foregoing
actions would enable Marvel Holdings to make any of the foregoing payments on
the Marvel Holdings Notes or that any of such actions would be permitted by
the terms of the indenture, Marvel's credit facilities or the debt instruments
of the subsidiaries of Marvel Holdings then in effect.
NWCG Holdings is a holding company with no business operations or
source of income of its own other than its interest in NWCG. NWCG Holdings
ability to repay the 13.8% Senior Secured Discount Notes due 1999 ("NWCG
Holdings Notes") at maturity will be dependent on the value of the NWCG stock
securing such notes, and dividends and distributions, if any, related to such
NWCG stock. NWCG or other affiliated entities are not required to declare
dividends or make distributions to NWCG Holdings. NWCG Holdings currently
anticipates that in order to make required payments under the NWCG Holdings
Notes, NWCG Holdings will be required to adopt one or more alternatives, such
as borrowing funds, selling equity securities or seeking capital contributions
or loans from Mafco Holdings or other affiliates. None of NWCG Holdings'
affiliates will be required to make any such capital contributions or loans,
and there can be no assurance that any of the foregoing
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<PAGE>
alternatives could be effected on satisfactory terms or would be permitted by
the terms of the NWCG Holdings Notes, other agreements or any future financing
arrangements entered into by NWCG or its subsidiaries or NWCG Holdings'
affiliates.
During 1995 the Company's corporate cash requirements consisted
primarily of debt service and administrative expenses. On July 1, 1996,
Andrews' 12 3/4% Subordinated Debentures will mature. The Company's principal
source of liquidity at the corporate level is expected to consist of advances
from Mafco Holdings and affiliates. At March 1, 1996, December 31, 1995 and
December 31, 1994, Mafco Holdings and affiliates had outstanding advances to
the Company of $310.7, $307.1 and $154.2, respectively. At December 31, 1994,
Holdings III had advances of $8.3 to Mafco Holdings as permitted under the
Holdings III indenture. Such advance was repaid in 1995. At March 1, 1996,
December 31, 1995 and December 31, 1994, Marvel IV had advanced $498.0, $441.0
and $216.3 to Mafco Holdings and its subsidiaries representing the net
proceeds from the borrowings under the Marvel IV Credit Agreement.
At December 31, 1995 and 1994, $46.7 of the Company's indebtedness
was guaranteed by M&F Holdings. The guarantees are subordinated obligations of
M&F Holdings and are partially secured by assets of M&F Holdings.
(d) Recent Pronouncements
The Company accounts for its stock compensation arrangements under
the provisions of APB 25, "Accounting for Stock Issued to Employees", and
intends to continue to do so.
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." The Company will adopt Statement No. 121
in the first quarter of 1996 and management believes the effect of adoption
will not be material to the consolidated financial statements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index To Consolidated Financial Statements and Financial
Statement Schedules appearing on page F-1 of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The name, age, principal occupation for the last five years, selected
biographical information and the period of previous service as a director of
Andrews as to each such director are set forth below as of the latest
practicable date.
<TABLE>
<CAPTION>
Name Age Principal Occupations
- ---- --- ---------------------
<S> <C> <C>
Ronald O. Perelman 53 Mr. Perelman has been Chairman of the Board and Chief Executive
Officer of MacAndrews & Forbes Holdings Inc. ("M&F Holdings") for
more than the past five years. Mr. Perelman also is Chairman of the
Board of Consolidated Cigar Corporation ("Consolidated Cigar"), First
Nationwide Bank, A Federal Savings Bank ("First Nationwide"), Mafco
Consolidated Group Inc. ("Mafco Consolidated"), Mafco Worldwide
Corporation ("Mafco Worldwide"), Marvel Entertainment Group, Inc.
("Marvel"), Meridian Sports Incorporated ("Meridian"), New World
Communications Group Incorporated ("NWCG"), New World Television
Incorporated ("New World Television"), Power Control Technologies
Inc. ("PCT") and Toy Biz, Inc. ("Toy Biz"), and is the Chairman of
the Executive Committee of the Board of Directors of Revlon, Inc.
("Revlon") and Revlon Consumer Products Corporation ("Revlon
Products"). Mr. Perelman is a director of the following corporations
which file reports pursuant to the Securities Exchange Act of 1934:
The Coleman Company, Inc., Coleman Holdings Inc. ("Coleman
Holdings"), Coleman Worldwide Corporation ("Coleman Worldwide"),
Consolidated Cigar, First Nationwide Bank, First Nationwide Holdings
Inc. ("First Nationwide Holdings"), Mafco Consolidated, Mafco
Worldwide, Marvel, Marvel Holdings Inc. ("Marvel Holdings"), Marvel
(Parent) Holdings Inc. ("Marvel Parent"), Marvel III Holdings Inc.
("Marvel III"), Meridian, NWCG, NWCG Holdings Corporation ("NWCG
Holdings"), New World Television, Revlon, Revlon Products, Revlon
Worldwide Corporation, and Toy Biz.
Donald G. Drapkin 48 Mr. Drapkin has been Vice Chairman and a Director of M&F Holdings and
various of its affiliates since 1987. Mr. Drapkin was a partner in
the law firm of Skadden, Arps, Slate, Meagher & Flom for more than
five years prior to March 1987. He is a Director of each of Coleman,
Coleman Holdings, Coleman Worldwide, Revlon, Revlon Products, Revlon
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Worldwide, Marvel, Marvel Holdings, Marvel III, Marvel Parent, Toy
Biz, The Claridge Hotel and Casino Corporation and VIMRx
Pharmaceuticals, Inc.
Howard Gittis 62 Mr. Gittis has been Vice Chairman and Director of M&F Holdings and
various of its affiliates since 1985. He is a Director of each of
Consolidated Cigar, First Nationwide, First Nationwide Holdings,
Jones Apparel Group, Inc., Mafco Consolidated, Mafco Worldwide, Loral
Corporation, NHL, NWCG, NWTV, PCT, Revlon Products and Revlon
Worldwide.
Bruce Slovin 59 Mr. Slovin has been President and Director of M&F Holdings and
various of its affiliates since 1980. He is a director of each of
Coleman, Coleman Holdings, Coleman Worldwide, Continental Health
Affiliates, Inc., Cantel Industries, Inc., Oak Hill Sportswear
Corporation, Infu-Tech, Inc., Meridian and PCT.
</TABLE>
EXECUTIVE OFFICERS
The following table sets forth the name, age, position with Andrews
and selected biographical information for each of the executive officers of
Andrews as of the latest practicable date.
Name Age Position
- ---- --- --------
Ronald O. Perelman 53 Chairman of the Board
Donald G. Drapkin 48 Vice Chairman
Howard Gittis 62 Vice Chairman
Bruce Slovin 59 Vice Chairman
William C. Bevins, Jr. 49 President and Chief Executive Officer
Mr. Bevins was elected President and Chief Executive Officer in
November 1988 and has been Executive Vice President of Mafco Holdings since
November 1988; Chief Executive Officer of Marvel since 1991 and NWCG since its
formation in 1993; Director and Chief Financial & Administrative Officer of
Turner Broadcasting System, Inc. for more than five years prior to 1988.
Arthur H. Bilger 43 Executive Vice President and
Chief Operating Officer
Mr. Bilger has been Executive Vice President and Chief Operating
Officer since 1994. Mr. Bilger is also President and Chief Operating Officer
of NWCG. Mr. Bilger is a retired partner of Apollo Advisors, L.P., which acts
as managing general partner of Apollo Investment Fund, L.P. and AIF II, L.P.,
securities investment funds, and of Lion Advisors, L.P., which acts as
financial advisor to and representative for certain institutional investors
with respect to securities investments. Mr. Bilger was Vice President and
Director of Apollo Capital Management and Lion Capital Management from 1990
through 1994. Previous to this, Mr. Bilger was Director, Executive Vice
President and co-head of corporate finance at Drexel Burnham Lambert
Incorporated.
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<PAGE>
Terry C. Bridges 52 Executive Vice President and
Chief Administrative Officer
Mr. Bridges has been Executive Vice President and Chief
Administrative Officer since 1993. Mr. Bridges is also Executive Vice
President and Chief Administrative Officer of NWCG. Prior to joining Andrews
in 1993, Mr. Bridges was a partner in the law firm of Troutman Sanders in
Atlanta, Georgia for more than the previous five years.
Joseph P. Page 42 Executive Vice President and
Chief Financial Officer
Mr. Page has been Executive Vice President and Chief Financial
Officer since 1994. Mr. Page is also Executive Vice President and Chief
Financial Officer of NWCG. Prior to joining Andrews in 1994, Mr. Page was a
partner in the accounting firm of Price Waterhouse for more than the previous
five years.
Paul E. Shapiro 55 Executive Vice President
Mr. Shapiro has been Executive Vice President of the Company since
1994. Mr. Shapiro is also Executive Vice President and General Counsel of
Marvel. He was a shareholder in the law firm of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quental from 1991 to 1993 and is currently of Counsel to that
firm. Prior to 1991, Mr. Shapiro was a shareholder in the law firm of Shapiro
& Bregman, P.A. Mr. Shapiro is also a director of Toll Brothers, Inc.
Michael H. Diamond 50 Executive Vice President
Mr. Diamond has been Executive Vice President of Andrews Group since
1994 and prior to 1994, Mr. Diamond was a partner in the law firm of Skadden,
Arps, Slate, Meagher and Flom for more than the previous five years.
Laurence Winoker 39 Vice President and Controller
Mr. Winoker was elected Vice President and Controller in September
1992. He has been Vice President and Controller of Mafco Holdings and various
of its affiliates since that date. He was Assistant Vice President and
Assistant Controller of Mafco Holdings and various affiliates for more than
five years prior to September 1992.
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company
and the Company's subsidiaries to the Company's Chief Executive Officer and
the Company's executive officers. Certain officers of the Company received
long-term compensation awards from NWCG. Information required by this Item 11
as it relates to NWCG is incorporated by reference from the definitive proxy
statement for the 1996 annual meeting of NWCG shareholders, which is required
to be filed pursuant to Regulation 14A no later than 120 days following the
end of the fiscal year reported on.
<TABLE>
<CAPTION>
NAME AND OTHER
PRINCIPAL ANNUAL
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)
- -------- ---- --------- -------- ---------------
<S> <C> <C> <C> <C>
William C. Bevins, Jr. 1995 2,000,000 2,000,000 3,596,273 (a)
1994 2,000,000 2,000,000 815,474 (b)
1993 2,000,000 3,000,000 21,751
Arthur H. Bilger 1995 1,000,000 500,000 117,080 (d)
1994 45,513 (c) - -
Terry C. Bridges 1995 677,083 200,000 48,732
1994 620,833 250,000 44,687
1993 250,000 (c) 50,000 12,537
Joseph P. Page 1995 550,000 250,000 27,424
1994 500,000 200,000 15,147
Paul E. Shapiro 1995 600,000 150,000 106,624 (e)
1994 600,000 150,000 104,896 (e)
</TABLE>
(a) Includes $3,378,870 related to a Company property transferred to Mr.
Bevins, $169,200 of airplane allowances, $32,746 of automobile
allowances, with the remainder representing insurance premiums paid on
behalf of Mr. Bevins.
(b) Includes $700,000 of housing and expense allowances, $39,037 of
automobile allowances, $62,550 of airplane allowances, with the remainder
representing insurance premiums paid on behalf of Mr. Bevins.
(c) Reflects compensation since the date of commencement of employment.
(d) Reflects $59,580 of airplane allowances and $57,500 of housing
allowances.
(e) Includes $100,000 of housing allowances.
Mr. Bevins has an agreement with Andrews effective January 1, 1993
whereby Mr. Bevins is employed as President and Chief Executive Officer of
Andrews Group. The term of the employment
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<PAGE>
agreement was originally for three years and has been extended by the mutual
agreement of the parties through December 31, 1998. The employment agreement
provides for the payment to Mr. Bevins of a base salary of $2,000,000 per
annum and additional bonus compensation, if any, as may be awarded to him in
the sole discretion of the Board of Directors.
Mr. Bilger has an agreement with Andrews effective December 15, 1994
whereby Mr. Bilger is employed as Executive Vice President and Chief Operating
Officer of Andrews. Mr. Bilger also has an agreement with NWCG effective
December 15, 1994 whereby Mr. Bilger is employed as President and Chief
Operating Officer of NWCG. The terms of the employment agreements are for
three years. The employment agreement with NWCG provides for the payment to
Mr. Bilger of a base salary of $1,000,000 per annum through the end of the
term. The agreement also provides for an annual bonus to be determined at the
sole discretion of the Board of Directors.
Mr. Bridges has an agreement with Andrews effective August 1, 1993
whereby Mr. Bridges is employed as Executive Vice President and Chief
Administrative Officer of Andrews. The term of this agreement, as renewed and
extended by agreement dated as of January 1, 1996, extends until December 31,
1998. The employment agreement provides for the payment to Mr. Bridges of an
initial base salary of $600,000 which increases by $50,000 annually on each
August 1 (through August 1, 1997) of the term. The agreement also provides for
an annual bonus to be determined at the sole discretion of the Board of
Directors.
Mr. Page has an agreement with Andrews effective November 15, 1993
whereby Mr. Page is employed as Executive Vice President and Chief Financial
Officer of Andrews. The term of this agreement, as renewed and extended by
agreement dated as of January 1, 1996, extends until December 31, 1998. The
employment agreement provides for the payment to Mr. Page of an initial base
salary of $500,000 which increases commencing January 1, 1994 by $50,000
annually on each subsequent January 1 of the term. The agreement also provides
for an annual bonus to be determined at the sole discretion of the Board of
Directors.
Mr. Shapiro has an agreement with Andrews effective October 28, 1993
whereby Mr. Shapiro is employed as Executive Vice President of Andrews. Mr.
Shapiro also serves as Executive Vice President and General Counsel of Marvel.
The term of the agreement is three years. The employment agreement provides
for the payment to Mr. Shapiro of a base salary of $600,000 per annum through
the end of the term and may be adjusted upward at the sole discretion of the
Board of Directors. The agreement also provides for an annual bonus to be
determined at the sole discretion of the Board of Directors not to be less
than $150,000 per annum. Mr. Shapiro also receives a $100,000 per annum living
expense.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the ownership of shares of common
stock by each person known by the Company to own beneficially more than five
percent of the outstanding shares, by each director and by all officers and
directors as a group as of March 15, 1996.
Beneficial Owner Shares Beneficially Owned Percent of Class
---------------- ------------------------- ----------------
Ronald O. Perelman 1,000 (1) 100%
- -----------
(1) All of such Shares are beneficially owned by M&F Holdings and, in turn, by
Mafco Holdings, of which Mr. Perelman is the sole stockholder.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (DOLLARS IN
MILLIONS)
"Other assets" at December 31, 1995 and 1994 includes $2.9 debt
securities issued by a subsidiary of Mafco Holdings that were purchased in the
open market.
The Company has depended upon advances and/or capital contributions
from M&F Holdings and its affiliates to meet its cash needs. At March 1, 1996,
December 31, 1995 and December 31, 1994, such outstanding advances to the
Company and its subsidiaries were $310.7, $307.1 and $154.2, respectively.
At March 2, 1996, an aggregate of 78.0 million shares, or
76.7%, of common stock of Marvel were pledged to secure indebtedness or
letters of credit of subsidiaries of Mafco Holdings, including Marvel
Holdings, Parent Holdings, Holdings III and Four Star Holdings Inc. In
addition, 2.9 million shares are subject to a negative pledge under the terms
of the Marvel Holdings Notes Indenture. The indentures governing this
indebtedness contain various covenants relating to Marvel, including certain
limitations on Marvel's indebtedness. At December 31, 1995 and 1994, $46.7 of
the Company's indebtedness was guaranteed by a subsidiary of Mafco Holdings.
The guarantees are subordinated obligations of such subsidiary and are
partially secured by its assets.
At December 31, 1994, Holdings III had advances of $8.3 to Mafco
Holdings as permitted under the Holdings III indenture. Such advance was
repaid in 1995. At March 1, 1996, December 31, 1995 and December 31, 1994,
Marvel IV had advanced $498.0, $441.0 and $216.3 to Mafco Holdings and its
subsidiaries representing the net proceeds from the borrowings under the
Marvel IV Credit Agreement.
Information required by this Item 13 as it relates to Andrews'
principal operating subsidiaries, Marvel and NWCG, is incorporated by
reference from the definitive proxy statements for the 1996 annual meetings of
Marvel and NWCG shareholders, which are required to be filed pursuant to
Regulation 14A no later than 120 days following the end of the fiscal year
reported on.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8K
a) 1 and 2 Financial statements and financial statement schedules
------------------------------------------------------
The Financial Statements and Financial Statements
Schedules and Report of Independent Auditors included
in this Report are indexed on page F-1.
3. Exhibits
EXHIBIT DESCRIPTION
------- -----------
2.1 Agreement and Plan of Merger, dated as of July 24,
1992 among Fleer Corp., Marvel and M Acquisition Corp.
filed as Exhibit (c)(1) to Registrant's Tender Offer
Statement on Schedule 14D-1 filed with the Securities
and Exchange Commission on July 28, 1992, as amended
(the "Fleer Schedule 14D-1") and incorporated herein
by reference.
2.2 Exchange Agreement, dated as of April 10, 1989, among
Andrews Group Incorporated, Four Star Holdings Corp.,
Four Star Acquisition Corp. and Lawrence L. Kuppin,
Harry Evans Sloan and Robert C. Rehme (the "New World
Exchange Agreement") (incorporated herein by reference
to Exhibit (c)(5) of the Tender Offer Statement on
Schedule 14D-1 of Andrews Group Incorporated, Four
Star Holdings Corp., and Four Star Acquisition Corp.
dated April 14, 1989 (the "New World Tender Offer"),
as amended June 5, 1989 (incorporated herein by
reference to Exhibit (c)(7) of Amendment No. 4 to the
New World Tender Offer dated June 6, 1989).
2.3 Stipulation Regarding Implementation of Settlement
Agreement and Resolution of Investment Advisor's
Claim, dated May 25, 1993 (incorporated by reference
to Exhibit 2.6 of the NWTV Registration Statement on
form S-1; No. 33-64546; relating to NWTV's 11% Secured
Senior Notes due 2005. Series 1 (the "NWTV
Registration Statement).
2.4 Amendment to Agreement and Plan of Reorganization and
merger, dated as of December 30, 1993 (incorporated by
reference to Exhibit 2.11 of the NWTV Registration
Statement).
2.5 Agreement and Plan of Reorganization and Merger, dated
as of November 23, 1993, by and among NWTV, Andrews
Group, the Company and Merger Sub (the "Agreement and
Plan of Reorganization and Merger") (incorporated by
reference to Exhibit 2.11 of the Registration
Statement on form S-1, No. 33-72738 of NWC (the "New
World Registration Statement").
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2.6 Amendment to Agreement and Plan of Reorganization and
Merger, dated as of February 9, 1994 (incorporated by
reference to Exhibit 2.11B of the New World
Registration Statement).
2.7 Amendment to Agreement and Plan of Reorganization and
Merger, dated as of February 10, 1994 (incorporated by
reference to Exhibit 2.11C of the New World
Registration Statement).
3.1 Restated Certificate Of Incorporation of the Company
as filed with the Delaware Secretary of State on
August 16, 1990 (incorporated herein by reference to
the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 (the "1991
10-K")).
3.2 Amended and Restated By-Laws of the Company
(incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-4
(Registration No. 33-34829) filed with the SEC on May
11, 1990 (the "1990 S-4")).
4.1 Form of Indenture between the Company and Security
Pacific National Trust Company (New York), as Trustee,
including the form of 10% Senior Subordinated
Debentures due 1999 (incorporated herein by reference
to the 1990 S-4).
4.2 Indenture, dated as of July 1, 1986, between the
Company and United States Trust Company of New York,
as Trustee, including the form of 12-3/4% Debentures
(incorporated herein by reference to Amendment No. 1
To Registration Statement on Form S-2 (No. 33-6205)
filed by Registrant on July 2, 1986), as amended by
First Supplemental Indenture, dated as of June 13,
1988 (incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1988 (the "1988 10-K").
4.3 Certificate Of Designations, Preferences And Relative
Rights, Qualifications, Limitations And Restrictions
Of The Series "A" Adjustable Rate Cumulative Preferred
Stock Of Four Star Holdings Corp. (incorporated herein
by reference to the Registrant's Current Report on
Form 8-K dated June 5, 1989), as amended (incorporated
herein by reference to the Registrant's Current Report
on Form 8-K dated June 5, 1989).
4.4 Senior Notes due 1999 of Four Star Holdings Corp. in
the aggregate principal amount of $46,154,500
(incorporated herein by reference to the Company's
Current Report on Form 8-K dated June 5, 1989).
4.5 Indenture, dated as of November 1, 1985, between New
World Pictures, Ltd. and European American Bank
relating to 11% Subordinated Notes due November 1,
1995 (incorporated herein by reference to Registration
Statement on Form S-1 (No. 2-99865) filed by New World
Entertainment, Ltd.).
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4.6 Indenture, dated as of September 15, 1986, between New
World Pictures, Ltd. and European American Bank, as
Trustee, including the form of 12-1/4% Subordinated
Sinking Fund Debentures due September 15, 1988
(incorporated herein by reference to Registration
Statement on Form S-1 (No. 33-8568) filed by New World
Entertainment, Ltd.).
4.7 Indenture, dated as of May 25, 1993, by and between
NWTV, as Issuer, and Continental Bank, National
Association, as Trustee (incorporated by reference to
Exhibit 4.1 of the NWTV Registration Statement).
4.8 Indenture, dated as of May 25, 1993, by and between
NWTV, as Issuer, and NationsBank of Georgia, National
Association, as Trustee (incorporated by reference to
Exhibit 4.2 of the NWTV Registration Statement).
4.9 Collateral Trust and Intercreditor Agreement, dated as
of May 25, 1993, among NWTV, the Secured Party
Representatives named therein, and Chemical Bank, as
Collateral Trustee (incorporated by reference to
Exhibit 4.3 of the NWTV Registration Statement).
4.10 NWTV Pledge and Security Agreement, dated as of May
25, 1993, by and between NWTV, as Pledgor, and
Chemical Bank, as Collateral Trustee (incorporated by
reference to Exhibit 4.4 of the NWTV Registration
Statement).
4.11 Stockholders Agreement, dated as of May 25, 1993,
among NWTV, Andrews Group Incorporated, and the
Initial Executing Stockholders listed therein
(incorporated by reference to Exhibit 4.6 of the NWTV
Registration Statement).
4.12 Registration Rights Agreement, dated as of May 25,
1993, among NWTV, and the Stockholders,
Warrantholders, and Debtholders listed on the
Signature Pages thereto (incorporated by reference to
Exhibit 4.7 of the NWTV Registration Statement).
4.13 New Equity Stock Subscription Agreement, dated as of
January 26, 1993, by and between NWTV and Andrews
Group Incorporated, as amended January 29, 1993 and
February 11, 1993 (incorporated by reference to
Exhibit 4.8 of the NWTV Registration Statement).
4.14 Purchase Agreement, dated May 20, 1993, among NWTV,
Andrews Group Incorporated for the limited purpose of
acknowledging the agreement set forth in Section 2
thereto and Bear, Stearns & Co. Inc. (incorporated by
reference to Exhibit 4.9 of the NWTV Registration
Statement).
4.15 Registration Agreement, dated May 20, 1993, by and
between NWTV and Bear, Stearns & Co. Inc.
(incorporated by reference to Exhibit 4.10 of the NWTV
Registration Statement).
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4.16 Form of Class A Warrant of NWTV (incorporated by
reference to Exhibit 4.11 of the NWTV Registration
Statement).
4.17 Form of Class B Warrant of NWTV (incorporated by
reference to Exhibit 4.12 of the NWTV Registration
Statement).
4.18 Form of Class A, Series 2 Warrants of NWCG
(incorporated by reference to Exhibit 3.3 of the NWCG
Form 8-K/A dated March 19, 1994.
4.19 Fourth Amendment, dated as of May 12, 1994 to the
Credit and Guarantee Agreement, dated as of September
17, 1992, as amended, among Marvel, Fleer, the
financial institutions parties thereto and Chemical
Bank, as administrative agent (incorporated by
reference to Marvel's 1993 Annual Report on Form 10-K
for the fiscal year ended December 31, 1993).
4.20 Credit Agreement dated as of July 20, 1994 among
Marvel IV Holdings Inc., the banks named therein and
Citibank, N.A. (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1994 ("the 1994
10Q")).
4.21 Execution Copy of Borrower Security Agreement dated as
of July 27, 1994 (incorporated by reference to the
1994 10Q).
4.22 Execution Copy of Borrower Parent Security Agreement
dated as of July 27, 1994 (incorporated by reference
to the 1994 10Q).
4.23 Execution Copy of Mafco Security Agreement dated as of
July 27, 1994 (incorporated by reference to the 1994
10Q).
4.24 Execution Copy of Four Star Pledge Agreement dated as
of July 27, 1994 (incorporated by reference to the
1994 10Q).
4.25 Execution Copy of Andrews Pledge Agreement dated as of
July 27, 1994 (incorporated by reference to the 1994
10Q).
4.26 Execution Copy of M&F Pledge Agreement dated as of
July 27, 1994 (incorporated by reference to the 1994
10Q).
4.27 Execution Copy of Coleman Pledge Agreement dated as of
July 27, 1994 (incorporated by reference to the 1994
10Q).
4.28 Execution Copy of New Coleman Pledge Agreement dated
as of July 27, 1994 (incorporated by reference to the
1994 10Q).
4.29 Execution Copy of Borrower Parent Guaranty dated as of
July 27, 1994 (incorporated by reference to the 1994
10Q).
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4.30 Execution Copy of Mafco Guaranty dated as of July 27,
1994 (incorporated by reference to the 1994 10Q).
4.31 Execution Copy of Coleman Guaranty dated as of July
27, 1994 (incorporated by reference to the 1994 10Q).
4.32 Execution Copy of Equity Contribution Agreement dated
as of July 27, 1994 (incorporated by reference to the
1994 10Q).
4.33 Certificate of Incorporation and Amendments for Marvel
IV Holdings Inc. (incorporated by reference to the
1994 10Q).
4.34 Certificate of Incorporation and Amendments for Marvel
V Holdings Inc. (incorporated by reference to the 1994
10Q).
4.35 Certificate of Incorporation and Amendments for
Coleman (Parent) Holdings Inc. (incorporated by
reference to the 1994 10Q).
4.36 A voting trust agreement, duly executed by Marvel IV
Holdings Inc., Marvel V Holdings Inc., Citibank, N.A.
and NationsBank, as voting trustee (incorporated by
reference to the 1994 10Q).
4.37 A voting trust agreement, duly executed by Marvel V
Holdings Inc., Four Star Holdings Corp., Citibank,
N.A. and NationsBank, as voting trustee (incorporated
by reference to the 1994 10Q).
4.38 A voting trust agreement, duly executed by Coleman
(Parent) Holdings Inc., New Coleman Holdings , Inc.,
Citibank, N.A. and NationsBank, as voting trustee
(incorporated by reference to the 1994 10Q).
4.39 First Amendment dated as of March 10, 1995 to Credit
Agreement dated as of July 20, 1994 among Marvel IV
Holdings Inc., the banks named therein and Citibank
N.A. as agent and related agreements (incorporated by
reference to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1995 (the "1995
10Q")).
4.40 Amended and Restated Agreement dated as of June 29,
1995 among Marvel IV Holdings Inc., the banks named
therein and Citibank N.A. as agent and related
agreements (incorporated by reference to the 1995 10Q)
4.41* Second Amended and Restated Credit Agreement dated as
December 15, 1995 among Marvel IV Holdings Inc., the
banks named therein and Citibank, N.A., as agents.
4.42* First Amendment to the Second Amended and Restated
Credit Agreement dated as of January 9, 1996.
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4.43* Second Amendment to the Second Amended and Restated
Credit Agreement dated as of January 24, 1996.
10.1 Reimbursement Agreement, dated as of June 5, 1989,
between Four Star Holdings Corp. and Manufacturers
Hanover Trust Company, as Agent (incorporated herein
by reference to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989 (the
"1989 10-K")).
10.2 Reimbursement Agreement, dated as of June 5, 1989,
between New World Entertainment, Ltd. and
Manufacturers Hanover Trust Company, as Agent
(incorporated herein by reference to the 1989 10-K).
10.3 Agreement, dated as of June 5, 1989, between New World
Entertainment, Ltd. et al. and Manufacturers Hanover
Trust Company, pursuant to which Manufacturers Hanover
Trust Company purchased the outstanding loan under the
Amended And Restated Loan Agreement dated August 17,
1988 between General Electric Capital Corporation and
New World Entertainment, Ltd. (incorporated herein by
reference to the Current Report on Form 8-K dated
September 17, 1988 filed by New World Entertainment,
Ltd.).
10.4 Credit and Guarantee Agreement, dated as of September
17, 1992, among Marvel Entertainment Group, Inc.,
Fleer Corp., the banks from time-to-time party
thereto, the Co-Agents and Chemical Bank, as
administrative agent (incorporated herein by reference
to Exhibit 4.1 to Marvel's 1992 Annual Report on Form
10-K for the fiscal year ended December 31, 1992 (the
"1992 Marvel 10-K").
10.5 First Amendment and Consent Number 1, dated as of
April 16, 1993 to the Credit and Guarantee Agreement,
dated as of September 17, 1992, among the Marvel
Entertainment Group, Inc., Fleer Corp., the banks from
time-to-time parties thereto, the Co-Agents and
Chemical Bank, as Administrative Agent incorporated by
reference to Exhibit 4.2 to the 1992 Marvel 10-K.
10.6 Second Amendment and Consent Number 2, dated as of
April 30, 1993 to the Credit and Guarantee Agreement,
dated as of September 17, 1992, among the Marvel
Entertainment Group, Inc., Fleer Corp., the banks from
time-to-time parties thereto, the Co-Agents and
Chemical Bank, as Administrative Agent incorporated by
reference to Exhibit 4.3 to the 1992 Marvel 10-K.
10.7 Third Amendment, dated as of November 15, 1993 to the
Credit and Guarantee Agreement, dated as of September
17, 1992, among the Marvel Entertainment Group, Inc.,
Fleer Corp., the banks from time-to-time parties
thereto, the Co-Agents and Chemical Bank, as
Administrative Agent.
10.8 Credit Agreement, dated as of April 30, 1993, among
Toy Biz., the financial institutions from time-to-time
parties thereto and Chemical Bank, as
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Administrative Agent, incorporated by reference to
exhibit 4.4 to the 1992 Marvel 10-K.
10.9 Credit Agreement, dated as of April 25, 1990, among
New World Entertainment, Ltd. and Manufacturers
Hanover Trust Company, as agent (incorporated herein
by reference to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1990 (the
"1990 10-K"), as amended by the First Amendment dated
as of July 13, 1990, Second Amendment dated as of
September 28, 1990, Third Amendment dated as of
November 19, 1990, Fourth Amendment dated as of
January 31, 1991, Waiver and Fifth Amendment dated as
of March 31, 1991, Sixth Amendment dated as of April
26, 1991, Waiver and Seventh Amendment dated as of May
24, 1991, Waiver and Eighth Amendment dated as of
September 30, 1991, Waiver and Ninth Amendment dated
as of December 31, 1991 (incorporated herein by
reference to the 1991 10-K) and Tenth Amendment dated
as of November 30, 1992
10.10 Secured Revolving Dual Currency Credit Agreement,
dated December 20, 1990, among New World
Entertainment, Ltd., Manufacturers Hanover Trust
Company, Credit Lyonnais Bank Nederland N.V., NMB
Postbank Groep N.V. and Credit du Nord (incorporated
herein by reference to the 1990 10-K).
10.11 Letter Agreement, dated June 11, 1990, between New
World Entertainment, Ltd. and Turner Program Services,
Inc. (incorporated herein by reference to the 1990
10-K).
10.12 Agreement dated November 15, 1991 by and among TST
Acquisition Corp., Sony Pictures Entertainment and New
World Entertainment, Ltd. and certain of its
subsidiaries (incorporated herein by reference to the
1991 10-K).
10.13 Guarantee dated as of December 31, 1991 by New Marvel
Holdings Inc. in favor of Manufacturers Hanover Trust
Company, as amended by First Amendment dated as of
February 20, 1992, with related Pledge Agreement dated
as of December 31, 1991 by New Marvel Holdings Inc. in
favor of Manufacturers Hanover Trust Company
(incorporated herein by reference to the 1991 10-K).
10.14 Guaranty dated as of March 4, 1992 by MS Pledge Corp.
Inc. in favor of Credit Suisse, with related Pledge
Agreement dated as of March 4, 1992 by MS Pledge Corp.
Inc. in favor of Credit Suisse (incorporated herein by
reference to the 1991 10-K).
10.15 Credit Agreement, dated as of August 28, 1992 by and
among Marvel Entertainment Group, Inc., Chemical Bank,
as administrative agent, and the Banks party thereto
filed as Exhibit (b)(2) to the Fleer Schedule 14D-1
and incorporated herein by reference.
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10.16 Credit and Guarantee Agreement, dated as of September
17, 1992, among Marvel, Fleer Corp., the banks from
time-to-time party thereto, the Co-Agents and Chemical
Bank, as administrative agent (incorporated by
reference to Exhibit 4.1 of the 1992 Marvel 10-K).
10.17 Purchase Agreement dated November 20, 1986, between
New World Pictures, Ltd. and Cadence Industries
Corporation (incorporated by reference to Exhibit 10.1
to Marvel's Registration Statement on Form S-1 (No.
33-40574) filed May 14, 1991 ("Marvel's 1991
Registration Statement")).
10.18 Acquisition Agreement dated as of November 4, 1988,
between New World Pictures, Ltd. and Andrews Group
Incorporated relating to Marvel Entertainment Group,
Inc. (incorporated by reference to Exhibit 10.2 to
Marvel's 1991 Registration Statement).
10.19 Distribution Agreement dated as of September 1, 1993,
between Curtis Circulation Company and Marvel
Entertainment Group, Inc. (incorporated by reference
to Marvel's 1993 10-K).
10.20 Form of Agreement dated as of January 1, 1991, between
Eastern News Distributors, Inc. and Marvel
Entertainment Group, Inc. (incorporated by reference
to Exhibit 10.4 Marvel's 1991 Registration Statement).
10.21 Marketing and Distribution Agreement dated November 1,
1989 between Publishers Group West Incorporated and
Marvel Entertainment Group, Inc. (incorporated by
reference to Exhibit 10.5 to Marvel's 1991
Registration Statement).
10.22 Printing Agreement dated as of November 1, 1992,
between Sullivan Graphics Inc. and Marvel
Entertainment Group, Inc. (incorporated by reference
to Exhibit 10.6 to Marvel's 1992 Form 10-K).
10.23 Lease dated as of July 1, 1986, between 387 P.A.S.
Enterprises and Cadence Industries Corporation (9th
floor) (incorporated by reference to Exhibit 10.7 to
Marvel's 1991 Registration Statement).
10.24 Lease Modification and Extension Agreement dated as of
July 1, 1991, between 387 P.A.S. Enterprises and
Marvel Entertainment Group, Inc. (9th, 10th, 11th and
12th floors) (incorporated by reference to Exhibit
10.9 to Marvel's 1991 Form 10-K).
10.25 Sublease dated September 13, 1991 between American
Banker Bond Buyer and Marvel Entertainment Group, Inc.
(12th floor) (incorporated by reference to Exhibit
10.10 to Marvel's 1991 Form 10-K).
10.26 Andrews Group Incorporated Savings and Investment Plan
(incorporated by reference to Exhibit 10.9 to Marvel's
1991 Registration Statement).
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10.27 Marvel Entertainment Group, Inc. 1991 Stock Option
Plan (incorporated by reference to Exhibit 10.10 to
Amendment No. 3 filed July 15, 1991 ("Amendment No.
3") to Marvel's 1991 Registration Statement).
10.28 First Amendment to the Marvel Entertainment Group,
Inc. 1991 Stock Option Plan (incorporated by reference
to Exhibit 4.2 to the Marvel Entertainment Group,
Inc.'s Registration Statement on Form S-8 (File No.
33-63892)).
10.29 Services Agreement dated as of July 22, 1991, among
Marvel Entertainment Group, Inc., MacAndrews & Forbes
Holdings Inc. and Andrews Group (incorporated by
reference to Exhibit 10.13 to the 1991 Marvel Form
10-K).
10.30 Tax Indemnification Agreement dated as of July 22,
1991, between Marvel Entertainment Group, Inc. and
Mafco Holdings Inc. (incorporated by reference to
Exhibit 10.14 to the 1991 Marvel Form 10-K).
10.31 Tax Sharing Agreement dated as of May 18, 1993, among
Marvel Entertainment Group, Inc., certain of its
subsidiaries and Mafco Holdings Inc. (incorporated by
reference to Exhibit 10.32 to the Marvel (Parent)
Holdings Inc. Registration Statement on Form S-1)
10.32 Amended and Restated Tax Sharing Agreement dated as of
January 1, 1994, between Mafco Holdings Inc., Marvel
III Holdings Inc., Marvel and certain subsidiaries of
Marvel (incorporated by reference to Exhibit 10.15 to
the 1993 Marvel Form 10-K).
10.33 Stock Purchase Agreement dated as of July 1, 1993,
between Marvel Holdings Inc. and the Marvel
Entertainment Group, Inc. (incorporated by reference
to Exhibit 10.16 to the 1993 Marvel Form 10-K).
10.34 Term Sheet for License Agreement dated January 25,
1995, between Major League Baseball Properties, Inc.
and Fleer Corp. (incorporated by reference to the 1994
Marvel 10-K).
10.35 License Agreement dated December 22, 1994, between
Major League Baseball Players Association and Fleer
Corp. (incorporated by reference to the 1994 Marvel
10-K).
10.36 Retail License Agreement No. 677 dated September 1992,
between NBA Properties, Inc. and Fleer Corp.
(incorporated by reference to Exhibit 10.22 to
Marvel's Amendment No. 1 on Form 8 dated April 27,
1993 to Marvel's 1992 10-K).
10.37 Amendment dated November 28, 1994, to Retail License
Agreement No. 677 dated September 1992, between NBA
Properties, Inc. and Fleer Corp. (incorporated by
reference to the 1994 Marvel 10-K).
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10.38 Amendment dated December 21, 1992, to License
Agreement dated September 1992, between NBA
Properties, Inc. and Fleer Corp. Confidential
treatment has been requested for portions of this
document (incorporated by reference to the 1994 Marvel
10-K).
10.39 Amendment dated September 21, 1993, to License
Agreement dated September 1992, between NBA
properties, Inc. and Fleer Corp., as amended December
21, 1992 (incorporated by reference to the 1994 Marvel
10-K). Confidential treatment has been requested for
portions of this document.
10.40 General Retail License Agreement (No. R01809) dated as
of February 19, 1993, between National Football League
Properties, Inc. and Fleer Corp. incorporated by
reference to Exhibit 10.1 to the Form 8-K of the
registrant filed July 8, 1993 (the "July Form 8-K").
Confidential treatment has been granted for portions
of this document.
10.41 Agreement dated April 23, 1993, between Fleer Corp.
and National Football League Players Association
incorporated by reference to Exhibit 10.2 to the July
Form 8-K. Confidential treatment has been granted for
portions of this document.
10.42 Amendment dated May 28, 1993, to Agreement dated April
23, 1993, between Fleer Corp. and National Football
League Players Association incorporated by reference
to Exhibit 10.3 to the July Form 8-K. Confidential
treatment has been granted for portions of this
document.
10.43 General Retail License Agreement (No. R02505) dated
March 8, 1993, between National Football League
Properties, Inc. and Fleer Corp.(incorporated by
reference to the 1993 Marvel 10-K). Confidential
treatment has been requested for portions of this
document.
10.44 General Retail License Agreement (No. R02506) dated
March 8, 1993, between National Football League
Properties, Inc. and Fleer Corp. (incorporated by
reference to the 1993 Marvel 10-K). Confidential
treatment has been requested for portions of this
document.
10.45 General Player Licensing Agreement dated March 1,
1993, between National Football League Properties,
Inc. and Fleer Corp. (incorporated by reference to the
1993 Marvel 10-K). Confidential treatment has been
requested for portions of this document.
10.46 License Agreement dated August 31, 1993, between Fleer
Corp. and National Football League Players
Association. (incorporated by reference to the 1993
Marvel 10-K). Confidential treatment has been
requested for portions of this document.
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10.47 Amendment dated August 31, 1993, to License Agreement
dated August 31, 1993, between Fleer Corp. and
National Football League Players Association
(incorporated by reference to the 1993 Marvel 10-K).
Confidential treatment has been requested for portions
of this document.
10.48 License Agreement dated June 30, 1995, between SkyBox
International Inc. and National Football League
Players Incorporated, as amended June 30, 1995.
(incorporated by reference to Marvel's Annual Report
on Form 10-K for the year ended December 31, 1995 (the
"1995 Marvel 10-K"). Confidential treatment has been
requested for portions of this document.
10.49 License Agreement dated September 25, 1992, between
National Hockey League Players Association and Fleer
Corp. incorporated by reference to Exhibit 10.26 to
the 1992 Form 8. Confidential treatment has been
granted for portions of this document.
10.50 Amendment dated April 7, 1993, to License Agreement
dated September 25, 1992, between National Hockey
League Players Association and Fleer Corp.
Confidential treatment has been requested for portions
of this document.
10.51 Amendment dated July 21, 1993, to License Agreement
dated September 25, 1992, between National Hockey
League Players Association and Fleer Corp.
10.52 License Agreement dated as of October 16, 1992,
between NHL Enterprises, Inc. and Fleer Corp.
incorporated by reference to Exhibit 10.27 to the 1992
Form 8.
10.53 Amendment dated April 20, 1993, to License Agreement
dated October 16, 1992, between NHL Enterprises, Inc.
and Fleer Corp.
10.54 License Agreement dated January 10, 1996, between
SkyBox International Inc. and The Walt Disney Company
(incorporated by reference to the Marvel 1995 10-K).
Confidential treatment has been requested for portions
of this document.
10.55 Agreement dated September 28, 1993, between National
Football League Properties, Inc. and Fleer Corp.
(incorporated by reference to Exhibit 10.42 to the
1993 Marvel 10-K).
10.56 Formation and Contribution Agreement dated as of March
19, 1993, among Toy Biz, Inc., Isaac Perlmutter, Isaac
Perlmutter T.A., the registrant, Avi Arad and Toy Biz
Acquisition, Inc., as amended as of March 31, 1993,
and April 30, 1993, incorporated by reference to
Exhibit 10.29 to the registrant's Form 10-Q for the
quarterly period ended March 31, 1993.
10.57 Loan Participation Agreement between Manufacturers
Hanover Trust Company as Selling Bank and Four Star
Holdings Corp., as Participants (incorporated by
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reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992 ("the 1992
10-K").
10.58 Amended and Restated Loan Participation Agreement
between Chemical Bank as Selling Bank and Four Star
Holdings Corp., as Participant (incorporated by
reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992 ("the 1992
10-K").
10.59 New Equity Stock Subscription Agreement dated as of
January 26, 1993 by and between NWTV and Andrews Group
(incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1992 ("the 1992 10-K").
10.60 Letter Agreement dated as of February 27, 1992 between
Turner Program Services Inc. and New World
Entertainment (incorporated by reference to the
Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992 ("the 1992 10-K").
10.61 Formation and Contribution Agreement dated March 19,
1993 among Toy Biz, Inc., Isaac Perlmutter, Isaac
Perlmutter T.A., Marvel Entertainment Group, Inc., Avi
Arad and Toy Biz Acquisition, Inc. (incorporated by
reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992 ("the 1992
10-K").
10.62 First Amendment, dated as of December 22, 1993, by and
among NWTV, the Institutions listed on the Signature
Pages thereof and Canadian Imperial Bank of Commerce
New York Agency (incorporated by reference to Exhibit
10.2 of the NWTV Registration Statement).
10.63 Credit Agreement, dated as of May 25, 1993, among
NWTV, the Lenders listed therein and Canadian Imperial
Bank of Commerce New York Agency, as Agent
(incorporated by reference to Exhibit 10.1 of the NWTV
Registration Statement).
10.64 First Amended and Restated Credit Agreement, dated as
of December 22, 1993, by and among NWTV, the
distributions listed on the Signature Pages thereof
and Canadian Imperial Bank of Commerce New York Agency
(incorporated by reference to exhibit 10.1A of the
NWTV Registration Statement)
10.65 Affiliation Agreement, dated as of March 1, 1989, by
and between National Broadcasting Company, Inc. and NW
Communications of San Diego, Inc., as extended on May
24, 1993 (incorporated by reference to Exhibit 10.8 of
the NWTV Registration Statement).
10.66 Affiliation Agreement by and between Fox Broadcasting
Company and WJBK License, Inc. (incorporated by
reference to Exhibit 10.0 of NWCG Holdings Corporation
Registration Statement on Form S-1 (No.33- 82274)
relating to
65
<PAGE>
NWCG Holdings Corporation Senior Discount
Notes (the "NWCG Holdings Registration Statement")).
10.67 Affiliation Agreement by and between Fox Broadcasting
Company and WAGA License, Inc. (incorporated by
reference to Exhibit 10.10 of the NWCG Holdings
Registration Statement).
10.68 Affiliation Agreement by and between Fox Broadcasting
Company and WJW License, Inc. (incorporated by
reference to Exhibit 10.11 of the NWCG Holdings
Registration Statement).
10.69 Affiliation Agreement by and between Fox Broadcasting
Company and TVT License, Inc. (incorporated by
reference to Exhibit 10.12 of the NWCG Holdings
Registration Statement).
10.70 Affiliation Agreement by and between Fox Broadcasting
Company and WITI License, Inc. (incorporated by
reference to Exhibit 10.13 of the NWCG Holdings
Registration Statement).
10.71 Affiliation Agreement by and between Fox Broadcasting
Company and KSAZ License, Inc. (incorporated by
reference to Exhibit 10.14 of the NWCG Holdings
Registration Statement).
10.72 Affiliation Agreement by and between Fox Broadcasting
Company and WDAF License, Inc. (incorporated by
reference to Exhibit 10.15 of the NWCG Holdings
Registration Statement).
10.73 Employment Agreement, dated as of May 25, 1993, by and
between NWTV and Robert E. Selwyn, Jr. (incorporated
by reference to Exhibit 10.9 of the NWTV Registration
Statement).
10.74 Employment Agreement, dated as of May 24, 1993, by and
between NWTV and Eric J. Froistad (incorporated by
reference to Exhibit 10.10 of the NWTV Registration
Statement).
10.75 Employment Agreement, dated as of May 25, 1993, by and
between NWTV and Larry D. Haugen (incorporated by
reference to Exhibit 10.11 of the NWTV Registration
Statement).
10.76 Employment Agreement, dated as of May 25, 1993, by and
between NWTV and James G. Gorman (incorporated by
reference to Exhibit 10.12 of the NWTV Registration
Statement).
10.77 Employment Agreement, dated as of May 24, 1993, by and
between NWTV and David A. Ramon (incorporated by
reference to Exhibit 10.13 of the NWTV Registration
Statement).
66
<PAGE>
10.78 Employment Agreement, dated as of May 25, 1993, by and
between NWTV and George N. Gillett, Jr. (incorporated
by reference to Exhibit 10.14 of the NWTV Registration
Statement).
10.79 Employment agreement, dated as of January 1, 1993, by
and between Andrews Group and William C. Bevins, Jr.
(incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1993 (the "1993 10-K")).
10.80 Employment agreement, dated as of August 1, 1993, by
and between Andrews Group and Terry C. Bridges
(incorporated by reference to the 1993 10-K).
10.81 Employment agreement, dated as of November 15, 1993,
by and between Andrews Group and Joseph P. Page
(incorporated by reference to the 1993 10-K).
10.82 Employment agreement, dated as of June 1, 1993, by and
between Andrews Group and Bill Kerstetter
(incorporated by reference to the 1993 10-K).
10.83 Employment agreement, dated as of October 28, 1993, by
and between Andrews Group and Paul E. Shapiro
(incorporated by reference to the 1993 10-K).
10.84 Employment agreement dated as of April 20, 1994, by
and between Andrews Group and Michael H. Diamond
(incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1994 ("the 1994 10-K").
10.85 Employment Agreement dated as of May 1, 1994, between
the Registrant and Terry C. Stewart (incorporated by
reference to the Marvel 1994 10-K).
10.86 Employment Agreement dated as of July 24, 1992,
between Fleer Corp. and Paul H. Mullan. (incorporated
by reference to Exhibit 10.39 to the 1993 Marvel
10-K).
10.87 Employment Agreement dated as of July 1, 1992, between
Marvel and Jeffrey L. Kaplan. (incorporated by
reference to Exhibit 10.41 to the 1993 Marvel 10-K).
10.88* Employment Agreement dated as of December 15, 1994, by
and between New World Communications Group and Arthur
H. Bilger.
10.89* Employment agreement dated as of December 15, 1994, by
and between Andrews Group Incorporated and Arthur H.
Bilger.
10.90 Employment Agreement dated as of August 1, 1995,
between Marvel Entertainment Group Inc. and Jeffrey L.
Kaplan (incorporated by reference to the Marvel 1995
10-K).
67
<PAGE>
10.91 Employment Agreement dated as of July 1, 1995, between
Marvel Entertainment Group Inc. and Gerard S.
Calabrese (incorporated by reference to the Marvel
1995 10-K).
10.92 Joint Venture Agreement dated December 9, 1994,
between Marvel Restaurant Venture Corp. and EBCO
Management, Inc. (incorporated by reference to Exhibit
10.45 to the Marvel 1994 10-K). Confidential treatment
has been granted for portions of this document.
10.93 Stock Purchase Agreement dated as of August 4, 1994,
among Panini Publishing International S.A., Istituto
Geografico De Agostini S.p.A., Bain Gallo Cuneo
Capital Investments S.p.A., Killawlan Ltd., Cabra
International Ltd. and Marvel Comics Italia S.r.l.
incorporated by reference to Exhibit 10.48 to the
Marvel 1994 Second Quarter 10-Q. Confidential
treatment has been requested for portions of this
document.
10.94 Amended and Restated Credit and Guarantee Agreement
dated as of August 30, 1994, among Marvel, Fleer
Corp., the banks from time-to-time parties thereto,
the Co-Agents and Chemical Bank, as Administrative
Agent. (incorporated by reference to Exhibit 10.49 to
the Marvel Form 8-K filed September 15, 1994 (the
"1994 Marvel August 8-K") and Exhibit 10.50 to the
1994 Marvel August 8-K).
10.95 Term Loan and Guarantee Agreement dated as of August
30, 1994, among Marvel Comics Italia S.r.1., Marvel
and Instituto Bancario San Paolo Di Torino, S.p.A.
(incorporated by reference to Exhibit 10.50 to the
1994 Marvel August 8-K).
10.96 Participation Agreement dated as of August 30, 1994,
among Instituto Bancario San Paolo Di Torino, S.p.A.,
New York Limited Branch, as Italian Lender, Chemical
Bank, as Administrative Agent, and the financial
institutions signatory thereto, as Participants.
(incorporated by reference to Exhibit 10.51 to the
1994 Marvel August 8-K).
10.97 Credit and Guarantee Agreement dated as of April 24,
1995, by and among Marvel Entertainment Group, Inc.,
Fleer Corp., Chemical Bank, as Administrative Agent,
and the financial institutions parties thereto
(incorporated by reference to Exhibit (b)(3) to the
Final Amendment to the Marvel 1995 Schedule 14D-1.
10.98 First Amendment dated as of November 22, 1994, to the
Amended and Restated Credit and Guarantee Agreement by
and among Marvel Entertainment Group, Inc., Fleer
Corp., Chemical Bank, as Administrative Agent, and the
financial institutions parties thereto (incorporated
by reference to Exhibit 10.4 to the Form 8-K of Marvel
Entertainment Group, Inc. filed May 11, 1995.
68
<PAGE>
10.99 Second Amendment dated as of April 24, 1995, to the
Amended and Restated Credit and Guarantee Agreement by
and among Marvel Entertainment Group, Inc., Fleer
Corp., Chemical Bank, as Administrative Agent, and the
financial institutions parties thereto (incorporated
by reference to Exhibit 10.5 to the Form 8-K of Marvel
Entertainment Group, Inc. filed May 11, 1995.
10.100 Consent Number 1 dated as of February 9, 1996, to the
Marvel Entertainment Group, Inc.'s Credit Agreements
with Chemical Bank, as Administrative Agent, and the
financial institutions from time to time parties
thereto (incorporated by reference to the Marvel 1995
10-K).
10.101 Third Amendment dated as of March 1, 1996, to the
Amended and Restated Credit and Guarantee Agreement by
and among Marvel Entertainment Group, Inc., Fleer
Corp., Chemical Bank, as Administrative Agent, and the
financial institutions from time to time parties
thereto (incorporated by reference to the Marvel 1995
10-K.).
10.102 Consent Number 2 and First Amendment dated as of March
1, 1996, to the Credit and Guarantee Agreement among
Marvel Entertainment Group, Inc., Fleer Corp., the
financial institutions from time to time parties
thereto, the Co-Agents and Chemical Bank, as
Administrative Agent (incorporated by reference to the
Marvel 1995 10-K.).
10.103 Commitment Letter, dated March 27, 1996, among Marvel
Entertainment Group, Inc., Fleer Corp., Chemical
Securities Inc. and Chemical Bank, individually and as
Administrative Agent (incorporated by reference to the
Marvel 1995 10-K.).
10.104 License Agreement dated April 30, 1993, by and between
Toy Biz, Inc. and Marvel Entertainment Group, Inc., as
amended December 1, 1994 (incorporated by reference to
Exhibit 10.9 to the Toy Biz 1995 Registration
Statement).
10.105 Amendment dated February, 1995, to the License
Agreement dated August 30, 1993, as amended, between
Toy Biz, Inc. and Marvel Entertainment Group, Inc.
(incorporated by reference to Exhibit 10.9(b) to the
Toy Biz 1995 Registration Statement).
10.106 License Agreement dated July 1, 1994, between Toy Biz,
Inc. and Marvel Entertainment Group, Inc.
(incorporated by reference to Exhibit 10.12 to the Toy
Biz 1995 Registration Statement).
10.107 Offer to Purchase of Fleer Acquisition Corp. dated
March 15, 1995 (incorporated by reference to Exhibit
(a)(1) to the Marvel 1995 Schedule 14D-1.
69
<PAGE>
10.108 Indemnification Agreement, dated as of March 9, 1994,
by and between Andrews Group and NWCG, (incorporated
by reference to Exhibit 2 of Current Report on Form
8-K dated March 14, 1994 of NWCG).
10.109 Non-Competition Agreement, dated as of March 9, 1994,
by and between Andrews Group and NWCG, (incorporated
by reference to Exhibit 1 of Current Report on Form
8-K dated March 14, 1994 of NWCG).
10.110 Registration Rights and Tag-Along Agreement, dated as
of March 28 1994 by and among NWCG, Andrews Group,
Apollo TV Partners, L.P., and Apollo TV Partners II,
L.P.
10.111 Asset Purchase Agreement, dated as of May 4, 1994, by
and between the Company and Great American Television
and Radio Company, Inc., as amended a so May 24, 1994
(incorporated by reference to Exhibit 1 of the
Company's Report on Form 8-K dated May 20, 1994 (the
"May 20, 1994 Form 8-K").
10.112 Option Agreement, dated as of May 20, 1994, by and
among each of the Persons listed on Schedule I
thereto, Donaldson, Lufkin & Jenrette Securities
Corporation, as Agent for the Sellers, DLJ Merchant
Banking, Inc. and the Company, as amended as of May
24, 1994 (incorporated by reference to Exhibit 3 of
the May 20, 1994 Form 8-K).
10.113 Securities Purchase Agreement, dated as of May 21,
1994, by and among the Company and Fox (incorporated
by reference to Exhibit 3 of the May 20, 1994 Form
8-K).
10.114 Amendment No. 1 to the Securities Purchase Agreement,
dated as of May 27, 1994, by and among the Company and
Fox (incorporated by reference to Exhibit 6 of the May
20, 1994 Form 8-K).
10.115 Form of Station Affiliation Agreement entered into
with Fox Broadcasting Company (incorporated by
reference to Exhibit 6 of the May 20, 1994 Form 8-K).
10.116 Registration Rights Agreement, dated as of May 27,
1994, by and between the Company and Fox (incorporated
by reference to Exhibit 7 of the May 20, 1994 Form
8-K).
10.117 Warrant Agreement, dated as of May 27, 1994, by and
between the Company and Fox (incorporated by reference
to Exhibit 11 of the May 20, 1994 Form 8-K).
10.118 Understanding Regarding Programming Production, dated
as of May 27, 1994, by and between the Company and Fox
(incorporated by reference to Exhibit 12 of the May
20, 1994 Form 8-K).
70
<PAGE>
10.119 Tag Along Rights Agreement, dated as of May 27, 1994,
by and between Andrews and Fox (incorporated by
reference to Exhibit 13 of the May 20, 1994 Form 8-K).
10.120 Class D Warrant to Purchase Class A Common Stock
(incorporated by reference to Exhibit 11 of the May
20, 1994 Form 8-K).
10.121 Credit Agreement, dated as of September 29, 1994,
among NWC Acquisition Corporation, the financial
institutions from time to parties thereto, the
co-agents identified on the signature pages thereof,
The Chase Manhattan Bank, N.A. and Chemical Bank, as
Managing Agents, The Chase Manhattan Bank, N.A., as
Documentation Agent, and Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 1 of the Company's Report on Form 8-K dated
October 12, 1994 (the "October 12, 1994 Form 8-K")).
10.122 Guarantee, dated as of September 29, 1994, made by NWC
Intermediate Holdings Corporation, in favor of
Chemical Bank, as Administrative Agent (incorporated
by reference to Exhibit 2 of the October 12, 1994 Form
8-K).
10.123 Pledge Agreement, dated as of September 29, 1994, made
by NWTV Intermediate Holdings Corporation, in favor of
Chemical Bank, as Administrative Agent (incorporated
by reference to Exhibit 3 of the October 12, 1994 Form
8-K).
10.124 Guarantee, dated as of September 29, 1994, made by
NWTV Intermediate Holdings Corporation, in favor of
Chemical Bank, as Administrative Agent (incorporated
by reference to Exhibit 4 of the October 12, 1994 Form
8-K).
10.125 Pledge Agreement, dated as of September 29, 1994, made
by NWTV Intermediate Holdings Corporation, in favor of
Chemical Bank, as Administrative Agent (incorporated
by reference to Exhibit 5 of the October 12, 1994 Form
8-K).
10.126 Pledge Agreement, dated as of September 29, 1994, made
by NWC Acquisition, in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 6 of the October 12, 1994 Form 8-K).
10.127 Security Agreement, dated as of September 29, 1994,
made by NWC Acquisition, in favor of Chemical Bank, as
Administrative Agent (incorporated by reference to
Exhibit 7 of the October 12, 1994 Form 8-K).
10.128 Subsidiaries' Guarantee, dated as of September 29,
1994, made by each of the corporations that are
signatories thereto, and NWC Acquisition, in
71
<PAGE>
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 8 of the October
12, 1994 Form 8-K).
10.129 Security Agreement, dated as of September 29, 1994,
made by NW Communications of Phoenix, Inc., in favor
of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 10 of the
October 12, 1994 Form 8-K).
10.130 Pledge Agreement, dated as of September 29, 1994, made
by NW Communications of Phoenix, Inc., in favor of
Chemical Bank, as Administrative Agent (incorporated
by reference to Exhibit 11 of the October 12, 1994
Form 8-K).
10.131 Security Agreement, dated as of September 29, 1994,
made by New World Communications of North Carolina,
Inc., in favor of Chemical Bank, as Administrative
Agent (incorporated by reference to Exhibit 12 of the
October 12, 1994 Form 8-K).
10.132 Pledge Agreement, dated as of September 29, 1994, made
by New World Communications of North Carolina, Inc.,
in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 13 of the
October 12, 1994 Form 8-K).
10.133 Security Agreement, dated as of September 29, 1994,
made by NW Communications of Birmingham, Inc., in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 14 of the
October 12, 1994 Form 8-K).
10.134 Pledge Agreement, dated as of September 29, 1994, made
by NW Communications of Birmingham, Inc., in favor of
Chemical Bank, as Administrative Agent (incorporated
by reference to Exhibit 15 of the October 12, 1994
Form 8-K).
10.135 Security Agreement, dated as of September 29, 1994,
made by New World Communications of Kansas City, Inc.,
in favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 16 of the
October 12, 1994 Form 8-K).
10.136 Pledge Agreement, dated as of September 29, 1994, made
by New World Communications of Kansas City, Inc., in
favor of Chemical Bank, as Administrative Agent
(incorporated by reference to Exhibit 17 of the
October 12, 1994 Form 8-K).
10.137 Merger Agreement, dated as of November 28, 1994, by
and between NW Television and Viacom International
Inc. (incorporated by reference to Exhibit 1 of the NW
Television's Report on Form 8-K dated March 7, 1995).
72
<PAGE>
21* List of Subsidiaries
24* Powers of Attorney executed by Messrs. Perelman,
Gittis, Drapkin, Slovin and Bevins.
27* Financial Data Schedule
* Filed with this report
b) Reports on Form 8-K during the fourth quarter of 1995
None
73
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ANDREWS GROUP INCORPORATED
(Registrant)
By:/s/ William C. Bevins
----------------------------------
William C. Bevins, Jr.
President and Chief Executive Officer
By:/s/ Joseph P. Page
----------------------------------
Joseph P. Page
Executive Vice President and
Chief Financial Officer
By:/s/ Laurence Winoker
----------------------------------
Laurence Winoker
Vice President and Controller
(Chief Accounting Officer)
Dated: March 29, 1996
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on March 29, 1996 in the
capacities indicated.
By: Ronald O. Perelman *
---------------------
Ronald O. Perelman
Director
By: William C. Bevins, Jr. *
-------------------------
William C. Bevins, Jr.
Director
By: Donald G. Drapkin *
--------------------
Donald G. Drapkin
Director
By: Howard Gittis *
----------------
Howard Gittis
Director
By: Bruce Slovin *
---------------
Bruce Slovin
Director
Date: March 29 , 1996
* The undersigned by signing his name hereto does hereby execute this
Annual Report pursuant to powers of attorney filed as exhibits to the
Annual Report.
By:/s/ Laurence Winoker
--------------------
Laurence Winoker
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
--------------------------
ITEM 8, ITEM 14 (A)(1) AND (2) AND (D)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1995
The following consolidated financial statements of Andrews
Group Incorporated and Subsidiaries are included in Item 8:
Pages
Report of Independent Auditors ............................................ F-2
Consolidated Balance Sheets as of December 31, 1995 and 1994............... F-3
Consolidated Statements of Operations
for the years ended December 31, 1995, 1994 and 1993.................... F-4
Consolidated Statements of Stockholder's Deficit
for the years ended December 31, 1995, 1994 and 1993.................... F-5
Consolidated Statements of Cash Flows
for the years ended December 31, 1995, 1994 and 1993.................... F-6
Notes to Consolidated Financial Statements................................. F-8
The following financial statement schedules of Andrews Group
Incorporated is included in Item 14(d):
Schedule I - Condensed Financial Information of Registrant..............F-40
Schedule II- Valuation and Qualifying Accounts..........................F-43
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been
omitted.
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
Andrews Group Incorporated
We have audited the accompanying consolidated balance sheets of Andrews Group
Incorporated and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholder's deficit and cash
flows for each of the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedules listed in the Index at
Item 14(a). These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Andrews Group Incorporated and subsidiaries at December 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material
respects, the information set forth therein.
Ernst & Young LLP
New York, New York
March 28, 1996
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1995 1994
----------- -----------
ASSETS
<S> <C> <C>
Cash $ 114.5 $ 175.7
Trade receivables, net 408.8 302.8
Inventories 82.4 51.0
Television program contract rights 23.7 23.9
Film costs, net 83.8 62.4
Deferred taxes 55.2 12.7
Prepaid expenses and other 95.8 49.4
---------- ----------
Total current assets 864.2 677.9
Property, plant and equipment, net 290.7 232.0
Intangible assets, net 2,440.0 1,648.4
Loans to affiliate 441.0 224.6
Other assets 228.8 446.3
---------- ----------
$ 4,264.7 $ 3,229.2
========== ==========
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
Current portion of long-term debt $ 74.9 $ 100.8
Note payable 16.7
Accounts payable and accrued expenses 394.5 286.9
Television program contracts payable 26.9 26.8
Deferred income 46.8 28.2
Participations and residuals payable 43.4 23.9
---------- ----------
Total current liabilities 603.2 466.6
Long-term debt 2,951.0 2,148.9
Indebtedness to affiliates 307.1 154.2
Other liabilities 187.2 142.1
Minority interest 449.7 414.7
Redeemable preferred stock of subsidiaries 340.4 246.9
Commitments and contingencies
Stockholder's deficit:
Common stock, $1.00 par value; 1,000 shares
authorized, issued and outstanding
Additional paid-in-capital 40.2 32.6
Accumulated deficit (614.5) (375.6)
Cumulative translation adjustment 0.4 (1.2)
---------- ----------
Total stockholder's deficit (573.9) (344.2)
---------- ----------
$ 4,264.7 $ 3,229.2
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-3
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1995 1994 1993
----------------- ----------------- -----------------
<S> <C> <C> <C>
Net revenues $1,434.3 $ 911.7 $ 665.7
Operating expenses:
Direct costs 900.4 509.4 381.4
Selling, general and administrative expenses 402.0 254.5 145.8
Amortization of goodwill and intangibles 68.3 46.1 30.1
Restructuring 25.0 - -
----------------- ----------------- -----------------
Operating income 38.6 101.7 108.4
----------------- ----------------- -----------------
Other (expense) income:
Interest expense (304.9) (206.4) (125.1)
Interest and net investment income 45.8 19.3 8.7
Gain on sale of business interests, net 48.0 86.8 -
Amortization of debt issuance costs and other (36.5) (12.5) (7.5)
----------------- ----------------- -----------------
(247.6) (112.8) (123.9)
----------------- ----------------- -----------------
Loss before income taxes, minority interest, equity
in net income of investees, extraordinary items and
cumulative effect of accounting change (209.0) (11.1) (15.5)
Provision for income taxes (40.2) (28.0) (22.3)
Minority interest in loss (income) of subsidiaries 12.5 16.0 (9.9)
Equity in net income of investees 1.1 9.4 4.8
----------------- ----------------- -----------------
Loss before extraordinary item (235.6) (13.7) (42.9)
Extraordinary item (3.3) - (2.0)
Cumulative effect of accounting change - - (1.7)
----------------- ----------------- -----------------
Net loss $ (238.9) $ (13.7) $ (46.6)
================= ================= =================
</TABLE>
See notes to consolidated financial statements.
F-4
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE
COMMON PAID-IN ACCUMULATED TRANSLATION
STOCK CAPITAL DEFICIT ADJUSTMENT TOTAL
------------ ----------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993 $ - $ 21.3 $ (315.3) $ (0.4) $ (294.4)
Currency translation adjustment (0.6) (0.6)
Net loss (46.6) (46.6)
Effect of Marvel UK transaction 0.8 0.8
Distributions, net (17.5) (17.5)
Effect of exercise of stock
options of Marvel 3.6 3.6
------------ ----------- -------------- --------------- -------------
Balance, December 31, 1993 $ - $ 8.2 $ (361.9) $ (1.0) $ (354.7)
Currency translation adjustment (0.2) (0.2)
Net loss (13.7) (13.7)
Contributions, net 1.5 1.5
Effect of exercise of stock
options of Marvel 22.9 22.9
------------ ----------- -------------- --------------- -------------
Balance, December 31, 1994 $ - $ 32.6 $ (375.6) $ (1.2) $ (344.2)
Currency translation adjustment 1.6 1.6
Net loss (238.9) (238.9)
Contributions, net 0.8 0.8
Effect of exercise of stock
options of Marvel 6.8 6.8
------------ ----------- -------------- --------------- -------------
Balance, December 31, 1995 $ - $ 40.2 $ (614.5) $ 0.4 $ (573.9)
============ =========== ============== =============== =============
</TABLE>
See notes to consolidated financial statements.
F-5
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss ($238.9) ($13.7) ($46.6)
------------ ------------ ------------
Adjustments to reconcile net loss to net cash flows from operating
activities:
Depreciation and amortization 127.1 78.2 47.4
Noncash interest expense 100.4 74.5 29.5
Undistributed earnings of investees (1.1) (9.4) (4.8)
Minority interest in (loss) earnings of subsidiaries (12.5) (16.0) 9.9
Distribution from unconsolidated subsidiary 3.0
Gain on sale of business interests (48.0) (86.8)
Cumulative effect of accounting change 1.7
Extraordinary item 3.3 2.0
Excess of television program contract rights amortization
over payments 4.4 4.4 4.0
Film cost amortization (under) over additions (15.7) (21.0) 8.4
Changes in assets and liabilities, net of effects of acquisitions,
dispositions and previously unconsolidated subsidiaries
Increase in assets (46.3) (104.2) (26.9)
Increase in liabilities 47.0 44.4 0.6
------------ ------------ ------------
161.6 (35.9) 71.8
------------ ------------ ------------
Net cash flows from operating activities (77.3) (49.6) 25.2
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Broadcast stations deposits and acquisitions, net of cash acquired (360.5) (461.1) (137.2)
Acquisition of SkyBox, net of cash acquired (162.5)
Acquisition of Panini Group, net of cash acquired (0.2) (133.2)
Purchase of Marvel common stock (8.2) (21.5) (325.6)
Acquisition of Fleer, net of cash acquired (32.1)
Other acquisitions, investments and advances (28.3) (20.1) (21.5)
Proceeds from sale of business interests 208.2
Loans to affiliates, net (216.4) (224.6)
Capital expenditures (77.3) (34.7) (14.0)
------------ ------------ ------------
Net cash flows from investing activities (645.2) (895.2) (530.4)
------------ ------------ ------------
(Continued)
</TABLE>
See notes to consolidated financial statements.
F-6
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long term debt $ 901.0 $ 739.8 $ 529.0
Repayment and repurchases of debt (476.0) (77.1) (62.4)
Issuance of preferred stock, common stock, stock options and warrants 87.2 652.9 3.7
Loans from affiliates, net 152.9 (220.0) 120.1
Distributions pursuant to NWTV reorganization (27.3)
Debt issuance costs and other, net (5.8) (14.6) (29.2)
------------ ------------ ------------
Net cash flows from financing activities 659.3 1,081.0 533.9
------------ ------------ ------------
Effect of exchange rate changes on cash 2.0 (0.6)
Net increase (decrease) in cash (61.2) 135.6 28.7
Cash at beginning of the period 175.7 40.1 11.4
------------ ------------ ------------
Cash at end of the period $ 114.5 $ 175.7 $ 40.1
============ ============ ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
- ----------------------------------------------
Interest paid during the period $ 181.2 $ 100.1 $ 55.0
Taxes paid during the period 19.8 2.7 19.8
Purchase of television program contract rights 37.7 29.6 31.1
Additions to film costs 113.4 60.7 31.9
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION:
Andrews Group Incorporated ("Andrews", and together with its
subsidiaries, the "Company") is a wholly owned subsidiary of MacAndrews &
Forbes Holdings Inc. ("M&F Holdings") which is a wholly owned subsidiary of
Mafco Holdings Inc. ("Mafco Holdings"). Prior to June 4, 1990, the Company was
a 57% owned subsidiary of M&F Holdings. On June 4, 1990, a wholly owned
subsidiary of M&F Holdings merged with and into the Company, and the Company
became a wholly owned subsidiary of M&F Holdings (the "Andrews Merger").
The Company currently operates in the youth entertainment business
through its approximately 79% ownership interest in Marvel Entertainment
Group, Inc. ("Marvel") and the television broadcasting and production and
distribution businesses through its approximately 42% ownership interest (83%
voting interest) in New World Communications Group Incorporated ("NWCG"),
assuming conversion of NWCG Series B Preferred Stock at December 31, 1995.
The youth entertainment segment's operations consist of (i) the
publishing and sale of comic books and children's magazines, (ii) the
manufacture and distribution of sports and entertainment picture cards and
children's activity sticker collections, (iii) consumer products, media and
advertising-promotion licensing of the various characters owned by Marvel,
(iv) the design, marketing and distribution of toys through Toy Biz Inc. ("Toy
Biz") and (v) the manufacture and distribution of adhesives and confectionery
products.
At December 31, 1995, the television broadcasting segment, through
NWCG's wholly-owned subsidiaries NW Television Incorporated ("NW Television")
and NWC Acquisition Corporation ("NW Acquisition"), owns and operates twelve
broadcast television stations in the 64 largest U.S. Designated Market Areas
(as defined by A.C. Nielsen Company). The television programming production
and distribution segment, through New World Entertainment, Ltd. ("NW
Entertainment") produces, acquires and distributes television programming in
the United States and international markets.
Certain reclassifications have been made to conform to the current
year's presentation.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All material intercompany accounts and
transactions have been eliminated. Minority interest represents the minority
stockholders' proportionate share of the results of operations and equity of
Marvel, Toy Biz and NWCG.
F-8
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. The
principal areas of judgment relate to provisions for returns and other sales
allowances, doubtful accounts and the realizability of inventories and film
costs.
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.
ACCOUNTS RECEIVABLE:
The broadcast television stations sell advertising time to a variety
of customers in diversified industries; the production and distribution
segment distributes film products to broadcast networks' affiliates,
independent television stations and cable television domestically and
overseas. The youth entertainment segment did not have any significant
concentrations of credit risk. The Company performs periodic credit
evaluations of its customers' financial condition and generally does not
require collateral. Receivables for the youth entertainment segment are
generally due within 30-90 days; receivables for the broadcasting segment are
generally due within 30 days; receivables for the production and distribution
segment are payable under the terms of the contracts for periods frequently
exceeding one year. Credit losses have consistently been within management's
expectations and industry standards.
INVENTORIES:
Inventories are valued at the lower of cost (first-in, first-out
(FIFO) or last-in, first-out (LIFO)) or market. The value of inventories
accounted for using the LIFO method (approximately 11% and approximately 65%
for 1995 and 1994, respectively) would not have been substantially different
than the value reported on the FIFO method at December 31, 1995 and 1994.
FILM COSTS:
Film costs consist of story rights, screenplays, acquisition and
production costs (which benefit future periods) and capitalized overhead
costs, and are stated at the lower of cost, net of accumulated amortization,
or estimated net realizable value. Abandoned story and development costs are
charged to production direct costs. The current portion of film costs include
unamortized costs of film inventory released and allocated to NWCG's primary
markets and television films in production that are under contract of sale.
F-9
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
Film costs are amortized, and estimated total costs of participations
and residuals are accrued, in the same ratio that current gross revenues bear
to management's estimated total gross revenues from all sources on an
individual film or series basis. Such estimates are revised quarterly and
estimated losses, if any, are provided for in full when known. Based on
management's estimate of future revenues, approximately 82% of unamortized
film costs will be amortized over the next three years.
TELEVISION PROGRAM CONTRACT RIGHTS:
The rights to broadcast non-network programs are stated at the lower
of cost, less accumulated amortization, or net realizable value. Costs are
amortized based upon the usage of programs under methods which generally
result in accelerated amortization. The cost of program rights expected to be
used within one year is classified as a current asset. Sports broadcast rights
are generally expensed when the events are televised.
PROPERTY, PLANT AND EQUIPMENT:
All expenditures for additions and improvements to property, plant
and equipment are capitalized and normal repairs and maintenance are charged
to expense as incurred. Construction-in-progress principally includes
machinery and equipment being constructed for Marvel by outside vendors under
contract. Depreciation and amortization of property, plant and equipment are
provided on the straight-line basis over the estimated asset lives ranging
from 3 to 33 years.
DEFERRED FINANCING COSTS:
Costs incurred with the issuance of debt are included in other assets
net of accumulated amortization. Amortization is reflected over the respective
lives of the applicable issues and costs are written off when it becomes
evident that the related debt will be retired.
INTANGIBLE ASSETS:
Intangible assets include network affiliation agreements, broadcast
licenses, trademarks, goodwill, excess reorganization value and other
intangibles. The components of intangible assets are amortized on a
straight-line basis over 10-40 years.
The carrying value of intangible assets is reviewed if the facts and
circumstances suggest that they may be impaired. If this review indicates that
the intangible assets will not be recoverable, as determined based on
undiscounted estimated cash flows of the related business over the remaining
amortization period, the Company's carrying value of the intangible assets
would be reduced to its estimated fair value.
F-10
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
LONG-LIVED ASSETS:
In March 1995, the Financial Accounting Standards Board issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." The Company will adopt Statement No. 121
in the first quarter of 1996 and management believes the effect of adoption
will not be material to the consolidated financial statements.
STOCK BASED COMPENSATION:
The Company's subsidiaries grant stock options for a fixed number of
shares to employees with an exercise price equal to the fair value of the
shares at the date of grant. The Company accounts for stock option grants in
accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees,
and accordingly, recognizes no compensation expense for the stock option
grants.
FAIR MARKET VALUE OF FINANCIAL INSTRUMENTS:
The carrying values of cash, receivables, accounts payable and
accrued liabilities approximate fair value. The fair value of the Company's
long-term debt is estimated using discounted cash flow analyses, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements, and quoted market rates. The estimated fair value of long-term
debt at December 31, 1995 approximated its book value. Because considerable
judgment is required in interpreting market data to develop estimates of fair
value, the estimates are not necessarily indicative of the amounts that could
be realized or would be paid in a current market exchange. The effect of using
different market assumptions or estimation methodologies may be material to
the estimated fair value amounts.
REVENUE RECOGNITION:
Marvel's sales are recorded upon shipment of products. Sales made on
a returnable basis are recorded net of a provision for anticipated returns.
These estimates are revised, as necessary, to reflect actual experience and
market conditions. Subscription revenues are generally collected in advance
for a one year subscription. These revenues are deferred and recognized as
income on a pro-rata basis over an annual period. Income from licensing of
characters owned by Marvel is recorded at the time characters are available to
the licensee and collection is reasonably assured. Receivables due more than
one year from the balance sheet date are discounted to their present value.
Production and distribution revenues from broadcast television, home
video, pay and cable television licensing contracts which may provide for the
receipt of non-refundable guaranteed amounts, are recognized when the film is
available for exploitation, providing other conditions of sale have been met.
Recognition of revenues related to deposits and cash advances received on
pre-sales are deferred until all material conditions of the sale have been
met. Deferred income consists primarily of advance payments received on
television contracts for which the programs are not yet available for
broadcast or exploitation. NWCG enters into contracts for the licensing of
television products for which the
F-11
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
revenue and related accounts receivable will be recorded in future periods
when the products are available for broadcast or exploitation. These contracts
aggregated $58.7 at December 31, 1995.
ADVERTISING EXPENSE:
Advertising production costs are expensed when the advertisement is
first run. Media advertising costs are expensed on the projected sales method
during interim periods. Advertising expense was $69.2, $38.5 and $24.8 in
1995, 1994 and 1993, respectively. The amount of advertising costs included in
prepaid expenses and other as of December 31, 1995 and 1994 was $2.8 and $1.7,
respectively.
ROYALTIES:
Minimum guaranteed royalties, as well as royalties in excess of
minimum guarantees, are expensed based on sales of related products. The
realization of minimum guarantees paid is evaluated by the Company based on
the projected sales of the related products.
TRANSLATION OF FOREIGN CURRENCIES:
The financial position and results of operations of the Company's
foreign subsidiaries are measured using local currency as the functional
currency. Assets and liabilities of subsidiaries are translated at the
exchange rate in effect at year-end. Income statement accounts are translated
at the average rate of exchange prevailing during the period. Gains and losses
resulting from foreign currency transactions are included in the results of
operations and those resulting from translation of financial statements are
recorded as a component of stockholder's deficit.
2. ACQUISITIONS, DISPOSITIONS AND MERGERS
(A) NW TELEVISION
On May 25, 1993, the Company purchased NWTV ("NWTV Purchase") for
aggregate consideration of $100.0 (a) 11,808,529 shares of common stock
(approximately 54.15%) of NW Television and (b) 1,500,000 Class B Warrants to
purchase NW Television common stock at $8.47 per share. The acquisition of NW
Television occurred in connection with a reorganization of NW Television under
Chapter 11 of the U.S. Bankruptcy Code. NW Television's plan of reorganization
(the "Plan") was confirmed by the Bankruptcy Court on May 6, 1993 and became
effective on May 25, 1993 (the "Effective Date"). The remaining capital stock
of NW Television was distributed to certain holders of debt of NW Television.
The acquisition of NW Television was financed with borrowings from an
affiliate.
In addition, NW Television acquired the assets of WTVT-TV
constituting the Tampa Station, (the "Tampa Station Purchase"), which were
previously owned indirectly by a former affiliate of NW Television for
consideration consisting of $163.3 in cash, provided by (i) the Company's
investment
F-12
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
and (ii) $63.3 proceeds, net of underwriters discount, from the sale of $65.0
aggregate principal amount of 11% Notes. (See Note 9).
The fair value of assets acquired and liabilities assumed in the NWTV
Purchase and Tampa Station Purchase were $973.8 and $871.5, respectively.
(B) NWCG MERGER AGREEMENT
On March 7, 1994, in accordance with the November 1993 Agreement and
Plan of Reorganization and Merger (as amended, the "NW Television Merger
Agreement") between NW Television, NWCG, and Andrews, NW Television merged
into a subsidiary of NWCG and all outstanding shares of common stock of NW
Television were converted into a like number of shares of NWCG common stock
(the "NWCG Merger"). Further, the holders of the Class A Warrants and Class B
Warrants obtained the right to acquire and receive a like number of shares of
NWCG common stock. As a result of the Merger, NW Television became a
wholly-owned subsidiary of NWCG International Inc. ("Four Star"). On March 9,
1994, NWCG purchased all of the capital stock of NW Entertainment and Four
Star and entered into a non-competition agreement and an indemnification
agreement with Andrews (as such agreements are contemplated by the NW
Television Merger Agreement), in exchange for the issuance by NWCG to Andrews
of 25,383,707 shares of Class B Common Stock. Due to the Company's common
control over NW Entertainment, Four Star and NWCG, in connection with this
transaction, the Company recorded a credit to goodwill of $20.7 to reflect the
excess of the Company's carrying value of NWCG over its historical book value.
The reduction in goodwill will be amortized over a 40-year period.
NWCG completed an equity offering (the "NWCG Offering") pursuant to
which each holder of record other than Andrews ("Record Holders") of the Class
B Common Stock or of Existing $.01 Warrants on March 9, 1994 (the "Record
Date") was entitled, in accordance with NWCG's Amended and Restated
Certificate of Incorporation and the NW Television Merger Agreement, to
subscribe for 1.90732627 shares of Class B Common Stock (or, under certain
circumstances, Class A Warrants, Series 2 of NWCG, exercise price $.01 per
share (the "new $.01 Warrants" and, together with the Existing Warrants, the
"Warrants")) for each share of Class B Common Stock or Existing $.01 Warrant
owned by such Record Holder as of the close of business on the Record Date.
The NWCG Offering, which expired on March 31, 1994, resulted in a non-cash
gain to the Company of $31.0.
(C) STATION ACQUISITIONS AND DISPOSITIONS
In September and October 1994, NWCG consummated the acquisition of
four broadcast television stations, KSAZ-TV (Phoenix), WDAF-TV (Kansas City),
WGHP-TV (Greensboro-High Point) and WBRC-TV (Birmingham) from CitiCasters (the
"CitiCasters' Stations") for consideration of $359.4 plus the Class D Warrant
with an estimated fair value of $10.0. The fair value of assets acquired and
liabilities assumed were $378.0 and $8.5, respectively. On March 31, 1995,
NWCG granted to Fox Television Stations, Inc. ("Fox") an option to acquire
both WGHP-TV and WBRC-TV for approximately $140.4, subject to certain
adjustments. NWCG contributed the stock of the
F-13
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
subsidiaries which own and operate WGHP-TV and WBRC-TV to a trust of which
NWCG is the beneficiary (the "Trust"). NWCG had no role in the management or
operation of the stations contributed to the Trust. Further, NWCG borrowed
approximately $40.4 from Fox, secured by the beneficial interest in the Trust
and non-recourse to any other assets of NWCG. In July 1995 Fox purchased
WBRC-TV for $100.0 under the terms of the purchase option. The consideration
for the purchase consisted of $74.1 of the option payment applied to the
purchase price and a reduction of the note payable to Fox. As of December 31,
1995, NWCG retained WGHP-TV in the Trust and had corresponding non-recourse
debt of $16.7. In the first quarter of 1996, Fox purchased WGHP-TV under the
terms of the agreement and all of the remaining non-recourse debt was
extinguished.
In March 1995, NWCG sold its investment in WSBK-TV ("the Boston
Station") for gross proceeds of $107.5. NWCG recorded a gain on the sale of
$41.7. NWCG repaid $19.5 of the Bank Credit Agreement Loans in March 1995 and
$77.3 of the Step-Up Notes in April 1995 from the net proceeds of the Boston
Station sale. (See Note 9).
NWCG purchased certain debt and equity securities of Argyle
Television Holding, Inc. ("Argyle") for total consideration of approximately
$750.4, including $100 in cash paid for an option in 1994 and assumption of
debt of approximately $283.6. The fair value of assets acquired and
liabilities assumed were $778.5 and $318.4, respectively. For financial
reporting purposes, the acquisition occurred on March 31, 1995. FCC approval
for change in control of the television stations occurred on April 14, 1995.
Argyle controlled four VHF television stations, KDFW-TV (Dallas, Texas),
KTBC-TV (Austin, Texas), KTVI-TV (St. Louis), and WVTM-TV (Birmingham,
Alabama). The Company changed the network affiliation of three of these
stations to the Fox Network. Upon consummation of the affiliation changes,
NWCG issued Series C Preferred Stock to Fox for consideration of approximately
$62.8.
(D) SKYBOX ACQUISITION
On April 27, 1995, pursuant to an Agreement and Plan of Merger dated
as of March 8, 1995 (the "SkyBox Merger Agreement"), among SkyBox
International Inc. ("SkyBox"), Marvel and an indirect wholly owned subsidiary
of Marvel, Marvel acquired all of the issued and outstanding shares of SkyBox
common stock for $16 per share. The purchase price, including fees, expenses
and other acquisition costs, totaled $165.0. The transaction was accomplished
through a tender offer and subsequent merger (the "SkyBox Acquisition"). The
purchase price includes an obligation to former SkyBox stockholders who did
not tender their shares. The SkyBox Acquisition was financed by a borrowing
under a term loan agreement with a syndicate of banks, the Co-Agents and
Chemical Bank, as administrative agent (the "U.S. Term Loan Agreement") (see
Note 9).
The SkyBox Acquisition was accounted for using the purchase method of
accounting. The purchase price has been allocated to assets and liabilities
based on their respective fair values at April 27, 1995. The fair value of
assets acquired and liabilities assumed were $35.7 and $28.6, respectively.
F-14
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
(E) INVESTMENT IN TOY BIZ
On March 19, 1993, Marvel entered into an agreement (the "Toy Biz
Agreement") with Zib, Inc. (formerly Toy Biz, Inc. ("Predecessor")), its
controlling stockholder and Avi Arad, a well-known designer of toys, for the
formation of Toy Biz. Toy Biz is a developer, marketer and distributor of
toys, including MARVEL SUPER HEROES action figures, and Toy Biz's most popular
lines based on Marvel's mutant X-MEN and SPIDER-MAN and third party licensed
toys, such as its Gerber infant products. Toy Biz also designs, markets and
distributes its own line of proprietary children's toys, also including BABY
TUMBLES SURPRISE and POOCH, THE GOOD PUPPY.
Avi Arad and a company he owns entered into certain consulting and
licensing agreements with Toy Biz. Avi Arad also received options to purchase
2,000,000 shares of Marvel's Common Stock at an exercise price of $9.75 per
share. On March 2, 1995, Toy Biz completed an initial public offering in which
it issued and sold 2,750,000 shares of class A common stock at $18 per share.
Avi Arad also sold 700,000 shares of class A common stock owned by him in the
Toy Biz IPO. The net proceeds to Toy Biz, after deducting commissions and
offering expenses, of approximately $44.1 were used to pay outstanding amounts
due under the advance from Marvel and the sole stockholder of the Predecessor
and for working capital and general corporate purposes. Marvel recorded a gain
of approximately $14.3 on the Toy Biz IPO in recognition of the net increase
in value of Marvel's investment in Toy Biz. In conjunction with the Toy Biz
IPO, Marvel's equity ownership was reduced to approximately 36.6%, and its
voting control increased to approximately 85.3%. The Company's statements of
operations and financial position include the operations of Toy Biz since the
Toy Biz IPO on March 2, 1995.
(F) PURCHASE OF MARVEL SHARES
On May 7, 1993, a wholly owned subsidiary, Marvel (Parent) Holdings
Inc. ("Parent Holdings"), consummated a tender offer for 20 million shares of
common stock of Marvel at a price of $15 per share in cash (the "Tender
Offer"). The Company has also purchased shares of Marvel common stock on the
open market. The Tender Offer and open market purchases increased the
Company's indirect ownership of Marvel common stock from approximately 60% to
approximately 79% as of December 31, 1995 and resulted in goodwill of
approximately $329.4. The Tender Offer was financed with the proceeds received
from the private placement of senior secured discount notes of Marvel Holdings
Inc. and from other cash resources. (See Note 9).
(G) PANINI
Pursuant to a Stock Purchase Agreement dated as of August 4, 1994
(the "Stock Purchase Agreement"), by and among Panini Publishing International
S.A., Istituto Geografico De Agostini S.p.A., Bain Gallo Cuneo Capital
Investments S.p.A., Killawlan Ltd. and Cabra International Ltd. (collectively,
the "Sellers"), Marvel and Marvel Comics Italia S.r.l ("Marvel Italia")
acquired all of the equity of Maxwell Communications Italia S.p.A. ("MCI"),
the holder of all of the equity of Panini
F-15
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
S.r.l. (the "Panini Acquisition"). The purchase price for the entire equity of
MCI was Italian Lire 251.5 billion (approximately $158.4 based on exchange
rates in effect on the date of acquisition) plus fees and expenses of
approximately Italian Lire 6.4 billion (approximately $4.0 based on exchange
rates in effect on the date of acquisition). Effective September 1, 1994,
Marvel Italia and Panini S.r.1. merged operations under the name Panini S.p.A.
("Panini").
The Panini Acquisition was accounted for using the purchase method of
accounting. The purchase price has been allocated to assets and liabilities of
Panini based on their respective fair values at August 31, 1994. The purchase
price and expenses associated with the acquisition exceeded the fair values of
Panini's net assets by Italian lire 170.8 billion ($107.6 based on exchange
rates in effect on the date of acquisition) and has been assigned to goodwill
and other intangibles, which is being amortized over forty years on the
straight-line basis. The fair value of assets acquired and liabilities assumed
were $114.5 and $59.7, respectively.
The Panini Acquisition was financed by a term loan and guarantee
agreement (the "Term Loan Agreement") providing for a term loan credit
facility (the "Term Loan Facility") of Italian Lire 244.5 billion
(approximately $154.0 based on exchange rates in effect on the date of
acquisition) and from additional funds borrowed under Marvel's Amended and
Restated Credit Agreement (See Note 9). Related fees and expenses were
approximately $1.0.
(H) OTHER ACQUISITIONS
On March 31, 1993, Four Star acquired fifty percent of the issued and
outstanding common stock of Genesis, for (i) $3.0 of cash, (ii) $10.0 of notes
payable issued to Genesis and its selling stockholders and (iii) the
assignment to Genesis of a $2.0 note receivable from an affiliate of Genesis.
In March 1994, NWCG acquired the remaining 50% interest in Genesis for NWCG
equity securities valued at approximately $17.2.
On November 15, 1993, the Company purchased a 37.5% interest in
Guthy-Renker, a marketer of various products through infomercials, for
approximately $7.0 in cash and a promissory note in an original amount of
approximately $18.0 (the "Guthy-Renker Note"). The Company has a three year
option from the date of purchase to increase its interest to 50%.
In May 1994, NWCG purchased Moving Target Productions, Inc. ("Moving
Target") for NWCG equity securities valued at approximately $8.2.
During the fourth quarter of 1994, Marvel purchased all of the
outstanding shares of capital stock of Malibu Comics Entertainment, Inc.
("Malibu"), a comic book publisher, and acquired certain license agreements
and all of the outstanding shares of capital stock of Welsh Publishing Group,
Inc. ("Welsh"), a publisher of children's magazines. In addition, Marvel
acquired the distribution operations of Superhero Enterprises Inc. ("Heroes
World"), a distributor and marketer of comic books, cartoon character related
entertainment trading cards, games and toys. The aggregate purchase price for
these acquisitions was approximately $30.0 (including fees and expenses),
including payments of $4.5 which were not made as of
F-16
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
December 31, 1995. These acquisitions were accounted for using the purchase
method of accounting. The purchase price has been allocated to assets and
liabilities based on their estimated respective fair values at the date of
their respective acquisitions. The purchase price and expenses associated with
the acquisitions exceeded the fair values of net assets acquired by
approximately $35.0 and have been assigned to goodwill, which is being
amortized over twenty to forty years on the straight-line basis.
In July 1995 NWCG purchased Cannell for NWCG Series E Cumulative
Preferred Stocks valued at approximately $30 million and certain other
consideration.
During 1995, Toy Biz acquired certain assets and assumed certain
liabilities of Spectra Star, Inc., a kite, outdoor and flying toy company. The
purchase price, including estimated fees and expenses related to the
acquisition, totaled approximately $13.6. The acquisition was accounted for
using the purchase method of accounting. The allocation of the purchase price
to the assets based on their respective fair values at the date of acquisition
is subject to finalization. The purchase price and expenses associated with
this acquisition exceeded the fair value of net assets acquired by $9.6 and
has been assigned to goodwill, which is being amortized over forty years on
the straight-line basis.
During the fourth quarter of 1995, Panini acquired the remaining
balance of the equity interest held by its joint venture partner in Brazil,
Editora Abril Panini (now Panini Brazil). The purchase price, including
estimated fees and expenses related to the acquisition, totaled approximately
$11.8. The acquisition was accounted for using the purchase method of
accounting. The allocation of the purchase price to assets and liabilities
based on their respective values at the date of acquisition is subject to
finalization. The purchase price and expenses associated with this acquisition
exceeded the fair value of net assets by $10.1 and have been assigned to
goodwill, which is being amortized over forty years on the straight-line
basis.
The results of operations of these companies on a pro forma basis as
if they had occurred at the beginning of the respective years of acquisition,
individually and in the aggregate, were not significant to the Company.
3. PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information
gives effect, as of January 1, 1994, to the acquisition of Panini and SkyBox,
the NWCG Merger, the NWCG Offering, the acquisition of the remaining 50% of
the stock of Genesis, the purchase of the CitiCasters' stations, the disposal
of WGHP-TV, WBRC-TV and WSBK-TV, the acquisition of the Argyle stations and
the issuance of preferred stock of NWCG. The pro forma financial results do
not necessarily reflect either future results or the results that would have
occurred had the transactions discussed above actually occurred on the date
indicated.
F-17
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
(UNAUDITED)
YEAR ENDED
DECEMBER 31,
----------------------------------
1995 1994
--------------- --------------
Net revenues $1,482.4 $1,264.1
Loss before extraordinary item and
cumulative effect of accounting change (234.7) (93.1)
Net loss (238.0) (93.1)
4. INVENTORIES
DECEMBER 31,
----------------------------------
1995 1994
--------------- --------------
Raw materials $23.7 $17.6
Work-in progress 22.3 13.2
Finished goods 58.8 21.9
Less: Reserve for obsolescence (22.4) (1.7)
------ ------
$82.4 $51.0
===== ======
5. FILM COSTS
Film costs, net of accumulated amortization consists of the following:
DECEMBER 31,
----------------------------------
1995 1994
--------------- --------------
Current
Released $55.2 $43.9
In process and development 28.6 18.5
----- -----
$83.8 $62.4
===== =====
DECEMBER 31,
----------------------------------
1995 1994
--------------- --------------
Non-Current
Released $31.8 $43.6
In process and development 3.6 1.3
----- -----
$35.4 $44.9
===== =====
Non-current film costs are included in other assets. Accumulated
amortization of film costs was $649.0 and $549.2 at December 31, 1995 and
1994.
F-18
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
6. PROPERTY, PLANT AND EQUIPMENT, NET
DECEMBER 31,
------------------------------------
1995 1994
--------------- ---------------
Land and buildings $110.7 $95.5
Machinery, equipment and towers 201.1 131.3
Furniture and fixtures 35.9 25.6
Leasehold improvements and other 8.2 5.8
Construction-in-progress 4.7 7.6
------ ------
360.6 265.8
Less: Accumulated depreciation
and amortization (69.9) (33.8)
------ ------
$290.7 $232.0
====== ======
Depreciation expense was $36.9, $18.8 and $9.5 in 1995, 1994 and
1993, respectively.
7. INTANGIBLE ASSETS
DECEMBER 31,
----------------------------------
1995 1994
--------------- --------------
Network affiliation agreements,
broadcast licenses, goodwill,
excess reorganization value
and other $2,589.7 $1,732.7
Less: Accumulated amortization (149.7) (84.3)
-------- --------
$2,440.0 $1,648.4
======== ========
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
DECEMBER 31,
------------------------------------
1995 1994
---------------- --------------
Trade accounts payable $118.9 $85.3
Interest 30.0 23.0
Income taxes 33.8 14.3
Compensation, commissions and
related benefits 31.5 29.7
Reserve for returns 59.0 47.6
Royalties and incentives 33.5 14.2
Other 87.8 72.8
------ ------
$394.5 $286.9
====== ======
F-19
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
9. DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
Marvel Entertainment Group, Inc.:
Amended and Restated Credit Agreement (a) $ 87.5 $ 242.5
Term Loan Agreement (a) 139.5 141.5
U.S. Term Loan Agreement (a) 350.0 -
Capitalized leases and other debt 9.5 0.3
Toy Biz Credit Facility (a) - -
Marvel Holdings Inc. 11.25% Discount Notes (b) 402.8 361.0
Marvel (Parent) Holdings Inc. 11 7/8% Discount Notes (c) 193.4 172.3
Marvel III Holdings Inc. 9 1/8% Senior Secured Notes (d) 125.0 125.0
Marvel IV Holdings Inc. Credit Agreement (e) 373.0 234.0
New World Communications Group Incorporated:
Acquisition Credit Agreement (f) 400.0 25.0
Guthy-Renker Note (g) - 7.9
Bank Credit Agreement Loans (h) 27.6 48.3
Step-Up Notes (i) 114.4 199.7
11% Notes (j) 373.7 373.7
NW Entertainment Credit Agreement (k) 76.0 -
NWCG Holdings Corporation 13.75% Discount Notes (l) 261.1 227.6
Four Star Holdings Corp. Senior Notes due 1999 (m) 46.2 46.2
Andrews Group Incorporated:
10% Debentures (n) 26.8 24.4
12 3/4% Debentures (o) 14.1 13.6
Other notes and mortgages 5.3 6.7
-------- --------
3,025.9 2,249.7
Less current portion (74.9) (100.8)
--------- --------
$2,951.0 $2,148.9
======== ========
</TABLE>
(a) Marvel's long-term debt principally represents the outstanding balance of
the U.S. Term Loan Agreement entered into in April 1995, the Amended and
Restated Credit Agreement effective August 30, 1994 between Marvel, a
syndicate of banks, the Co-Agents and Chemical Bank, as administrative agent
(the "Amended and Restated Credit Agreement"), and the outstanding balance of
the Term Loan Agreement effective August 30, 1994, between the Company and
Instituto Bancario San Paolo Di Torino S.p.A. The U.S. Term Loan Agreement is
repayable in six semi-annual installments beginning August 31, 1999. The Term
Loan Agreement is repayable in fourteen increasing semi-annual installments,
which began February 28, 1995. Portions of the revolving credit facility under
the Amended and Restated Credit Agreement mature on September 1, 1999, 2000
and 2001.
F-20
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
Loans under the U.S. Term Loan Agreement bear interest at a rate per
annum equal to the Eurodollar Rate (as defined in the U.S. Term Loan
Agreement), plus the Applicable Margin (as defined in this paragraph), or the
Alternate Base Rate (as defined in the U.S. Term Loan Agreement). Eurodollar
Rate Loans will, at the option of Marvel, have interest periods of one, two,
three or six months. Applicable Margin means (a) with respect to Eurodollar
Rate loans, 2% to 2 1/2% through the first Anniversary Date (as defined in the
U.S. Term Loan Agreement) and 1 1/8% to 2 1/2% thereafter, to be determined
based on Marvel's financial performance and (b) with respect to Alternate Base
Rate loans, 1% to 1 1/2% through the first Anniversary Date and 1/8 of 1% to 1
1/2% thereafter, to be determined based on Marvel's financial performance.
The Term Loan Facility bears interest at a rate per annum equal to
the Eurocurrency Rate (as defined in the Term Loan Agreement) or, in certain
limited circumstances, the Negotiated Rate (as defined in the Term Loan
Agreement), in each case plus the Applicable Margin (as defined in this
paragraph). Eurocurrency Rate Loans have, at the option of Panini, interest
periods of one, two, three or six months. Applicable Margin means (a) with
respect to Eurocurrency Loans, 5/8 of 1% to 2%, to be determined based on
Marvel's financial performance and (b) with respect to Negotiated Rate Loans,
1%.
In connection with the U.S. Term Loan Agreement, Marvel also entered
into an amendment to the existing Amended and Restated Credit Agreement which,
among other things, permitted Marvel to incur the indebtedness under the U.S.
Term Loan Agreement. Pursuant to this amendment, the Applicable Margin under
the existing Amended and Restated Credit Agreement for Alternate Base Rate
loans will range from 0% to 1% and for Eurodollar Rate loans will range from
5/8 of 1% to 2%, in each case depending on Marvel's financial performance.
The average cost of borrowings for the U.S. Term Loan Agreement, the
Amended and Restated Credit Agreement and the Term Loan Agreement was
approximately 8 7/8% for the year ended December 31, 1995. The average cost of
borrowings for the Amended and Restated Credit Facility for the year ended
December 31, 1994 was 5.6% , and the average cost of borrowings for the Term
Loan Agreement was 9.5% for the four months ended December 31, 1994.
The undrawn commitments under the revolving credit portion of the
Amended and Restated Credit Agreement at December 31, 1995 were $32.5. The
Amended and Restated Credit Agreement requires Marvel to pay a commitment fee
of 1/4 to 3/8 of 1% per annum on the unused portion.
The U.S. Term Loan Agreement (through incorporation by reference to
the Amended and Restated Credit Agreement), the Amended and Restated Credit
Agreement and the Term Loan Agreement include various restrictive covenants
prohibiting Marvel from, among other things, incurring additional
indebtedness, with certain limited exceptions, and making dividend, redemption
and certain other payments on its capital stock. The U.S. Term Loan Agreement,
the Amended and Restated Credit Agreement and the Term Loan Agreement also
contain certain customary financial covenants and events of default for
financings of this type, including a change of ownership covenant of more than
25% of the voting shares of Marvel. Mandatory prepayments are required to be
made
F-21
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
out of net proceeds from sales of assets by Marvel, with certain exceptions,
and from certain excess cash flow (as defined in the Amended and Restated
Credit Agreement).
As a result of the refinancing of the term loan portion of the
Amended and Restated Credit Agreement, Marvel recorded a $3.3 extraordinary
charge, net of taxes of $2.1, during the second quarter of 1995, which
represents the write-off of related deferred financing costs.
During March 1996, Marvel amended its agreements with its lenders
providing for, among other things, an additional $25.0 revolving credit
facility, which will expire on December 31, 1996. This revolving credit
facility is pari passu to the loans extended by the banks pursuant to Marvel's
existing loan agreements. Marvel also secured all of its bank loans with the
domestic assets of Marvel.
In connection with the Toy Biz IPO, Toy Biz entered into a three year
$30.0 revolving line of credit with a syndicate of banks for which Chemical
Bank serves as administrative agent. Substantially all of the assets of Toy
Biz have been pledged to secure borrowings under the Toy Biz credit facility.
Borrowings under the Toy Biz credit facility bear interest at either Chemical
Bank's alternate base rate or at the Eurodollar rate plus the applicable
margin. The applicable margin is 1% unless Toy Biz meets specific financial
operating levels, in which case the applicable margin decreases to 3/4 of 1%.
The Toy Biz credit facility requires Toy Biz to pay a commitment fee of 3/8 of
1% per annum on the average daily unused portion of the credit facility. At
December 31, 1995, no amounts were drawn against the credit facility.
The Toy Biz credit facility, as amended, contains various financial
covenants, as well as restrictions, on the incurrence of new indebtedness,
prepaying or amending subordinated debt, acquisitions and similar investments,
the sale or transfer of assets, capital expenditures, limitations on
restricted payments, dividends, issuing guarantees and creating liens. The Toy
Biz credit facility also requires an annual reduction commencing January 1,
1996 of outstanding borrowings to zero for a period of 45 consecutive days
commencing during the first six months of the calendar year. In addition, the
Toy Biz credit facility requires that (a) Marvel continue to control a
majority of the voting power of Toy Biz and (b) the exclusive royalty free
perpetual worldwide license agreement between Toy Biz and Marvel remain in
effect.
(b) On April 22, 1993, Marvel Holdings issued and sold $517.4 principal amount
at maturity of senior secured discount notes (the "Old Marvel Holdings Notes")
in a private placement. Subsequent to the private placement, the Old Marvel
Holdings Notes were exchanged for Series B Senior Secured Discount Notes (the
"Marvel Holdings Notes"), pursuant to a registration statement on Form S-1
which was filed with the Securities and Exchange Commission (the "SEC"). The
Marvel Holdings Notes mature on April 15, 1998 and are secured by 48 million
shares of Marvel common stock. There will be no periodic payments of interest
on the Marvel Holdings Notes which were offered at a substantial discount from
their principal amount which represents a yield to maturity of 11 1/4%. The
indenture pursuant to which the Marvel Holdings Notes were issued contain
various restrictions on new indebtedness, sale or transfer of assets, payment
of dividends and change in control.
F-22
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
Additionally, the indenture requires Marvel Holdings to hold a majority of the
outstanding shares of Marvel common stock at all times.
(c) On October 20, 1993, Parent Holdings issued and sold $251.7 principal
amount of 11 7/8% Senior Secured Discount Notes (the "Parent Notes") pursuant
to a registration statement on Form S-1 which was filed with the SEC. There
will be no periodic payments of interest on the Parent Notes which were
offered at a substantial discount from their principal amount which represents
a yield to maturity of 11 7/8%. The Parent Notes mature on April 15, 1998 and
are secured by 20 million shares of Marvel common stock owned directly by
Parent Holdings and all of the outstanding shares of Marvel Holdings common
stock. The net proceeds of the offering of approximately $144.9 were used to
repay advances from and other indebtedness to Mafco Holdings and its
affiliates. The indenture pursuant to which Parent Holdings Notes were issued
contains various restrictions on new indebtedness, sale or transfer of assets,
payment of dividends and change in control. Additionally, the indenture
requires Parent Holdings to hold or cause Marvel Holdings together with Parent
Holdings to hold a majority of the outstanding shares of Marvel common stock
at all times.
(d) On February 18, 1994, Marvel III Holdings Inc. ("Holdings III") issued and
sold $125.0 principal amount of 9 1/8% Senior Secured Notes due 1998 (the
"Senior Notes") in a private placement. Subsequent to the private placement, a
registration statement on Form S-1 was filed with the SEC to exchange the
Senior Notes for 9 1/8% Series B Senior Secured Notes due 1998 (the "Holdings
III Notes"). The Holdings III Notes mature February 15, 1998, with interest
payments payable in semi-annual installments on February 15 and August 15 of
each year, commencing August 15, 1994. The net proceeds from the offering of
approximately $121.2 were used to repay indebtedness to Mafco Holdings and its
affiliates. The Holdings III Notes are guaranteed on a non-recourse basis by
Parent Holdings, which guaranty is secured by a first priority lien on
approximately 9.3 million shares of Marvel common stock.
(e) In July 1994, Marvel IV Holdings, Inc., a wholly owned subsidiary of the
Company ("Marvel IV Holdings"), entered into a bank credit agreement (the
"Marvel IV Credit Agreement") with Citibank, N.A. as agent for a group of
banks. The Marvel IV Credit Agreement provided for borrowings up to $240.0.
The agreement was amended on June 29, 1995 and on December 15, 1995 (the
"Second Amended Marvel IV Credit Agreement"). The Second Amended Marvel IV
Credit Agreement provides for a $305.0 term loan facility and $125.0 revolving
credit facility. The revolving credit facility matures on September 1, 1997.
The term loan facility matures on September 1, 1997 with scheduled quarterly
payments of $10.0 from March 1, 1996 through and including June 1, 1997 and a
final payment of $245.0 on September 1, 1997. Borrowings outstanding under the
Second Amended Marvel IV Credit Agreement bear interest, as appropriate for
the type of advance, at either (i) the Base Rate (as defined) plus a margin of
2.25%-3.00% or (ii) the Eurodollar Rate (as defined) plus a margin of
4.00-5.50%. The margin varies based upon the sum of the aggregate amount of
outstanding borrowings plus the aggregate unused commitments. Marvel IV's
obligations are guaranteed by certain affiliates of the Company. As of
December 31, 1995, Marvel IV borrowed $305.0 and $68.0 under the term and
revolving credit facilities, respectively. Borrowings outstanding
F-23
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
as of December 31, 1995 bore interest at a rate of 11.3%. Net proceeds from
these borrowings were advanced to Mafco Holdings and its subsidiaries.
(f) NW Acquisition has a $400.0 revolving credit facility (the "NW Acquisition
Credit Facility") which has a final maturity on September 29, 2001. The NW
Acquisition Credit Facility bears interest at the Eurodollar rate plus 1.5% to
2.75% or the prime rate plus .25% to 1.5%, at NW Acquisition's option. NW
Acquisition's debt leverage ratio determines the premium above those rates. Up
to $25.0 of the NW Acquisition Credit Facility is available for working
capital needs and up to $375.0 is available for qualifying acquisitions of
broadcast television stations through September 29, 1996 at which time the
revolving credit will convert to term loans maturing in five years. The term
loan has mandatory quarterly repayments based on various percentages of the
outstanding balance plus mandatory annual prepayments based upon the
dispositions of certain assets and upon excess cash flow, as defined. The NW
Acquisition Credit Facility is secured by liens on common stock and
intercompany notes of subsidiaries holding the assets and liabilities of the
acquired stations, as defined. The weighted average interest rate in effect at
December 31, 1995 was 8.10%.
(g) Andrews Group issued the Guthy-Renker Note in connection with its
acquisition of an interest in Guthy-Renker on November 15, 1993. The note was
paid in 1995.
(h) NW Television's term loan facility ("Bank Credit Agreement Loans") has a
final maturity on June 30, 1998 and bears interest at LIBOR plus 2.25% or
prime plus 1.25%, at NW Television's option. Minimum annual principal payments
which are shared with holders of the Step-Up Notes (see (i) below) are $6.0 in
1996 and $8.9 in 1997 (as adjusted for a mandatory payment made in 1995).
There are mandatory annual prepayments based upon the excess cash flow of NW
Television, as defined, with the balance due at maturity. The Bank Credit
Agreement Loans are secured by liens on the common stock and intercompany
notes of the broadcast stations held by NW Television (the "Pledged
Collateral"). The weighted average interest rate in effect at December 31,
1995 was 8.17%.
(i) NW Television's Senior Secured Notes maturing June 30, 1998 (the "Step-Up
Notes") bear interest at 7.5% to May 25, 1996, 8.5% to May 25, 1997 and 9.5%
thereafter, payable quarterly. Interest expense on the Step-Up Notes is
accrued at 7.82%, which represents the effective interest rate over the
remaining term of the notes. The excess of interest accrued at the effective
rate over interest at the stated rate of the notes is included in other
noncurrent liabilities. Noteholders are entitled to share pro rata with
holders of Bank Credit Agreement Loans in all mandatory payments. The
remaining principal balance is due at maturity. The Step-Up Notes are
redeemable at NW Television's option at any time prior to maturity at 100% of
outstanding principal plus accrued interest. The Step-Up Notes are secured by
the Pledged Collateral on a pari passu basis with the Bank Credit Agreement
Loans.
(j) NW Television's Senior Secured Notes maturing on June 30, 2005 (the "11%
Notes") bear interest at 11% to maturity, payable semi-annually. The 11% Notes
are redeemable at NW Television's option at any time on or after June 30, 1998
at 101% of outstanding principal amount prior to June 30, 1999 and 100%
thereafter, plus accrued interest. 50% of the original principal amount of the
11% Notes must be redeemed on June 30, 2004 at 100% of the outstanding
principal
F-24
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
amount plus accrued interest. The remaining balance is due at maturity. The
11% Notes are secured by a lien on the Pledged Collateral, third in priority
behind permitted letters of credit, the Bank Credit Agreement Loans and
Step-Up Notes.
(k) NW Entertainment has a $100 revolving credit facility with a final
maturity on March 24, 1999 with interest at Eurodollar rate plus 11/2% or a
prime rate plus 1/2%. NWCG has the option of the Eurodollar or prime rates.
Borrowings are based on eligible accounts receivable and are secured by film
costs, receivables and other assets. The weighted average interest rate in
effect at December 31, 1995 was 7.76%.
(l) During 1994, NWCG Holdings Corporation ("NWCG Holdings"), a wholly owned
subsidiary of the Company, issued and sold $420.5 principal amount of Senior
Secured Discount Notes due 1999 (the "NWCG Holdings Notes"). The net proceeds
of the offering of $212.3 were used to repay indebtedness to affiliates. The
NWCG Holdings Notes require no cash interest payments until maturity on June
15, 1999 and yield approximately 13.8% per annum. The NWCG Holdings Notes are
secured by a first priority pledge of 34,510,000 shares of NWCG Class B Common
Stock and limit NWCG Holdings and NWCG's ability to incur additional
indebtedness.
(m) In connection with the acquisition of NW Entertainment in 1989, Four Star
Holdings Corp. ("Four Star Holdings"), a wholly owned subsidiary of the
Company, issued $46.2 of notes (the "Senior Notes"). The Senior Notes are due
in 1999 with interest payable February 1, May 1, August 1 and November 1. The
applicable interest rate is LIBOR plus 1 1/2%. The interest rate was 8.5% and
7.13% at December 31, 1995 and 1994, respectively. The Senior Notes are
secured by irrevocable standby letters of credit (which are guaranteed by M&F
Holdings and secured by securities held by an affiliate). Commitment fees
ranging from 2% to 2 1/4% per annum are payable on the outstanding letters of
credit.
(n) In connection with the Andrews Merger, the Company issued 10% Senior
Subordinated Debentures due 1999 (the "10% Debentures"). During 1992, in
connection with the settlement of certain litigation, $4.1 face value of 10%
Debentures were issued. The 10% Debentures have a face value of $31.2 and were
recorded with an original issue discount. The 10% Debentures pay interest
semi-annually and mature on December 31, 1999. However, in accordance with the
settlement of certain litigation, the Company has agreed to exercise its
optional right to redeem the 10% Debentures on June 30, 1997 and to use its
best efforts to cause a registered broker to make a market in the 10%
Debentures. The discount is amortized over the life of the debentures to June
1997. The unamortized discount at December 31, 1995 and 1994 was $4.5 and
$6.8, respectively.
(o) In July 1986, the Company issued $80.0 of 12 3/4% Subordinated Debentures
due 1996 (the "12 3/4% Debentures"). The 12 3/4% Debentures pay interest
semi-annually on January 1 and July 1 and mature on July 1, 1996. On June 15,
1988, the Company repurchased approximately $65.7 principal amount of the 12
3/4% Debentures through an offer to purchase and consent solicitation. The
Company, at its option, may redeem the 12 3/4% Debentures at par. Through
December 31, 1995, no redemptions have been made.
F-25
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
In connection with the Andrews Merger, effective June 4, 1990, 43% of
the 12 3/4% Debentures were revalued utilizing an effective interest rate of
16%. The discount for imputed interest of $2.0 is being amortized over the
remaining life of the 12 3/4% Debentures. The unamortized discount at December
31, 1995 and 1994 was $0.3 and $0.7, respectively.
The intercompany notes pledged as collateral under certain debt
agreements of NWCG may be subordinated by NWCG to up to $95.0 of trade debt of
the broadcast television stations.
NWCG's debt agreements contain various ratios and covenants,
including restrictions on additional indebtedness, investments, capital
expenditures, transactions with affiliated companies and payment of dividends.
The aggregate scheduled amounts of debt maturities and sinking fund
requirements in the years 1996 through 2000 are $74.7, $420.4, $1099.8, $675.3
and $228.5, respectively.
10. RELATED PARTY TRANSACTIONS
During the years ended December 31, 1995, 1994 and 1993, Toy Biz
accrued royalties of $5.7, $6.5 and $4.3 to Mr. Arad for toys he invented or
designed.
During 1994, Marvel entered into an apparel license with Classic
Heroes, Inc. an affiliate of Toy Biz controlled by a non-Mafco Holdings
director. Under the contract, Marvel recognized $5.0 of income in 1994. In
1995, Marvel, at its initiation, terminated the contract and incurred $4.0 of
costs which has been charged to operations.
Effective July 1, 1993, Marvel purchased all of the outstanding
shares of common stock of Marvel Comics Limited ("Marvel U.K.") from Marvel
Holdings. The purchase price was approximately $1.9 (including fees and
expenses). Since Marvel and Marvel U.K. were under common control, this
transaction was accounted for at historical cost. In connection with the
transaction, a credit of $0.8 to additional paid-in capital was recorded.
"Other assets" at December 31, 1995 and 1994 includes $2.9 debt
securities issued by M&F Holdings and an affiliate that were purchased in the
open market.
The Company has depended upon advances and/or capital contributions
from M&F Holdings and its affiliates to meet its cash needs. At March 1, 1996,
December 31, 1995 and December 31, 1994, such outstanding advances to the
Company and its subsidiaries were $310.7, $307.1 and $154.2, respectively.
At March 2, 1996, an aggregate of 78.0 million shares, or
76.7%, of common stock of Marvel were pledged to secure indebtedness or
letters of credit of subsidiaries of Mafco Holdings, including Marvel
Holdings, Parent Holdings, Holdings III and Four Star Holdings Inc. In
addition,
F-26
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
2.9 million shares are subject to a negative pledge under the terms of the
Marvel Holdings Notes Indenture. The indentures governing this indebtedness
contain various covenants relating to Marvel, including certain limitations on
Marvel's indebtedness. At December 31, 1995 and 1994, $46.7 of the Company's
indebtedness was guaranteed by M&F Holdings. The guarantees are subordinated
obligations of M&F Holdings and are partially secured by assets of M&F
Holdings.
At December 31, 1994, Holdings III had advances of $8.3 to Mafco
Holdings as permitted under the Holdings III indenture. Such advance was
repaid in 1995. At March 1, 1996, December 31, 1995 and December 31, 1994,
Marvel IV had advanced $498.0, $441.0 and $216.3 to Mafco Holdings and its
subsidiaries representing the net proceeds from the borrowings under the
Marvel IV Credit Agreement.
Through 1995 Holdings III's principal source of cash to pay interest
on the Holdings III Notes was payments from Marvel under a tax sharing
agreement. During 1995 and through March 28, 1996, Holdings III received $6.5
of capital contributions to pay interest on the Holdings III Notes.
NW Entertainment leases its principal office space from an affiliate
of the Company. The lease, which has payments of $2.8 per year, expires in
2005 and has one five-year renewal option.
At December 31, 1995 and 1994, the Company has unsecured loans
totalling $2.2 and $1.6 to certain executive officers of Andrews and Marvel.
11. PREFERRED STOCK OF SUBSIDIARIES
FOUR STAR HOLDINGS
In June 1989, Four Star Holdings issued 5,127 shares of Adjustable
Rate Cumulative Preferred Stock at $1,000 per share to former NW Entertainment
management stockholders in connection with the acquisition of NW
Entertainment. The dividend rate is 60% of the sum of LIBOR plus 1 1/2% to be
paid quarterly on February 1, May 1, August 1 and November 1. At its option,
Four Star Holdings may redeem the preferred stock at par. The preferred stock
is non-voting and has a mandatory redemption requirement at par on June 8,
1999.
NWCG
In March 1994, NWCG issued 1,200,000 shares of preferred stock,
Series A, $.01 par value per share ("NWCG Series A Preferred Stock") to an
affiliate of Apollo Advisors, L.P. ("Apollo Advisors") for $60.0. The NWCG
Series A Preferred Stock is mandatorily redeemable in 2009, bears a dividend
of 6 3/8% per annum, converts to NWCG Class B Common Stock at $10.164 per
share and has certain registration, preemptive and tag-along rights.
In May 1994, Fox Television Stations, Inc. ("Fox") purchased $250.0
of NWCG Series B Junior Convertible Preferred Stock, par value $.01 per share
(the "NWCG Series B Preferred Stock"),
F-27
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
which is convertible into 19,349,845 shares of NWCG Class A Common Stock at
$12.92 per share. The NWCG Series B Preferred Stock has a liquidation
preference of $.01 per share, is entitled to dividends only in an amount equal
to dividends declared and paid on NWCG Class A Common Stock, is non-voting and
is neither optionally nor mandatorily redeemable. This purchase resulted in a
non-cash gain to the Company of approximately $50.5. NWCG and Fox also agreed
to share equally in the deficiency of proceeds received by Fox under the
targeted sales price, as defined, for Fox's Atlanta, Georgia and Dallas, Texas
television stations. The Company recorded $19.8 as a reduction of the Series B
Preferred Stock in 1995 pursuant to the agreement.
Fox invested an additional $250.0 in NWCG through the purchase of
NWCG Series C Preferred Stock and warrants to purchase up to 1,250,000 shares
of NWCG Class A Common Stock at $15 per share and up to 4,625,000 shares of
NWCG Class A Common Stock at $50 per share. The investment was made over 1994
and 1995, upon the effectiveness of affiliation agreements between NWCG's
television stations and Fox. The NWCG Series C Preferred Stock is non-voting
and mandatorily redeemable on the seventh anniversary of issuance at its
aggregate liquidation preference of $250.0.
In July 1995, NWCG issued 300,000 shares of NWCG Series E Cumulative
Convertible Redeemable Preferred Stock ("NWCG Series E Preferred"), $.01 par
value per share as consideration for the acquisition of Cannell. The NWCG
Series E Preferred is redeemable at the option of NWCG after July 1998, bears
a dividend rate of 7% per annum and is convertible to NWCG Class A Common
Stock at $19.95 per share. The NWCG Series E Preferred Stock is non-voting and
has a liquidation preference of $30.0.
12. INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
As permitted under SFAS No. 109, the Company chose not to restate prior
periods. SFAS No. 109 requires a change from the deferred to the liability
method of computing deferred taxes. The cumulative effect of this change was
to increase the net loss for 1993 by approximately $1.7.
F-28
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
Components of the provision for income taxes consisted of the
following:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income (loss) before provision for income taxes, minority
interest, equity in net income of investees,
extraordinary item and cumulative effect of
accounting change:
Domestic ($243.6) ($22.7) ($16.1)
Foreign 34.6 11.6 0.6
------- -------- -------
($209.0) ($11.1) ($15.5)
======== ======= =======
Provision (benefit) for taxes:
Current:
Federal $ .9 $12.3 $9.6
State and local 4.0 7.7 7.4
Foreign 11.1 5.8 2.3
---- ----- -----
16.0 25.8 19.3
Deferred:
Federal 6.7 (.7) 2.0
State and local 10.8 1.2 1.0
Foreign 6.7 1.7 --
----- ------ --------
24.2 2.2 3.0
---- ------ ------
Total $40.2 $28.0 $22.3
==== ===== =====
</TABLE>
The Company provides for taxes as if it had filed a separate
consolidated tax return. The Company with the exception of NWCG and Toy Biz,
is included in the consolidated federal and certain state and local income tax
returns of Mafco Holdings. NWCG began filing consolidated federal and certain
state tax returns effective January 1, 1994. Prior to this date, tax returns
were filed by NWCG's predecessor, NWTV. Effective March 1994, with the
purchase of the capital stock of NW Entertainment and Four Star and the
purchase of the remaining 50% of Genesis, NW Entertainment, Four Star and
Genesis are included in NWCG's consolidated federal and certain state tax
returns. Prior to this date NW Entertainment and Four Star were included in
the consolidated federal and certain state and local income tax returns of the
Company. Toy Biz files separate federal, state and local income tax returns.
The provisions for federal income taxes in 1995, 1994 and 1993
related primarily to the earnings of subsidiaries which file separate tax
returns. Marvel was not included in the federal consolidated returns of the
Company for periods prior to May 18, 1993 and subsequent to June 30, 1994. At
June 30, 1994, the Company's ownership percentage in Marvel was reduced below
80%, thus causing the company to treat Marvel as having deconsolidated for tax
purposes. However, Marvel is still included in the consolidated federal tax
return of Mafco Holdings, as Mafco Holdings, through the Company and other
affiliates maintains greater than 80% ownership in Marvel. The Company has
F-29
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
not recorded a benefit for its separate company loss, including those of its
subsidiaries, for the periods in which Marvel was not a member of the
Company's consolidated group as the Company is not assured that it will be
able to realize benefit for such losses in the future. During 1995, Marvel
recorded a federal tax benefit which is partially offset by a provision for
federal taxes at Toy Biz. In addition, the federal income tax provision
includes a tax expense in 1995 and 1993 and a benefit in 1994 related to NWCG.
NWCG's income tax expense in 1995 resulted primarily from the recognition of
income taxes on the sale of WSBK. The liability associated with these taxes
will be offset by utilization of NW Television's pre-bankruptcy plan effective
date net operating losses. The utilization has been reflected as a reduction
of excess reorganization value. The state and local and foreign tax provisions
relate primarily to the operations of Marvel, NWCG and Toy Biz.
A portion of the deferred foreign tax provision for the year ended
December 31, 1994 relates to the utilization of foreign net operating loss
carryforwards and has been recorded as a credit to goodwill.
Deferred taxes result from temporary differences in the recognition
of income and expenses for financial and income tax reporting purposes and
differences between the fair value of assets acquired in business combinations
accounted for as purchases and their tax bases. The approximate effect of
temporary differences that gave rise to deferred tax balances at December 31,
1995 and 1994, were as follows:
1995 1994
------- ------
Gross deferred tax assets:
Trade receivables, net $9.2 $6.7
Accounts payable and accrued expenses 41.4 13.0
Other assets 20.1 13.2
Film costs, net 55.3 36.2
Reserves related to foreign investments 7.3 6.5
Foreign net operating loss carryforward 8.0 4.8
Domestic net operating loss carryforward 341.6 261.4
----- -----
Total deferred tax asset 482.9 341.8
Valuation allowance (317.1) (251.4)
------- ------
Net deferred tax asset 165.8 90.4
Gross deferred liabilities:
Licensing income 14.4 8.8
Intangibles 134.1 119.5
Other liabilities, net 62.1 17.1
----- ------
Total deferred tax liability 210.6 145.4
----- -----
Net deferred tax liability ($44.8) ($55.0)
======= ======
At December 31, 1995, the Company, excluding NWCG, had federal net
operating loss carryforwards of approximately $350.0 which expire between 1998
and 2010.
NWCG's net operating loss carryforward ("NOL") at December 31, 1995
was approximately $497.8 expiring in 2002 through 2010, of which approximately
$430.2 is subject to certain limitations
F-30
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
under Section 382 described below. Limitations imposed by Section 382 of the
Internal Revenue Code (the "Code") after a change of control limit the amount
of NOL which will be available to offset future taxable income.
At December 31, 1995, the Company has provided a valuation allowance
relating to its NOL due to uncertainty as to the realization of taxable income
in the future. In addition, NWCG has provided for a valuation allowance
against the restricted NOL for the excess of NOL over the amount of taxable
temporary differences which will reverse during the permitted carryover
periods.
The effective tax rate on loss before provision for income taxes,
minority interest, equity in net income of investees, extraordinary item and
cumulative effect of accounting change varies from the current statutory
federal income tax rate as follows:
Year ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
Statutory rate (35%) (35%) (35%)
State and local taxes, net 5 51 38
Nondeductible amortization expense 15 96 52
Effect of rate change - - 10
Foreign taxes 3 19 10
U.S. loss without benefit 29 394 77
Non taxable gain (loss) 1 (274) -
Other 1 1 (8)
----- ------ -----
Effective rate 19% 252% 144%
===== ====== =====
The Company has not provided for taxes on undistributed foreign
earnings of approximately $26.0 and $6.0 at December 31, 1995 and 1994,
respectively, as the Company intends to permanently reinvest these earnings in
the future growth of the business. Determination of the amount of unrecognized
deferred U.S. income tax liability is not practicable because of the
complexities associated with its hypothetical calculations.
13. EMPLOYEE BENEFIT PLANS
PENSION PLANS:
Marvel has noncontributory defined benefit pension plans for salaried
employees. The benefits are based on the employees' years of service and
highest five years of compensation. Contributions are intended to provide for
benefits attributed to service to date and for those expected to be earned in
the future. Employees are eligible to participate in the pension plan after
two years of service at which time they are fully vested.
Certain employees of NWCG not participating in union-sponsored plans
who meet eligibility requirements are included in one of two company-sponsored
defined benefit pension plans (the "Pension Plans"). Under the provisions of
the Pension Plans, benefits are earned based on years of
F-31
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
service and the participants' average earnings during the three to five
consecutive highest paid calendar years of employment.
In certain of the Company's pension plans, the plan assets exceed the
accumulated pension obligations ("Overfunded Plans") and in certain other
plans, such obligations exceed the plan assets ("Underfunded Plans"). The
following tables sets forth the funded status of the Company's plans with the
respective amounts recognized in the consolidated balance sheets at the dates
indicated:
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------------------
Overfunded Underfunded
Plans Plans Total
----- ----- -----
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, includes vested benefit
of $69.7 $58.9 $11.8 $70.7
Effect of projected salary increase 21.8 - 21.8
---- ----- ----
Projected benefit obligation 80.7 11.8 92.5
Less plan assets (primarily listed stocks, U.S. bonds,
money market and equity mutual funds) at fair value 62.9 7.8 70.7
---- ----- ----
Plan assets less than projected benefit obligation (17.8) (4.0) (21.8)
Unrecognized prior service cost (4.1) - (4.1)
Unrecognized net loss (gain) 10.6 (.1) 10.5
------- -------- -------
Accrued pension cost ($11.3) ($4.1) ($15.4)
======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1994
--------------------------------------------
Overfunded Underfunded
Plans Plans Total
----- ----- -----
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, includes vested benefit
of $41.1 $4.8 $36.7 $41.5
Effect of projected salary increase 0.5 13.6 14.1
------ ------ ------
Projected benefit obligation 5.3 50.3 55.6
Less plan assets (primarily listed stocks, U.S. bonds,
money market and equity mutual funds) at fair value 5.7 38.5 44.2
------ ------ ------
Plan assets in excess of (less than) projected benefit
obligation 0.4 (11.8) (11.4)
Unrecognized prior service cost (0.2) (2.4) (2.6)
Unrecognized net loss - 2.7 2.7
-------- -------- -------
Prepaid (accrued) pension cost $ 0.2 ($11.5) ($11.3)
====== ======= =======
</TABLE>
F-32
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
Year ended December 31,
-------------------------------
1995 1994 1993
---- ---- -----
Net pension cost includes the following
components:
Service cost-benefits earned
during the period....................... $3.2 $ 3.5 $ 1.8
Interest cost on projected
benefits obligation..................... 5.7 4.5 2.5
Actual (return) loss on plan assets ...... (10.0) 1.3 (3.0)
Amortization of prior service costs....... (.3) (.2)
Unrecognized (loss) gain subject to
amortization .......................... 4.5 (5.1) 0.7
----- ----- -----
Net periodic pension cost ................ $3.1 $4.0 $ 2.0
===== ==== =====
The weighted average discount rates used in determining the actuarial
present value of the projected benefit obligation and net pension cost are
7.25% and 8.0%-8.5% for 1995 and 1994, respectively. The rate of increase in
future compensation levels were 3.0%-5.0% for 1995 and 4.5%-5.0% for 1994. The
expected long-term rate of return on plan assets were 8.0%-10.0% for 1995 and
8.0%-9% for 1994 and 1993.
POSTRETIREMENT BENEFITS AND OTHER PLANS
NWCG provides certain additional benefits to retired or involuntarily
terminated employees of certain subsidiaries based on years of service. As of
December 31, 1995 and 1994 the Company had a liability of approximately $5.4
and $5.6, respectively, related to these benefits.
SAVINGS
Certain subsidiaries of the Company participate in 401k Plans. Those
subsidiaries match contributions to the 401k Plans equal to a percentage of
each participant's contributions under certain circumstances.
Contributions by the Company under the 401k Plans are not significant.
14. COMMITMENTS AND CONTINGENCIES
The Company occupies various facilities and uses certain equipment
under operating lease arrangements which expire through 2005 including renewal
options. The leases for facilities require additional payments for property
taxes, insurance and maintenance costs and are subject to periodic escalation
charges. Minimum rental commitments under all non-cancelable leases at
December 31, 1995, aggregated $30.7. Such commitments, net of income from
subleases and excluding amounts included within restructuring charges, for
each of the five years subsequent to December 31, 1995 are $7.9, $7.0, $6.1,
$4.3 and $2.6, respectively. Rent expense amounted to $10.1, $9.6 and $5.5,
net of sublease income, for the years ended December 31, 1995, 1994 and 1993,
respectively.
Minimum payments under Marvel's sports licensing contracts are $55.3,
$43.6, $34.6 and $19.8 in 1996, 1997, 1998 and 1999, respectively.
As of December 31, 1995, the broadcasting segment has commitments
aggregating approximately $32.6 for various broadcast programming rights
through 2000. Certain agreements
F-33
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
require the Company to purchase programming that has not yet been produced;
the dollar amount of such contracts is not estimable.
15. LEGAL PROCEEDINGS
On March 9, 1995, a complaint, purporting to be a class action, was
filed against SkyBox, certain of SkyBox's officers and directors and Marvel in
the Court of Chancery in the State of Delaware in and for New Castle County,
entitled Strougo v. Lorber, et al., C.A. No. 14107 ("Strougo"). The complaint
generally alleges that SkyBox and certain of its officers and directors
breached their fiduciary duties by accepting the cash tender offer and the
merger at an unfair and inadequate price, failing to consider other potential
purchasers in a manner designed to obtain the highest possible price for
SkyBox's stockholders and not acting in the best interest of stockholders. The
complaint also alleges that Marvel aided and abetted the breaches of fiduciary
duty committed by the other defendants named in the complaint. The complaint
seeks preliminary and permanent injunctions against consummation of the
merger, damages, costs and experts' fees and expenses.
On March 16, 1995, a complaint, purporting to be a class action was
filed against SkyBox and certain of SkyBox's officers and directors in the
Court of Chancery in the State of Delaware in and for New Castle County,
entitled Krim and Gerber v. SkyBox International Inc., et al., C.A. No. 14127.
The complaint generally makes allegations similar to those contained in the
Strougo complaint and seeks similar injunctive and other relief.
Marvel and two of its officers, William C. Bevins and Terry C.
Stewart, are named as defendants in a purported class action entitled Brian
Barry SEP IRA v. Marvel Entertainment Group, Inc., pending in the United
States District Court for the Southern District of New York. The complaint
seeks unspecified damages on behalf of a proposed class of purchasers of
Marvel's common stock from April 11, 1994 to December 31, 1994 for alleged
violations of Sections 10 (b) and 20 (a) of the Securities Exchange Act of
1934, as amended, as well as Rule 10b-5 promulgated thereunder. Plaintiff
alleges that the defendants, through their own statements and those of
analysts, artifically inflated the price of common stock by creating earnings
expectations which Marvel did not meet. Plaintiff also contends that the
defendants failed to timely disclose softness in the publishing and sports
trading card markets which led to Marvel's not attaining its purported
earnings target. Plaintiff claims that the individual defendants, because of
their corporate positions, are liable under the securities laws as control
persons of Marvel. The defendants moved to dismiss the complaint in its
entirety on February 23, 1996. Marvel believes the plaintiff's case is
meritless and plans to vigorously defend this matter.
On March 10, 1994, Steven Cooperman commenced an action, on behalf of
himself and purportedly derivatively on behalf of SCI Television, Inc. (or its
purported successor corporation, NWCG) and as a class action, against certain
of the officers and directors of NWCG, certain of their respective affiliates
and certain of their advisors, asserting, among other things, breaches of
fiduciary duty, unjust enrichment, constructive fraud and abuse of control in
connection with the transactions contemplated by the Agreement (the "Action").
The Action is entitled Steven Cooperman, On Behalf
F-34
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
of Himself and Derivatively on Behalf of SCI Television, Inc., a Delaware
corporation (or its successor corporation, SCI Parent Corporation to be
re-named New World Communications Group, Inc.) v. Ronald O. Perelman, et al.,
and SCI Television, Inc., a Delaware corporation (or its successor
corporation, SCI Parent Corporation to be re-named New World Communications
Group, Inc.), Case No. BC100359 (Superior Court of the State of California,
County of Los Angeles). The Action sought equitable relief and damages.
Settlement of this litigation has been reached and preliminarily approved by
the Court. Under the terms of the settlement, NWCG will issue 2 million
warrants for the purchase of NWCG stock at the market price on the day of
issue. The warrants will be exercisable over a 90-day period, 5 years from the
date of issue. There was also a payment of cash consideration, the majority of
which was expensed in 1994. In addition, as part of the settlement, Andrews
will contribute the stock of L.C. Holdings, a company with an educational film
library, to NWCG. When the securities are issued, the fair value of the
securities will be reflected in NWCG's common stockholders' equity with a
corresponding reduction to additional paid-in-capital.
In February 1989, Robert Eckstein, et al. brought an action for
violation of Federal securities laws against NW Entertainment and other
parties (the "Eckstein Action"). In October 1988, Ralph Majeski, et al.
brought an action for fraud, misrepresentation, breaches of contract and
fiduciary duty and pendent state law claims against NW Entertainment and other
parties (the "Majeski Action"). Classes were certified in both actions. In
March 1992, the court granted a motion for summary judgment and dismissed both
the Eckstein Action and the Majeski Action. Plaintiffs in the Majeski Action
filed a motion for reconsideration, which was denied by the District Court on
June 2, 1992. Notices of Appeal were filed in both actions.
The plaintiffs in the Majeski action filed a lawsuit in the Circuit
Court of Milwaukee County, Wisconsin on March 8, 1993 (the "Majeski State
Court Action"). The Majeski State Court Action alleges essentially the same
pendent state law claims that had been asserted in the federal Majeski Action.
On August 20, 1993, the Court of Appeals for the Seventh Circuit
vacated the district court judgments and remanded the cases to the district
court for further proceedings. On November 18, 1993 the defendants filed a
Petition for Writ of Certiorari with the United States Supreme Court, seeking
review of the Court of Appeals Order. The defendant's petition was denied on
or about January 18, 1994.
In November 1993, both the Eckstein and Majeski plaintiffs filed
motions seeking leave to amend the complaints. The defendants did not oppose
the Eckstein plaintiffs' motion because those plaintiffs' did not add new
claims or assert new theories. The Majeski plaintiffs' motion seeks to amend
their Section 10(b) and breach of fiduciary duty claims, add a claim for
treble damages under the Racketeer Influenced and Corrupt Organizations Act,
18 U.S.C. ss.ss. 1961-68 and delete certain common law claims and pursue them
in a separate proceeding. The defendants filed papers opposing the Majeski
plaintiffs' proposed amendments. A hearing on the foregoing motions was held
on January 26, 1994. On January 27, 1994 the Court granted the Eckstein
plaintiffs' motion to amend
F-35
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
and took the Majeski plaintiff's motion to amend under consideration. The
Majeski State Court Action was voluntarily dismissed by the plaintiffs.
In February 1994, the defendants filed motions for summary judgment
in both actions. On August 31, 1994, the court denied the Majeski plaintiffs'
motion to amend their first amended complaint, granted the defendants' motions
for summary judgment in both the Eckstein and Majeski Actions and dismissed
both actions with prejudice. The Eckstein plaintiffs filed a motion for
reconsideration on September 15, 1994, which was denied by the court on
October 28, 1994. Both the Eckstein and Majeski Actions were appealed by the
plantiffs to the United States Court of Appeals for the Seventh Circuit. Oral
argument for these appeals was held on April 17, 1995. On June 26, 1995, the
Court of Appeals affirmed the judgments of the District Court in favor of the
defendants. On July 10, 1995, the Eckstein plaintiffs filed a petition for
rehearing and suggestion of rehearing en banc. The petition was denied by the
Court of Appeals on July 21, 1995. Neither the Eckstein or Majeski plaintiffs
sought review of the Seventh Circuit's decision in the Supreme Court.
On July 27, 1995, the district court entered a final order taxing
costs against the Majeski plaintiffs in favor of the defendants. The Court of
Appeals for the Seventh Circuit affirmed that decision, in an unpublished
order, on January 24, 1996, and issued its mandate on February 15, 1996. The
Majeski plaintiff's time to file a petition for writ of certiorari in the
Supreme Court has not yet expired.
On or about July 6, 1995, the Majeski plaintiffs filed a purported
class action lawsuit in the Circuit Court for Milwaukee County, Wisconsin,
entitled Ralph Majeski, et al. v. Balcor Entertainment Company Ltd., et al.,
Case No. 95CV006579 (the "Second Majeski State Court Action"). The Second
Majeski State Court Action is based on allegations similar to those in the
Federal Court Majeski Action, and seeks similar relief. The complaint alleges
claims based on state law asserting, among other things, breach of fiduciary
duties, negligent and intentional misrepresentation and deceit, breach of
contract, and a derivative claim on behalf of another defendant, Balcor Film
Investors, and its successor. On October 23, 1995, plaintiffs filed an amended
complaint, which made only minor, technical changes. On November 2, 1995, the
court entered its order, without objection from the defendants, certifying the
plaintiff-class and directing that notice be sent to all class members. NW
Entertainment filed a motion to dismiss the complaint for lack of personal
jurisdiction.
On November 16, 1995, plaintiffs filed a Second Amended Complaint
adding as a defendant the most recently appointed co-trustee of the BFI Trust.
The newly-named defendant, joined by all other defendants, thereafter removed
the case to United States District Court. On November 20, 1995, the District
Court granted plaintiff's motion to remand and returned the case to the
Circuit Court, Milwaukee County, State of Wisconsin. The New World defendants
have now renewed their motion to dismiss for lack of personal jurisdiction in
the state court in response to the Second Amended Complaint. No hearing date
has yet been scheduled for the motion.
F-36
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
The Company and its subsidiaries are also parties to various other
litigation, some of which are in the process of being settled. The Company
believes that it is unlikely that the outcome of all pending litigation in the
aggregate will have a material adverse effect on the consolidated financial
condition of the Company and its subsidiaries taken as a whole.
F-37
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
16. BUSINESS SEGMENT DATA
The Company is engaged in three lines of business: youth
entertainment, broadcasting and production and distribution. Identifiable
assets by industry include assets directly identified with those operations.
Corporate assets consist primarily of cash and loans to affiliates. Financial
information for the Company's segments is as follows:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net revenues:
Youth entertainment $829.3 $514.8 $419.3
Broadcasting 376.8 302.1 164.9
Production and distribution 228.2 94.8 81.5
--------- ------- ------
Total net revenues $1,434.3 $911.7 $665.7
========= ======= ======
Operating profit (loss) (1):
Youth entertainment $16.0 $115.1 $105.1
Broadcasting 50.2 44.6 29.4
Production and distribution (7.5) (37.6) (11.8)
------ -------- --------
58.7 122.1 122.7
Unallocated expenses, net (2) (267.7) (133.2) (138.2)
------- -------- --------
Loss before income taxes, minority interest,
equity in net income of investees,
extraordinary item and cumulative effect
of accounting change ($209.0) ($11.1) ($15.5)
======== ======= =======
Identifiable assets: 1995 1994
---- ----
Youth entertainment $1,097.4 $774.0
Broadcasting 1,843.3 1,437.1
Production and distribution 345.8 251.6
Corporate 978.2 766.5
--------- ---------
Total assets $4,264.7 $3,229.2
======== ========
</TABLE>
F-38
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Depreciation and amortization expense:
Youth entertainment $39.2 $14.9 $12.3
Broadcasting 62.5 40.5 22.0
Production and distribution 4.5 2.9 3.1
Corporate 20.9 19.9 10.0
-------- ------ ------
Total depreciation
and amortization expense $127.1 $78.2 $47.4
====== ===== =====
Capital expenditures:
Youth entertainment $42.5 $4.2 $3.3
Broadcasting 23.3 18.2 4.6
Production and distribution 4.9 5.0 .7
Corporate 6.6 7.3 5.4
------- ------- ------
Total capital expenditures $77.3 $34.7 $14.0
===== ===== =====
Geographic Areas:
Net revenues:
United States, Canada and Puerto Rico $1,184.9 $824.4 $580.6
Europe and other 279.0 97.5 85.1
Eliminations (29.6) (10.2) -
----------- --------- ---------
$1,434.3 $911.7 $665.7
======= ====== ======
Operating profit (loss) (1):
United States, Canada and Puerto Rico 14.1 $102.7 $126.2
Europe and other 44.6 19.4 (3.5)
-------- ------- --------
58.7 122.1 122.7
Unallocated expense, net (2) (267.7) (133.2) (138.2)
--------- ------- -------
($209.0) ($11.1) ($15.5)
======== ======= =======
1995 1994
---- ----
Identifiable assets:
United States, Canada and Puerto Rico $2,975.8 $2,235.5
Europe and other 310.7 227.2
Corporate 978.2 766.5
--------- ----------
Total assets $4,264.7 $3,229.2
======== ========
</TABLE>
F-39
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
(1) Operating profit (loss) represents total net revenues less operating
expenses, valuation adjustments, amortization of goodwill, and identifiable
miscellaneous income and expense and excludes general corporate expenses,
interest expense and net investment income.
(2) Unallocated expenses represent interest expense, interest and investment
income and general corporate expenses incurred to manage all of the Company's
activities.
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Year ended December 31, 1995
---------------------------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Net revenue $274.4 $335.9 $407.5 $416.5 $1,434.3
Operating income (loss) 9.5 13.5 55.4 (39.8) 38.6
Income (loss) before extraordinary
item and cumulative effect (36.7) (54.5) (37.5) (106.9) (235.6)
Net loss (36.7) (57.7) (37.5) (107.0) (238.9)
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1994
---------------------------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Net revenue $180.0 $194.8 $246.5 $290.4 $911.7
Operating income 25.5 25.2 30.6 20.4 101.7
Income (loss) before extraordinary
item and cumulative effect 13.2 36.0 (10.7) (52.2) (13.7)
Net loss 13.2 36.0 (10.7) (52.2) (13.7)
</TABLE>
18. RESTRUCTURING OF OPERATIONS
In the fourth quarter of 1995, Marvel recorded restructuring charges
of $25.0 related primarily to the publishing and confections operations. As
part of the restructuring, Marvel has terminated approximately 275 employees,
covering editorial, production, distribution and administrative employee
groups and accordingly, provided $10.7 of termination benefits, of which $2.5
has been paid as of December 31, 1995. Additionally, approximately $6.7
relates to facility closures and consolidation costs, of which $3.5 has been
paid as of December 31, 1995, and $7.6 relates to other costs, of which $4.0
has been paid as of December 31, 1995. The remaining amounts, as of December
31, 1995, are included in accrued expenses and other.
F-40
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Millions)
<TABLE>
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts (c) Deductions of Period
- ----------- ------------ ------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995
Allowance for returns $21.0 $ 101.5 $ 3.8 ($64.7)(A) $ 61.6
Allowance for doubtful accounts 13.8 25.7 6.2 (17.3)(B) 28.4
Reserve for inventory obsolescence 1.7 33.6 9.8 (22.7) 22.4
Included in accounts payable and accrued expenses
Reserves for returns 47.6 163.7 7.5 (159.8)(A) 59.0
Included in other assets
Allowance for doubtful accounts 2.6 - - (1.4) 1.2
Year ended December 31, 1994
Allowance for return 15.8 86.4 - (81.2)(A) 21.0
Allowance for doubtful accounts 6.6 2.1 6.1 (1.0)(B) 13.8
Reserve for inventory obsolescence 0.7 7.3 0.3 (6.6) 1.7
Included in accounts payable and accrued expenses
Reserves for returns 12.1 97.9 15.6 (78.0)(A) 47.6
Included in other assets
Allowance for doubtful accounts 3.8 - (1.2) - 2.6
Year ended December 31, 1993
Allowance for returns 9.1 76.7 - (70.0)(A) 15.8
Allowance for doubtful accounts 3.5 2.3 2.3 (1.5)(B) 6.6
Reserve for inventory obsolescence 1.1 5.8 (6.2) 0.7
Included in accounts payable and accrued expenses
Reserves for returns 20.5 45.5 - (53.9)(A) 12.1
Included in other assets
Allowance for doubtful accounts 3.3 1.1 - (0.6) 3.8
</TABLE>
- --------------------------------------------------------
(a) Actual returns
(b) Doubtful accounts written off, less recoveries
(c) Primarily represents amounts acquired.
F-41
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS (PARENT ONLY)
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
December 31,
------------------------------
1995 1994
-------------- --------------
ASSETS
Prepaid expenses and other $0.1 $0.3
Investments in and advances to
subsidiaries net of
cumulative losses and distributions 20.3 83.2
Intangible assets, net 18.6 19.2
Other assets 27.4 23.7
-------------- --------------
Total assets $66.4 $126.4
============== ==============
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current portion of long-term debt $14.1 $0.0
Accrued expenses 12.9 14.0
Long-term debt 26.8 38.0
Indebtedness to subsidiaries and affiliates 582.0 415.0
Other liabilities 4.5 3.6
-------------- --------------
Total liabilities 640.3 470.6
-------------- --------------
Stockholder's deficit:
Common stock $1.00 par value; 1,000 shares
authorized, issued and outstanding
Additional paid-in-capital 40.2 32.6
Accumulated deficit (614.5) (375.6)
Cumulative translation adjustment 0.4 (1.2)
-------------- --------------
Total stockholder's deficit (573.9) (344.2)
-------------- --------------
$66.4 $126.4
============== ==============
F-42
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS (PARENT ONLY)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION> Year Ended December 31,
------------------------------------------------
1995 1994 1993
----------------- -------------- --------------
<S> <C> <C> <C>
General and administrative expenses $10.4 $4.1 $7.3
------- -------- -------
Operating loss (10.4) (4.1) (7.3)
------- -------- -------
Other (expenses) income:
Interest expense (56.0) (52.2) (36.0)
Interest and investment income 0.5 0.7 10.3
Amortization of goodwill and debt
issuance costs (1.3) (3.0) (2.7)
Miscellaneous, net (0.2) (0.3) (0.1)
------- -------- -------
(57.0) (54.8) (28.5)
------- -------- -------
Loss before income taxes and equity
in net income (loss) of subsidiaries
and investees (67.4) (58.9) (35.8)
Benefit for income taxes 11.7
Equity in net (loss) income
of subsidiaries (171.5) 35.8 (20.9)
Equity in net income of investees 9.4 0.1
------- -------- -------
Loss before cumulative effect of
an accounting change (238.9) (13.7) (44.9)
Cumulative effect of an accounting change (1.7)
------- -------- -------
Net loss ($238.9) ($13.7) ($46.6)
======= ======== =======
</TABLE>
F-43
<PAGE>
ANDREWS GROUP INCORPORATED AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS (PARENT ONLY)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss ($238.9) ($13.7) ($46.6)
------- -------- -------
Adjustments to reconcile net loss
to net cash flows from operating
activities:
Depreciation and amortization 1.3 4.2 4.5
Net gain and equity in net loss
of subsidiaries 170.1 (45.1) 20.9
Noncash interest expense 2.8 2.2
Change in assets and liabilites,
net of effects of sales of businesses:
Increase in accounts payable and
accrued expenses 0.4 0.5 0.7
(Decrease) increase in other assets 5.0 (0.6) (4.0)
------- -------- -------
179.6 (38.8) 22.1
------- -------- -------
Net cash flows from operating activities (59.3) (52.5) (24.5)
------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of NWTV (102.3)
Acquisition of equity interests (9.1)
Other, net (4.3) (0.2)
------- -------- -------
Net cash flows from investing activities (4.3) 0.0 (111.6)
------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from net loans from
affiliates and issuance of debt 168.0 49.4 154.5
Contributions, net (99.6)
Other, net (4.8) 3.1 (18.4)
------- -------- -------
Net cash flows from
financing activities 63.6 52.5 136.1
------- -------- -------
Net decrease in cash and cash equivalents 0.0 0.0 0.0
Cash and cash equivalents at
beginning of the period 0.0 0.0 0.0
------- -------- -------
Cash and cash equivalents at end
of the period $0.0 $0.0 $0.0
======= ======== =======
Supplemental schedule of cash flow information:
Interest paid during the period $5.0 $3.3 $6.8
</TABLE>
F-44
EXECUTION COPY
$430,000,000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 15, 1995
Among
MARVEL IV HOLDINGS INC.,
as Borrower,
THE BANKS NAMED HEREIN,
as Banks,
and
CITIBANK, N.A.,
as Agent
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<TABLE>
<S> <C> <C>
SECTION 1.01. Certain Defined Terms 2
SECTION 1.02. Computation of Time Periods 27
SECTION 1.03. Accounting Terms 27
</TABLE>
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
<TABLE>
<S> <C> <C>
SECTION 2.01. The Advances 27
SECTION 2.02. Making the Advances 28
SECTION 2.03. Repayment 30
SECTION 2.04. Termination or Reduction of the Commitments 30
SECTION 2.05. Prepayments 31
SECTION 2.06. Interest 38
SECTION 2.07. Interest Rate Determination 39
SECTION 2.08. Fees 39
SECTION 2.09. Increased Costs; Illegality 40
SECTION 2.10. Conversion of Advances 42
SECTION 2.11. Payments and Computations 42
SECTION 2.12. Taxes 43
SECTION 2.13. Sharing of Payments, Etc. 46
SECTION 2.14. Removal of Lender 46
SECTION 2.15. Defaulting Lender 47
</TABLE>
ARTICLE III
CONDITIONS OF LENDING
<TABLE>
<S> <C> <C>
SECTION 3.01. Conditions Precedent to Effective Date 49
SECTION 3.02. Conditions Precedent to Each Borrowing 55
SECTION 3.03. Determinations Under Section 3.01 56
</TABLE>
ARTICLE IV
<PAGE>
ii
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower 57
ARTICLE V
COVENANTS OF THE BORROWER
<TABLE>
<S> <C> <C>
SECTION 5.01. Affirmative Covenants 62
(a) Compliance with Laws, Etc. 62
(b) Compliance with Environmental Laws 62
(c) Maintenance of Insurance 62
(d) Preservation of Corporate Existence, Etc. 62
(e) Visitation Rights 63
(f) Keeping of Books 63
(g) Maintenance of Properties, Etc. 63
(h) Termination of Financing Statements 63
(i) Performance of Related Documents 63
(j) Collateral Account 64
(k) Reporting Requirements 64
(l) Look-Forward Certificate 67
(m) Transactions with Affiliates 68
(n) Use of Proceeds 68
(o) Mafco Tax Group 68
(p) Marvel Tax Agreements 69
SECTION 5.02. Negative Covenants 69
(a) Liens, Etc. 69
(b) Lease Obligations 69
(c) Mergers, Etc. 69
(d) Sales, Etc. of Assets 70
(e) Dividends, Repurchases, Etc. 70
(f) Investments 70
(g) Change in Nature of Business 71
(h) Accounting Changes 71
(i) Debt 71
(j) Charter Amendments 71
(k) Prepayments, Etc. of Debt 71
(l) Amendment, Etc. of Related Documents 71
(m) Negative Pledge 72
(n) Partnerships 72
</TABLE>
<PAGE>
iii
<TABLE>
<S> <C> <C>
(o) Capital Expenditures 72
(p) Issuance of Capital Stock 72
(q) Payment Restrictions 72
</TABLE>
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default 72
ARTICLE VII
THE AGENT
<TABLE>
<S> <C> <C>
SECTION 7.01. Authorization and Action 77
SECTION 7.02. Agent's Reliance, Etc. 78
SECTION 7.03. Citibank and Affiliates 78
SECTION 7.04. Lender Credit Decision 79
SECTION 7.05. Indemnification 79
SECTION 7.06. Successor Agent 79
</TABLE>
ARTICLE VIII
MISCELLANEOUS
<TABLE>
<S> <C> <C>
SECTION 8.01. Amendments, Etc. 80
SECTION 8.02. Notices, Etc. 80
SECTION 8.03. No Waiver; Remedies 81
SECTION 8.04. Costs; Expenses 81
SECTION 8.05. Right of Set-off 82
SECTION 8.06. Binding Effect 83
SECTION 8.07. Assignments and Participations 83
SECTION 8.08. Governing Law; Submission to Jurisdiction 86
SECTION 8.09. Execution in Counterparts 86
SECTION 8.10. WAIVER OF JURY TRIAL 87
</TABLE>
<PAGE>
iv
Schedule I - List of Existing Advances, Advances, Commitments and Lending
Offices
Schedule II - List of Subsidiaries
Schedule III - List of Existing Debt
Schedule IV - List of Investments
Schedule V - List of Existing Liens
Schedule VI - Calculation of Defeased Debt Amount
Exhibit A-1 - Form of Term A Note
Exhibit A-2 - Form of Term B Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit B - Form of Assignment and Acceptance
Exhibit C - Form of Notice of Borrowing
Exhibit D-1 - Form of Mafco Security Agreement
Exhibit D-2 - Form of Borrower Security Agreement
Exhibit E-1 - Form of Mafco Guaranty
Exhibit E-2 - Form of Borrower Parent Guaranty
Exhibit E-3 - Form of New World Guaranty
Exhibit F - Form of Confidentiality Letter
Exhibit G - Form of Restated Certificate of Incorporation of
FN Holdings
Exhibit H - Form of Restated Certificate of Incorporation
of FN Parent
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of December 15,
1995 among MARVEL IV HOLDINGS INC., a Delaware corporation (the "Borrower"), the
banks, financial institutions andother institutional lenders (the "Financial
Institutions") listed on the signature pages hereof and CITIBANK, N.A.
("Citibank"), as agent (in such capacity, the "Agent") for the Lenders (as
hereinafter defined) hereunder.
PRELIMINARY STATEMENTS
(1) In connection with the purchase of certain assets and the
assumption of certain liabilities (the "Transaction") of First Nationwide Bank,
A Federal Savings Bank (the "Bank"), by First Madison Bank, F.S.B. (now known as
First Nationwide Bank), an indirect Subsidiary (as hereinafter defined) of Mafco
Holdings Inc., a Delaware corporation ("Mafco"), the Borrower entered into a
Credit Agreement dated as of July 20, 1994, as amended by the First Amendment
dated as of March 10, 1995 (said agreement, as so amended, being the "Original
Credit Agreement"), with the financial institutions and other institutional
lenders party thereto (the "Original Lenders") and Citibank, as agent for the
Original Lenders.
(2) Pursuant to the Original Credit Agreement, the Borrower
requested that the Original Lenders make advances to it, in an aggregate
principal amount of up to $240,000,000, on the terms and conditions set forth
therein.
(3) Subsequently, the Borrower entered into an Amended and
Restated Credit Agreement dated as of June 29, 1995, as amended by the First
Amendment dated as of October 27, 1995 (said agreement, as so amended, being the
"Existing Credit Agreement"), with the financial institutions and other
institutional lenders party thereto (the "Existing Lenders") and Citibank, as
agent for the Existing Lenders.
(4) Pursuant to the Existing Credit Agreement, the Borrower
requested that the Existing Lenders make advances to it, in an aggregate
principal amount of up to $350,000,000, on the terms and conditions set forth
therein.
(5) The Borrower has requested that the Financial Institutions
hereunder enter into this Agreement to amend and restate the Existing Credit
Agreement and to lend to the Borrower from time to time an aggregate principal
amount of up to $430,000,000. The Lenders hereunder have indicated their
willingness to amend and restate the Existing Credit Agreement and to provide
such additional financing on the terms and conditions of this Agreement.
<PAGE>
2
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree that,
subject to the satisfaction of the conditions set forth in Section 3.01, the
Existing Credit Agreement is amended and restated in its entirety to read as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"A Company" means each Loan Party, FN Parent, FN Holdings, Coleman
Holdings Inc., Coleman Worldwide, Marvel III, Marvel Parent, Marvel Holdings and
NWCG Holdings.
"Advance" means a Revolving Credit Advance, a Term A Advance or a
Term B Advance.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"Agent" has the meaning specified in the recital of parties to this
Agreement.
"Agent's Account" means the account of the Agent maintained by the
Agent with Citibank at 399 Park Avenue, New York, New York 10043, Account No.
3685-2248.
"Amended and Restated Security Agreements" means the Borrower Security
Agreement and the Mafco Security Agreement.
"Andrews" means Andrews Group Incorporated, a Delaware corporation.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of a Base Rate Advance and such
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance.
<PAGE>
3
"Applicable Margin" means, at any time, (i) if the sum of the
aggregate amount of Advances outstanding at such time plus the aggregate unused
Commitments is greater than or equal to $301,000,000, 3.0% per annum for Base
Rate Advances and 5.5% per annum for Eurodollar Rate Advances, (ii) if the sum
of the aggregate amount of Advances outstanding at such time plus the aggregate
unused Commitments is less than $301,000,000 and greater than or equal to
$251,000,000, 2.75% per annum for Base Rate Advances and 5.0% per annum for
Eurodollar Rate Advances, (iii) if the sum of the aggregate amount of Advances
outstanding at such time plus the aggregate unused Commitments is less than
$251,000,000 and greater than or equal to $201,000,000, 2.5% per annum for Base
Rate Advances and 4.5% per annum for Eurodollar Rate Advances and (iv) if the
sum of the aggregate amount of Advances outstanding at such time plus the
aggregate unused Commitments is less than $201,000,000, 2.25% per annum for Base
Rate Advances and 4.0% per annum for Eurodollar Rate Advances.
"Appropriate Lender" means, at any time, with respect to any of the
Term A, Term B or Revolving Credit Facilities, a Lender that has a Commitment
with respect to such Facility at such time.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee of such Lender, and accepted by the Agent, in
substantially the form of Exhibit B hereto.
"Bank" has the meaning specified in the Preliminary Statements.
"Bank Preferred Stock Document" means the Federal Stock Charter of
First Madison Bank, FSB, as supplemented by the First Supplementary Section to
Section 5 of the Charter of First Gibraltar Bank, FSB and the Second
Supplemental Section to Section 5 of the Charter of First Madison Bank, FSB.
"Base Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the highest
of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no
nearest 1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1% per annum,
plus (ii) the rate obtained by dividing (A) the latest three-week moving average
of secondary market morning offering rates in the United States for threemonth
certificates of deposit of major United States money market banks, such three-
week moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business Day, on the
next succeeding Business Day)
<PAGE>
4
for the three-week period ending on the previous Friday by Citibank on the basis
of such rates reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank from
three New Yorkcertificate of deposit dealers of recognized standing selected
byCitibank, by (B) a percentage equal to 100% minus the average of the daily
percentages specified during such three-week period by the Board of Governors of
the Federal Reserve System (or any successor thereto) for determining the
maximum reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank with respect to
liabilities consisting of or including (among other liabilities) three-month
U.S. dollar nonpersonal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment rates estimated
by Citibank for determining the then current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation (or any successor thereto)
for insuring U.S. dollar deposits of Citibank in the United States; and
(c) 1/2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance that bears interest as provided
in Section 2.06(a)(i).
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower Collateral Account" has the meaning specified in the
Borrower Security Agreement.
"Borrower Parent" means Marvel V Holdings Inc., a Delaware
corporation.
"Borrower Parent Guaranty" means the Amended and Restated Guaranty
dated as of December 15, 1995 made by the Borrower Parent in favor of the
Lenders and the Agent, as such guaranty may be amended or otherwise modified
from time to time in accordance with its terms.
"Borrower Parent Security Agreement" means the Security Agreement
dated July 27, 1994 made by the Borrower Parent and NationsBank of Georgia,
National Association, in its capacity as voting trustee, to the Agent, as such
agreement may be amended or otherwise modified from time to time in accordance
with its terms.
"Borrower Security Agreement" means the Second Amended and Restated
Borrower Security Agreement dated as of December 15, 1995 made by the Borrower
to the
<PAGE>
5
Agent, as such agreement may be amended or otherwise modified from time to time
in accordance with its terms.
"Borrower's Account" means the account of the Borrower maintained by
the Borrower with Citibank, N.A., at its office at 399 Park Avenue, New York,
New York 10043, Account No. 40650489.
"Borrowing" means a Revolving Credit Borrowing, the Term A Borrowing
or the Term B Borrowing.
"Business Day" means a day of the year on which banks are not required
or authorized by law to close in New York City and, if the applicable Business
Day relates to any Eurodollar Rate Advances, on which dealings are carried on in
the London interbank market and banks are open for business in London.
"Calculation Period" means, for any date in respect of any common
stock, the immediately preceding five Business Days during which such common
stock traded on the relevant national stock exchange or the Nasdaq national
market system.
"Capital Expenditures" means, for any period, the sum of (a) all
expenditures during such period for equipment, fixed assets, real property or
improvements, or for replacements or substitutions therefor or additions
thereto, that have a useful life of more than one year plus (b) the aggregate
principal amount of all Debt (including obligations under Capitalized Leases)
assumed or incurred in connection with any such expenditures.
"Capitalized Leases" has the meaning specified in clause (e) of the
definition of Debt.
"Cash Equivalents" means any of the following, to the extent owned by
the Borrower or its Subsidiaries free and clear of all Liens and having a
maturity not greater than 180 days from the date of issuance thereof: (a)
direct obligations of the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally guaranteed by the full
faith and credit of the Government of the United States, (b) insured
certificates of deposit of or time deposits with any commercial bank that is a
Lender or a member of the Federal Reserve System, issues (or the parent of which
issues) commercial paper rated as described in clause (c), is organized under
the laws of the United States or any State thereof and has combined capital and
surplus of at least $1,000,000,000, (c) commercial paper in an aggregate amount
of not more than $10,000,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United States and rated
at least "Prime-1" (or the then equivalent grade) by Moody's Investors Services,
Inc. or "A-1" (or the then equivalent grade) by Standard & Poor's Ratings Group
or (d) shares of money market mutual or similar funds having assets in excess
<PAGE>
6
of $100,000,000 and which invest exclusively in assets satisfying the
requirements of clauses (a) through (c) of this definition.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980.
"C&F Guarantor" means C&F (Parent) Holdings Inc., a Delaware
corporation.
"C&F Guaranty" means the Guaranty dated June 15, 1995 made by C&F
Guarantor in favor of the Lenders and the Agent, as such guaranty may be amended
or otherwise modified from time to time in accordance with its terms.
"C&F Pledge Agreement" means the Pledge Agreement dated June 15, 1995
made by C&F Guarantor to the Agent, as such agreement may be amended or
otherwise modified from time to time in accordance with its terms.
"Cigar" means Consolidated Cigar Corporation, a Delaware corporation.
"Cigar Guarantor" means Consolidated Cigar II Holdings Inc., a
Delaware corporation.
"Cigar Guaranty" means the Amended and Restated Cigar Guaranty dated
as of June 15, 1995 made by Cigar Guarantor in favor of the Lenders and the
Agent, as such guaranty may be amended or otherwise modified from time to time
in accordance with its terms.
"Cigar Non-Operating Subsidiary" means C&F Guarantor.
"Cigar Pledge Agreement" means the Amended and Restated Cigar Pledge
Agreement dated as of June 15, 1995 made by Cigar Guarantor and NationsBank of
Georgia, National Association to the Agent, as such agreement may be amended or
otherwise modified from time to time in accordance with its terms.
"Citibank" has the meaning specified in the recital of parties to this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and the rulings issued thereunder.
"Coleman" means The Coleman Company, Inc., a Delaware corporation.
<PAGE>
7
"Coleman Guarantor" means Coleman (Parent) Holdings Inc., a Delaware
corporation.
"Coleman Guaranty" means the Amended and Restated Coleman Guaranty
dated as of June 29, 1995 made by Coleman Guarantor in favor of the Lenders and
the Agent, as such guaranty may be amended or otherwise modified from time to
time in accordance with its terms.
"Coleman Holdings" means Coleman Holdings Inc., a Delaware
corporation.
"Coleman Non-Operating Subsidiaries" means Coleman Holdings and
Coleman Worldwide.
"Coleman Pledge Agreement" means the Pledge Agreement dated July 27,
1994 made by Coleman Guarantor to the Agent, as such agreement may be amended or
otherwise modified from time to time in accordance with its terms.
"Coleman Tax Agreements" means (i) the Tax Allocation Agreement dated
as of August 24, 1990, as amended through the date hereof, between Mafco and New
Coleman, (ii) the Tax Sharing Agreement dated as of February 26, 1992, as
amended through the date hereof, among Mafco, Coleman Finance Holdings Inc.,
Coleman and the Subsidiaries of Coleman party thereto, (iii) the Tax Sharing
Agreement dated as of February 26, 1992, as amended through the date hereof,
among Mafco, New Coleman, Coleman Finance Holdings Inc. and the Subsidiaries of
Coleman Finance Holdings Inc. party thereto, (iv) the Tax Equivalent Payment
Agreement dated as of March 4, 1992, as amended through the date hereof, between
Mafco and Coleman Finance Holdings Inc., (v) the Supplemental Tax Sharing
Agreement dated as of February 26, 1992, as amended through the date hereof,
between Coleman and M&F, (vi) the Tax Sharing Agreement dated as of May 27, 1993
among Mafco, Coleman Worldwide, Coleman and its Subsidiaries party thereto,
(vii) the Tax Sharing Agreement dated as of May 27, 1993 among Mafco, Coleman
Worldwide and the other Persons party thereto, (viii) the Tax Sharing Agreement
dated as of July 22, 1993 between Mafco and Coleman Holdings, and (ix) the Tax
Sharing Termination Agreement dated as of May 27, 1993 among Mafco, New Coleman,
Coleman and the other Persons party thereto.
"Coleman Worldwide" means Coleman Worldwide Corporation, a Delaware
corporation.
"Coleman Worldwide Indenture" has the meaning specified in Schedule
VI.
<PAGE>
8
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be subject to any
Lien in favor of the Agent and the Lenders.
"Collateral Accounts" means the Borrower Collateral Account, the Mafco
Collateral Account and the Second Mafco Collateral Account.
"Collateral Documents" means each Security Agreement and each Pledge
Agreement.
"Commitment" means a Revolving Credit Commitment, a Term A Commitment
or a Term B Commitment .
"Consolidated" for any Person refers to the consolidation of the
financial statements of such Person and its Subsidiaries in accordance with
GAAP.
"Consolidated Cigar Parent" means Consolidated Cigar (Parent) Holdings
Inc., a Delaware corporation.
"Conversion", "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.10.
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money; (b) all Obligations of such Person for the
deferred purchase price of property or services (other than trade payables not
overdue by more than 60 days incurred in the ordinary course of such Person's
business); (c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments; (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property); (e) all Obligations of such Person as
lessee under leases that have been or should be, in accordance with GAAP,
recorded as capital leases ("Capitalized Leases"); (f) all Obligations,
contingent or otherwise, of such Person under acceptance, letter of credit or
similar facilities; (g) all Obligations of such Person to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of such Person
or any warrants, rights or options to acquire such capital stock; (h) all Debt
of others referred to in clauses (a) through (g) above guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (i) to pay or purchase such Debt
or to advance or supply funds for the payment or purchase of such Debt, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Debt or to assure the holder of such Debt against loss, (iii) to supply
funds to or in any other manner invest in
<PAGE>
9
the debtor (including any agreement to pay for property or services irrespective
of whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss; and (i) all Debt referred to in
clauses (a) through (h) above secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Debt.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
"Defaulted Advance" means, with respect to any Lender at any time, the
amount of any Advance required to be made by such Lender to the Borrower
pursuant to Section 2.01 at or prior to such time which has not been so made as
of such time; provided, however, that any Advance made by the Agent for the
account of such Lender pursuant to Section 2.02(c) shall not be considered a
Defaulted Advance even if, at such time, such Lender shall not have reimbursed
the Agent therefor as provided in Section
2.02(c). In the event that a portion of a Defaulted Advance shall be deemed made
pursuant to Section 2.15(a), the remaining portion of such Defaulted Advance
shall be considered a Defaulted Advance originally required to be made pursuant
to Section 2.01 on the same date as the Defaulted Advance so deemed made in
part.
"Defaulted Amount" means, with respect to any Lender at any time, any
amount required to be paid by such Lender to the Agent or any other Lender
hereunder or under any other Loan Document at or prior to such time which has
not been so paid as of such time, including, without limitation, any amount
required to be paid by such Lender to (a) the Agent pursuant to Section 2.02(c)
to reimburse the Agent for the amount of any Advance made by the Agent for the
account of such Lender, (b) any other Lender pursuant to Section 2.13 to
purchase any participation in Advances owing to such other Lender and (c) the
Agent pursuant to Section 7.05 to reimburse the Agent for such Lender's ratable
share of any amount required to be paid by the Lenders to the Agent as provided
therein. In the event that a portion of a Defaulted Amount shall be deemed paid
pursuant to Section 2.15(b), the remaining portion of such Defaulted Amount
shall be considered a Defaulted Amount originally required to be made hereunder
or under any other Loan Document on the same date as the Defaulted Amount so
deemed paid in part.
"Defaulting Lender" means, at any time, any Lender that, at such time,
(a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take or be the
subject of any action or proceeding of a type described in Section 6.01(e).
"Defeased Debt Amount" means for any date of determination for any
Designated Person listed on Schedule VI an amount calculated in the manner set
forth on
<PAGE>
10
Schedule VI for such Designated Person or such other amount as may be agreed by
the Agent and the Borrower.
"Deposit Certificate" has the meaning specified in Section
5.01(l).
"Deposit/Tax Contribution Amount" has the meaning specified in Section
2.05(b)(v).
"Designated Coleman Subsidiaries" means Coleman Holdings, Coleman
Worldwide and Coleman.
"Designated Marvel Subsidiaries" means Marvel III, Marvel Parent,
Marvel Holdings and Marvel.
"Designated New World Subsidiaries" means New World Guarantor, NWCG
Holdings and New World.
"Designated Operating Companies" means Coleman, New World, Marvel and
MCG.
"Designated Persons" means the Borrower, Coleman Guarantor, New World
Guarantor, C&F Guarantor, and FN Parent (in the case of FN Parent, for as long
as, and only as long as, the Bank is regulated as a federal savings bank).
"Dollars" and the sign "$" each means lawful money of the United
States.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender, as the case may be, or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the Agent.
"Effective Date" has the meaning specified in Section
3.01.
"Eligible Assignee" means (a) any commercial bank organized under the
laws of the United States, or any State thereof, and having total assets in
excess of $1,000,000,000; (b) any savings and loan association or savings bank
organized under the laws of the United States, or any State thereof, and having
a net worth determined in accordance with GAAP in excess of $250,000,000; (c)
any commercial bank organized under the laws of any other country that is a
member of the Organization for Economic Cooperation and Development ("OECD") or
has concluded special lending arrangements with the International Monetary Fund
Associated with its General Arrangements to Borrow, or a
<PAGE>
11
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, so long as such bank is acting through a branch or agency
located in the United States, in the Cayman Islands or in the country in which
it is organized or another country that is described in this clause (c); (d) the
central bank of any country that is a member of the OECD; (e) any finance
company, insurance company or other financial institution or fund (whether a
corporation, partnership, trust or other entity) that (i) is not affiliated with
the Borrower, (ii) is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and (iii) has total
assets in excess of $250,000,000; and (f) any other Person (other than an
Affiliate of the Borrower) approved by the Agent and the Borrower, such approval
not to be unreasonably withheld.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of noncompliance or
violation, investigation, proceeding, consent order or consent agreement based
upon or arising out of any Environmental Law or any Environmental Permit,
including without limitation (a) any claim by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages pursuant to any Environmental Law and (b) any claim by any third
party seeking damages, contribution, or injunctive relief arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" means any federal, state or local law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
relating to the environment, health or safety including, without limitation,
CERCLA, the Resource Conservation and Recovery Act, the Hazardous Materials
Transportation Act, the Clean Water Act, the Toxic Substances Control Act, the
Clean Air Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide and Rodenticide Act and the Occupational Safety and
Health Act.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"Equity Contribution Agreement" means the Equity Contribution
Agreement dated as of July 27, 1994 between the Borrower and the Borrower
Parent, as such agreement may be amended or otherwise modified from time to
time in accordance with its terms.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" of any Person means any other Person that for
purposes of Title IV of ERISA is a member of such Person's controlled group, or
under common control with such Person, within the meaning of Section 414 of the
Code.
<PAGE>
12
"ERISA Event" with respect to any Person means (a) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of ERISA; (d) the withdrawal by such Person or any
of its ERISA Affiliates from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(e) the failure by such Person or any of its ERISA Affiliates to make a payment
to a Plan described in Section 302(f)(1) of ERISA; (f) the adoption of an
amendment to a Plan of such Person or any of its ERISA Affiliates requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or (g) the
institution by the PBGC of proceedings to terminate a Plan of such Person or any
of its ERISA Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of
any event or condition described in Section 4042 of ERISA that would constitute
grounds for the termination of, or the appointment of a trustee to administer,
such Plan; provided, however, that an event described in clause (a), (c) or (d)
of this definition, or in clause (b) of this definition solely with respect to a
standard termination under Section 4041(b) of ERISA, shall be an ERISA Event
only if such event is reasonably likely to result in a material liability of
such Person or any of its ERISA Affiliates.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance pursuant to which
it became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.
"Eurodollar Rate" means, for any Interest Period for each Eurodollar
Rate Advance comprising part of the same Borrowing, an interest rate per annum
equal to the rate per annum obtained by dividing (a) the average (rounded upward
to the nearest whole multiple of 1/100 of 1% per annum, if such average is not
such a multiple) of the rate per annum at which deposits in U.S. dollars are
offered by the principal office of Citibank in London, England to prime banks in
the London interbank market at 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period for a period equal to such Interest Period
by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
for such Interest Period. The Eurodollar Rate for each Interest Period shall be
<PAGE>
13
determined by the Agent on the basis of applicable rates furnished to and
received by the Agent from Citibank two Business Days before the first day of
such Interest Period, subject, however, to the provisions of Section 2.07.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section 2.06(a)(ii).
"Eurodollar Rate Reserve Percentage" of any Lender for any Interest
Period for any Advance means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for such Lender with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Proceeds Amount" has the meaning specified in Section
2.05(b)(vii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Advances" means the Existing Term Advances and the Existing
Revolving Advances.
"Exchange Agreement" means the Exchange Agreement dated as of October
3, 1994 among FN Parent, FN Holdings and Gerald J. Ford.
"Existing Credit Agreement" has the meaning specified in the
Preliminary Statements.
"Existing Lenders" has the meaning specified in the Preliminary
Statements.
"Existing Revolving Advance" has the meaning set forth in Section
2.01(a).
"Existing Term Advance" has the meaning set forth in Section 2.01(a).
"Facility" means the Revolving Credit Facility, the Term A Facility or
the Term B Facility.
<PAGE>
14
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financial Institutions" has the meaning specified in the recital of
parties to this Agreement.
"First Nationwide Companies" means First Gibraltar (Parent) Holdings
Inc., a Delaware corporation, First Gibraltar Holdings Inc., a Delaware
corporation, FN Parent, FN Holdings and the Bank.
"Flavors" means Mafco Worldwide Corporation, a Delaware corporation.
"Flavors Guarantor" means Flavors (Parent) Holdings Inc., a Delaware
corporation.
"Flavors Guaranty" means the Amended and Restated Flavors Guaranty
dated as of June 15, 1995 made by Flavors Guarantor in favor of the Lenders and
the Agent, as such guaranty may be amended or otherwise modified from time to
time in accordance with its terms.
"Flavors Non-Operating Subsidiary" means C&F Guarantor.
"Flavors Pledge Agreement" means the Amended and Restated Flavors
Pledge Agreement dated as of June 15, 1995 made by Flavors Guarantor and
NationsBank of Georgia, National Association to the Agent, as such agreement may
be amended or otherwise modified from time to time in accordance with its terms.
"FN Documents" means the FN Holdings Debt Document, the New FN
Holdings Debt Documents, the Exchange Agreement and the Stockholders Agreement.
"FN Holdings" means First Nationwide Holdings, Inc., a Delaware
corporation.
"FN Holdings Debt" means the 12-1/4% Senior Notes due 2001 in an
aggregate principal amount equal to $200,000,000.
<PAGE>
15
"FN Holdings Debt Document" means the Indenture dated as of July 15,
1994 made by FN Holdings in favor of The First National Bank of Boston, as
trustee, in connection with the FN Holdings Debt.
"FN Management Incentive Plan" means the Management Incentive Plan for
Certain Employees of the Bank established by FN Holdings to provide long-term
incentives to certain key executives of the Bank.
"FN Parent" means First Nationwide (Parent) Holdings Inc., a Delaware
corporation.
"FN Parent Loan Agreement" means the Loan Agreement dated as of
September 30, 1994 between the Borrower Parent and FN Parent, as amended from
time to time in accordance with its terms.
"FN Parties" means the Bank, FN Holdings and FN Parent.
"FN Party Charter Documents" means the certificate of incorporation of
FN Parent, the certificate of incorporation of FN Holdings and the Bank
Preferred Stock Document.
"FN Tax Agreement" means the Tax Sharing Agreement dated as of January
1, 1994 among Mafco, FN Holdings, the Bank and certain Subsidiaries of FN
Holdings and the Bank.
"Four Star" means Four Star Holdings Corp., a Delaware corporation.
"Four Star Pledge Agreement" means the Non-Recourse Guaranty and
Pledge Agreement dated July 27, 1994 made by Four Star and NationsBank of
Georgia, National Association, in its capacity as voting trustee, to the Agent,
as such agreement may be amended or otherwise modified from time to time in
accordance with its terms.
"Fully Satisfied" shall mean, with respect to the Payment Obligations
as of any date, that, on or before such date, (a) the principal of and interest
accrued to such date on all outstanding Advances shall have been paid in full in
cash, (b) the Commitments shall have been terminated in full and (c) all fees,
expenses and other amounts then due and payable which constitute Payment
Obligations shall have been paid in cash; provided, however, that on such date
none of the Agent and the Lenders shall have made any claims in respect of
Payment Obligations against the Borrower or any other Loan Party under any
provision of any of the Loan Documents that has not been cash collateralized by
an amount sufficient in the reasonable judgment of the Agent, the Required
Lenders and any such Lender (if such Lender is not one of the Lenders
constituting the Required Lenders) to secure such claim.
<PAGE>
16
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of, and used in, the preparation
of the audited consolidated financial statements referred to in Section 4.01(f),
except that with respect to (x) the preparation of any financial statement
required to be furnished pursuant to clause (i), (ii) or (iii) of Section
5.01(k) and (y) changes to financial statement presentation and accounting
policies contemplated by Section 5.02(h), "GAAP" shall mean such principles as
in effect from time to time in the United States of America.
"Guarantor" means each of Mafco, Borrower Parent, Coleman Guarantor,
New World Guarantor, Flavors Guarantor, Cigar Guarantor and C&F Guarantor.
"Guaranty" means each of the Borrower Parent Guaranty, the C&F
Guaranty, the Cigar Guaranty, the Coleman Guaranty, the Flavors Guaranty, the
Mafco Guaranty and the New World Guaranty.
"Hazardous Materials" means (a) petroleum or petroleum products,
natural or synthetic gas, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and radon gas, (b) any substances defined as
or included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous wastes", "restricted hazardous
wastes", "toxic substances", "toxic pollutants", "contaminants" or "pollutants",
or words of similar import, under any Environmental Law and (c) any other
substance exposure to which is regulated under any Environmental Law.
"Indemnified Party" has the meaning specified in Section 8.04(c).
"Initial Date" means, for purposes of Section 2.12, in the case of the
Agent and each Financial Institution, the date of its execution and delivery of
this Agreement and, in the case of each Lender other than a Financial
Institution, the date of the Assignment and Acceptance pursuant to which it
becomes a Lender.
"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Eurodollar
Rate Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, as the Borrower may, upon notice received by the Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the first day of such Interest Period, select; provided, however, that
<PAGE>
17
(i) the Borrower may not select any Interest Period which ends after
any principal repayment installment date unless, after giving effect to such
selection, the aggregate principal amount of Base Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on or prior to such
principal repayment installment date shall be at least equal to the aggregate
principal amount of such Advances due and payable on or prior to such dates;
(ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided that,
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and
(iii) whenever the first day of any Interest Period occurs on a day in
a calendar month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such Interest Period
shall end on the last Business Day of such succeeding calendar month.
"Investment" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock, warrants, rights,
options, debt obligations or other securities of such Person, any capital
contribution to such Person or any other investment in such Person, including,
without limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clauses (h) and (i) of the definition of "Debt" in
respect of such Person.
"Lenders" means the Financial Institutions listed on the signature
pages hereof and each Eligible Assignee that shall become a party hereto
pursuant to Section 8.07 and each assignee that shall become a party hereto
pursuant to Section 2.14.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"Loan Documents" means this Agreement, the Notes, each Guaranty, each
Collateral Document, the Equity Contribution Agreement and the FN Parent Loan
Agreement.
"Loan Party" means each of the Borrower, each Guarantor, M&F, Andrews,
Four Star and New Coleman.
"Look-Forward Certificate" has the meaning specified in Section
5.01(l).
<PAGE>
18
"Mafco" has the meaning specified in the Preliminary Statements.
"Mafco Collateral Account" has the meaning specified in the Mafco
Security Agreement.
"Mafco Guaranty" means the Second Amended and Restated Mafco Guaranty
dated as of December 15, 1995 made by Mafco in favor of the Lenders and the
Agent, as such guaranty may be amended or otherwise modified from time to time
in accordance with its terms.
"Mafco Pledge Agreement" means the Amended and Restated Pledge
Agreement dated as of June 29, 1995 made by Mafco and NationsBank of Georgia,
National Association, in its capacity as voting trustee, to the Agent, as such
agreement may be amended or otherwise modified from time to time in accordance
with its terms.
"Mafco Security Agreement" means the Second Amended and Restated Mafco
Security Agreement dated as of December 15, 1995 made by Mafco to the Agent, as
such agreement may be amended or otherwise modified from time to time in
accordance with its terms.
"Mandatory Distribution Period" means the period from the Effective
Date until the date on which the aggregate principal amount of the prepayments
made pursuant to Sections 2.05(b)(iv) and (b)(v) shall equal $110,000,000.
"Margin Stock" has the meaning specified in Regulation U of the Board
of Governors of the Federal Reserve System and any successor regulations
thereto, as in effect from time to time.
"Marvel" means Marvel Entertainment Group, Inc., a Delaware
corporation.
"Marvel Holdings" means Marvel Holdings Inc., a Delaware corporation.
"Marvel Holdings Debt" means the Debt described on Schedule III under
the caption "Marvel Holdings Debt", including the accretion of such Debt
pursuant to the Marvel Holdings Indenture.
"Marvel Holdings Indenture" means the Indenture, dated as of April 15,
1993, made by Marvel Holdings in favor of NationsBank of Georgia, National
Association as Trustee pursuant to which Marvel Holdings issued its Senior
Secured Discount Notes due 1998 and Series B Senior Secured Discount Notes due
1998.
"Marvel III" means Marvel III Holdings Inc., a Delaware corporation.
<PAGE>
19
"Marvel III Debt" means the Debt described on Schedule III under the
caption "Marvel III Debt", as such Debt may be reduced through scheduled or
required amortization.
"Marvel III Indenture" means the Indenture, dated as of February 15,
1994, made by Marvel III in favor of NationsBank of Georgia, National
Association as Trustee pursuant to which Marvel III issued its 9-1/8% Senior
Secured Notes due 1998 and its 9-1/8% Series B Senior Secured Notes due 1998.
"Marvel Parent" means Marvel (Parent) Holdings Inc., a Delaware
corporation.
"Marvel Parent Debt" means the Debt, described on Schedule III under
the caption "Marvel Parent Debt", including the accretion of such Debt pursuant
to the Marvel Parent Indenture.
"Marvel Parent Indenture" means the Indenture, dated as of October 1,
1993, made by Marvel Parent in favor of NationsBank of Georgia, National
Association as Trustee pursuant to which Marvel Parent issued its Senior Secured
Discount Notes due 1998.
"Marvel Tax Agreements" means (i) the Tax Sharing Agreement dated as
of April 22, 1993 between Mafco and Marvel Holdings, (ii) the Tax Sharing
Agreement dated as of October 20, 1993 between Mafco and Marvel Parent and (iii)
the Amended and Restated Tax Sharing Agreement dated as of January 1, 1994 among
Mafco, Marvel III, Marvel and the Subsidiaries of Marvel party thereto.
"Material Adverse Change" means, with respect to any Person, a
material adverse change in the condition (financial or otherwise), operations,
assets, business or prospects of such Person and its Subsidiaries, taken as a
whole.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect upon (a) the condition (financial or otherwise),
operations, assets, business or prospects of such Person and its Subsidiaries,
taken as a whole, or (b) the ability of a Loan Party to perform its obligations
under any Loan Document, or (c) the rights and remedies of the Agent or any
Lender under any Loan Document.
"MCG" means Mafco Consolidated Group Inc., a Delaware corporation.
"MCG Tax Agreement" means the Tax Sharing Agreement dated as of June
15, 1995 among Mafco, MCG and Subsidiaries of MCG party thereto.
"M&F" means MacAndrews & Forbes Holdings Inc., a Delaware corporation.
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20
"M&F Pledge Agreement" means the Non-Recourse Guaranty and Pledge
Agreement dated July 27, 1994 made by M&F to the Agent, as such agreement may be
amended or otherwise modified from time to time in accordance with its terms.
"Multiemployer Plan" of any Person means a multiemployer plan, as
defined in Section 4001(a)(3) of ERISA, which is subject to Title IV of ERISA,
and to which such Person or any of its ERISA Affiliates is making or accruing an
obligation to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"Multiple Employer Plan" of any Person means a single employer plan,
as defined in Section 4001(a)(15) of ERISA, which is subject to Title IV of
ERISA, and (a) that is maintained for employees of such Person or any of its
ERISA Affiliates and at least one Person other than such Person and its ERISA
Affiliates or (b) that was so maintained and in respect of which such Person or
any of its ERISA Affiliates could have liability under Section 4064 or 4069 of
ERISA in the event such plan has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset or the sale or issuance by any Person of any
Debt or capital stock, any securities convertible into or exchangeable for
capital stock or any warrants, rights or options to acquire capital stock, the
aggregate amount of cash received from time to time by or on behalf of such
Person in connection with such transaction after deducting therefrom only (a)
reasonable and customary brokerage commissions, underwriting fees and discounts,
legal fees and expenses, finder's fees, accountants' fees and expenses and other
similar fees, expenses and commissions, (b) the amount of taxes payable or
estimated in good faith to be payable within 12 months following the date of the
consummation of such transaction in connection with or as a result of such
transaction and (c) the amount of any Debt that, by the terms of such Debt, is
required to be repaid upon such disposition, in each case to the extent, but
only to the extent, that the amounts so deducted are payable to a Person that is
not an Affiliate (other than such amounts that are payable by the Borrower and
its Subsidiaries to an Affiliate pursuant to a Related Document) and are
properly attributable to such transaction or to the asset that is the subject
thereof.
"Net Equity Contribution Amount" shall have the meaning specified in
Section 2.05(b)(i).
"Net Equity Value" means for any day of determination for any
Designated Person:
(i) with respect to the Borrower, an amount equal to the excess of
(A) the product of the number of shares of common stock of Marvel owned directly
or indirectly by the Borrower times the average closing price during the
Calculation Period relating
<PAGE>
21
to such day of determination of such common stock on the New York Stock Exchange
over (B) the Defeased Debt Amount of the Borrower;
(ii) with respect to Coleman Guarantor, an amount equal to the excess
of (A) the product of the number of shares of common stock of Coleman owned
directly or indirectly by Coleman Guarantor times the average closing price
during the Calculation Period relating to such day of determination of such
common stock on the New York Stock Exchange over (B) the Defeased Debt Amount of
Coleman Guarantor;
(iii) with respect to New World Guarantor, an amount equal to the
excess of (A) the product of the number of shares of Class B common stock of New
World owned directly or indirectly by New World Guarantor times the average
closing price of the Class A common stock during the Calculation Period relating
to such day of determination for such Class A Common Stock on either the New
York Stock Exchange or the Nasdaq National Market System over (B) the Defeased
Debt Amount of New World Guarantor;
(iv) with respect to C&F Guarantor, an amount equal to the product of
the number of shares of common stock of MCG owned directly or indirectly by C&F
Guarantor times the average closing price during the Calculation Period relating
to such day of determination of such common stock on the New York Stock
Exchange; and
(v) with respect to FN Parent, an amount equal to
$288,000,000, less the aggregate amount of net losses of the Bank since
September 30, 1994, less the aggregate amount of distributions of capital of the
Bank existing on September 30, 1994, less any reductions in the equity accounts
of the Bank determined in accordance with generally accepted accounting
principles in effect from time to time.
"Net Residual Value" means for any day of determination an amount
equal to the aggregate Net Equity Value of the Designated Persons on such day.
"New Coleman" means New Coleman Holdings Inc., a Kansas corporation.
"New Coleman Pledge Agreement" means the Non-Recourse Guaranty and
Pledge Agreement dated July 27, 1994 made by New Coleman and NationsBank of
Georgia, National Association, in its capacity as voting trustee, to the Agent,
as such agreement may be amended or otherwise modified from time to time in
accordance with its terms.
"New FN Holdings Debt" means up to $100,000,000 aggregate principal
amount of Senior Subordinated Notes to be issued by FN Holdings in accordance
with the terms of the Mafco Guaranty.
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22
"New FN Holdings Debt Documents" means the indenture and any other
agreement or instrument pursuant to which the New FN Holdings Debt is issued or
which governs the terms of the New FN Holdings Debt.
"New World" means New World Communications Group Incorporated, a
Delaware corporation.
"New World Guarantor" means NWCG (Parent) Holdings Corporation, a
Delaware corporation.
"New World Guaranty" means the Second Amended and Restated New World
Guaranty dated as of December 15, 1995 made by New World Guarantor in favor of
the Lenders and the Agent, as such guaranty may be amended or otherwise modified
from time to time in accordance with its terms.
"New World Pledge Agreement" means the Amended and Restated Pledge
Agreement dated as of June 29, 1995 made by New World Guarantor to the Agent, as
such agreement may be amended or otherwise modified from time to time in
accordance with its terms.
"Non-Operating Subsidiary" means each of Marvel III, Marvel Parent and
Marvel Holdings.
"Note" means a Revolving Credit Note, a Term A Note or a Term B Note.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"NWCG Holdings" means NWCG Holdings Corporation, a Delaware
corporation.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including, without
limitation, any liability of such Person on any claim, whether or not the right
of any creditor to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such claim is
discharged, stayed or otherwise affected by any proceeding referred to in
Section 6.01(e). Without limiting the generality of the foregoing, the
Obligations of the Loan Parties under the Loan Documents include (a) the
obligation to pay principal, interest, charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by any Loan Party under
any Loan Document and (b) the obligation to reimburse any amount in respect of
any of the foregoing that any Lender, in its sole discretion, may elect to pay
or advance on behalf of such Loan Party.
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23
"Original Credit Agreement" has the meaning specified in the
Preliminary Statements.
"Original Lenders" has the meaning specified in the Preliminary
Statements.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Payment Obligations" shall mean all principal, interest, fees,
charges, expenses, attorneys' fees and expenses, indemnities and any other
amounts payable by the Loan Parties under the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor agency or entity performing substantially the same functions.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledge Agreements" means the C&F Pledge Agreement, the Cigar Pledge
Agreement, the Coleman Pledge Agreement, the Flavors Pledge Agreement, the Four
Star Pledge Agreement, the Mafco Pledge Agreement, the M&F Pledge Agreement, the
New Coleman Pledge Agreement, the New World Pledge Agreement and the Second
Andrews Pledge Agreement.
"Register" has the meaning specified in Section 8.07(c).
"Related Documents" means the Marvel Tax Agreements, the Coleman Tax
Agreements, the FN Tax Agreement and the MCG Tax Agreement.
"Required Lenders" means at any time Lenders owed or holding at least
a majority in interest of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and (b) the aggregate unused Commitments
(provided that, for purposes hereof, neither the Borrower, nor any of its
Affiliates, if a Lender, shall be included in (a) the Lenders holding such
amount of the Advances or having such amount of the Commitments or (b)
determining the aggregate unpaid principal amount of the Advances or the total
Commitments); provided, however, that if any Lender shall be a Defaulting Lender
at such time, there shall be excluded from the determination of Required Lenders
at such time (i) the aggregate principal amount of the Advances made by such
Lender and outstanding at such time and (ii) the aggregate Commitments of such
Lender at such time.
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24
"Revolving Credit Advance" has the meaning specified in Section
2.01(d).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by the Revolving
Credit Lenders.
"Revolving Credit Commitment" means, with respect to any Revolving
Credit Lender at any time, the amount set forth opposite such Lender's name on
Schedule I hereto under the caption "Revolving Credit Commitment" or, if such
Lender has entered into one or more Assignments and Acceptances, set forth for
such Lender in the Register maintained by the Agent pursuant to Section 8.07(c)
as such Lender's "Revolving Credit Commitment", as such amount may be reduced at
or prior to such time pursuant to Section 2.04.
"Revolving Credit Facility" means, at any time, the aggregate amount
of the Revolving Credit Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Lender" means any Lender that has a Revolving Credit
Commitment.
"Revolving Credit Note" means a promissory note of the Borrower
payable to the order of any Revolving Credit Lender, in substantially the form
of Exhibit A-3 hereto, evidencing the aggregate indebtedness of the Borrower to
such Lender resulting from the Revolving Credit Advances made by such Lender.
"Second Andrews Pledge Agreement" means the Amended and Restated Non
Recourse Guaranty and Pledge Agreement dated as of June 29, 1995 made by Andrews
and NationsBank of Georgia, National Association, in its capacity as voting
trustee, to the Agent, as such agreement may be amended or otherwise modified
from time to time in accordance with its terms.
"Second Mafco Collateral Account" has the meaning specified in the
Mafco Security Agreement.
"Second Net Equity Contribution Amount" has the meaning specified in
Section 2.05(b)(ii).
"Security Agreements" means each Amended and Restated Security
Agreement and the Borrower Parent Security Agreement.
"Single Employer Plan" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, which is subject to Title IV of ERISA,
and (a) that is maintained for employees of such Person or any of its ERISA
Affiliates and no Person other than such Person and its ERISA Affiliates or (b)
in respect of which such Person or any of its
<PAGE>
25
ERISA Affiliates could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (b) the present fair salable
value of the assets of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an unreasonably
small capital. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Special Expenses" means the mandatory special assessment or other
similar charge imposed on or after the date hereof on the Bank's deposits by a
regulatory agency having supervisory authority over the Bank in connection with
the recapitalization of the Savings Association Insurance Fund.
"Stockholders Agreement" means the Stockholders Agreement dated as of
October 3, 1994, among FN Parent, FN Holdings and Gerald J. Ford.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (a) the Voting
Stock of such corporation, (b) the interest in the capital or profits of such
partnership or joint venture or (c) the beneficial interest in such trust or
estate is at the time directly or indirectly owned or controlled by such Person,
by such Person and one or more of its other Subsidiaries or by one or more of
such Person's other Subsidiaries; provided, however, that for all purposes of
the Loan Documents, Toy Biz, Inc. shall not be a Subsidiary of any of the Loan
Parties.
"Supermajority Lenders" means at any time Lenders owed or holding at
least 67% of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and (b) the aggregate unused Commitments (provided
that, for purposes hereof, neither the Borrower nor any of its Affiliates, if a
Lender, shall be included in (a) the Lenders holding such amount of the Advances
or having such amount of the Commitments or (b) determining the aggregate unpaid
principal amount of the Advances or the total Commitments); provided, however,
that if any Lender shall be a Defaulting Lender at such time, there shall be
excluded from the determination of Supermajority Lenders at such time (i) the
aggregate principal amount of the Advances made by such Lender and outstanding
at such time and (ii) the aggregate Commitments of such Lender at such time.
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26
"Tax Certificate" has the meaning specified in Section 5.01(k)(xiii).
"Taxes" has the meaning specified in Section 2.12(a).
"Term Advances" means the Term A Advances and the Term B Advances.
"Term A Advance" has the meaning specified in Section 2.01(b).
"Term A Borrowing" means a borrowing consisting of simultaneous Term A
Advances of the same Type made by the Term A Lenders.
"Term A Commitment" means, with respect to any Term A Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term A Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 8.07(c) as such Lender's
"Term A Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.04.
"Term A Facility" means, at any time, the aggregate amount of the Term
A Lenders' Term A Commitments at such time.
"Term A Lender" means any Lender that has a Term A Commitment.
"Term A Note" means a promissory note of the Borrower payable to the
order of any Term A Lender, in substantially the form of Exhibit A-1 hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from the
Term A Advance made by such Lender.
"Term B Advance" has the meaning specified in Section
2.01(c).
"Term B Borrowing" means a borrowing consisting of simultaneous Term B
Advances of the same Type made by the Term B Lenders.
"Term B Commitment" means, with respect to any Term B Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term B Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Agent pursuant to Section 8.07(c) as such Lender's "Term B
Commitment", as such amount may be reduced at or prior to such time pursuant to
Section 2.04.
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27
"Term B Facility" means, at any time, the aggregate amount of the Term
B Lenders' Term B Commitments at such time.
"Term B Lender" means any Lender that has a Term B Commitment.
"Term B Note" means a promissory note of the Borrower payable to the
order of any Term B Lender, in substantially the form of Exhibit A-2 hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from the
Term B Advances made by such Lender.
"Termination Date" means the earlier of (a) September 1,
1997 or (b) the date of termination in whole of the Revolving Credit
Commitments, Term A Commitments and the Term B Commitments pursuant to Section
2.04 or 6.01.
"Transaction" has the meaning specified in the Preliminary Statements.
"Treasury Regulations" means the temporary and final regulations
promulgated under the Internal Revenue Code of 1986, as amended from time to
time.
"Type" refers to the distinction between Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurodollar Rate.
"Unfunded Pension Liabilities" with respect to any Plan means the
excess, if any, of its accumulated benefit obligation ("ABO"), as determined in
accordance with Statement of Financial Accounting Standards No. 87 or any
successor thereto ("FAS 87") over the fair market value of its assets (as of
such date) (provided that in determining the ABO for this purpose, the interest,
mortality and other relevant actuarial assumptions used to fund such Plan as of
its most recent actuarial valuation) shall be used instead of the interest,
mortality and other relevant actuarial assumptions that would otherwise be
prescribed by FAS 87.
"Unused Revolving Credit Commitment" means, with respect to any Lender
at any time, (a) such Lender's Revolving Credit Commitment at such time, minus
(b) the aggregate principal amount of all Revolving Credit Advances made by such
Lender and outstanding at such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section
3(1) of ERISA.
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28
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Part IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. (a) Purchase of Assignments. Effective
as of the Effective Date, the Existing Lenders will sell and assign an interest
in and to all of the Existing Lenders' respective rights and obligations under
the advances set forth opposite their names under the caption "Existing Term
Advances" on Schedule I (the "Existing Term Advances") and under the caption
"Existing Revolving Advances" on Schedule I (the "Existing Revolving Advances")
to the Financial Institutions and the Financial Institutions will purchase and
assume the Existing Advances set forth opposite their names under the captions
"Term A Advances", "Term B Advances" and
"Revolving Advances" on Schedule I.
(b) The Term A Advances. Each Term A Lender severally agrees, on
the terms and conditions hereinafter set forth, to make an advance (a "Term A
Advance") on the Effective Date in an aggregate amount not to exceed the excess,
if any, of such Lender's Term A Commitment on the Effective Date over the
aggregate principal amount of the Existing Term Advances purchased and assumed
by such Lender on the Effective Date. The Existing Term Advances purchased and
assumed pursuant to Section 2.01(a) shall be deemed to be Term A Advances for
all purposes hereunder. Amounts borrowed under this Section 2.01(b) and repaid
or prepaid may not be reborrowed.
(c) The Term B Advances. Each Term B Lender severally agrees, on
the terms and conditions hereinafter set forth, to make an advance (a "Term B
Advance") on the Effective Date in an aggregate amount not to exceed such
Lender's Term B Commitment on the Effective Date. Amounts borrowed under this
Section 2.01(c) and repaid or prepaid may not be reborrowed.
(d) The Revolving Credit Advances. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "Revolving Credit Advance") to the Borrower from time to time
on any Business Day during the period
<PAGE>
29
from the date hereof until the Termination Date in an aggregate amount not to
exceed at any time outstanding such Lender's Revolving Credit Commitment on such
Business Day (taking into account the aggregate principal amount of the Existing
Revolving Advances purchased and assumed by such Lender on the Effective Date
which are still outstanding on such Business Day). The Existing Revolving
Advances purchased and assumed pursuant to Section 2.01(a) by the Revolving
Credit Lenders shall be deemed to be Revolving Credit Advances for all purposes
hereunder. Each Revolving Credit Borrowing shall be in an aggregate amount not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and
shall consist of Revolving Credit Advances made on the same day by the Revolving
Credit Lenders ratably according to their Revolving Credit Commitments. Within
the limits of each Revolving Credit Lender's Unused Revolving Credit Commitment
in effect from time to time, the Borrower may borrow, prepay pursuant to Section
2.05(a) and reborrow under this Section 2.01(d).
SECTION 2.02. Making the Advances. (a) Except as otherwise provided
in Section 2.15, each Borrowing shall be made on notice given not later than
11:00 A.M. (New York City time) on the first Business Day prior to the date of a
proposed Borrowing consisting of Base Rate Advances or the third Business Day
prior to the date of a proposed Borrowing consisting of Eurodollar Rate
Advances, by the Borrower to the Agent, which shall give to each Appropriate
Lender prompt notice thereof by telecopier, telex or cable. Each such notice of
a Borrowing (a "Notice of Borrowing") shall be by telecopier, telex or cable,
and, with respect to a Notice of Borrowing by telex or cable, confirmed
immediately thereafter in writing, in substantially the form of Exhibit C
hereto, specifying therein the requested (i) date of such Borrowing, (ii)
Facility under which such Borrowing is to be made, (iii) Type of Advances
comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v)
Interest Period for each Eurodollar Rate Advance included in such Borrowing. In
the case of a proposed Borrowing comprised of Eurodollar Rate Advances, the
Agent shall promptly notify the Borrower and each Appropriate Lender of the
applicable interest rate under Section 2.06(a)(ii). Each Appropriate Lender
shall, before 12:00 noon (New York City time) on the date of such Borrowing,
make available for the account of its Applicable Lending Office to the Agent at
the Agent's Account, in same day funds, such Lender's ratable portion of such
Borrowing. After the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will make such funds
available by crediting the Borrower's Account.
(b) Each Notice of Borrowing shall be irrevocable and binding on
the Borrower. The Borrower shall indemnify each Appropriate Lender against any
loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Borrowing for such
Borrowing the applicable conditions set forth in Article III, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.
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30
(c) Unless the Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Agent such Lender's ratable portion of such Borrowing, the Agent may assume,
or at its option request confirmation from such Lender, that such Lender has
made such portion available to the Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Agent may, in
reliance upon such assumption or confirmation (as the case may be), make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such ratable portion available to
the Agent, such Lender and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (i) in the case of the Borrower,
the interest rate applicable at such time under Section 2.06 to Advances
comprising such Borrowing and (ii) in the case of such Lender, the cost
(expressed as a rate per annum) to the Agent of funding such Lender's ratable
portion; provided that, upon the request of such Lender, the Agent shall provide
such Lender with a certificate as to the calculation of such amount. If such
Lender shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Lender's Advance as part of such Borrowing for purposes of
this Agreement.
(d) The failure of any Lender to make the Advance to be made by
it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
(e) The Borrower may not request a Borrowing comprised of
Eurodollar Rate Advances or, pursuant to Section 2.10, Convert Base Rate
Advances into Eurodollar Rate Advances or select a new Interest Period for
existing Eurodollar Rate Advances if, after the making or Conversion of such
Advances or the selection of such Interest Period, the number of outstanding
Borrowings comprised of Eurodollar Rate Advances having different Interest
Periods (whether of different duration or commencing on different dates) would
exceed 6.
SECTION 2.03. Repayment. (a) Term A Advances. The Borrower shall
repay to the Agent for the ratable account of the Term A Lenders the aggregate
outstanding principal amount of the Term A Advances on the following dates in
the amounts indicated:
Date Amount
---- ------
March 1, 1996 $10,000,000
June 1, 1996 $10,000,000
September 1, 1996 $10,000,000
December 1, 1996 $10,000,000
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31
March 1, 1997 $10,000,000
June 1, 1997 $10,000,000
September 1, 1997 $214,202,898.55
(b) Term B Advances. The Borrower shall repay to the Agent for
the ratable account of the Term B Lenders on the Termination Date the aggregate
principal amount of the Term B Advances then outstanding.
(c) Revolving Credit Advances. The Borrower shall repay to the
Agent for the ratable account of the Revolving Credit Lenders on the Termination
Date the aggregate principal amount of the Revolving Credit Advances then
outstanding.
SECTION 2.04. Termination or Reduction of the Commitments. (a)
Optional. The Borrower shall have the right, upon at least three Business Days'
prior notice to the Agent, to terminate in whole or reduce ratably in part the
unused portions of the Term A Commitments, the Term B Commitments and the Unused
Revolving Credit Commitments; provided that each partial reduction of a Facility
(i) shall be in an aggregate amount of $10,000,000 or an integral multiple of
$1,000,000 in excess thereof and (ii) shall be made ratably among the
Appropriate Lenders in accordance with their Commitments with respect to such
Facility.
(b) Mandatory. The Revolving Credit Facility shall be
automatically and permanently reduced on each date on which such reduction is
required to be made pursuant to Section 2.05(b)(i), (ii), (iii), (iv), (v),
(vi), (vii) or (viii), provided that each such reduction of the Revolving Credit
Facility shall be made ratably among the Revolving Credit Lenders in accordance
with their Revolving Credit Commitments.
SECTION 2.05. Prepayments. (a) Optional. The Borrower may, upon at
least one Business Day's notice to the Agent, in the case of Base Rate Advances,
and three Business Days' notice to the Agent, in the case of Eurodollar Rate
Advances, stating the proposed date, the applicable Facility and aggregate
principal amount of the prepayment, and if such notice is given, the Borrower
shall, prepay the outstanding principal amounts of the Advances comprising part
of the same Borrowing in whole or ratably in part, together with accrued
interest to the date of such prepayment on the principal amount so prepaid;
provided, however, that, with respect to any prepayment made in connection with
the provisions of Section 7(o) of the Mafco Guaranty, no such notice shall be
required; provided further that (x) each partial prepayment (other than a
prepayment made in connection with the provisions of Section 7(o) of the Mafco
Guaranty) shall be in an aggregate principal amount not less than $10,000,000 or
an integral multiple of $1,000,000 in excess thereof (or, if the aggregate
principal amount of all Advances that constitute part of such Borrowing is less,
such aggregate principal amount) and (y) in the event any such prepayment of
Eurodollar Rate Advances is not made on the last day of an Interest Period, the
Borrower shall be obligated to reimburse the Lenders in respect thereof
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32
pursuant to Section 8.04(b). Each such prepayment of any Advances shall be
applied to the installments thereof in inverse order of maturity.
(b) Mandatory. (i) The Borrower shall, on the date of deposit of
each cash equity contribution in the Borrower Collateral Account as a result of
a loan made by FN Parent to the Borrower Parent pursuant to the terms of the FN
Parent Loan Agreement that relates solely to net income of the Bank (excluding,
to the extent included in net income, (1) any gains (net of taxes) from the sale
of deposits and property, plant and equipment related to such deposits, and (2)
any net income that is attributable to the recognition of the deferred tax
assetnet operating loss carry forwards of the Bank), (x) pay interest and fees
payable in respect of the Facilities and expenses of the Agent (including the
reasonable fees and expenses of counsel to the Agent), in each such case, on the
date of application provided for in this Section 2.05(b)(i), (y) subject to the
provisions of Section 2.05(b)(vi) below, have released to it pursuant to the
provisions of Section 7(b) of the Borrower Security Agreement an aggregate
amount equal to allpayments of interest on the Advances that have been made by
or on behalf of the Borrower pursuant to the terms of this Agreement since the
date of the most recent prepayment and application made pursuant to Section
2.05(b)(i) or Section 2.05(b)(ii) prior to the date of deposit of such cash
equity contribution; provided that no event has occurred and is continuing, or
would result from the release of such amounts to the Borrower, which constitutes
a Default or Event of Default (the amount of each such cash equity contribution
less the amounts, if any, paid by or on behalf of the Borrower or released to
the Borrower, as the case may be, pursuant to clauses (x) and (y) above shall be
referred to in this Section 2.05(b)(i) as the "Net Equity Contribution Amount"),
and then (z) apply:
(A) up to 75% of such Net Equity Contribution Amount to the making
of a prepayment in an amount equal to the amount of the then current scheduled
principal payment in respect of the Term A Facility pursuant to Section 2.03 but
only to the extent, if any, that such payment has not been made under Section
2.05(b)(i)(B) or Section 2.05(b)(ii)(B) prior to the date of such cash equity
contribution; provided, however, that, if the then current scheduled principal
payment in respect of the Term A Facility has been prepaid in full prior to the
date of such cash equity contribution (other than as a result of a prepayment
during the calendar quarter in which such cash equity contribution occurs
pursuant to the provisions of Section 2.05(b)(i)(B) or Section 2.05(b)(ii)(B)),
the Borrower shall have no obligation to prepay the Advances; provided further
that, if the then current scheduled principal payment in respect of the Term A
Facility has been prepaid in full prior to the date of such cash equity
contribution as a result of a prepayment during the calendar quarter in which
such cash equity contribution occurs pursuant to the provisions of Section
2.05(b)(i)(B) or Section 2.05(b)(ii)(B), such Net Equity Contribution Amount
shall be applied to the then current scheduled principal payment in respect of
the Term A Facility pursuant to the terms of this Section 2.05(b)(i)(A) and the
prepayment pursuant to Section 2.05(b)(i)(B) or Section 2.05(b)(ii)(B), as the
case may be, shall be reapplied pursuant to the terms of such
<PAGE>
33
Section; provided further that, on and after the payment in full of the Term A
Advances, such Net Equity Contribution Amount shall be applied pro rata to (x)
the Term B Facility and (y) the Revolving Credit Facility as set forth in
Section 2.05(b)(ix) below; and provided further that any amount not required to
be prepaid pursuant to the terms of this Section 2.05(b)(i)(A) shall, subject to
the provisions of Section 2.05(b)(vi) below, be released to the Borrower
pursuant to the provisions of Section 7(b) of the Borrower Security Agreement;
and
(B) 25% of such Net Equity Contribution Amount to the making of a
prepayment in such amount; provided, however, that each such prepayment shall be
applied first, to the then current scheduled principal payment in respect of the
Term A Facility but only to the extent, if any, that such payment has not been
made under Section 2.05(b)(i)(A) or Section 2.05(b)(ii)(A), second, to the next
scheduled principal payment in respect of the Term A Facility, third, to the
remaining installments of the Term A Facility pursuant to Section 2.03 in
inverse order of maturity and fourth, pro rata to (x) the Term B Facility and
(y) the Revolving Credit Facility as set forth in Section 2.05(b)(ix) below;
provided, however, that if both the then current scheduled principal payment in
respect of the Term A Facility and the next scheduled principal payment in
respect of the Term A Facility have been prepaid in full prior to the date of
such cash equity contribution, such portion of such prepayment shall be applied
first, to the remaining installments of the Term A Facility in inverse order of
maturity and second, pro rata to (x) the Term B Facility and (y) the Revolving
Credit Facility as set forth in Section 2.05(b)(ix) below; provided further that
if a prepayment pursuant to the terms of this Section 2.05(b)(i)(B) is applied
to the next scheduled principal payment in respect of the Term A Facility and,
subsequent to such application, a prepayment pursuant to the terms of Section
2.05(b)(i)(A) or Section 2.05(b)(ii)(A) is applied to such next scheduled
principal payment in respect of the Term A Facility, the amount applied to such
next scheduled principal payment in respect of the Term A Facility pursuant to
the terms of this Section 2.05(b)(i)(B) shall be reapplied first, to the
remaining installments of the Term A Facility in inverse order of maturity and
second, pro rata to (x) the Term B Facility and (y) the Revolving Credit
Facility as set forth in Section 2.05(b)(ix) below.
For purposes of this Section 2.05(b)(i) and Section 2.05(b)(ii), the
"then current" scheduled principal payment means the scheduled principal payment
due in respect of the Term A Facility on the date of application provided for in
this Section 2.05(b)(i) or Section 2.05(b)(ii), as the case may be, or, if no
such principal payment is due on such date, the first such principal payment due
in respect of the Term A Facility after such date.
(ii) The Borrower shall, on the date of deposit of each cash equity
contribution in the Borrower Collateral Account relating to any loan made by FN
Holdings to the Borrower Parent pursuant to the terms of the certificate of
incorporation of FN Holdings that relates
<PAGE>
34
solely to net income of the Bank (excluding, to the extent included in net
income, (1) any gains (net of taxes) from the sale of deposits and property,
plant and equipment related to such deposits, and (2) any net income that is
attributable to the recognition of the deferred tax assetnet operating loss
carry forwards of the Bank), (x) to the extent not paid pursuant to Section
2.05(b)(i), pay interest and fees payable in respect of the Facilities and
expenses of the Agent (including the reasonable fees and expenses of counsel to
the Agent), in each such case, on the date of application provided for in this
Section 2.05(b)(ii), (y) to the extent not paid pursuant to Section 2.05(b)(i)
and subject to the provisions of Section 2.05(b)(vi) below, have released to it
pursuant to the provisions of Section 7(c) of the Borrower Security Agreement
and aggregate amount equal to all payments of interest on the Advances that have
been made by or on behalf of the Borrower pursuant to the terms of this
Agreement since the date of the most recent prepayment and application made
pursuant to Section 2.05(b)(i) or Section 2.05(b)(ii) prior to the date of such
cash equity contribution; provided that no event has occurred and is continuing,
or would result from the release of such amounts to the Borrower, which
constitutes a Default or Event of Default (the amount of each such cash equity
contribution less the amounts, if any, paid by or on behalf of the Borrower or
released to the Borrower, as the case may be, pursuant to clauses (x) and (y)
above shall be referred to in this Section 2.05(b)(ii) as the "Second Net Equity
Contribution Amount"), and then (z) apply:
(A) up to 75% of the amount of such Second Net Equity Contribution
Amount to the making of a prepayment in an amount equal to the amount of the
then current scheduled principal payment in respect of the Term A Facility
pursuant to Section 2.03 but only to the extent, if any, that such payment has
not been made under Section 2.05(b)(i)(B) or Section 2.05(b)(ii)(B) prior to the
date of such cash equity contribution; provided, however, that if the then
current scheduled principal payment in respect of the Term A Facility has been
prepaid in full prior to the date of such cash equity contribution (other than
as result of a prepayment during the calendar quarter in which such cash equity
contribution amount occurs pursuant to the provisions of Section 2.05(b)(i)(B)
or Section 2.05(b)(ii)(B)), the Borrower shall have no obligation to prepay the
Advances; provided further that, if the then current scheduled principal payment
in respect of the Term A Facility has been prepaid in full prior to the date of
such cash equity contribution as result of a prepayment during the calendar
quarter in which such cash equity contribution occurs pursuant to the provisions
of Section 2.05(b)(i)(B) or Section 2.05(b)(ii)(B), such Second Net Equity
Contribution Amount shall be applied to the then current scheduled principal
payment in respect of the Term A Facility pursuant to the terms of this Section
2.05(b)(ii)(A) and the prepayment pursuant to Section 2.05(b)(i)(B) or Section
2.05(b)(ii)(B), as the case may be, shall be reapplied pursuant to the terms of
such Section; provided further that, on and after the payment in full of the
Term A Advances, such Second Net Equity Contribution Amount shall be applied pro
rata to (x) the Term B Facility and (y) the Revolving Credit Facility as set
forth in Section 2.05(b)(ix) below; and provided further that any amount not
required to be prepaid pursuant to the terms of this Section 2.05(b)(ii)(A)
shall, subject to the provision
<PAGE>
35
of Section 2.05(b)(vi) below, be released to the Borrower pursuant to the
provisions of Section 7(c) of the Borrower Security Agreement; and
(B) 25% of the amount of such Second Net Equity Contribution Amount
to the making of a prepayment in such amount; provided, however, that each such
prepayment shall be applied first, to the then current scheduled principal
payment in respect of the Term A Facility but only to the extent, if any, that
such payment has not been made under Section 2.05(b)(i)(A) or Section
2.05(b)(ii)(A); second, to the next scheduled principal payment in respect of
the Term A Facility, third, to the remaining installments of the Term A Facility
pursuant to Section 2.03 in inverse order of maturity and fourth, pro rata to
(x) the Term B Facility and (y) the Revolving Credit Facility as set forth in
Section 2.05(b)(ix) below; provided, however, that if both the then current
scheduled principal payment in respect of the Term A Facility and the next
scheduled principal payment in respect of the Term A Facility have been prepaid
in full prior to the date of such cash equity contribution, such portion of such
prepayment shall be applied first, to the remaining installments of the Term A
Facility in inverse order of maturity and second, pro rata to (x) the Term B
Facility and (y) the Revolving Credit Facility as set forth in Section
2.05(b)(ix) below; provided further that if a prepayment pursuant to the terms
of this Section 2.05(b)(ii)(B) is applied to the next scheduled principal
payment in respect of the Term A Facility and, subsequent to such application, a
prepayment pursuant to the terms of Section 2.05(b)(i)(A) or Section
2.05(b)(ii)(A) is applied to such next scheduled principal payment in respect of
the Term A Facility, the amount applied to such next scheduled principal payment
in respect of the Term A Facility pursuant to the terms of this Section
2.05(b)(ii)(B) shall be reapplied first, to the remaining installments of the
Term A Facility in inverse order of maturity and second, pro rata to (x) the
Term B Facility and (y) the Revolving Credit Facility as set forth in Section
2.05(b)(ix) below.
(iii) The Borrower shall, on the date of deposit of each cash equity
contribution in the Borrower Collateral Account relating to any loans made by FN
Holdings to the Borrower Parent pursuant to the terms of the certificate of
incorporation of FN Holdings that relate to dividends, other distributions or
any loans or advances from the Bank arising out of excess capital of the Bank,
make a prepayment in an amount equal to the amount of such cash equity
contribution. The portion of each such prepayment to be applied to principal in
accordance with Section 2.05(b)(x) below shall be applied, first, to the
remaining installments of the Term A Facility pursuant to Section 2.03 in
inverse order of maturity and second, pro rata to (x) the Term B Facility and
(y) the Revolving Credit Facility as set forth in Section 2.05(b)(ix) below.
(iv) The Borrower shall, on the date of each dividend,
distribution, loan or advance from the Bank to FN Holdings arising solely out of
any gains (net of taxes) from the sale of deposits in California and property,
plant and equipment related to such deposits, make a prepayment in an amount
equal to the amount of such dividend, distribution, loan or advance. The portion
of each such prepayment to be applied to principal in accordance with Section
2.05 below shall be applied first, to the remaining installments of the Term A
Facility pursuant to
<PAGE>
36
Section 2.03 in inverse order of maturity and second, pro rata to (x) the Term B
Facility and (y) the Revolving Credit Facility as set forth in Section
2.05(b)(ix) below.
(v) The Borrower shall, on the date of each dividend,
distribution, loan or advance from the Bank to FN Holdings arising solely out of
the excess of (A) the sum of (1) any gains (net of taxes) from the sale of
deposits (other than the sale of deposits in California) and property, plant and
equipment related to such deposits and (2) any net income that is attributable
to the recognition of the deferred tax asset-net operating loss carry forwards
of the Bank over (B) any charges to earnings (net of taxes) of the Bank taken
for any Special Expenses, provided that the aggregate amount of the charges
described in clause (B) of this Section 2.05(b)(v) shall not exceed $80 million
(the amount equal to the difference between clauses (A) and (B) shall be
referred to in this Section 2.05(b)(v) as the "Deposit/Tax Contribution
Amount"), apply such Deposit/Tax Contribution Amount as follows:
(A) 75% of the first $100,000,000 of such Deposit/Tax Contribution
Amounts to the making of a prepayment in such amount;
(B) 50% of the next $70,000,000 of such Deposit/Tax Contribution
Amounts to the making of a prepayment in such amount;
(C) 0% of the next $60,000,000 of such Deposit/Tax Contribution
Amounts to the making of a prepayment in such amount; and
(D) 50% of the remainder of such Deposit/Tax Contribution Amounts to
the making of a prepayment in such amount;
provided, however, that the portion of each such prepayment to be applied to
principal in accordance with Section 2.05(b)(x) below shall be applied first, to
the remaining installments of the Term A Facility pursuant to Section 2.03 in
inverse order of maturity and second, pro rata to (x) the Term B Facility and
(y) the Revolving Credit Facility as set forth in Section 2.05(b)(ix) below;
provided further that any amount not required to be prepaid pursuant to the
terms of this Section 2.05(b)(v) shall, subject to the provisions of Section
2.05(b)(vi), be released to the Borrower pursuant to the provisions of Section
7(b) of the Borrower Security Agreement.
(vi) The Borrower shall, on any date (A) on which a cash equity
contribution referred to in Section 2.05(b)(i) above is deposited in the
Borrower Collateral Account, on which a dividend, distribution, loan or advance
referred to in Section 2.05(b)(v) above is made or on which a deposit of amounts
paid under or in connection with any Related Documents is made to the Mafco
Collateral Account and (B) either (I) a Default has occurred and is continuing,
(II) the Borrower fails to deliver a LookForward Certificate or a Deposit
Certificate with respect to such deposit in accordance with the terms of Section
5.01(l) or (III) the Required
<PAGE>
37
Lenders determine, in their reasonable discretion, within 15 Business Days
following the date of the receipt of the Look-Forward Certificate or within two
Business Days following the date of the receipt of the Deposit Certificate, as
the case may be, referred to in clause (B)(II), that (x) the equity
contributions receivable by the Borrower (to the extent they relate to net
income of the Bank and any gains (net of taxes) from the sale of deposits and
property, plant and equipment related to such deposits) will be insufficient to
service the scheduled amortization payments other than the payments due on
September 1, 1997 (taking into account, among other things, the Bank's
performance to date, the quality of the Bank's assets and the presence of any
agreement with the Bank's regulators including, but not limited to, an agreement
relating to capital, asset quality, dividends or management) or (y) the Net Cash
Proceeds which Mafco and its Subsidiaries expect to receive from the
contemplated sale of assets or issuance of Debt will be insufficient to make the
principal payment in respect of the Facilities due on September 1, 1997, make a
prepayment in an amount equal to the amount of such cash equity contribution or
the amount of the deposit in the Mafco Collateral Account, as the case may be,
plus any interest on Collateral Investments made with such contribution or
deposit. The portion of each such prepayment to be applied to principal in
accordance with Section 2.05(b)(x) below shall be applied first, to prepay the
installments of the Term A Facility in order of maturity and second, pro rata to
(x) the Term B Facility and (y) the Revolving Credit Facility as set forth in
Section 2.05(b)(ix) below.
(vii) The Borrower shall:
(A) on the date of receipt by any A Company of the Net Cash Proceeds
of issuances, sales or liquidations of any capital stock (including any
securities convertible into or exchangeable for capital stock or any warrants,
rights or options to acquire capital stock) of any A Company,
(B) on the date of receipt by any A Company of any dividends, other
distributions or any loans or advances made in respect of the capital stock of
any other A Company,
(C) on the date of receipt by any A Company of the Net Cash Proceeds
of any sales of any assets of any A Company,
(D) on the date of deposit of each cash equity contribution in the
Borrower Collateral Account relating to the proceeds of dividends, other
distributions or any loans or advances made by the Bank (other than any
dividends, other distributions or loans or advances referred to in Section
2.05(b)(i), (ii), (iii), (iv) and (v) above),
(E) on the date of receipt by any A Company of the proceeds of
distributions, dividends or any loans or advances made on account of or as a
result of the issuance, sale or liquidation of any capital stock (including any
securities convertible into or
<PAGE>
38
exchangeable for capital stock or any warrants, rights or options to acquire
capital stock) of, or the sale, issuance or incurrence of any Debt by, any
Designated Operating Company or the Bank,
(F) on the date of receipt by any A Company of the Net Cash Proceeds
from the sale, issuance or incurrence by any A Company of any Debt (other than
the New FN Holdings Debt),
(G) on the date of receipt by any A Company of the proceeds of
dividends, other distributions or any loans or advances made on account of or as
a result of any sale of any assets of any Designated Operating Company, and
(H) on the date of receipt by Mafco, any of its Subsidiaries or any
of its Affiliates of the Net Cash Proceeds of any disposition of the capital
stock of Laboratory Corporation of America Holdings Inc. for a purchase price in
excess of $13 per share of such capital stock (such excess being the "Excess
Proceeds Amount"),
make a prepayment in an amount equal (1) in the case of clauses (A) through (G)
above, to the amount so received or deposited, as the case may be, and (2) in
the case of clause (H) above, to the Excess Proceeds Amount, except, in each
case, to the extent (x) required pursuant to the terms of any agreement or
instrument relating to Debt existing on the date hereof or otherwise approved by
the Required Lenders of any A Company or Designated Operating Company or the New
FN Holdings Debt to prepay or redeem or purchase such Debt or (y) prohibited to
be so applied by the terms of any agreement or instrument relating to Debt
existing on the date hereof or otherwise approved by the Required Lenders of any
A Company or Designated Operating Company or the New FN Holdings Debt. The
portion of each such prepayment to be applied to principal in accordance with
Section 2.05(b)(x) below shall be applied first, to prepay the installments of
the Term A Facility in inverse order of maturity and second, pro rata to (x) the
Term B Facility and (y) the Revolving Credit Facility as set forth in Section
2.05(b)(ix) below.
(viii) The Borrower shall, on each date that an Event of Default set
forth in Section 6.01(a) shall have occurred and be continuing, make a
prepayment in an amount equal to the amount on deposit in the Second Mafco
Collateral Account. The portion of each such prepayment to be applied to
principal in accordance with Section 2.05(b)(x) below shall be applied first, to
prepay the installments of the Term A Facility in inverse order of maturity and
second, pro rata to (x) the Term B Facility and (y) the Revolving Credit
Facility as set forth in Section 2.05(b)(ix) below.
(ix) Prepayments of the Revolving Credit Facility made pursuant to
Sections 2.05(b)(i) through (viii) above shall be applied to permanently reduce
the Revolving Credit Facility as set forth in Section 2.04(b). The Borrower
shall, on each Business Day, prepay an aggregate principal amount of the
Revolving Credit Advances comprising part of the same
<PAGE>
39
Borrowings equal to the amount by which the aggregate principal amount of the
Revolving Credit Advances then outstanding exceeds the Revolving Credit Facility
on such Business Day.
(x) Except as otherwise specifically provided in this Section
2.05(b), all prepayments under this Section 2.05(b) shall be applied first, to
the payment of interest and fees payable in respect of the Facilities and to the
payment of expenses of the Agent (including the reasonable fees and expenses of
counsel to the Agent) and second, to the prepayment of the Advances comprising
part of the same Borrowing as specified or to the permanent reduction of the
Revolving Credit Facility as specified.
(xi) If, as a result of the making of any prepayment required to be
made pursuant to this Section 2.05, the Borrower would incur costs pursuant to
Section 8.04(b), the Borrower may deposit the amount of such prepayment with the
Agent, for the benefit of the Appropriate Lenders, in a cash collateral account,
until the end of the applicable Interest Period at which time such payment shall
be made. The Borrower hereby grants to the Agent, for the benefit of the
Lenders, a security interest in all amounts in which the Borrower has any right,
title or interest which are from time to time on deposit in such cash collateral
account and expressly waives all rights (which rights the Borrower hereby
acknowledges and agrees are vested exclusively in the Agent) to exercise
dominion or control over any such amounts.
SECTION 2.06. Interest. (a) Ordinary Interest. The Borrower shall
pay interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of the Base
Rate in effect from time to time plus the Applicable Margin in effect from time
to time, payable in arrears quarterly on the first Business Day of each March,
June, September and December during such periods, commencing March 1, 1996, and
on the date such Base Rate Advance shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such Advance
is a Eurodollar Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of the Eurodollar Rate for such
Interest Period plus the Applicable Margin in effect from time to time, payable
in arrears on the last day of such Interest Period and, if such Interest Period
has a duration of more than three months, on each day that occurs during such
Interest Period every three months from the first day of such Interest Period.
(b) Default Interest. The Borrower shall pay on demand interest
on the unpaid principal amount of each Advance that is not paid when due and on
the unpaid amount of all
<PAGE>
40
interest, fees and other amounts then due and payable hereunder that is not paid
when due from the due date thereof to the date paid, at a rate per annum equal
at such time to (i) in the case of any amount of principal, 2% per annum above
the rate of interest per annum required to be paid on such Advance immediately
prior to the date on which such amount became due and payable and (ii) in the
case of all other amounts, 2% per annum above the rate per annum required to be
paid on Base Rate Advances pursuant to Section 2.06(a)(i) above.
SECTION 2.07. Interest Rate Determination. (a) The Agent shall
give prompt notice to the Borrower and each Lender of the applicable interest
rate determined by the Agent for purposes of Section 2.06(a)(i) or (ii), and the
applicable rate, if any, furnished by Citibank for the purpose of determining
the applicable interest rate under Section 2.06(a)(i) or (ii).
(b) If Citibank cannot furnish timely information to the Agent for
determining the Eurodollar Rate, the Agent shall forthwith notify the Borrower
and each Lender that the interest rate cannot be determined for such Eurodollar
Rate Advances, whereupon (i) each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended until
the Agent shall notify the Borrower that Citibank has determined that the
circumstances causing such suspension no longer exist.
(c) If the Required Lenders notify the Agent that the Eurodollar
Rate for any Interest Period for such Eurodollar Rate Advances will not
adequately reflect the cost to such Required Lenders of making, funding or
maintaining their pro rata shares of such Eurodollar Rate Advances for such
Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each such Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower that such Required Lenders have determined that the
circumstances causing such suspension no longer exist.
(d) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Agent will forthwith notify the Borrower and the Lenders and the Interest Period
for such Eurodollar Rate Advances will be one month.
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower agrees to pay
to the Agent for the account of the Revolving Credit Lenders a commitment fee on
the average daily Unused Revolving Credit Commitment of such Revolving Credit
Lender from the date hereof, in the case of each Financial Institution, and from
the effective date specified in the Assignment and Acceptance pursuant to which
it became a Revolving Credit Lender, in the case of each other Revolving Credit
Lender, until the Termination Date at a rate equal to 1-1/4% per
<PAGE>
41
annum, payable in arrears on the date of the initial Borrowing, thereafter
quarterly on the first Business Day of each March, June, September and December
commencing March 1, 1996, and on the Termination Date.
(b) Other Fees. The Borrower shall pay to the Agent for its own
account such fees as are set forth in the fee letter dated December 1, 1995
between Mafco and Citibank, as the same may be amended or otherwise modified
from time to time.
SECTION 2.09. Increased Costs; Illegality. (a) Except as to taxes,
levies, imposts, deductions, charges, withholdings or liabilities with respect
thereto (it being understood that the Borrower shall not have any liability for
any taxes, levies, imposts, deductions, charges, withholdings or liabilities
with respect thereto, except as provided in Section 2.12), if, due to either (i)
the introduction of or any change (other than any change by way of imposition or
increase of reserve requirements included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance by any Lender with any guideline or request from any central bank or
other governmental authority in any case introduced, changed, interpreted or
requested after the date hereof (whether or not having the force of law), there
shall be (x) imposed, modified or deemed applicable any reserve, special deposit
or similar requirement against assets held by, or letters of credit or
guarantees issued by, or deposits in or for the account of, any Lender or (y)
imposed on any Lender any other condition relating to this Agreement or the
Advances made by it, and the result of any event referred to in clause (x) or
(y) shall be to increase the cost to such Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Advances, then the Borrower shall from
time to time, upon demand by such Lender (with a copy of such demand to the
Agent) made within 60 days after the first date on which such Lender has actual
knowledge that it is entitled to make demand for payment under this Section
2.09(a), pay to the Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost; provided, however,
that if such Lender fails to so notify the Borrower within such 60-day period,
such increased cost shall commence accruing on such later date on which the
Lender notifies the Borrower; provided further that, before making any such
demand, such Lender agrees to use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such a designation would avoid the
need for, or reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
A certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Lender, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental or monetary authority in regard to capital adequacy (whether or not
having the force of law) including, without limitation, any guideline
contemplated by the report dated July 1988 entitled "International Convergence
of Capital Management and Capital Standards" issued by the Bank Committee on
Banking
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42
Regulations and Supervisory Practices, in any case in which such law,
regulation, guideline or request became effective or was made after the date
hereof, has or would have the effect of reducing the rate of return on the
capital of, or maintained by, such Lender or any corporation controlling such
Lender as a consequence of such Lender's Advances or Commitments hereunder and
other commitments of this type, by increasing the amount of capital required or
expected to be maintained by such Lender or any corporation controlling such
Lender, to a level below that which such Lender or any corporation controlling
such Lender could have achieved but for such adoption, effectiveness, change or
compliance (taking into account such Lender's or such corporation's policies
with respect to capital adequacy), then the Borrower shall, from time to time,
pay such Lender, upon demand by such Lender (with a copy of such demand to the
Agent) made within 60 days after the first date on which such Lender has actual
knowledge that it is entitled to make demand for payment under this Section
2.09(b) of such reduction in return, such additional amount as may be specified
by such Lender as being sufficient to compensate such Lender for such reduction
in return, to the extent that such Lender reasonably determines such reduction
to be attributable to the existence of such Lender's commitment to lend
hereunder; provided, however, that if such Lender fails to so notify the
Borrower within such 60-day period, such amounts shall commence accruing on such
later date on which the Lender notifies the Borrower. A certificate as to such
amounts submitted to the Borrower and the Agent by such Lender shall be
conclusive and binding for all purposes, absent manifest error.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for any Lender or its Eurodollar Lending
Office to perform its obligations hereunder to make Eurodollar Rate Advances or
to fund or maintain Eurodollar Rate Advances hereunder, then, upon written
notice by such Lender to the Borrower (with a copy to the Agent), (i) each
Eurodollar Rate Advance of such Lender will automatically Convert into a Base
Rate Advance and (ii) the obligation under each Facility under which such Lender
has a Commitment to make, or to Convert Base Rate Advances into, Eurodollar Rate
Advances shall be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist;
provided, however, that, before making any such demand, such Lender shall
designate a different Eurodollar Lending Office if the making of such a
designation would avoid the need for giving such notice and demand, and would
not, in the judgment of such Lender, be otherwise disadvantageous to such
Lender. For purposes of this Section 2.09(c), a notice to the Borrower by a
Lender shall be effective with respect to any Eurodollar Rate Advance on the
last day of the then current Interest Period for such Advance; provided,
however, that, if it is not lawful for such Lender to maintain such Advance
until the end of the Interest Period applicable thereto, then the notice to the
Borrower shall be effective upon receipt by the Borrower.
SECTION 2.10. Conversion of Advances. (a) Optional. The Borrower
may on any Business Day, upon notice given to the Agent not later than noon (New
York City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the
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43
provisions of Section 2.07 and 2.09, Convert all or any portion of the Advances
of one Type comprising the same Borrowing into Advances of the other Type;
provided, however, that any Conversion of Eurodollar Rate Advances into Base
Rate Advances shall be made on, and only on, the last day of an Interest Period
for such Eurodollar Rate Advances, and any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be subject to the limitation set forth in Section
2.02(e) and in an amount not less than $5,000,000. Each such notice of
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Advances to be Converted and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for such Advances.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $5,000,000, such
Advances shall automatically Convert into Base Rate Advances.
(ii) Upon the occurrence and during the continuance of any Event of
Default (or, in the case of any involuntary proceeding described in Section
6.01(e), a Default), (A) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance and (B) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended.
SECTION 2.11. Payments and Computations. (a) The Borrower shall
make each payment hereunder and under the Notes not later than 11:00 A.M. (New
York City time) on the day when due in U.S. Dollars to the Agent at the Agent's
Account in same day funds. The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or
commitment fees ratably (other than amounts payable pursuant to Section 2.09 or
2.12) to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section
8.07(d), from and after the effective date specified in such Assignment and
Acceptance, the Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender assignee thereunder, and
the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.
(b) The Borrower hereby authorizes each Lender, if and to the
extent payment of principal, interest or fees owed to such Lender is not made
when due hereunder or under the Note or Notes held by such Lender, to charge
from time to time against any or all of the Borrower's accounts with such Lender
any amount so due.
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44
(c) All computations of interest based on the Eurodollar Rate, the
Base Rate or the Federal Funds Rate and of commitment fees shall be made by the
Agent, on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest or commitment fees are payable. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under any Note shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(e) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder or under
any Note that the Borrower will not make such payment in full, the Agent may
assume, or at its option request confirmation from the Borrower, that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate.
(f) If the Agent receives funds for application to the Obligations
under the Loan Documents under circumstances for which the Loan Documents do not
specify the Advances or the Facility to which, or the manner in which, such
funds are to be applied, the Agent may, but shall not be obligated to, elect to
distribute such funds in respect of a Facility to each Lender ratably in
accordance with such Lender's proportionate share of the principal amount of all
outstanding Advances under such Facility, in repayment or prepayment of such of
the outstanding Advances under such Facility or other Obligations owed to such
Lender, and for application to such principal installments, as the Agent shall
direct.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.11,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, (i) taxes
imposed on its income, and franchise taxes and backup withholding taxes imposed
on it, by the United States or the jurisdiction under the laws of which such
Lender or the Agent (as the case may be) is organized or any political
subdivision or taxing authority
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45
thereof or therein, (ii) taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction of such Lender's or, in either such case, the
Agent's principal office or Applicable Lending Office or any political
subdivision or taxing authority thereof or therein and (iii) United States
withholding tax payable with respect to payments hereunder under laws
(including, without limitation any statute, treaty, ruling, determination or
regulation) in effect on the Initial Date with respect to such Lender or the
Agent, but not excluding any United States withholding tax payable as a result
of any change in such laws occurring after the Initial Date (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Agent, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions of Taxes (including deductions of Taxes applicable to additional sums
payable under this Section 2.12) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions of Taxes been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided,
however, that any such Lender shall designate a different Applicable Lending
Office if, in the judgment of such Lender, such designation would avoid the need
for, or reduce the amount of, any Taxes required to be deducted from or in
respect of any sum payable hereunder to such Lender or the Agent and would not,
in the judgment of such Lender, be otherwise disadvantageous to such Lender.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.12) paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, additions to tax, interest and expenses) arising therefrom
or with respect thereto; provided that, in the event such Lender or the Agent,
as the case may be, successfully contests the assessment of such Taxes or Other
Taxes or any liability arising therefrom or with respect thereto, such Lender or
the Agent shall refund, to the extent of any refund thereof made to such Lender
or the Agent, any amounts paid by the Borrower under this Section 2.12(c) in
respect of such Taxes, Other Taxes or liabilities arising therefrom or with
respect thereto. Each Lender and the Agent agree that it will contest such
Taxes, Other Taxes or liabilities if (i) the Borrower furnishes to it an opinion
of reputable tax counsel acceptable to such Lender or the Agent to the effect
that such Taxes or Other Taxes were wrongfully or illegally imposed and (ii)
such Lender or the Agent determines, in its sole discretion, that it would not
be disadvantaged or prejudiced in any manner whatsoever as a result
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46
of such contest. This indemnification shall be made within 30 days from the
date such Lender or the Agent (as the case may be) makes written demand
therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Agent, at its address referred to in Section 8.02,
appropriate evidence of payment thereof. If no Taxes are payable in respect of
any payment hereunder or under the Notes by the Borrower from an account or
branch outside the United States or on behalf of the Borrower by a payor that is
not a United States person, the Borrower will furnish to the Agent, at such
address, a certificate from each appropriate taxing authority, or an opinion of
counsel acceptable to the Agent, in either case stating that such payment is
exempt from or not subject to Taxes. For purposes of this Section 2.12, the
terms "United States" and "United States person" shall have the meanings
specified in Section 7701 of the Code.
(e) Each Lender organized under the laws of a jurisdiction outside
the United States and the Agent, if organized under the laws of a jurisdiction
outside the United States, shall, on or prior to the Initial Date and from time
to time thereafter if requested in writing by the Borrower or the Agent (but
only so long thereafter as such Lender or the Agent remains lawfully able to do
so), provide the Borrower and (in the case of any such Lender other than the
Agent) the Agent with two duly completed copies of Internal Revenue Service form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender or the Agent is entitled to
benefits under an income tax treaty to which the United States is a party that
reduces the rate of withholding tax on payments under this Agreement or the
Notes or certifying that the income receivable pursuant to this Agreement or the
Notes is effectively connected with the conduct of a trade or business in the
United States.
(f) For any period with respect to which the Agent or a Lender has
failed to provide the Borrower with the appropriate forms described in
subsection (e) above (other than if such failure is due to a change in law
occurring after the date on which such person was originally required to provide
such forms, or if such forms are otherwise not required under subsection (e)
above), the Agent or such Lender shall not be entitled to increased payments or
indemnification under subsection (a) or (c) above with respect to Taxes imposed
by the United States; provided, however, that should the Agent or a Lender
become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as the Agent or such Lender shall
reasonably request to assist the Lender to recover such Taxes if, in the
judgment of the Borrower such steps would avoid the need for, or reduce the
amount of, any Taxes required to be deducted from or in respect of any sum
payable hereunder to the Agent or such Lender and would not, in the judgment of
the Borrower, be disadvantageous to the Borrower.
(g) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.12 shall survive the payment in full of principal and interest
hereunder and under the Notes.
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47
(h) If a Lender shall change its Applicable Lending Office other
than (i) at the request of the Borrower or (ii) at a time when such change would
not result in this Section 2.12 requiring the Borrower to make a greater payment
than if such change had not been made, such Lender shall not be entitled to
receive any greater payment under this Section 2.12 than such Lender would have
been entitled to receive had it not changed its Applicable Lending Office.
SECTION 2.13. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the Advances owing to it (other than
pursuant to Section 2.09 or 2.12) in excess of its ratable share of payments on
account of the Advances obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such interests or participating interests in the
Advances owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that, if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing an interest or participating interest from another Lender pursuant to
this Section 2.13 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such interest
or participating interest, as the case may be, as fully as if such Lender were
the direct creditor of the Borrower in the amount of such interest or
participating interest, as the case may be.
SECTION 2.14. Removal of Lender. In the event that any Lender
demands payment of costs or additional amounts pursuant to Section 2.09 or
Section 2.12 or asserts pursuant to Section 2.09(c) that it is unlawful for such
Lender to make Eurodollar Rate Advances, then (subject to such Lender's right to
rescind such demand or assertion within 10 days after the notice from the
Borrower referred to below) the Borrower may, upon 20 days' prior written notice
to such Lender and the Agent, elect to cause such Lender to assign its Advances
and Commitments in full to an assignee institution selected by the Borrower that
meets the criteria of an Eligible Assignee and is reasonably satisfactory to the
Agent, so long as such Lender receives payment in full of the outstanding
principal amount of all Advances made by it and all accrued and unpaid interest
thereon and all other amounts due and payable to such Lender as of the date of
such assignment (including without limitation amounts owing pursuant to Section
2.09 or 2.12), and in such case such Lender agrees to make such assignment, and
such assignee shall agree to accept such assignment and assume all obligations
of such Lender hereunder, in accordance with Section 8.07.
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48
SECTION 2.15. Defaulting Lender. (a) In the event that, at any one
time, (i) any Lender shall be a Defaulting Lender, (ii) such Defaulting Lender
shall owe a Defaulted Advance to the Borrower and (iii) the Borrower shall be
required to make any payment hereunder or under any other Loan Document to or
for the account of such Defaulting Lender, then the Borrower may, so long as no
Default shall occur or be continuing at such time and to the fullest extent
permitted by applicable law, set-off and otherwise apply the Obligation of the
Borrower to make such payment to or for the account of such Defaulting Lender
against the Obligation of such Defaulting Lender to make such Defaulted Advance.
In the event that the Borrower shall so set-off and otherwise apply the
Obligation of the Borrower to make any such payment against the Obligation of
such Defaulting Lender to make any such Defaulted Advance on any date, the
amount so set-off and otherwise applied by the Borrower shall constitute for all
purposes of this Agreement and the other Loan Documents an Advance by such
Defaulting Lender made on such date under the Facility pursuant to which such
Defaulted Advance was originally required to have been made pursuant to Section
2.01. Such Advance shall be considered, for all purposes of this Agreement, to
comprise part of the Borrowing in connection with which such Defaulted Advance
was originally required to have been made pursuant to Section 2.01. The
Borrower shall notify the Agent at any time the Borrower reduces the amount of
the Obligation of the Borrower to make any payment otherwise required to be made
by it hereunder or under any other Loan Document as a result of the exercise by
the Borrower of its right set forth in this subsection (a) and shall set forth
in such notice (A) the name of the Defaulting Lender and the Defaulted Advance
required to be made by such Defaulting Lender and (B) the amount set-off and
otherwise applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required to be made by
the Borrower to or for the account of such Defaulting Lender which is paid by
the Borrower, after giving effect to the amount set-off and otherwise applied by
the Borrower pursuant to this subsection (a), shall be applied by the Agent as
specified in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
the Agent or any of the other Lenders and (iii) the Borrower shall make any
payment hereunder or under any other Loan Document to the Agent for the account
of such Defaulting Lender, then the Agent may, on its behalf or on behalf of
such other Lenders and to the fullest extent permitted by applicable law, apply
at such time the amount so paid by the Borrower to or for the account of such
Defaulting Lender to the payment of each such Defaulted Amount up to the amount
required to pay such Defaulted Amount. In the event that the Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Agent shall constitute for all purposes of this
Agreement and the other Loan Documents payment, to such extent, of such
Defaulted Amount on such date. Any such amount so applied by the Agent shall be
retained by the Agent or distributed by the Agent to such other Lenders, ratably
in accordance with the respective portions of such Defaulted Amounts payable at
such time to the Agent and such other Lenders and, if the amount of such payment
made by the Borrower shall at such time
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49
be insufficient to pay all Defaulted Amounts owing at such time to the Agent and
the other Lenders, in the following order of priority:
(i) first, to the Agent for any Defaulted Amount then owing to the
Agent; and
(ii) second, to any other Lenders for any Defaulted Amounts then
owing to such other Lenders, ratably in accordance with such respective
Defaulted Amounts then owing to such other Lenders.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Agent pursuant to this subsection (b), shall be applied by the Agent as
specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender shall be
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
Advance or a Defaulted Amount and (iii) the Borrower, the Agent or any other
Lender shall be required to pay or distribute any amount hereunder or under any
other Loan Document to or for the account of such Defaulting Lender, then the
Borrower or such other Lender shall pay such amount to the Agent to be held by
the Agent, to the fullest extent permitted by applicable law, in escrow or the
Agent shall, to the fullest extent permitted by applicable law, hold in escrow
such amount otherwise held by it. Any funds held by the Agent in escrow under
this subsection (c) shall be deposited by the Agent in an account with Citibank,
in the name and under the control of the Agent, but subject to the provisions of
this subsection (c). The terms applicable to such account, including the rate of
interest payable with respect to the credit balance of such account from time to
time, shall be Citibank's standard terms applicable to escrow accounts
maintained with it. Any interest credited to such account from time to time
shall be held by the Agent in escrow under, and applied by the Agent from time
to time in accordance with the provisions of, this subsection (c). The Agent
shall, to the fullest extent permitted by applicable law, apply all funds so
held in escrow from time to time to the extent necessary to make any Advances
required to be made by such Defaulting Lender and to pay any amount payable by
such Defaulting Lender hereunder and under the other Loan Documents to the Agent
or any other Lender, as and when such Advances or amounts are required to be
made or paid and, if the amount so held in escrow shall at any time be
insufficient to make and pay all such Advances and amounts required to be made
or paid at such time, in the following order of priority:
(i) first, to the Agent for any amount then due and payable by such
Defaulting Lender to the Agent hereunder;
(ii) second, to any other Lenders for any amount then due and payable
by such Defaulting Lender to such other Lenders hereunder, ratably in accordance
with such respective amounts then due and payable to such other Lenders; and
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(iii) third, to the Borrower for any Advance then required to be made
by such Defaulting Lender pursuant to the Commitment of such Defaulting Lender.
In the event that such Defaulting Lender shall, at any time, cease to be a
Defaulting Lender, any funds held by the Agent in escrow at such time with
respect to such Defaulting Lender shall be distributed by the Agent to such
Defaulting Lender and applied by such Defaulting Lender to the Obligations owing
to such Lender at such time under this Agreement and the other Loan Documents
ratably in accordance with the respective amounts of such Obligations
outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies which the Borrower may
have against such Defaulting Lender with respect to any Defaulted Advance and
which the Agent or any Lender may have against such Defaulting Lender with
respect to any Defaulted Amount.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Effective Date. Article II
hereof shall be effective on and as of the date (the "Effective Date"), on which
each of the following conditions precedent shall have been satisfied or duly
waived:
(a) Except as permitted by the Existing Credit Agreement, there
shall have been no adverse change since June 29, 1995 in the corporate and legal
structure and capitalization of each A Company, each Designated Operating
Company and the Bank, including the terms and conditions of the charter, bylaws
and each class of capital stock of each such Person and of each agreement or
instrument relating to such structure or capitalization.
(b) Before giving effect to the transactions contemplated by this
Agreement, there shall have occurred no Material Adverse Change since December
31, 1994 relating to any of the Loan Parties, the FN Parties and the Designated
Operating Companies.
(c) There shall exist no action, suit, investigation, litigation or
proceeding affecting any of the Loan Parties, the FN Parties and the Designated
Operating Companies pending or threatened before any court, governmental agency
or arbitrator that (i) would be reasonably likely to have a Material Adverse
Effect (in the case of clause (a) of the definition thereof, the term "Person"
shall refer to such Loan Party, such FN Party or such Designated Operating
Company, as the case may be) or (ii) purports to affect the legality, validity
or enforceability of this Agreement, any Note,
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51
any other Loan Document, any Related Document, any FN Document or the
consummation of the transactions contemplated hereby and thereby.
(d) Nothing shall have come to the attention of the Lenders in
respect of any of the A Companies, the Designated Operating Companies or the
Bank that is inconsistent with or different from in any adverse respect any of
the results of the due diligence investigations of such Persons conducted in
connection with the Original Credit Agreement or the Existing Credit Agreement
and the Lenders shall have been given such access to the management, records,
books of account, contracts and properties of each A Company, each Designated
Operating Company or the Bank as they shall have requested.
(e) The Borrower shall have paid all accrued fees of the Agent and
the Lenders and all accrued expenses of the Agent (including the reasonable fees
and expenses of counsel to the Agent).
(f) The Agent shall have received on or before the Effective Date
the following, each dated as of the Effective Date (unless otherwise specified),
in form and substance satisfactory to the Agent (unless otherwise specified) and
(except for the Notes) in sufficient copies for each Lender:
(i) the Notes to the order of the Lenders, in exchange, where
applicable, for Notes under the Existing Credit Agreement;
(ii) certified copies of the resolutions of the board of directors
of the Borrower and each other Loan Party approving this Agreement, the Notes
and each other Loan Document to which it is or is to be a party, and of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, the Notes and each other Loan
Document;
(iii) a certificate of the Secretary or an Assistant Secretary of
the Borrower and each other Loan Party certifying the names and true signatures
of the officers of the Borrower and such other Loan Party authorized to sign
this Agreement, the Notes and each other Loan Document to which they are or are
to be parties and the other documents to be delivered hereunder and thereunder;
(iv) a copy of a certificate of the Secretary of State of the state
of incorporation of the Borrower, each other Loan Party, each Designated
Operating Company and each other A Company, dated reasonably near the Effective
Date, listing the charter of such Person and each amendment thereto on file in
his office and certifying that (A) such amendments are the only amendments to
such Person's charter on file in his office, (B) such Person has paid all
franchise taxes
<PAGE>
52
to the date of such certificate and (C) such Person is duly incorporated or
organized and in good standing under the laws of such state, and a copy of a
certificate of corporate existence of the Bank, dated reasonably near the
Effective Date from the Office of Thrift Supervision;
(v) (A) a certificate of each A Company signed on behalf of such
Person by its President or a Vice President and its Secretary or any Assistant
Secretary, dated as of the Effective Date (the statements made in such
certificate shall be true on and as of the Effective Date), certifying as to (1)
the absence of any amendments to the charter of such Person since the date of
the Secretary of State's certificate referred to in clause (iv) above, (2) the
absence of any amendments to the bylaws of such Person since the date of the
certificate in respect of such bylaws that was delivered to the Agent pursuant
to the terms of Section 3.01 or 3.02, as the case may be, of the Original Credit
Agreement, (3) the due incorporation and good standing of such Person as a
corporation under the laws of the relevant state of incorporation, and the
absence of any proceeding for the dissolution or liquidation of such Person, (4)
the truth in all material respects of the representations and warranties made by
such Person contained in the Loan Documents as though made on and as of the
Effective Date and (5) the absence of any event occurring and continuing, or
resulting from the Effective Date, that constitutes a Default, (B) a certificate
of Coleman Guarantor signed on behalf of Coleman Guarantor by its President or a
Vice President and its Secretary or any Assistant Secretary, dated as of the
Effective Date (the statements made in such certificate shall be true on and as
of the Effective Date), certifying as to (1) the absence of any amendments to
the charter of Coleman since the date of the Secretary of State's certificate
referred to in clause (iv) above, (2) the absence of any amendments to the
bylaws of Coleman since the date of the certificate in respect of such bylaws
that was delivered to the Agent pursuant to the terms of Sections 3.01 and 3.02
of the Original Credit Agreement and (3) the due incorporation and good standing
of Coleman as a corporation organized under the laws of the State of Delaware,
and the absence of any proceeding for the dissolution or liquidation of Coleman,
(C) a certificate of the Borrower signed on behalf of the Borrower by its
President or a Vice President and its Secretary or any Assistant Secretary,
dated as of the Effective Date (the statements made in such certificate shall be
true on and as of the Effective Date), certifying as to (1) the absence of any
amendments to the charter of Marvel since the date of the Secretary of State's
certificate referred to in clause (iv) above, (2) the absence of any amendments
to the bylaws of Marvel since the date of the certificate in respect of such
bylaws that was delivered to the Agent pursuant to the terms of Sections 3.01
and 3.02 of the Original Credit Agreement, and (3) the due incorporation and
good standing of Marvel as a corporation organized under the laws of the State
of Delaware, and the absence of any proceeding for the
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53
dissolution or liquidation of Marvel, (D) a certificate of New World Guarantor
signed on behalf of New World Guarantor by its President or a Vice President and
its Secretary or any Assistant Secretary, dated as of the Effective Date (the
statements made in such certificate shall be true on and as of the Effective
Date), certifying as to (1) the absence of any amendments to the charter of New
World since the date of the Secretary of State's certificate referred to in
clause (iv) above, (2) the absence of any amendments to the bylaws of New World
since the date of the certificate in respect of such bylaws that was delivered
to the Agent pursuant to the terms of Section 3.02 of the Original Credit
Agreement and (3) the due incorporation and good standing of New World as a
corporation organized under the laws of the State of Delaware, and the absence
of any proceeding for the dissolution or liquidation of New World and (E) a
certificate of C&F Guarantor signed on behalf of MCG by its President or a Vice
President and its Secretary or any Assistant Secretary, dated as of the
Effective Date (the statements made in such certificate shall be true on and as
of the Effective Date), certifying as to (1) the absence of any amendments to
the charter of MCG since the date of the Secretary of State's certificate
referred to in clause (iv) above, (2) a copy of the by-laws of MCG as in effect
on the Effective Date and (3) the due incorporation and good standing of MCG as
a corporation organized under the laws of the State of Delaware, and the absence
of any proceeding for the dissolution or liquidation of MCG;
(vi) a certificate of Mafco to the effect (A) that no information
provided by Mafco or any Subsidiary of Mafco to the Agent or any Lender in
connection with the Original Credit Agreement or the Existing Credit Agreement
or this Agreement, as such information has been amended, supplemented or
superseded by any other information delivered to the same parties receiving such
information contained or contains any material misstatement of fact or omitted
or omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading except
that, as to any financial model included therein, such certificate shall be
limited to a statement that such model was prepared in good faith by Mafco's or
such Subsidiary's management based on assumptions believed to be reasonable when
made and may be further qualified by a statement to the effect that because
assumptions as to future results are inherently subject to uncertainty and
contingencies beyond Mafco's or such Subsidiary's control, actual results of
Mafco or such Subsidiary may be higher or lower, (B) the Mafco Guaranty is in
full force and effect on the Effective Date, (C) that other than the agreements
referenced in Section 3.01(f)(ix), the charter documents of each A Company and
each FN Party, the Loan Documents and the Related Documents, there is no other
agreement, contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument binding on or affecting any A Company or any FN Party that
<PAGE>
54
imposes any material Obligation or any material restriction on any A Company or
any FN Party, (D) that the agreements referenced in Section 3.01(f)(ix) are the
only agreements, contracts, loan agreements, indentures, mortgages, deeds of
trust, leases or other instruments (1) evidencing Debt of any Designated
Operating Company or any of their Subsidiaries outstanding on the Effective
Date, (2) governing the terms of Debt of any Designated Operating Company or any
of their Subsidiaries outstanding on the Effective Date, or (3) containing any
commitment or other agreement by any Person to extend credit that would
constitute Debt to any Designated Operating Company or any of their
Subsidiaries, in each case that imposes or will impose material Obligations or
material restrictions on any Designated Operating Company and its Subsidiaries
taken as a whole and (E) that there is no other agreement or contract binding on
or affecting any Designated Operating Company or any of their Subsidiaries that
contains provisions that would restrict any Loan Party from performing or impair
the ability of any Loan Party to perform, any of the obligations of such Loan
Party under the Loan Documents;
(vii) the Mafco Security Agreement in substantially the form of
Exhibit D-1 duly executed by Mafco and the Borrower Security Agreement in
substantially the form of Exhibit D-2 duly executed by the Borrower, in each
case together with:
(1) certificates representing the Pledged Shares referred to
therein accompanied by undated stock powers executed in blank and instruments
evidencing the Pledged Debt referred to therein indorsed in blank,
(2) acknowledgment copies or stamped receipt copies of proper
financing statements, duly filed on or before the Effective Date under the
Uniform Commercial Code of all jurisdictions that the Agent may deem necessary
or desirable in order to perfect and protect the Liens created by the Mafco
Security Agreement, covering the Collateral described in the Mafco Security
Agreement,
(3) completed requests for information, dated on or before the
Effective Date, listing the financing statements referred to in clause (2) above
and all other effective financing statements filed in the jurisdictions referred
to in clause (2) above that name Mafco, as debtor, together with copies of such
other financing statements,
(4) evidence of the completion of all other recordings and filings
of or with respect to the Mafco Security Agreement that the Agent
<PAGE>
55
may deem necessary or desirable in order to perfect and protect the Liens
created thereby,
(5) copies of the Assigned Agreements referred to in the Mafco
Security Agreement (other than any Assigned Agreement delivered in connection
with the Original Credit Agreement), together with a consent to such assignment,
in substantially the form of Exhibit A thereto, duly executed by each party to
such Assigned Agreements other than Mafco, and
(6) evidence that all other action that the Agent may deem
necessary or desirable in order to perfect and protect the Liens created by the
Mafco Security Agreement has been taken;
(viii) the Mafco Guaranty in substantially the form of Exhibit E-
1, duly executed by Mafco, the Borrower Parent Guaranty in substantially the
form of Exhibit E-2, duly executed by Borrower Parent and the New World Guaranty
in substantially the form of Exhibit E-3, duly executed by New World Guarantor;
(ix) a certificate of Mafco to the effect that, other than the
agreements delivered to the Agent pursuant to Section 3.01(g)(xii)(B) and
Section 3.02(i)(xi)(B) of the Original Credit Agreement and other than as
specified in and delivered pursuant to such certificate and the certificate of
Mafco delivered pursuant to Section 3.01(f)(x) of the Existing Credit Agreement,
there is no other contract, loan agreement, indenture, mortgage, deed of trust,
lease or other instrument (i) evidencing Debt of any A Company, (2) governing
the terms of Debt of any A Company, or (3) containing any commitment or other
agreement by any Person to extend credit that would constitute Debt to any A
Company or any Designated Operating Company or any of its Subsidiaries, in each
case that imposes any material obligation or any material restriction on any A
Company or any Designated Operating Company and its Subsidiaries, taken as a
whole;
(x) such financial, business and other information regarding each
Loan Party and their Subsidiaries as the Lenders shall have reasonably
requested, including, without limitation, information as to possible contingent
liabilities, tax matters, environmental matters, obligations under ERISA and
Welfare Plans, collective bargaining agreements and other arrangements with
employees, annual financial statements of the Bank dated December 31, 1994,
interim financial statements of the Bank dated the end of the most recent fiscal
quarter for which financial statements are available, pro forma financial
statements as to the Borrower, and forecasts prepared by management of the Bank,
in form and
<PAGE>
56
substance satisfactory to the Lenders, of balance sheets, income statements and
cash flow statements of the Bank on a quarterly basis for the term of the
Facility;
(xi) a letter, in form and substance satisfactory to the Agent,
from Mafco to Ernst & Young, independent certified public accountants, advising
such accountants that the Agent and the Lenders have relied upon the financial
statements of Marvel, Coleman, New World, Flavors and Cigar in determining
whether to enter into the Loan Documents and have been authorized to exercise
all rights of Mafco to require such accountants to disclose any and all
financial statements and any other information of any kind that they may have
with respect to such Persons and their Subsidiaries and directing such
accountants to comply with any reasonable request of the Agent or any Lender for
such information;
(xii) a letter, in form and substance satisfactory to the Agent,
from the Bank to KPMG Peat Marwick, independent certified public accountants,
advising such accountants that the Agent and the Lenders have relied upon the
financial statements of the Bank in determining whether to enter into the Loan
Documents and have been authorized to exercise all rights of the Bank to require
such accountants to disclose any and all financial statements and any other
information of any kind that they may have with respect to the Bank and its
Subsidiaries and directing such accountants to comply with any reasonable
request of the Agent or any Lender for such information;
(xiii) a consent, in form and substance reasonably satisfactory to
the Lenders, duly executed by each of the Loan Parties (other than the Borrower)
with respect to the amendment and restatement of the Existing Credit Agreement;
(xiv) favorable opinions of counsel to Mafco reasonably satisfactory
to the Lenders, in form and substance reasonably satisfactory to the Lenders;
(xv) a favorable opinion of Shearman & Sterling, counsel for the
Agent, in form and substance reasonably satisfactory to the Agent; and
(xvi) such other information, approvals, opinions or other documents
as the Agent may reasonably request.
SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation
of each Appropriate Lender to make an Advance on the occasion of each Borrowing
(including the initial Borrowing) resulting in an increase in the aggregate
amount of outstanding Advances shall be subject to the further conditions
precedent that on the date of such Borrowing (a) the following statements shall
be true (and each of the giving of the applicable Notice of Borrowing and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
<PAGE>
57
representation and warranty by the Borrower that on the date of such Borrowing
such statements are true):
(i) The representations and warranties contained in the Loan
Documents are correct in all material respects on and as of the date of such
Borrowing, before and after giving effect to such Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties were true,
correct and complete in all material respects on and as of such earlier date;
and
(ii) No event has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom, which
constitutes a Default,
(b) the Borrower shall, on the seventh Business Day prior to the date of such
Borrowing, deliver to the Agent either (1) a Look-Forward Certificate or (2) a
Deposit Certificate if a LookForward Certificate has been delivered to the Agent
within 90 days prior to the date of such Borrowing, and the Required Lenders
shall not have determined, within 4 Business Days following the date of receipt
of such Look-Forward Certificate or Deposit Certificate, as the case may be, in
their reasonable discretion, that (x) the equity contributions receivable by the
Borrower (to the extent they relate to net income of the Bank and any gains (net
of taxes) from the sale of deposits and property, plant and equipment related to
such deposits) will be insufficient to service the scheduled amortization
payments (other than the payment due on September 1, 1997) (taking into account,
among other things, the Bank's performance to date, the quality of the Bank's
assets and the presence of any agreement with the Bank's regulators including,
but not limited to, an agreement relating to capital, asset quality, dividends
or management) or (y) the Net Cash Proceeds which Mafco and its Subsidiaries
expect to receive from the contemplated sale of assets or issuance of Debt is
insufficient to make the payments due in respect of the Facilities pursuant to
the provisions of Section 2.03 on September 1, 1997, and (c) the Agent shall
have received such other certificates, opinions and other documents as any
Lender through the Agent may reasonably request in order to confirm (i) the
accuracy of the Borrower's representations and warranties, (ii) the Borrower's
timely compliance with the terms, covenants and agreements set forth in this
Agreement, and (iii) the absence of any Default.
SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received notice from such Lender prior to the initial Borrowing
<PAGE>
58
specifying its objection thereto and such Lender shall not have made available
to the Agent such Lender's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:
(a) The Borrower (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property or in
which the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed would not have a Material
Adverse Effect (with respect to clause (a) of the definition thereof, the term
"Person" shall refer to the Borrower) and (iii) has all requisite corporate
power and authority to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted. All of the
outstanding capital stock of the Borrower has been validly issued, is fully paid
and non-assessable and is owned by the Borrower Parent free and clear of all
Liens except for the Liens created by the Collateral Documents.
(b) Set forth on Schedule II hereto is a complete and accurate list
of the Borrower and the Designated Marvel Subsidiaries of the Borrower, showing
as of the date hereof (as to each such Person) the jurisdiction of its
incorporation, the number of shares of each class of capital stock authorized,
and the number outstanding, on the date hereof and the percentage of the
outstanding shares of each such class owned (directly or indirectly) in the case
of the Borrower, by Borrower Parent, and in the case of the Designated Marvel
Subsidiaries, by the Borrower or a Subsidiary of Mafco and the number of shares
covered by all outstanding options, warrants, rights of conversion or purchase
and similar rights at the date hereof. All of the outstanding capital stock of
all of such Designated Marvel Subsidiaries has been validly issued, is fully
paid and non assessable and, except as set forth on Schedule II, is owned, as of
the date hereof, by the Borrower or one or more of its Subsidiaries free and
clear of all Liens, except those created by the Collateral Documents and those
set forth on Schedule V. Each such Subsidiary (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed would not have a
Material Adverse Effect (with
<PAGE>
59
respect to clause (a) of the definition thereof, the term "Person" shall refer
to the applicable Designated Marvel Subsidiary) and (iii) has all requisite
corporate power and authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.
(c) The execution, delivery and performance by the Borrower of this
Agreement, the Notes, each Loan Document and each Related Document to which it
is or is to be a party and the consummation by the Borrower of the transactions
contemplated hereby, are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene the
Borrower's charter or by-laws, (ii) violate any law (including, without
limitation, the Exchange Act), rule, regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System), order,
writ, judgment, injunction, decree, determination or award, (iii) conflict with
or result in the breach of, or constitute a default under, any loan agreement,
contract, indenture, mortgage, deed of trust, lease or other instrument binding
on or affecting any Loan Party, any of its Subsidiaries or any of its or their
properties, the effect of which conflict, breach or default is reasonably likely
to have a Material Adverse Effect (with respect to clause (a) of the definition
thereof, the term "Person" shall refer to the Borrower) or (iv) except for the
liens created by the Collateral Documents, the voting trust agreements referred
to in Sections 3.01(g)(xvi) and 3.02(i)(xv) of the Original Credit Agreement,
the Voting Trust Agreement dated as of June 15, 1995 among NationsBank of
Georgia, National Association, the Cigar Guarantor, C&F Guarantor and the Agent
and the Voting Trust Agreement dated as of June 15, 1995 among NationsBank of
Georgia, National Association, the Flavors Guarantor, C&F Guarantor and the
Agent, result in or require the creation or imposition of any Lien upon or with
respect to any of the properties of any Loan Party or any of its Subsidiaries.
Neither the Borrower nor any of its Subsidiaries is in violation of any such
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award or in breach of any such contract, loan agreement, indenture, mortgage,
deed of trust, lease or other instrument, the violation or breach of which would
be reasonably likely to have a Material Adverse Effect (with respect to clause
(a) of the definition thereof, the term "Person" shall refer to the Borrower).
(d) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
(i) the due execution, delivery and performance by the Borrower of this
Agreement or the Notes or any other Loan Document or any Related Document to
which it is or is to be a party or for the consummation of the transactions
contemplated hereby, (ii) the grant by the Borrower of the Liens granted by it
pursuant to the Collateral Documents, (iii) the perfection or maintenance of the
Liens created by the Collateral Documents (including the first priority nature
thereof) or (iv) the exercise by the Agent or any Lender of its rights under the
Loan Documents or the remedies in respect of the Collateral pursuant to the
Collateral
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60
Documents, except for the filing of financing statements in accordance with
Sections 3.01 and 3.02 of the Original Credit Agreement, Section 3.01(f)(vii)
and (viii) of the Existing Credit Agreement and Section 3.01(f)(vii) of this
Agreement and except as may be required in connection with the disposition of
any portion of the Collateral by laws affecting the offering and sale of
securities generally; provided, however, that no representation or warranty is
made as to any consent of, authorization, approval or other action by, or notice
to or filing with, any banking agency or regulatory body applicable to the
Agent.
(e) This Agreement has been, and each of the Notes, each other
Loan Document to which the Borrower is a party when delivered hereunder will
have been, duly executed and delivered by the Borrower. This Agreement is, and
each of the Notes and each other Loan Document to which the Borrower is a party
when delivered hereunder will be, the legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforceability of creditor's rights generally.
(f) The Consolidated and consolidating balance sheets of Marvel
III and its Subsidiaries as at December 31, 1994, and the related Consolidated
and consolidating statements of income and cash flows of Marvel III and its
Subsidiaries for the fiscal year then ended, accompanied, in the case of the
aforementioned Consolidated balance sheets and related Consolidated statements
of income and cash flows, by an opinion of Ernst & Young, independent public
accountants, and the Consolidated and consolidating balance sheets of Marvel III
and its Subsidiaries as at September 30, 1995, and the related Consolidated and
consolidating statements of income and cash flows of Marvel III and its
Subsidiaries for the nine months then ended, duly certified by the chief
financial officer of Marvel III, copies of which have been furnished to each
Lender, fairly present, subject, in the case of said balance sheets as at
September 30, 1995, and said statements of income and cash flows for the nine
months then ended, to yearend audit adjustments, the Consolidated and
consolidating financial condition of Marvel III and its Subsidiaries as at such
dates and the Consolidated and consolidating results of the operations of Marvel
III and its Subsidiaries for the periods ended on such dates, all in accordance
with generally accepted accounting principles applied on a consistent basis, and
since December 31, 1994, there has been no Material Adverse Change relating to
Marvel III.
(g) There is no pending or threatened action, proceeding,
governmental investigation or arbitration affecting any Loan Party, the Bank or
any of their Subsidiaries before any court, governmental agency or arbitrator,
which is reasonably likely to have a Material Adverse Effect (with respect to
clause (a) of the definition thereof, the term "Person" shall refer to such Loan
Party or the Bank, as the case may be) or that purports to affect the legality,
validity or enforceability of the Transaction,
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61
this Agreement, any Note, any other Loan Document or any Related Document or the
consummation of the transactions contemplated hereby or thereby.
(h) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock and no proceeds of
any Advance will be used to purchase or carry any Margin Stock, or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
(i) No proceeds of any Advance will be used to acquire any equity
security of a class that is registered pursuant to Section
12 of the Exchange Act.
(j) The Borrower and its ERISA Affiliates are in compliance in all
material respects with the applicable provisions of ERISA and the Code with
respect to each Plan thereof. No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan of the Borrower or any of its ERISA
Affiliates. The amount of all Unfunded Pension Liabilities under all Plans of
the Borrower and its ERISA Affiliates does not exceed $60,000,000. None of the
Borrower or any of its ERISA Affiliates has made contributions or incurred any
Withdrawal Liability to any Multiemployer Plan within the past five years, and
it is not reasonably expected that such contributions shall be made or required
or that such liability shall be incurred in any such case in amounts or under
circumstances that would be reasonably likely to result in a material liability
to the Borrower or any of its ERISA Affiliates. Schedule B (Actuarial
Information) to the 1992 annual report (Form 5500 Series) for each Plan of the
Borrower and each of its ERISA Affiliates, copies of which have been filed with
the Internal Revenue Service and furnished to the Lenders, is complete and
accurate in all material respects and fairly presents the funding status of such
Plan, and since the date of such Schedule B there has been no material adverse
change in such funding status. The obligations of the Borrower and its
Subsidiaries for post- retirement benefits to be provided under Plans which are
welfare benefit plans (as defined in Section 3(l) of ERISA) are not reasonably
likely to have a Material Adverse Effect (in the case of clause (a) of the
definition thereof, the term "Person" shall refer to the Borrower).
(k) The operations and properties of the Borrower and each of its
Subsidiaries are in substantial compliance with all Environmental Laws, all
necessary Environmental Permits have been obtained and are in effect for the
operations and properties of the Borrower and its Subsidiaries and the Borrower
and its Subsidiaries are in compliance with all such Environmental Permits,
except, as to all of the above, where the failure to do so would not be
reasonably likely to have a Material Adverse Effect (in the case of clause (a)
of the definition thereof, the term "Person" shall refer to the Borrower); and
no circumstances exist that are reasonably likely to (i) form the basis of an
Environmental Action against the Borrower or any of its Subsidiaries or any of
their respective properties or (ii) cause any such property to be subject to any
restrictions on
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62
ownership, occupancy, use or transferability under any Environmental Law that
would, in the case of either (i) or (ii) above, be reasonably likely to have a
Material Adverse Effect (in the case of clause (a) of the definition thereof,
the term "Person" shall refer to the Borrower).
(l) The Borrower and each of its Subsidiaries has filed, has caused
to be filed or has been included in all tax returns (Federal, state, local and
foreign) required to be filed and has paid all taxes shown thereon to be due,
together with applicable interest and penalties.
(m) Neither the Borrower nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended. Neither the making of any Advances,
nor the application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the other transactions contemplated hereby, will violate any
provision of such Act or any rule, regulation or order of the Securities and
Exchange Commission thereunder.
(n) The Borrower is, individually and together with its
Subsidiaries, Solvent.
(o) Set forth on Schedule III hereto is a complete and accurate list
of all Debt (other than intercompany Debt and Debt under the Loan Documents) of
the Borrower and its Subsidiaries, showing as of the date hereof the principal
amount outstanding thereunder; and there is (i) no other agreement, contract,
loan agreement, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting the Borrower or any of its NonOperating Subsidiaries
that imposes any material Obligation or material restriction on the Borrower or
any of its Subsidiaries (other than the Related Documents), (ii) no other
agreement, contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument (A) evidencing Debt of Marvel or any of its Subsidiaries,
(B) governing the terms of Debt of Marvel or any of its Subsidiaries, or (C)
containing any commitment or other agreement by any Person to extend credit that
would constitute Debt to Marvel or its Subsidiaries, in each case that imposes
or will impose material Obligations or material restrictions on Marvel and its
Subsidiaries taken as a whole, and (iii) no other agreement or contract binding
on or affecting Marvel or any of its Subsidiaries that contains provisions that
would restrict any Loan Party from performing or impair the ability of any Loan
Party to perform any of the obligations of such Loan Party under the Loan
Documents.
(p) Set forth on Schedule IV hereto is a complete and accurate list
of all Investments held by the Borrower or any of its Non-Operating
Subsidiaries, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
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ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders (such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested in
good faith), the failure to comply with which would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect (with respect
to clause (a) of the definition thereof, the term "Person" shall refer to the
Borrower).
(b) Compliance with Environmental Laws. Comply and cause each of
its Subsidiaries and all lessees and all other Persons occupying its properties
to comply, in all material respects, with all Environmental Laws and
Environmental Permits applicable to its operations and properties; obtain and
renew all Environmental Permits necessary for its operations and properties; and
conduct, and cause each of its Subsidiaries to conduct, any investigation,
study, sampling and testing, and undertake any cleanup, removal, remedial or
other action necessary to remove and clean up all Hazardous Materials from any
of its properties, in accordance with the requirements of all Environmental
Laws; provided, however, that neither the Borrower nor any of its Subsidiaries
shall be required to undertake any such cleanup, removal, remedial or other
action to the extent that its obligation to do so is being contested in good
faith and by proper proceedings and appropriate reserves are being maintained
with respect to such circumstances.
(c) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates.
(d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries (other than any Subsidiaries of
Marvel) to preserve and maintain, its corporate existence, rights (charter and
statutory) and franchises; provided, however, that neither the Borrower nor any
of its Subsidiaries shall be required to preserve any of its rights or
franchises if the Board of Directors of the Borrower or such Subsidiary (or, in
the case of Marvel, the executive committee of the Board of Directors
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64
of Marvel) shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any material respect
to the Borrower, such Subsidiary or the Lenders.
(e) Visitation Rights. At any reasonable time and from time to
time, upon reasonable prior notice permit the Agent or any of the Lenders or any
agents or representatives thereof, to the extent reasonably requested to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants.
(f) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each such Subsidiary to the extent necessary to permit the
preparation of the financial statements required to be delivered hereunder.
(g) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its properties
that are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
(h) Termination of Financing Statements. Upon the request of the
Agent, and at the expense of the Borrower, within 10 days after such request,
furnish to the Agent proper termination statements on Form UCC-3 covering such
financing statements as the Agent may reasonably request that were listed in the
completed requests for information referred to in Section 3.01(f)(vii)(3).
(i) Performance of Related Documents. Perform and observe, and
cause each of its Subsidiaries to perform and observe, all of the terms and
provisions of each Related Document to which such Person is a party to be
performed or observed by it, maintain each such Related Document in full force
and effect, enforce such Related Document in accordance with its terms, take all
such action to such end as may be from time to time requested by the Agent and,
upon request of the Agent, make to each other party to each such Related
Document such demands and requests for information and reports or for action as
the Borrower is entitled to make under such Related Document and cause its
Subsidiaries to do all of the foregoing with respect to any Related Document it
is party to.
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65
(j) Collateral Account. Maintain the Borrower Collateral Account
with Citibank pursuant to the terms of the Borrower Security Agreement.
(k) Reporting Requirements. Furnish to the Lenders through the
Agent:
(i) as soon as available and in any event within 50 days after the
end of each of the first three quarters of each fiscal year of the Borrower,
Consolidated balance sheets of the Borrower and its Subsidiaries as of the end
of such quarter and Consolidated statements of earnings, cash flows and
stockholders' equity of the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, certified (subject to normal year-end audit adjustment and the
absence of footnotes) on behalf of the Borrower by the chief financial officer
of the Borrower;
(ii) as soon as available and in any event within 105 days after the
end of each fiscal year of the Borrower, a copy of the annual audit report for
such year for the Borrower and its Subsidiaries, containing financial statements
for such year certified in a manner reasonably acceptable to the Required
Lenders by Ernst & Young or other independent public accountants reasonably
acceptable to the Required Lenders;
(iii) together with each delivery of financial statements pursuant to
clauses (i) and (ii) above, a certificate executed on behalf of the Borrower by
a senior officer of the Borrower stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Borrower has taken and proposes to
take with respect thereto;
(iv) as soon as possible and in any event within five days after
knowledge of the occurrence of each Default continuing on the date of such
statement, a statement executed on behalf of the Borrower by the chief financial
officer of the Borrower setting forth details of such Default and the action
which the Borrower has taken and proposes to take with respect thereto;
(v) as soon as available and in any event no later than February
1 of each fiscal year of the Bank, forecasts prepared by management of the Bank,
in form satisfactory to the Agent, of balance sheets and income statements on a
quarterly basis for the term of the Facility;
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66
(vi) promptly after the sending or filing thereof, copies of any
filings and statements that the Borrower or any Subsidiary of the Borrower files
with the Securities and Exchange Commission or any national securities exchange;
(vii) promptly and in any event within (A) thirty days after the
Borrower knows or has reason to know that any ERISA Event with respect to the
Borrower or any of its ERISA Affiliates has occurred, a statement describing
such ERISA Event and the action, if any, that the Borrower or such ERISA
Affiliate proposes to take with respect thereto, (B) thirty days either after
receipt thereof by the Borrower or after the Borrower knows or has reason to
know of the receipt thereof by any of its ERISA Affiliates from the sponsor of a
Multiemployer Plan of the Borrower or any of its ERISA Affiliates, a copy of
each notice received by any such Person concerning the imposition of Withdrawal
Liability upon such Person, the reorganization or termination of such
Multiemployer Plan, or the amount of the liability incurred, or that may be
incurred, by the Borrower or any of its ERISA Affiliates in connection with any
such event and (C) ten Business Days either after receipt thereof by the
Borrower or after the Borrower knows or has reason to know of the receipt
thereof by any of its ERISA Affiliates, copies of each notice from the PBGC
stating its intention to terminate any Plan of the Borrower or any of its ERISA
Affiliates or to have a trustee appointed to administer any such Plan, provided
that in the case of any event described in clauses (A), (B) or (C) hereof, such
event shall have a Material Adverse Effect (with respect to clause (a) of the
definition thereof, the term "Person" shall refer to the Borrower);
(viii) in the event of any change in GAAP from the date of the annual
financial statements referred to in Section 4.01(f) and upon delivery of any
financial statement required to be furnished under clauses (i) or (ii) of this
Section 5.01(k), a statement of reconciliation conforming any information
contained in such financial statement with GAAP as in effect on the date of the
annual financial statements referred to in Section 4.01(f);
(ix) promptly upon any officer of the Borrower obtaining knowledge
thereof, written notice of (A) the institution or nonfrivolous threat of any
action, suit, proceeding, governmental investigation or arbitration against or
affecting the Borrower or any of its Subsidiaries or any property of the
Borrower or any of its Subsidiaries (any such action, suit, proceeding,
investigation or arbitration being a "Proceeding") or (B) any material
development in any Proceeding that is already pending, where such Proceeding or
development has not previously been disclosed by the Borrower hereunder and
would be reasonably likely to have a Material Adverse Effect (in the case of
clause (a) of the definition of Material Adverse Effect, the term "Person" shall
refer to the Borrower); together in each
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67
case with such other information as any Lender through the Agent may reasonably
request to enable the Lenders and their counsel to evaluate such matters;
(x) promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities of the
Borrower or of any Subsidiary of the Borrower pursuant to the terms of any
indenture, loan or credit or similar agreement and not otherwise required to be
furnished to the Lenders pursuant to any other clause of this Section 5.01(k);
(xi) promptly upon receipt thereof, copies of all notices,
requests and other documents received by any Loan Party or any Subsidiary of any
Loan Party under or pursuant to any Related Document and, from time to time upon
request by the Agent, such information and reports regarding the Related
Documents as the Agent may reasonably request;
(xii) within 10 days after receipt, copies of all Revenue Agent
Reports (Internal Revenue Service Form 886), or other written proposals of the
Internal Revenue Service, that propose, determine or otherwise set forth
positive adjustments to the Federal income tax liability of the affiliated group
(within the meaning of Section 1504(a)(1) of the Internal Revenue Code) of which
the Borrower is a member aggregating $5,000,000 or more;
(xiii) promptly, and in any event within five Business Days after the
due date (with extensions) for filing the final Federal income tax return in
respect of each taxable year, a certificate of the Borrower (a "Tax
Certificate"), signed on behalf of the Borrower by the President or the chief
financial officer of the Borrower, stating that the common parent of the
affiliated group (within the meaning of Section 1504(a)(1) of the Internal
Revenue Code) of which the Borrower is a member has paid to the Internal Revenue
Service or other taxing authority the full amount that such affiliated group is
required to pay in respect of Federal income tax for such year and that the
Borrower and its Subsidiaries have received any amounts payable to them, and
have not paid amounts in respect of taxes (Federal, state, local or foreign) in
excess of the amount they are required to pay, under the Marvel Tax Agreements
in respect of such taxable year;
(xiv) promptly after the occurrence thereof, notice of any condition
or occurrence on any property of the Borrower or any Subsidiary of the Borrower
that results in a material noncompliance by the Borrower or any of its
Subsidiaries with any Environmental Law or Environmental Permit or would be
reasonably likely to (i) form the basis of an Environmental Action against the
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68
Borrower or any of its Subsidiaries or any such property that would be
reasonably likely to have a Material Adverse Effect (in the case of clause (a)
of the definition of Material Adverse Effect, the term "Person" shall refer to
the Borrower) or (ii) cause any such property to be subject to any restrictions
on ownership, occupancy, use or transferability under any Environmental Law or
Environmental Permit or would be reasonably likely to (i) form the basis of an
Environmental Action against the Borrower or any of its Subsidiaries or such
property that could have a Material Adverse Effect (in the case of clause (a) of
the definition of Material Adverse Effect, the term "Person" shall refer to the
Borrower);
(xv) (A) promptly after the making of any payment to Mafco by any
Person under any Marvel Tax Agreement, a certificate signed on behalf of the
Borrower by the president or chief financial officer of the Borrower, stating
the amount of such payment, together with a schedule in form and substance
reasonably satisfactory to the Agent setting forth in reasonable detail the
computations and other information on which the amount of such payment was
calculated, and (B) promptly after any deposit in the Borrower Collateral
Account, a certificate signed on behalf of the Borrower by the president or
chief financial officer of the Borrower, stating the amount of such deposit and
the source of the funds of such deposit, together with a schedule in form and
substance reasonably satisfactory to the Agent setting forth in reasonable
detail the computations and other information on which the amount and source of
such deposit were determined; and
(xvi) such other information respecting the condition (financial or
otherwise), operations, assets or business of the Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time reasonably
request.
(l) Look-Forward Certificate. With respect to each deposit (other
than of income or proceeds of Collateral Investments) to the Collateral Accounts
(other than the Second Mafco Collateral Account), the Borrower shall, within 15
Business Days prior to the date of such deposit or within five Business Days
after the date of such deposit, deliver a certificate (the "Look-Forward
Certificate") to the Agent stating that (i) the projected equity contributions
receivable by the Borrower from the Borrower Parent pursuant to the Equity
Contribution Agreement arising out of net income of the Bank (including any
gains (net of taxes) from the sale by the Bank of deposits and property, plant
and equipment related to such deposits), will be sufficient to pay scheduled
principal and accrued interest on the Advances during the remaining term of the
Facilities (other than the payment due on September 1, 1997), together with a
schedule in form reasonably satisfactory to the Agent setting forth in
reasonable detail the computations and other information on which such
certification is based) (taking into account, among
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other things, the Bank's performance to date, the quality of the Bank's assets
and the presence of any agreement with the Bank's regulators including, but not
limited to, an agreement relating to capital, asset quality, dividends or
management) and (ii) the Net Cash Proceeds which Mafco and its Subsidiaries
expect to receive from the contemplated sale of assets or the contemplated
issuance of Debt will be sufficient to make the payments due on September 1,
1997, together with, on and after December 1, 1996, the identity of the assets
to be sold or of the issuer of such Debt and such other details as the Agent
shall request; provided, however, that, notwithstanding the foregoing, if a Look
Forward Certificate has been delivered to the Agent within 90 days prior to a
deposit in the Mafco Collateral Account of amounts paid under or in connection
with any Related Document, the Borrower may, instead of delivering a LookForward
Certificate to the Agent, deliver a certificate (a "Deposit Certificate") to the
Agent, within 15 Business Days prior to the date of such deposit or within five
Business Days after the date of such deposit, stating that (x) there has been no
adverse change in (1) the financial condition of each of the Bank and Mafco and
its Subsidiaries, taken as a whole, since the date of the last LookForward
Certificate that was delivered to the Agent or (2) the projections contained in
such Look-Forward Certificate and (y) no event has occurred and is continuing
which constitutes an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.
(m) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates (other than the Borrower or any of its
Subsidiaries) on terms that are fair and reasonable and no less favorable to the
Borrower or such Subsidiary than it would obtain in a comparable arm'slength
transaction with a Person that is not an Affiliate; provided, however, that for
purposes of this Section 5.01(m), the term "Affiliate" shall not include any
officer or director of the Borrower or such Subsidiary, as the case may be, who
does not possess directly or indirectly the power to vote 5% or more of the
Voting Stock of the Borrower or its Subsidiaries; provided further that nothing
in this Section 5.01(m) shall restrict the performance by the parties to the
Marvel Tax Agreements of their respective obligations thereunder.
(n) Use of Proceeds. Use the proceeds of the Advances for general
corporate purposes of the Borrower and its Subsidiaries or for making advances
or distributions to Mafco.
(o) Mafco Tax Group. Maintain, and cause each of its domestic
Subsidiaries (other than the Subsidiaries of Marvel) to maintain, its status as
a member of the affiliated group (within the meaning of Section
1504(a)(1) of the Code) of which Mafco is the common parent.
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(p) Marvel Tax Agreements. If Marvel III shall receive any
payment under the Marvel Tax Agreements, the Borrower shall cause Marvel III to
loan, advance or otherwise distribute such payment to Mafco to the extent such
loan, advance or distribution is permitted under the Marvel III Indenture and in
accordance with the terms thereof.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will not:
(a) Liens, Etc. Create or suffer to exist, or permit any of its
Non- Operating Subsidiaries to create or suffer to exist, any Lien, upon or with
respect to any of its properties, whether now owned or hereafter acquired, or
sign or file, or permit its NonOperating Subsidiaries to sign or file, under the
Uniform Commercial Code of any jurisdiction, a financing statement that names
the Borrower or any of its NonOperating Subsidiaries as debtor, or sign, or
permit any of its NonOperating Subsidiaries to sign, any security agreement
authorizing any secured party thereunder to file such financing statement, or
assign, or permit any of its Non-Operating Subsidiaries to assign, any right to
receive income, other than the following Liens: (i) Liens created by the Loan
Documents; (ii) the Liens described on Schedule V provided that in the event any
property subject to any such Lien is released from such Lien, such released
property may not thereafter be subjected to any Lien other than Liens created by
the Loan Documents; (iii) mechanics', materialmen's, carriers' and similar Liens
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than 30 days or which are being contested in good
faith and by proper proceedings and as to which appropriate reserves are being
maintained; (iv) Liens for taxes, assessments and governmental charges or levies
not yet due and payable or which are being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained; and (v)
judgment or other similar Liens, provided that there shall be no period of more
than 10 consecutive days during which a stay of enforcement of the related
judgment shall not be in effect.
(b) Lease Obligations. Create, incur, assume or suffer to exist, or
permit any of its Non-Operating Subsidiaries to create, incur, assume or suffer
to exist, any obligations as lessee (i) for the rental or hire of real or
personal property in connection with any sale and leaseback transaction, or (ii)
for the rental or hire of other real or personal property of any kind under
leases or agreements to lease having an original term of one year or more.
(c) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Non-Operating
Subsidiaries to do so.
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(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Non-Operating Subsidiaries to sell, lease,
transfer or otherwise dispose of, any assets or grant, or permit any of its Non-
Operating Subsidiaries to grant, any option or other right to purchase, lease or
otherwise acquire any assets except (i) dispositions of obsolete, worn out or
surplus property disposed of in the ordinary course of business, (ii) sales,
leases, transfers or other dispositions of assets by a whollyowned Non-Operating
Subsidiary of the Borrower to any other wholly owned NonOperating Subsidiary of
the Borrower and (iii) sales, leases, transfers or other dispositions of assets
(other than the capital stock of any Non-Operating Subsidiary that the Borrower
or any other Non-Operating Subsidiary owns directly) for cash and for no less
than fair market value.
(e) Dividends, Repurchases, Etc. Declare or pay any dividends,
purchase, redeem, retire, defease or otherwise acquire for value any of its
capital stock or any warrants, rights or options to acquire such capital stock,
now or hereafter outstanding, return any capital to its stockholders as such,
make any distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such, or permit any of its Non-
Operating Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
for value any capital stock of the Borrower or any warrants, rights or options
to acquire such capital stock, except that the Borrower may (i) declare and
deliver dividends and distributions payable only in common stock or warrants,
rights or options to acquire common stock and (ii) declare and pay cash
dividends to its stockholders in an amount not to exceed the amount released by
the Agent from the Borrower Collateral Account pursuant to the provisions of
Section 7 of the Borrower Security Agreement or the proceeds of the Advances.
(f) Investments. Make or hold, or permit any of its Non Operating
Subsidiaries to make or hold, any Investment in any Person, other than (i)
Investments by the Borrower and its Subsidiaries in Cash Equivalents, (ii) a
loan by the Borrower to Mafco of up to $430,000,000 out of the proceeds of the
Advances, (iii) Investments by the Borrower in Mafco or any of its Subsidiaries
in an amount not to exceed the sum of the amount released by the Agent from the
Borrower Collateral Account pursuant to the provisions of Section 7 of the
Borrower Security Agreement plus the aggregate amount of any Investments in the
Borrower made by Mafco or any of its Subsidiaries out of the proceeds from the
amount released by the Agent from the Mafco Collateral Accounts pursuant to
Section 7 of the Mafco Security Agreement, (iv) loans or advances by Marvel III
to Mafco in connection with payments to be made pursuant to the terms of the
Marvel Tax Agreements, (v) Investments existing on the date hereof, and (vi)
contributions by the Borrower or any of its Non-Operating Subsidiaries of common
stock of Marvel to any Non Operating Subsidiary.
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(g) Change in Nature of Business. (i) Engage in any business other
than the ownership of the capital stock of Marvel III or (ii) permit any of its
Non-Operating Subsidiaries to make any change in the nature of the business
carried on at the date hereof by such Non-Operating Subsidiaries.
(h) Accounting Changes. Make or permit, or permit any of its Non-
Operating Subsidiaries to make or permit, any change in accounting policies
affecting (i) the presentation of financial statements or (ii) reporting
practices, except in either case as required or permitted by GAAP.
(i) Debt. Create, incur, assume or suffer to exist, or permit any
of its Non- Operating Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than: (i) in the case of the Borrower, Debt under the Loan
Documents; (ii) in the case of any of its Non-Operating Subsidiaries, (A) in the
case of Marvel III, the Marvel III Debt; (B) in the case of Marvel Parent, the
guaranty of the Marvel III Debt and the Marvel Parent Debt; and (C) in the case
of Marvel Holdings, the Marvel Holdings Debt, and (iii), in the case of the
Borrower and any of its Non-Operating Subsidiaries, endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
(j) Charter Amendments. Amend, or permit any of its Non Operating
Subsidiaries to amend, its certificate of incorporation or bylaws.
(k) Prepayments, Etc. of Debt. Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make
any payment in violation of any subordination terms of, any Debt, other than the
prepayment of the Advances in accordance with the terms of this Agreement, or
amend, modify or change in any manner any term or condition of any Debt or any
agreement relating to such Debt, or permit any of its Non-Operating Subsidiaries
to do any of the foregoing other than in the case of Marvel III, Marvel Parent
and Marvel Holdings, to make regularly scheduled or required repayments or
redemptions of the Marvel III Debt, the Marvel Parent Debt and the Marvel
Holdings Debt, respectively.
(l) Amendment, Etc. of Related Documents. Cancel or terminate any
Related Document to which it is a party or consent to or accept any cancellation
or termination thereof, amend, modify or change in any manner any term or
condition thereof or give any consent, waiver or approval thereunder, waive any
default under or any breach of any term or condition of any such Related
Document, agree in any manner to any other amendment, modification or change of
any term or condition of any Related Document, or take any other action in
connection with any such Related Document that would impair the value of the
interest or rights of the Borrower thereunder or that would impair the
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interest or rights of the Agent or any Lender or permit any of its Subsidiaries
to do any of the foregoing.
(m) Negative Pledge. Enter into or suffer to exist, or permit any
of its Non- Operating Subsidiaries to enter into or suffer to exist, any
agreement prohibiting or conditioning the creation or assumption of any Lien
upon any of its property or assets other than (i) in favor of the Agent and the
Lenders or (ii) any prohibition or condition existing on the date hereof.
(n) Partnerships. Become a general partner in any general or
limited partnership, or permit any of its Non-Operating Subsidiaries to do so.
(o) Capital Expenditures. Make, or permit any Non- Operating
Subsidiary to make, any Capital Expenditures.
(p) Issuance of Capital Stock. Issue, or permit any Non- Operating
Subsidiary to issue, any capital stock or warrants, rights or options to acquire
such capital stock.
(q) Payment Restrictions. Create or otherwise cause or suffer to
exist or become effective, or permit any of its Non-Operating Subsidiaries to
create or otherwise cause or suffer to exist or become effective, any consensual
encumbrance or restriction of any kind on the ability of the Borrower or such
Non Operating Subsidiary to (i) pay dividends or make any other distributions on
any of the Borrower's or such NonOperating Subsidiary's capital stock, (ii) make
loans or advances to Mafco or any subsidiary of Mafco or (iii) repay or prepay
any Debt owed by the Borrower or a Non Operating Subsidiary other than any (x)
consensual encumbrances or restrictions existing on the date hereof and (y)
other consensual encumbrances or restrictions that are no more onerous than
those encumbrances and restrictions in existence on the date hereof with respect
to the Borrower or such Non-Operating Subsidiary, as the case may be.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of, or interest on,
any Advance or any fees payable to the Agent or any Lender hereunder, in each
case when the same becomes due and payable, or any Loan Party shall fail to make
any other
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payment hereunder within five Business Days after the same becomes due and
payable; or
(b) Any representation or warranty made by any Loan Party or any FN
Party or under or in connection with any Loan Document or FN Document shall
prove to have been incorrect in any material respect when made or confirmed; or
(c) (i) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(h), 5.01(j), 5.01(k), 5.01(l),
5.01(n), 5.01(o) or 5.02, (ii) Mafco shall fail to perform or observe any term,
covenant or agreement contained in Section 7(i), 7(j), 7(l), 7(o), 7(p) or 8 of
the Mafco Guaranty, (iii) Coleman Guarantor shall fail to perform or observe any
term, covenant or agreement contained in Section 6(i), 6(k) or 7 of the Coleman
Guaranty, (iv) Borrower Parent shall fail to perform or observe any term,
covenant or agreement contained in Section 7(j) or 8 of the Borrower Parent
Guaranty, (v) New World Guarantor shall fail to perform or observe any term,
covenant or agreement contained in Section 7(h), 7(j) or 8 of the New World
Guaranty, (vi) C&F Guarantor shall fail to perform or observe any term, covenant
or agreement contained in Section 6(h), 6(j) or 7 of the C&F Guaranty, (vi)
Cigar Guarantor shall fail to perform or observe any term, covenant or agreement
contained in Section 6(h), 6(j) or 7 of the Cigar Guaranty, (vii) Flavors
Guaranty shall fail to perform or observe any term, covenant or agreement
contained in Section 6(h), 6(j) or 7 of the Flavors Guaranty or (viii) any Loan
Party shall fail to perform or observe any other term, covenant or agreement
contained in any Loan Document on its part to be performed or observed if such
failure shall remain unremedied for 30 days after written notice thereof shall
have been given to the Borrower by the Agent or any Lender; or
(d) Any A Company or any Designated Operating Company or the Bank
shall fail to pay any principal of or premium or interest on any Debt which is
outstanding in a principal amount of at least $10,000,000 in the aggregate (but
excluding Debt outstanding hereunder) of such A Company, such Designated
Operating Company or the Bank (as the case may be), when the same becomes due
and payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such Debt;
or any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof; or
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(e) Any A Company, any Designated Operating Company or the Bank
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against any A Company, any Designated Operating Company or any FN Party
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 45 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or any A Company, any Designated Operating Company or the
Bank shall take any corporate action to authorize any of the actions set forth
above in this Section 6.01(e); or
(f) Any judgment or order for the payment of money in excess
of $10,000,000 shall be rendered against any A Company, any Designated Operating
Company or the Bank and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect unless such judgment or order shall
have been vacated, satisfied or dismissed or bonded pending appeal; provided,
however, that any such judgment or order shall not be an Event of Default under
this Section 6.01(f) if and for so long as (i) the entire amount of such
judgment or order is covered by a valid and binding policy of insurance between
the defendant and the insurer covering payment thereof and (ii) such insurer,
which shall be rated at least "A" by A.M. Best Company, has been notified of,
and has not disputed the claim made for payment of the amount of such judgment
or order; or
(g) Any non-monetary judgment or order shall be rendered against any
A Company, any Designated Operating Company or the Bank that is reasonably
likely to have a Material Adverse Effect (in the case of clause (a) of the
definition thereof, the term "Person" shall refer to the Borrower) and there
shall be any period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect unless such judgment or order shall have been vacated, satisfied,
discharged or bonded pending appeal; or
(h) Ronald O. Perelman (or in the event of his incompetence or
death, his estate, heirs, executor, administrator, committee or other personal
representative) shall cease to beneficially own (i) at least 80% of the Voting
Stock of any A Company, any
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Designated Operating Company (other than New World) or the Bank or (ii) at least
51% of the voting power of the Voting Stock of New World; or
(i) Any ERISA Event shall have occurred with respect to Mafco or any
of its ERISA Affiliates and such ERISA Event, together with any and all other
ERISA Events that shall have occurred with respect to Mafco or any of its ERISA
Affiliates, is reasonably likely to have a Material Adverse Effect (with respect
to clause (a) of the definition thereof, the term "Person" shall refer to
Mafco); or
(j) Mafco or any of its ERISA Affiliates shall have been notified by
the sponsor of a Multiemployer Plan of the Borrower or any of its ERISA
Affiliates that it has incurred Withdrawal Liability to such Multiemployer Plan
in an amount that, when aggregated with all other amounts required to be paid to
Multiemployer Plans by Mafco and its ERISA Affiliates as Withdrawal Liability
(determined as of the date of such notification), exceeds $10,000,000 or
requires payments exceeding $10,000,000 per annum; or
(k) Mafco or any of its ERISA Affiliates shall have been notified by
the sponsor of a Multiemployer Plan of the Borrower or any of its ERISA
Affiliates that such Multiemployer Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of Mafco and
its ERISA Affiliates to all Multiemployer Plans that are then in reorganization
or being terminated have been or will be increased over the amounts contributed
to such Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or termination
occurs by an amount exceeding $10,000,000; or
(l) Any provision of any Loan Document, Related Document or FN
Document after delivery thereof pursuant to the Original Credit Agreement, the
Existing Credit Agreement or Section 3.01 hereof shall for any reason cease to
be valid and binding on or enforceable against any party to it, or any party to
any such document shall so state in writing; or
(m) Any Collateral Document after delivery thereof pursuant to the
Original Credit Agreement, the Existing Credit Agreement or Section 3.01 hereof
shall for any reason (other than pursuant to the terms thereof) cease to create
a valid and perfected first priority Lien on the Collateral purported to be
covered thereby; or
(n) Any provision of the FN Holdings Debt Document or, after the
execution and delivery of the New FN Holdings Debt Documents, the New FN
Holdings Debt Documents shall be terminated, amended, waived or otherwise
modified without the consent of the Required Lenders or any provision of the
certificate of incorporation of
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FN Parent or the certificate of incorporation of FN Holdings shall be amended or
modified without the consent of the Required Lenders, provided that (i) the
Certificate of Incorporation of FN Holdings may be amended and restated in
substantially the form of Exhibit G hereto and (ii) the Certificate of
Incorporation of FN Parent may be amended and restated in substantially the form
of Exhibit H hereto; or
(o) The Bank fails to maintain the minimum capital and leverage
ratios required as of the Effective Date for the Bank to be considered as a
"well capitalized" "savings association" pursuant to 12 U.S.C. Section 1831o and
12 C.F.R. Section 565, as such Sections may be amended, reenacted or
redesignated from time to time; or
(p) The common stock of any Designated Operating Company trading
on the date hereof shall cease to be publicly traded, in the case of Coleman,
Marvel and MCG, on the New York Stock Exchange and, in the case of New World,
the New York Stock Exchange or the Nasdaq National Market System; or
(q) Gerald J. Ford shall beneficially or legally own shares of the
common stock of FN Holdings other than shares of the Class B Common Stock; or
(r) Any Person party to the Related Documents shall fail to
directly deposit in the Mafco Collateral Account (i) a payment to Mafco under
any Related Document (which payment is required to be made and is permitted
under each indenture and credit agreement to which such Person is a party) or
(ii) a loan to Mafco of the proceeds of any payment received by such Person
under any Related Document (which loan is required to be made and is permitted
under each indenture and credit agreement to which such Person is a party) and
such failure shall remain unremedied for three Business Days; or
(s) (i) The Bank shall fail to distribute or dividend to FN
Holdings any net income that is attributable to the recognition of the deferred
tax asset-net operating loss carry forwards of the Bank or (ii) during the
Mandatory Distribution Period, the Bank shall fail to distribute or dividend to
FN Holdings an amount equal to the lesser of (x) any net after tax gain
recognized by the Bank from the sale or transfer of deposits and property, plant
and equipment related to such deposits and (y) an amount equal to the product of
(A) the aggregate amount of deposits sold or transferred (after giving effect to
any adjustments contractually agreed upon with respect thereto) (any such
transaction, a "Deposit Sale") multiplied by (B) 3.5% or (iii) during the
Mandatory Distribution Period, the Bank shall fail to distribute or dividend to
FN Holdings any net after tax gain recognized by the Bank from a Deposit Sale in
excess of the amount calculated pursuant to clause (ii) (such excess amount
shall hereinafter be referred to as the "Excess Amount") unless the Bank
reinvests, within 12 months of its receipt of such Excess Amount, such Excess
Amount in the business of the Bank and its Subsidiaries as it is currently
operated and other related activities in which the Bank and its Subsidiaries may
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lawfully engage; provided, however, that the Bank may reduce any amounts it is
otherwise required to distribute or dividend to FN Holdings pursuant to clause
(i), (ii) or (iii) above (other than amounts required to be distributed or
dividended in respect of the sale or transfer of deposits in California and
property, plant and equipment related to such deposits) by an amount equal to
any charges to earnings (net of taxes) of the Bank taken for any Special
Expenses, but in no event shall such reductions, in the aggregate, be greater
than $80 million; or
(t) (i) A payment shall be made to any executive of the Bank under
or in connection with the terms of the FN Management Incentive Plan in
contravention of the provisions of any Award Agreement (as defined in the FN
Management Incentive Plan) under the heading
"Subordination" entered into pursuant to the FN Management Incentive Plan or
(ii) any provision of any such Award Agreement under the heading "Subordination"
shall be amended, modified or changed in any manner without the consent of the
Required Lenders;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Notes,
all interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that, in the event of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances
shall automatically be terminated and (B) the Notes, all such interest and all
such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. As to any matters not expressly
provided for by the Loan Documents (including, without limitation, enforcement
or collection of the Notes), the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so
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acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding upon all Lenders and all holders of
Notes; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or applicable law. The Agent agrees to give to each Lender
prompt notice of each notice and other report given to it by the Borrower
pursuant to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees, shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may treat
the payee of any Note as the holder thereof until the Agent receives and accepts
an Assignment and Acceptance entered into by the Lender that is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07; (ii) may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations (whether written
or oral) made in or in connection with the Loan Documents; (iv) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of the Loan Documents on the part of the
Borrower or to inspect the property (including the books and records) of the
Borrower; (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
perfection or priority of any lien or security interest created or purported to
be created under or in connection with the Loan Documents or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of the Loan Documents by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 7.03. Citibank and Affiliates. With respect to its
Commitments, the Advances made by it and the Note issued to it, Citibank shall
have the same rights and powers under the Loan Documents as any other Lender and
may exercise the same as though it were not the Agent and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Citibank
hereunder in its individual capacity. Citibank and its affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of business
with, the Borrower, any of its Subsidiaries and any Person who may do business
with or own securities of the Borrower or any such Subsidiary, all as if
Citibank were not the Agent and without any duty to account therefor to the
Lenders.
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SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent or any other Lender
and based on the financial statements referred to in Section 4.01(f) and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders agree to indemnify the
Agent (to the extent not reimbursed by the Borrower), ratably according to the
respective principal amounts of the Advances then owing to each of them (or if
no Advances are at the time outstanding or if any Advances are then owing to
Persons which are not Lenders, ratably according to the respective amounts of
their Commitments), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Agent under the Loan
Documents, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of unpaid fees
owing to the Agent, and any out-of-pocket expenses (including counsel fees)
incurred by the Agent, in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, any Loan Document, to the extent that the
Agent is not paid such fees, or the Agent is not reimbursed for such expenses,
by the Borrower.
SECTION 7.06. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint,
with the consent of the Borrower, a successor Agent which shall be a Lender, or
if no Lender consents to act as Agent hereunder, an institution that would be
permitted to be an Eligible Assignee hereunder. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank that is acceptable to the Borrower (which shall not
unreasonably withhold its approval). Upon the acceptance of any appointment as
Agent thereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under the Loan Documents. After any
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retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each of the Lenders (other than any Lender which
is, at such time, a Defaulting Lender), do any of the following: (i) waive any
of the conditions specified in Section 3.01 or 3.02, (ii) change the definition
of the term "Required Lenders," (iii) release any material portion of the
Collateral or permit the creation, incurrence, assumption or existence of any
Lien on any material portion of the Collateral other than the Liens created by
the Collateral Documents and the Liens permitted by Section 5.02(a), Section
8(a) of the Borrower Parent Guaranty, Section 7(a) of the Coleman Guaranty,
Section 8(a) of the Mafco Guaranty, Section 7(a) of the C&F Guaranty and Section
8(a) of the New World Guaranty, (iv) amend this Section 8.01, (v) increase the
Commitments of the Lenders or subject the Lenders to any additional obligations,
(vi) reduce the principal of, or interest on, the Notes or any fees or other
amounts payable hereunder or (vii) postpone any date fixed for any mandatory
reduction in the Commitments or for any payment of principal of, or interest on,
the Notes or any fees or other amounts payable hereunder or amend Section 2.04
or 2.05; provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement
or any Note.
SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at c/o MacAndrews and
Forbes Holdings Inc., 38 East 63rd Street, New York, New York 10021, Attention:
Secretary, if to any Financial Institution at its Domestic Lending Office on
Schedule I-A hereto; if to any other Lender, at the address specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Agent, at its address at 399 Park Avenue, New York, New York 10043, Attention:
Jolie Eisner, or, as to the Borrower or the Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Agent. All such notices and
communications shall be effective (i) when received, if mailed or delivered or
telecopied
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(including machine acknowledgment), or (ii) when delivered to the telegraph
company, confirmed by telex answerback or delivered to the cable company,
respectively, except that notices and communications to the Agent pursuant to
Article II or VII shall not be effective until received by the Agent.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
Lender, or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs; Expenses. (a) The Borrower agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan Documents and the other documents to be
delivered hereunder (including, without limitation, (A) all due diligence,
transportation, computer, duplication, appraisal, audit and insurance expenses
and fees and expenses of consultants engaged with the prior consent of the
Borrower (which consent shall not be unreasonably withheld) and (B) the
reasonable fees and out-of-pocket expenses of counsel for the Agent with respect
thereto, with respect to advising the Agent as to its rights and
responsibilities, or the protection or preservation of rights or interests,
under the Loan Documents, with respect to negotiations with the Borrower or with
other creditors of the Borrower arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in, monitoring or otherwise participating in any bankruptcy, insolvency
or other similar proceeding affecting creditors' rights generally and any
proceeding ancillary thereto). The Borrower further agrees to pay on demand all
reasonable outof-pocket costs and expenses of the Agent and the Lenders in
connection with the enforcement of the Loan Documents and the other documents to
be delivered hereunder, whether in action, suit, litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally or
otherwise (including, without limitation, the reasonable fees (including the
allocated costs of internal counsel) and reasonable expenses of counsel for the
Agent and each Lender with respect thereto) and expenses in connection with the
enforcement of rights under this Section 8.04(a).
(b) If any payment of principal of any Eurodollar Rate Advance is
made by the Borrower to or for the account of a Lender other than on the last
day of the Interest Period for such Advance, as a result of a payment or
Conversion pursuant to Section 2.09(c) or 2.10, acceleration of the maturity of
the Notes pursuant to Section 6.01 or for any other reason, the Borrower shall,
upon demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without limitation, any loss, cost
or expense incurred by reason of the
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liquidation or reemployment of deposits or other funds acquired by any Lender to
fund or maintain such Advance.
(c) The Borrower agrees to indemnify and hold harmless the Agent
and each Lender and each of their affiliates and their officers, directors,
trustees, employees, agents and advisors (each, an "Indemnified Party") from and
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (or in connection with
the preparation for a defense of) any investigation, litigation or proceeding
arising out of, related to or in connection with this Agreement and the
transactions contemplated hereby, whether or not an Indemnified Party is a party
thereto, whether or not the transactions contemplated hereby are consummated,
whether or not any such claim, investigation, litigation or proceeding is
brought by the Borrower or any other person and whether or not such Indemnified
Party is a Lender at such time) except (i) to the extent such claim, damage,
loss, liability or expense (x) is found in a final, nonappealable judgment by a
court of competent jurisdiction (a "Final Judgment") to have resulted from such
Indemnified Party's gross negligence or willful misconduct or (y) arises from
any legal proceedings commenced against any Lender by any other Lender (in its
capacity as such and not as Agent), and (ii) in the case of any litigation
brought by the Borrower (A) seeking a judgment against any Indemnified Party for
any wrongful act or omission of such Indemnified Party and (B) in which a Final
Judgment is rendered in the Borrower's favor against such Indemnified Party, the
provisions of this paragraph will not be available to provide indemnification
for any damage, loss, liability or expense incurred by such Indemnified Party in
connection with such litigation described in clause (i) or in connection with
any claim for which Final Judgment is rendered in the Borrower's favor in a
litigation described in clause (ii) of this Section 8.04(c).
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
to such Lender now or hereafter existing under this Agreement and the Note or
Notes held by such Lender, whether or not such Lender shall have made any demand
under this Agreement or such Note or Notes and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application shall be made by such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application; provided further that no Lender shall exercise any such right of
set-off or any other right of set-off without the prior consent of the Agent.
The rights of each Lender under this Section 8.05 are in addition to other
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rights and remedies (including, without limitation, other rights of set-off)
which such Lender may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Agent and when the
Agent shall have been notified by each Financial Institution that such Financial
Institution has executed it and thereafter shall be binding upon and inure to
the benefit of the Borrower, the Agent and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Agent and the Required Lenders.
SECTION 8.07. Assignments and Participations. (a) Each Lender may
and, if demanded by the Borrower pursuant to Section 2.14, will assign to one or
more banks or other entities all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a uniform, and not
a varying, percentage of all rights and obligations under and in respect of one
or more of the Facilities; (ii) the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $5,000,000 and shall be an integral multiple of $1,000,000
in excess thereof, or shall be an assignment to another Lender or an assignment
of all of the assigning Lender's rights and obligations hereunder and under the
Notes, (iii) each such assignment shall be to another Lender, an Affiliate of
the assigning Lender or to an Eligible Assignee, (iv) each such assignment made
as a result of a demand by the Borrower pursuant to Section 2.14 shall be
arranged by the Borrower after consultation with the Agent and shall be either
an assignment of all of the rights and obligations of the assigning Lender under
this Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning Lender under
this Agreement, (v) no Lender shall be obligated to make any such assignment as
a result of a demand by the Borrower pursuant to Section 2.14 unless and until
such Lender shall have received one or more payments from either the Borrower or
one or more Eligible Assignees in an aggregate amount at least equal to the
aggregate outstanding principal amount of the Advances owing to such Lender,
together with accrued interest thereon to the date of payment of such principal
amount and all other amounts payable to such Lender under this Agreement, (vi)
the parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment and a processing and
recordation fee of $3,000 from the assignee and (vii) no such assignments shall
be permitted without the consent of the Agent and the Borrower. Such consent
not to be unreasonably withheld. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
<PAGE>
85
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01(f) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in Section
8.02 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders and
the Commitment of, and principal amount of the Advances owing under each
Facility to, each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent, and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
<PAGE>
86
(d) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee representing that it is an Eligible
Assignee, together with any Note or Notes subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Note or Notes a
new Note or Notes to the order of such Eligible Assignee in an amount equal to
the Commitment assumed by it under a Facility pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment hereunder
under such Facility, a new Note to the order of the assigning Lender in an
amount equal to such Commitment retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1, Exhibit A-2 or Exhibit A-3, as the case may be.
(e) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes held by it);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Note for all purposes of this Agreement, (iv) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would
reduce or postpone any date fixed for payment of principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree
pursuant to an agreement substantially in the form of Exhibit F to preserve the
confidentiality of any confidential information relating to the Borrower
received by it from such Lender.
(g) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this
<PAGE>
87
Agreement (including, without limitation, the Advances owing to it and the Note
or Notes held by it) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System.
SECTION 8.08. Governing Law; Submission to Jurisdiction. (a) This
Agreement and the Notes shall be governed by, and construed in accordance with,
the laws of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in New York
City, and any appellate court thereof, in any action or proceeding arising out
of or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to the foregoing and to paragraph (c) below, nothing in this Agreement
shall affect any right that any party hereto may otherwise have to bring any
action or proceeding relating to this Agreement against any other party hereto
in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court and the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(d) The Borrower agrees that service of process may be made on the
Borrower by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to the address of the Borrower specified in
Section 8.02, or by any other method of service provided for under the
applicable laws in effect in the State of New York.
SECTION 8.09. Execution in 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 one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
<PAGE>
88
SECTION 8.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT
AND THE LENDERS IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES OR THE
ACTIONS OF THE AGENT, OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
<PAGE>
89
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
MARVEL IV HOLDINGS INC.
By /s/
------------------------------
Name:
Title:
CITIBANK, N.A.,
By /s/ Jolie Eisner
------------------------------
Name: Jolie Eisner, Managing
Director
Title: Attorney-In-Fact
399 Park Ave./8th Fl./Zone 11
(212) 559-3498
FINANCIAL INSTITUTIONS
CITIBANK, N.A.
By /s/ Jolie Eisner
------------------------------
Name: Jolie Eisner, Managing
Director
Title: Attorney-In-Fact
399 Park Ave./8th Fl./Zone 11
(212) 559-3498
BANK OF AMERICA ILLINOIS
By /s/ Phillip F. Van Winkle
------------------------------
Name: Phillip F. Van Winkle
Title: Vice President
THE BANK OF NEW YORK
By /s/ Edward F. Ryan, Jr.
------------------------------
Name: Edward F. Ryan, Jr.
Title: Senior Vice President
<PAGE>
90
THE CHASE MANHATTAN BANK, N.A.
By /s/ Edward T. Crook
------------------------------
Name: Edward T. Crook
Title: Managing Director
CHEMICAL BANK
By /s/ Neil R. Boylan
------------------------------
Name: Neil R. Boylan
Title: Vice President
CREDIT LYONNAIS, CAYMAN ISLAND BRANCH
By /s/ W. Michael George
------------------------------
Name: W. Michael George
Title: Authorized Signature
CREDIT SUISSE
By /s/ Michael C. Mast
------------------------------
Name: Michael C. Mast
Title: Member of Senior Management
By /s/ Anne Schultheiss-Jensen
------------------------------
Name: Anne Schultheiss-Jensen
Title: Associate
<PAGE>
91
THE FIRST NATIONAL BANK OF BOSTON
By /s/
-------------------------------
Name:
Title: Director
THE FUJI BANK, LIMITED
By /s/ Katsunori Nozawa
-------------------------------
Name: Katsunori Nozawa
Title: Vice President & Manager
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
By /s/ Paul B. Clifford
-------------------------------
Name: Paul B. Clifford
Title: Deputy General Manager
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
-------------------------------
Name: Jeffrey W. Maillet
Title: Sr. Vice Pres.-Portfolio Mgr.
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By /s/ Richard Butler
-------------------------------
Name: Richard Butler
Title: Managing Director
<PAGE>
92
PILGRIM PRIME RATE TRUST
By /s/ Howard Tiffen
-------------------------------
Name: Howard Tiffen
Title: Senior Vice President
PRIME INCOME TRUST
By
-------------------------------
Name:
Title:
<PAGE>
93
NATIONSBANK NATIONAL
ASSOCIATION (CAROLINAS)
By /s/ S. Lynn Callicott
-------------------------------
Name: S. Lynn Callicott
Title: Corporate Finance Officer
<PAGE>
SCHEDULE I
EXISTING ADVANCES, ADVANCES, COMMITMENTS AND APPLICABLE LENDING OFFICES
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Citibank, N.A. -0- -0- -0- -0- $27,420,289.84 -0- $15,579,710.16 Domestic: 399 Park
Avenue
New York, New York 10043
Attention: Ed Vowinkel
Tel. No.: 718-248-4523
Fax No.: 718-248-4844
ABA No.: 021000089
Via Fed Transfer
Account No.: 3685-2248
Account Name: Medium
Term Fin.
Attention: Ed Vowinkel
Reference: Marvel IV
Holdings
Eurodollar:
Same
</TABLE>
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bankers Trust
Company $11,479,041.49 $7,142,857.14 -0- -0- -0- -0- -0- Domestic:
1 Bankers Trust Plaza
130 Liberty Street
New York, NY 10006
Attention: John Jeffcoat
Tel. No.: 212-250-8195
Fax No.: 212-250-6029
/7351
ABA No.: 021-001033
Via Fed Transfer
Account No.: 99-401-268
Account Name: Commercial
Loan Div.
Attention: Mary Rodwell
Reference: Marvel IV
Hldgs.
Eurodollar:
Same
The Bank
of New York -0- -0- -0- -0- $15,942,028.99 -0- $9,057,971.01 Domestic:
One Wall Street
New York, NY 10286
Attention:
Zoraida Dougherty
Tel. No.: 212-635-8730
Fax No.: 212-635-8679/34
ABA No.: 021000018
Via Fed Transfer
Account No.: GLA/ 111556
Account Name: Commercial
Loan Dept.
Attention:
Zoraida Dougherty
Reference:
Marvel IV Holdings
Eurodollar:
Same
</TABLE>
2
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bank of America
Illinois -0- -0- -0- -0- $21,043,478.26 -0- $11,956,521.74 Domestic:
231 South LaSalle
Chicago, IL 60697
Attention: Lily Reyes
Tel. No.: 312-828-3873
Fax No.: 312-974-9626
ABA No.: 071-000-039
Via Fed Transfer
Account No.: 47-03421
Attention: Account
Administration-L.Reyes
Reference:
Marvel IV Holdings
Eurodollar:
Same
The Chase
Manhattan
Bank, N.A. -0- -0- -0- -0- $9,565,217.39 -0- $5,434,782.61 Domestic:
2 Chase Manhattan Plaza
New York, N.Y. 10081
Attention: Rocky Chan
Tel. No.: 212-552-2920
Fax No.: 212-552-7325
ABA No.: 021-0000-21
Via Fed Transfer
Acct. No.: 900-9-0000-36
Account Name: Commercial
Loan Dept.
Attention: Rocky Chan
Reference: Mafco Holding
Eurodollar:
Same
</TABLE>
3
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chemical Bank -0- $243,797.25 -0- -0- $23,594,202.90 -0- $13,405,797.10 Domestic: 270 Park Avenue
New York, New York 10017
Attention:
Abigail L. Garcia
Tel. No.: 212-270-5425
Fax No.: 212-818-1456
ABA No.: 021-0001-28
Via Fed Transfer
Account No.:_____________
Account Name: Credit
Commercial Loan
Operations
Attention: John Gallagher
Reference: Mafco Holdings
Inc.
Eurodollar:
Same
Credit Lyonnais -0- -0- -0- -0- $21,043,478.26 -0- $11,956,521.74 Domestic:
1301 Avenue of
the Americas
New York, NY 10019
Attention: Lucie Mercado
Tel. No.: 212-261-7271
Fax No.: 212-261-3401
ABA No.: 026008073
Via Fed Transfer
Account No.:
01-008820-001-00
Account Name: Loan
Servicing
Attention: Lucy Mercado
Reference: Mafco
Eurodollar:
Same
</TABLE>
4
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Credit Suisse -0- $243,797.25 -0- -0- $23,594,202.90 -0- $13,405,797.10 Domestic:
12 East 49th Street
New York, NY 10017
Attention: Ed Siddons
Tel. No.: 212-238-5407
Fax No.: 212-238-5439
ABA No.: 026009179
Via Fed Transfer
Account No.: 904996-02
Account Name: Loan Dept.
Attention: Ed Siddons
Reference: Marvel IV
Holdings
Eurodollar:
Same
The First
National Bank
of Boston -0- -0- -0- -0- $9,565,217.39 -0- $5,434,782.61 Domestic:
100 Rustcraft Road
Dedham, MA 02026
Attention: Angela Moore
Tel. No.: 617-467-2292
Fax No.: 617-467-2276
ABA No.: 01000390
Account No.: 0411214
Via Fed Transfer
Attention: Angela Moore
Reference: Marvel IV
Holdings
Eurodollar:
Same
</TABLE>
5
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Fuji Bank,
Limited -0- -0- -0- -0- $15,942,028.99 -0- $9,057,971.01 Domestic:
2 World Trade Center
New York, NY 10048
Attention: Gemma Dizon
Tel. No.: 212-898-2069
Fax No.: 212-488-8216
ABA No.: 026009700
Via Fed Transfer
Account No.: 515011U3
Account Name: USCF III
Attention: Gemma Dizon
Reference: Mafco Holdings
Eurodollar:
Same
The Long-Term
Credit Bank
of Japan, Ltd. -0- -0- -0- -0- $12,753,623.19 -0- $7,246,376.81 Domestic:
444 South Flower Street
Los Angeles, CA 90071
Attention: Ken Nakagawa
Tel. No.: 213-689-6244
Fax No.: 213-626-1067
ABA No.: 122000218
Via Fed Transfer
Account No.: 220234834
Account Name: Long-Term
Credit Bank of Japan
Attention: Ken Nakagawa
Reference: Mafco Holdings
Inc.
Eurodollar:
Same
</TABLE>
6
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NationsBank,
National
Association
(Carolinas) -0- $243,797.25 -0- -0- $23,594,202.90 -0- $13,405,797.10 Domestic:
101 No. Tryon Street
Charlotte, NC 28255
Attention:
Charlie Franklin
Tel. No.: 704-386-4199
Fax No.: 704-386-8694
ABA No.: 053000196
Via Fed Transfer
Account No.: 13662122506
Account Name:
Corporate Credit
Services Support
Attention:
Charlie Franklin
Reference: Marvel IV
Holdings
Eurodollar:
Same
Internationale
Nederlanden
(U.S.) Capital
Corporation -0- -0- $11,479,041.49 $7,142,857.14 $15,942,028.99 -0- $9,057,971.01 Domestic:
135 East 57th Street
New York, NY 10022
Attention: Kunduck Moon
Tel. No.: (212) 446-0911
Fax No.: (212) 593-3362
ABA No.: 021000238
Via Fed Transfer
Account No.: 60007116
Account Name:
Internationale
Nederlanden (U.S.)
Capital Corporation
Reference: Marvel IV
Holdings
Eurodollar:
Same
Van Kampen
American Capital
Prime Rate
Income Trust -0- -0- -0- $731,391.75 $23,594,202.90 $13,405,797.10 -0- Domestic:
One Parkview Plaza
Oakbrook Terrace,
IL 60181
Attn: Jeffrey Mailet
Tel. No.: (708) 684-6438
Fax No.: (708) 684-6740
ABA No.: 011000028
Via Fed Transfer
Account No.: 99001265
Account Name: VKM PRIT
Reference: Marvel IV
Holdings
Eurodollar:
Same
</TABLE>
7
<TABLE>
Existing Term Revolving
Existing Term Revolving Advances Advances Revolving
Advances Advances (being (being Term A Term B Credit Applicable
Name of Bank (being assigned) (being assigned) assumed) assumed) Commitment Commitment Commitment Lending Office
- ------------ --------------- ---------------- ------- --------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pilgrim Prime
Rate Trust -0- -0- -0- -0- $21,043,478.26 $11,956,521.74 -0- Domestic:
40 N. Central Ave.
Suite 1200
Phoenix, AZ 85004
Attention:
Tel. No.: (602)417-8259
Fax. No.: (602) 417-8327
ABA No.: 011000028
Via Fed Transfer
Account No.: 37926342
Account Name: PL1F -
Pilgrim
Prime Rate Trust
Reference: Mafco Holdings
Eurodollar:
Same
Prime Income
Trust -0- -0- -0- -0- $9,565,217.39 $5,434,782.61 -0- Domestic:
2 World Trade Center
72nd Floor
New York, New York 10048
Attention:
April Chrysostomas
Tel. No.: (212) 392-5709
Fax No.: (212) 392-5345
ABA No.: 0210000018
Via Fed Transfer
Account No.: 003348
Account Name:
Prime Income Trust
Reference: Marvel IV
Holdings
Eurodollar:
Same
8
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SCHEDULE II
SUBSIDIARIES
Marvel IV Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage Owned: 99.5% by Marvel V Holdings Inc.
Options, Warrants and Similar Rights: None
Marvel III Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage Owned: 100% owned by Borrower
Options, Warrants and Similar Rights: None
Marvel (Parent) Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage Owned: 100% owned indirectly by Borrower
Options, Warrants and Similar Rights: None
Marvel Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage Owned: 100% owned indirectly by Borrower
Options, Warrants and Similar Rights: None
Marvel Entertainment Group, Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 250,000,000 shares of Common
Stock and 50,000,000 shares of Preferred Stock
Shares Outstanding: 101,701,264 shares of Common
Stock (as of 12/14/95)
Percentage Owned: 80.2% owned indirectly by Borrower
and other Subsidiaries of Mafco
Options, Warrants and Similar Rights: 8,469,061 stock
options (as of 12/14/95)
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SCHEDULE III
DEBT
A. Marvel III Holdings Inc.
1. $125,000,000 9-1/8% Senior Secured Notes due
1998 (Indenture dated February 15, 1994 with
NationsBank of Georgia, National Association).
B. Marvel (Parent) Holdings Inc.
1. $251,678,000 Senior Secured Discount Notes due
1998 (Indenture dated October 1, 1993 with
NationsBank of Georgia, National Association).
2. Non-Recourse Guaranty of Marvel III Holdings
Inc.'s 9-1/8% Senior Secured Notes due 1998.
C. Marvel Holdings Inc.
1. $517,447,000 Series B Senior Secured Discount
Notes due 1998 (Indenture dated April 15, 1993
with NationsBank of Georgia, National
Association).
D. Marvel Entertainment Group, Inc.
1. Guaranty of Fleer Corp.'s obligations under
the Amended and Restated Credit and Guarantee
Agreement dated as of August 30, 1994, among
Marvel Entertainment Group, Inc., Fleer Corp., the
banks party thereto and Chemical Bank, as
administrative agent (as amended on November 22,
1994 and April 24, 1995).
- principal amount outstanding as of
December 14, 1995: $97,500,000
2. Guaranty of Panini S.p.A. obligations under Term
Loan and Guarantee Agreement dated as of August
30, 1994 among Marvel Entertainment Group, Inc.,
Panini S.p.A. and Istituto Bancario San Paolo Di
Torino, S.p.A.
2
- principal amount outstanding as of
December 14, 1995: $139,000,000 (approx.)
3. Guaranty of Fleer Corp.'s obligations under the
Credit and Guarantee Agreement dated as of April
24, 1995, among Marvel Entertainment Group, Inc.,
Fleer Corp., the banks party thereto and Chemical
Bank, as administrative agent.
- principal amount outstanding as of
December 14, 1995: $350,000,000
E. Fleer Corp.
1. See item D.1 above.
2. See item D.3 above.
3. Undrawn Standby Letters of Credit - $642,142
(as of December 14, 1995).
4. Guaranty of Fleer Limited's Canadian $250,000
line of credit (as of December 14, 1995).
5. Capitalized Leases/Other Miscellaneous Debt -
$56,500 (as of December 14, 1995).
F. Skybox International Inc.
1. Undrawn Standby Letters of Credit -
$1,564,000 (as of December 14, 1995).
2. Undrawn Commercial Letter of Credit - $39,784
(as of December 14, 1995).
3. Capitalized Leases - $60,823.
G. Panini S.p.A.
1. Loan for working capital purposes with San
Paolo Di Torino due 12/31/95 - $2,900,000
(approximately).
2. Loan for working capital purposes with Monte
Paschi - $1,500,000 (approximately).
3. Loan for working capital purposes with Banca
Commerciale Mo due 12/27/95 - $300,000
(approximately).
4. Loan for working capital purposes with
Carimonte Banca S.p.A. - $100,000 (approximately).
3
5. Loan for working capital purposes with B.S.
Geminiano due 3/4/96 - $1,100,000 (approximately).
6. Loan for working capital purposes with B.
Agricola Mantovana due 3/4/96 - $1,100,000
(approximately).
7. Loan for working capital purposes with B.
Popalare Emilia - $1,300,000 (approximately).
8. Loan for working capital purposes with
Cariplo due 12/27/95 - $2,700,000 (approximately).
9. Loan for working capital purposes with Cassa
Di Risp Vignola due 2/8/96 - $700,000
(approximately).
10. Loan for working capital purposes with Cred
Bergamasco - $200,000 (approximately).
11. Loan with Banco Napoli due 11/6/2001 -
$9,400,000 (approximately).
12. Fixed rate loan with Bimer Banca - $137,000
(approximately).
13. See item D.2 above.
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SCHEDULE IV
INVESTMENTS
Investment
Person Issuer Type Amount
- ------ ------ ---- -----------
Marvel IV Holdings Marvel III Holdings Common 100%
Inc. Inc. Stock
Marvel III Holdings Marvel(Parent) Common 100%
Inc. Holdings Inc. Stock
Marvel (Parent) Marvel Holdings Common 100%
Holdings Inc. Inc. Stock
Marvel Common 29%
Entertainment Stock
Group, Inc.
Marvel Holdings Marvel Common 50%
Inc. Entertainment Stock
Group, Inc.
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SCHEDULE V
LIENS
Marvel III Holdings Inc.
1. Lien on 1,000 shares of Common
Stock of Marvel Parent owned by Marvel III in
favor of NationsBank of Georgia, National
Association, pursuant to Marvel III's
Indenture dated February 15, 1994.
Marvel (Parent) Holdings Inc.
1. Lien on 1,000 shares of Common
Stock of Marvel Holdings owned by Marvel
Parent in favor of NationsBank of Georgia,
National Association, pursuant to Marvel
Parent's Indenture dated October 1, 1993.
2. Lien on 9,302,326 shares of Common
Stock of Marvel owned by Marvel Parent in
favor of NationsBank of Georgia, National
Association, pursuant to Marvel III Holdings
Inc.'s Indenture dated February 15, 1994.
3. Lien on 20,000,000 shares of Common
Stock of Marvel owned by Marvel Parent in
favor of NationsBank of Georgia, National
Association, pursuant to Marvel Parent's
Indenture dated October 1, 1993.
Marvel Holdings Inc.
1. Lien on 48,000,000 shares of Common
Stock of Marvel owned by Marvel Holdings in
favor of NationsBank of Georgia, National
Association, pursuant to Marvel Holdings'
Indenture dated April 15, 1993.
Four Star Holdings Corp.
1. Lien on 285,200 shares of Common
Stock of Marvel owned by Four Star in favor
of NationsBank of North Carolina, National
Association pursuant to the Letter of Credit
Agreement and Reimbursement Agreement, dated
April 20, 1994, between Four Star and
NationsBank of North Carolina, National
Association.
2
Meridian Sports Holdings Inc.
1. Lien on 573,599 shares of Common
Stock of Marvel owned by Meridian Sports
Holdings Inc., a Delaware corporation
("MSH"), in favor of Chemical Bank pursuant
to the Meridian Sports Holdings Pledge
Agreement dated as of April 28, 1995 among
MSH, Chemical Bank, as agent under each
Reimbursement Agreement and Credit Agreement
(as defined therein), and Chemical Bank, as
depositary.
2. Lien on 146,600 shares of Common
Stock of Marvel owned by MSH in favor of
NationsBank, National Association
(Carolinas), as collateral agent, pursuant to
the Pledge Agreement dated as of April 28,
1995 between MSH and NationsBank, National
Association (Carolinas), as collateral agent
for each of itself, Bank of America Illinois
and The Toronto-Dominion Bank.
<PAGE>
SCHEDULE VI
Defeased Debt Calculations
The Defeased Debt Amount for each Designated Person listed below
for any date of determination shall be calculated as follows for each such
Designated Person:
Borrower: The Defeased Debt Amount for the Borrower shall be an amount
equal to the sum of:
(i) the greater of (A) the "repurchase price" (assuming a
repurchase date 105 days after the date of determination) of the
aggregate amount of all Debt outstanding under the Marvel III
Indenture as of the repurchase date plus accrued and unpaid interest
thereon through the repurchase date, as determined pursuant to
Section 4.07(a) of the Marvel III Indenture and (B) the "redemption
price" (assuming a redemption date 60 days after the date of
determination) for a "Change of Control" (as defined in the Marvel
III Indenture) of the aggregate amount of all Debt outstanding under
the Marvel III Indenture as of the redemption date, as determined
pursuant to Section 5 of Exhibit B to the Marvel III Indenture, plus
(ii) the greater of (A) the "repurchase price" (assuming a
repurchase date 105 days after the date of determination) of the
aggregate amount of all Debt outstanding under the Marvel Parent
Indenture as of the repurchase date, as determined pursuant to
Section 4.07(a) of the Marvel Parent Indenture and (B) the
"redemption price" (assuming a redemption date 60 days after the date
of determination) for a "Change of Control" (as defined in the Marvel
Parent Indenture) of the aggregate amount of all Debt outstanding
under the Marvel Parent Indenture as of the redemption date, as
determined pursuant to Section 5 of Exhibit A to the Marvel Parent
Indenture, plus
(iii) the greater of (A) the "repurchase price" (assuming a
repurchase date 105 days after the date of determination) of the
aggregate amount of all Debt outstanding under the Marvel Holdings
Indenture as of the repurchase date, as determined pursuant to
Section 4.07(a) of the Marvel Holdings Indenture and (B) the
"redemption price" (assuming a redemption date 60 days after the date
of determination) for a "Change of Control" (as defined in the Marvel
Holdings Indenture) of the aggregate amount of all Debt outstanding
under the Marvel Holdings Indenture as of the redemption date, as
2
determined pursuant to Section 5 of Exhibit B to the Marvel Holdings
Indenture.
Coleman
Guarantor: The Defeased Debt Amount for Coleman Guarantor shall be an
amount equal to the sum of:
(i) the greater of (A) the "repurchase price" (assuming a
repurchase date 105 days after the date of determination) of the aggregate
amount of all Debt outstanding under the Coleman Holdings Indenture as of
the repurchase date plus accrued and unpaid interest thereon through the
repurchase date, as determined pursuant to Section 4.08(a) of the Coleman
Holdings Indenture and (B) the aggregate amount required as of the date of
determination to be deposited with the Trustee (as defined in the Coleman
Holdings Indenture) to effectthe "legal defeasance option" or the "covenant
defeasance option" under the Coleman Holdings Indenture (assuming a redemption
date of July 15, 1996), as provided for in Sections 8.02(1) and 8.02(2) of the
Coleman Holdings Indenture and Section 5 of Exhibit B to the Coleman
Holdings Indenture, plus
(ii) the "Redemption Price" as defined in Section 5 of
Exhibit A to the Coleman Worldwide Indenture (assuming a redemption
date of May 27, 1998) of the aggregate amount of all Debt outstanding
under the Coleman Worldwide Indenture as of the redemption date.
New World
Guarantor: The Defeased Debt Amount for New World Guarantor shall be an
amount equal to the greater of (A) the "repurchase price" (assuming
a repurchase date 105 days after the date of determination) of the
aggregate amount of all Debt outstanding under the NWCG Holdings
Indenture as of the repurchase date, as determined pursuant to
Section 4.07(a) of the NWCG Holdings Indenture and (B) the aggregate
amount required as of the date of determination to be deposited with
the Trustee (as defined in the NWCG Holdings Indenture) to effect
the "legal defeasance option" or the "covenant defeasance option"
under the NWCG Holdings Indenture (assuming a maturity date of
June 15, 1999), as provided for in Sections 8.02(1) and 8.02(2) of
the NWCG Holdings Indenture.
3
As used in this Schedule VI, the following terms shall have the
following meanings:
"Coleman Worldwide Indenture" means the Indenture, dated as of May 27,
1993, made by Coleman Worldwide in favor of Continental Bank, National
Association as trustee pursuant to which Coleman Worldwide issued its Liquid
Yield Option TM Notes due 2013.
"Coleman Holdings Indenture" means the Indenture, dated as of July 15,
1993 made by Coleman Holdings in favor of Continental Bank, National Association
as trustee pursuant to which Coleman Holdings issued its Senior Secured Discount
Notes due 1998 and its Series B Senior Secured Discount Notes due 1998.
"NWCG Holdings Indenture" means the Indenture, dated as of June 30, 1994
made by NWCG Holdings in favor of Nationsbank of Georgia, National Association
as trustee pursuant to which NWCG Holdings issued its Senior Secured Discount
Notes due 1999 and will issue its Series B Senior Secured Discount Notes due
1999.
<PAGE>
EXHIBIT A-1
TO THE SECOND
AMENDED AND
RESTATED
CREDIT AGREEMENT
FORM OF TERM A NOTE
$____________ Dated: December __, 1995
FOR VALUE RECEIVED, the undersigned, MARVEL IV HOLDINGS INC., a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Second Amended and Restated Credit Agreement referred to below)
the aggregate principal amount of the Term A Advances (as defined below) owing
to the Lender by the Borrower pursuant to the Second Amended and Restated Credit
Agreement (as defined below) on the dates and in the amounts specified in the
Second Amended and Restated Credit Agreement, but in no event later than
September 1, 1997.
The Borrower promises to pay interest on the unpaid principal
amount of each Term A Advance from the date of each Term A Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Second Amended and Restated Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citibank, N.A., as Agent, at its offices at 399 Park
Avenue, New York, New York 10043, Account No. 3685-2248, in same day funds.
Each Term A Advance owing to the Lender by the Borrower and the maturity
thereof, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto, which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Second Amended and Restated Credit Agreement
dated as of December __, 1995 (such agreement, as it may hereafter be amended
or modified, being the "Second Amended and Restated Credit Agreement") among
the Borrower, the Lender and certain other lenders parties thereto and Citibank,
N.A., as Agent for the Lender and such other lenders. The Second Amended and
Restated Credit Agreement, among other things,
2
(i) provides for the making of Term A Advances (the "Term A Advances") by the
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from such Term A Advances being evidenced
by this Promissory Note, and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
MARVEL IV HOLDINGS INC.
By:
--------------------------------
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid Unpaid Principal Notation
Date Advance of Prepaid Balance Made by
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EXHIBIT A-2
TO THE SECOND
AMENDED AND
RESTATED
CREDIT AGREEMENT
FORM OF TERM B NOTE
$____________ Dated: December __, 1995
FOR VALUE RECEIVED, the undersigned, MARVEL IV HOLDINGS INC., a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Second Amended and Restated Credit Agreement referred to below)
the aggregate principal amount of the Term B Advances (as defined below) owing
to the Lender by the Borrower pursuant to the Second Amended and Restated Credit
Agreement (as defined below) on the dates and in the amounts specified in the
Second Amended and Restated Credit Agreement, but in no event later than
September 1, 1997.
The Borrower promises to pay interest on the unpaid principal
amount of each Term B Advance from the date of each Term B Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Second Amended and Restated Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citibank, N.A., as Agent, at its offices at 399 Park
Avenue, New York, New York 10043, Account No. 3685-2248, in same day funds.
Each Term B Advance owing to the Lender by the Borrower and the maturity
thereof, and all payments made on account of principal thereof, shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto, which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Second Amended and Restated Credit Agreement
dated as of December __, 1995 (such agreement, as it may hereafter be amended or
modified, being the "Second Amended and Restated Credit Agreement") among the
Borrower, the Lender and certain other lenders parties thereto and Citibank,
N.A., as Agent for the Lender and
2
such other lenders. The Second Amended and Restated Credit Agreement, among
other things, (i) provides for the making of Term B Advances (the "Term B
Advances") by the Lender to the Borrower from time to time in an aggregate
amount not to exceed at any time outstanding the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from such Term B Advances
being evidenced by this Promissory Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
MARVEL IV HOLDINGS INC.
By:
----------------------------------
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid Unpaid Principal Notation
Date Advance of Prepaid Balance Made by
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EXHIBIT A-3
TO THE SECOND
AMENDED AND
RESTATED
CREDIT AGREEMENT
FORM OF REVOLVING CREDIT NOTE
$____________ Dated: December __, 1995
FOR VALUE RECEIVED, the undersigned, MARVEL IV HOLDINGS INC., a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Second Amended and Restated Credit Agreement referred to below)
the aggregate principal amount of the Revolving Credit Advances (as defined
below) owing to the Lender by the Borrower pursuant to the Second Amended and
Restated Credit Agreement (as defined below) on the dates and in the amounts
specified in the Second Amended and Restated Credit Agreement, but in no event
later than September 1, 1997.
The Borrower promises to pay interest on the unpaid principal
amount of each Revolving Credit Advance from the date of each Revolving Credit
Advance until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Second Amended and Restated
Credit Agreement.
Both principal and interest are payable in lawful money of the
United States of America to Citibank, N.A., as Agent, at its offices at 399 Park
Avenue, New York, New York 10043, Account No. 3685-2248, in same day funds.
Each Revolving Credit Advance owing to the Lender by the Borrower and the
maturity thereof, and all payments made on account of principal thereof, shall
be recorded by the Lender and, prior to any transfer hereof, endorsed on the
grid attached hereto, which is part of this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Second Amended and Restated Credit Agreement
dated as of December __, 1995 (such agreement, as it may hereafter be amended or
modified, being the "Second Amended and Restated Credit Agreement") among the
Borrower, the Lender and certain other lenders parties thereto and Citibank,
N.A., as Agent for the Lender and
2
such other lenders. The Second Amended and Restated Credit Agreement, among
other things, (i) provides for the making of revolving credit advances (the
"Revolving Credit Advances") by the Lender to the Borrower from time to time in
an aggregate amount not to exceed at any time outstanding the U.S. dollar amount
first above mentioned, the indebtedness of the Borrower resulting from such
Revolving Credit Advances being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
MARVEL IV HOLDINGS INC.
By:
----------------------------------
Title:
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Principal Paid Unpaid Principal Notation
Date Advance of Prepaid Balance Made by
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EXHIBIT B
TO THE SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated _________, 199_
Reference is made to the Amended and Restated Credit Agreement
dated as of December __, 1995 (as amended or otherwise modified from time to
time, the "Second Amended and Restated Credit Agreement") among MARVEL IV
HOLDINGS INC., a Delaware corporation (the "Borrower"), the Lenders (as defined
in the Second Amended and Restated Credit Agreement) and CITIBANK, N.A., as
Agent for the Lenders (the "Agent"). Terms defined in the Second Amended and
Restated Credit Agreement are used herein with the same meaning.
____________ (the "Assignor") and ___________ (the "Assignee")
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
and the Assignee hereby purchases and assumes from the Assignor, an interest in
and to the Assignor's rights and obligations under the Second Amended and
Restated Credit Agreement as of the date hereof equal to the percentage interest
specified on Annex 1 of all outstanding rights and obligations under the
Facility or Facilities specified on Annex 1. After giving effect to such sale
and assignment, the Assignee's Commitment and the amount of the Advances owing
to the Assignee will be as set forth in Annex 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any Loan
Party or the performance or observance by any Loan Party of any of its
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note or Notes held by the
Assignor and requests that the Agent exchange such Note or Notes for a new Note
or Notes payable to the order of the Assignee in an amount equal to the
Commitment assumed by the Assignee pursuant hereto or new Notes
2
payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and the Assignor in an amount equal to
the Commitment retained by the Assignor under the Second Amended and Restated
Credit Agreement, respectively, as specified on Annex 1.
3. The Assignee (i) confirms that it has received a copy of
the Second Amended and Restated Credit Agreement, together with copies of the
financial statements referred to in Section 4.01 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Second Amended and Restated Credit Agreement; (iii)
confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the
Second Amended and Restated Credit Agreement as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (v) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Second Amended and Restated Credit
Agreement are required to be performed by it as a Lender; [and] (vi) specifies
as its Lending Office (and address for notices) the office set forth beneath its
name on the signature pages hereof [and (vii) attaches the forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Second Amended and Restated Credit Agreement or such other documents as are
necessary to indicate that all such payments are subject to such rates at a rate
reduced by an applicable tax treaty].(1)
4. Following the execution of this Assignment and
Acceptance by the Assignor and the Assignee, it will be delivered to the Agent
for acceptance and recording by the Agent. The effective date of this
Assignment and Acceptance shall be the date of acceptance thereof by the Agent,
unless otherwise specified on Annex 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Agent, as of
the Effective Date, (i) the Assignee shall be a party to the Second Amended and
Restated Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Second
Amended and Restated Credit Agreement.
- ------------
1. Include clause (vii) if the Assignee is organized under the law of a
jurisdiction outside the United States.
3
6. Upon such acceptance and recording by the Agent, from
and after the Effective Date, the Agent shall make all payments under the Second
Amended and Restated Credit Agreement and the Notes in respect of the interest
assigned hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Second Amended and Restated Credit Agreement and the Notes for periods prior
to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
8. This Assignment and Acceptance 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 one and the same agreement. Delivery of
an executed counterpart of Annex 1 to this Assignment and Acceptance by
telecopier shall be as effective as delivery of a manually executed counterpart
of this Assignment and Acceptance.
IN WITNESS WHEREOF, the parties hereto have caused Annex 1 to this Assignment
and Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Annex 1 hereto.
Annex 1
to
Assignment and Acceptance
Dated , 199
As to each Facility in respect of which an interest is being assigned.
Percentage Interest assigned: %
Assignee's Commitment: $
Aggregate outstanding principal
amount of Advances assigned: $
Principal amount of Note payable
to Assignee: $
Principal amount of Note payable
to Assignor: $
Effective Date**: _________________, 199_
[NAME OF ASSIGNOR, as Assignor]
By:
----------------------------------
Title:
[NAME OF ASSIGNEE], as Assignee
By:
-----------------------------------
Title:
Lending Office
(and address for notices):
[Address]
Accepted this ___ day of __________,
199_
CITIBANK, N.A., as Agent
By:
----------------------------------
Title:
- ------------
** This date should be no earlier than the date of acceptance by the Agent.
EXHIBIT C
TO THE SECOND AMENDED
AND RESTATED
CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING
CITIBANK, N.A.
as Agent for the Lenders parties
to the Second Amended and Restated Credit Agreement [Date]
referred to below
399 Park Avenue
New York, New York 10043
Attention: _____________
Ladies and Gentlemen:
The undersigned, MARVEL IV HOLDINGS INC., refers to the Second
Amended and Restated Credit Agreement dated as of December __, 1995 (as amended
or otherwise modified form time to time, the "Second Amended and Restated Credit
Agreement"; the terms defined therein being used herein as therein defined),
among the undersigned, certain Lenders parties thereto and CITIBANK, N.A., as
Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to
Section 2.02 of the Second Amended and Restated Credit Agreement that the
undersigned hereby requests a Borrowing under the Second Amended and Restated
Credit Agreement, and in that connection sets forth below the information
relating to such Borrowing (the "Proposed Borrowing") as required by Section
2.02(a) of the Second Amended and Restated Credit Agreement:
(i) The Business Day of the Proposed Borrowing is ____________,
[199_];
(ii) The Facility under which the Proposed Borrowing is
requested is the ______ Facility.
(iii) The Type of Advances comprising the Proposed Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances];
(iv) The aggregate amount of the Proposed Borrowing is
$__________.
(v) The initial Interest Period for each Eurodollar Rate Advance
made as part of the Proposed Borrowing is _____ month[s].]
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:
(A) the representations and warranties contained in the Loan Documents
are correct in all material respects on and as of the date of such Proposed
Borrowing, before and after giving effect to the Proposed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date,
except to the extent such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties were true,
correct and complete in all material respects on and as of such earlier date;
and
2
(B) no Default has occurred and is continuing, or would result from
such Proposed Borrowing or from the application of the proceeds therefrom.
Very truly yours,
MARVEL IV HOLDINGS INC.
By:
----------------------------------
Title:
EXHIBIT F
TO THE SECOND
AMENDED AND RESTATED
CREDIT AGREEMENT
FORM OF CONFIDENTIALITY LETTER
[BANK LETTERHEAD]
[Date]
Citibank, N.A.
as Agent
399 Park Avenue
New York, NY 10043
[Name and address of Bank
selling a participation or
making an assignment under
the Amended and Restated Credit Agreement referred to below]
Dear Sirs:
We understand that Citibank, N.A. ("Citibank") is acting as
Agent under the Second Amended and Restated Credit Agreement dated as of
December __, 1995 (as amended or otherwise modified from time to time, the
"Second Amended and Restated Credit Agreement"; terms used herein and not
otherwise defined are used as defined therein) among Marvel IV Holdings Inc.
(the "Borrower"), Citibank, as Agent for the Lenders thereunder, the banks and
financial institutions and other institutional lenders party thereto (the
"Lenders"). In connection with our evaluation of a proposed purchase of a
participation in, or acceptance of an assignment of, a portion of the Advances
and Commitments, Citibank and/or a Lender or an affiliate of Citibank or a
Lender have furnished, and will furnish, us with a copy of the Second Amended
and Restated Credit Agreement and non-public information concerning the Borrower
and the Bank (all such non-public information, whether furnished before or after
the date of this letter, and including, without limitation, the financial model
referred to below, collectively the "Transaction Information").
We agree to keep confidential (and to cause our officers,
directors, employees, agents and representatives to keep confidential) all
Transaction Information and, in the event we do not participate or accept an
assignment under the Second Amended and Restated Credit Agreement, at
Citibank's, such Lender's or the Borrower's request, to return (and to cause
such other person to return) to Citibank, such Lender or the Borrower, as the
case may be, all written Transaction Information and all copies thereof,
extracts therefrom and analyses and other materials based thereon, except that
we shall be permitted to disclose details of the Transaction Information (i) to
such of our officers, directors, employees, agents and representatives (which
agents and representatives shall not include any financial institutions)
2
and legal or other advisors who need to know such information in connection with
our evaluation of a possible participation in, or possible acceptance of an
assignment of, Advances and Commitment thereunder and who agree to be bound by
the restrictions set forth herein; (ii) to the extent required by applicable
laws and regulations or by any subpoena or similar legal process (provided that
we will promptly notify the Borrower of such requirement as far in advance of
its disclosure as is practicable to enable the Borrower to seek a protective
order and, to the extent practicable, we will cooperate with the Borrower in
seeking any such order), or requested by any governmental agency or authority
having jurisdiction over us (provided that we will first inform the Borrower of
any such request other than those from bank regulatory authorities or examiners
and, in either case, we will inform any such agency or authority that such
information is subject to this letter agreement); (iii) to the extent Citibank
and the Borrower shall have consented to such disclosure in writing; and (iv) to
the extent that a public announcement or dissemination of such Transaction
Information shall have been made other than as a result of a breach of this
Confidentiality Letter.
We further agree that we will use the Transaction Information
only in connection with our evaluation of becoming a possible participant or
Eligible Assignee under the Second Amended and Restated Credit Agreement.
The undertakings contained herein are for your benefit and the
benefit of the Borrower.
Upon its receipt of this confidentiality letter signed by us, we
understand that Citibank or a Lender may forward to us a financial model for the
periods through 1997 pertaining to the Borrower and the Bank. Such information
will subsequently form part of the Transaction Information for all purposes
hereunder.
We understand that the financial model was prepared in good
faith by Mafco's management based on assumptions believed to be reasonable when
made. However, because assumptions as to future results are inherently subject
to uncertainty and contingencies beyond Mafco's control, actual results of the
Borrower and the Bank may be higher or lower.
[Name of Lender]
By:
----------------------------------
Title:
<PAGE>
EXECUTION COPY
SECOND AMENDED AND RESTATED MAFCO GUARANTY
Dated as of December 15, 1995
From
MAFCO HOLDINGS INC.
as Guarantor
in favor of
THE LENDERS PARTY TO THE AMENDED AND
RESTATED CREDIT AGREEMENT REFERRED TO HEREIN
and
CITIBANK, N.A.
as Agent
<PAGE>
T A B L E O F C O N T E N T S
</TABLE>
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. Guaranty 2
2. Guaranty Absolute 2
3. Waivers 3
4. Subrogation 4
5. Payments Free and Clear of Taxes, Etc 4
6. Representations and Warranties 6
7. Affirmative Covenants 12
(a) Compliance with Laws, Etc 12
(b) Compliance with Environmental Laws 13
(c) Maintenance of Insurance 13
(d) Preservation of Corporate Existence, Etc 13
(e) Visitation Rights 13
(f) Keeping of Books 13
(g) Maintenance of Properties, Etc 14
(h) Performance of Related Documents and FN Documents 14
(i) Collateral Account 14
(j) Reporting Requirements 14
(k) Transactions with Affiliates 17
(l) Mafco Tax Group 18
(m) Notices 18
(n) Certain Payments 18
(o) Prepayment of Advances and Additional Collateral 18
(p) Termination of Financing Statements 20
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
8. Negative Covenants 20
(a) Liens, Etc 21
(b) Lease Obligations 21
(c) Mergers, Etc 21
(d) Sales, Etc. of Assets 21
(e) Dividends, Repurchases, Etc 22
(f) Investments 22
(g) Change in Nature of Business 23
(h) Accounting Changes 23
(i) Debt 23
(j) Charter Amendments 24
(k) Prepayments, Etc. of Debt 24
(l) Amendment, Etc. of Related Documents 24
(m) Negative Pledge 24
(n) Partnerships 24
(o) Capital Expenditures 24
(p) Issuance of Capital Stock 24
(q) Payment Restrictions 25
(r) Restriction on the Revlon Companies 25
9. Amendments, Etc 25
10. Notices, Etc 26
11. No Waiver; Remedies 26
12. Right of Set-off 26
13. Indemnification 26
14. Continuing Guaranty; Assignments
Under the Credit Agreement 27
15. Governing Law; Submission to Jurisdiction;
Waiver of Jury Trial 27
16. Execution in Counterparts; Delivery by Telecopier 28
</TABLE>
<PAGE>
Schedule I - Subsidiaries
Schedule II - Liens
Schedule III - Authorizations, etc.
Schedule IV - Open Years
Schedule V - Debt
Schedule VI - Investments
Exhibit A - Terms of Subordination for Loans to Borrower Parent
Exhibit B - Terms of Subordination for FN Management Incentive Plan
Exhibit C - Terms of New FN Holdings Debt
<PAGE>
SECOND AMENDED AND RESTATED GUARANTY
SECOND AMENDED AND RESTATED GUARANTY dated as of December 15,
1995 made by Mafco Holdings Inc., a Delaware corporation (the
"Guarantor"), in favor of the Lenders (the "Lenders") party to the Credit
Agreement (as defined below) and Citibank, N.A. ("Citibank"), as agent (the
"Agent") for the Lenders.
PRELIMINARY STATEMENTS. (1) Marvel IV Holdings Inc., a
Delaware corporation (the "Borrower"), entered into a Credit Agreement dated as
of July 20, 1994, as amended by the First Amendment dated as of March 10, 1995
(as so amended, the "Original Credit Agreement"), with financial institutions
and other institutional lenders party thereto (the "Original Lenders") and
Citibank, as agent for the Original Lenders. In consideration of the premises
and in order to induce the Original Lenders to make advances under the Original
Credit Agreement, the Guarantor entered into a Guaranty dated July 27, 1994 in
favor of the Original Lenders and Citibank, as agent for the Original Lenders.
(2) Subsequently, the Borrower entered into an Amended and
Restated Credit Agreement dated as of June 29, 1995, as amended by the First
Amendment dated as of October 27, 1995 (said Agreement, as so amended, being the
"Existing Credit Agreement") with the financial institutions and other
institutional Lenders party thereto (the "Existing Lenders") and Citibank, as
agent for the Existing Lenders. In consideration of the premises and in order
to induce the Existing Lenders to make advances under the Existing Credit
Agreement, the Guarantor entered into an Amended and Restated Guaranty dated as
of June 29, 1995 in favor of the Existing Lenders and Citibank, as agent for the
Existing Lenders.
(3) The Borrower has entered into a Second Amended and
Restated Credit Agreement dated as of December 15, 1995 (said Agreement, as it
may hereafter be amended or otherwise modified from time to time, being the
"Credit Agreement"; the terms defined therein and not otherwise defined herein
being used herein as therein defined) with the Lenders and the Agent which
amends and restates the Existing Credit Agreement in its entirety.
(4) It is a condition precedent to the effectiveness of the
Credit Agreement that the Guarantor, as indirect owner of 100 percent of the
outstanding shares of stock of the Borrower, shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to enter into the Credit Agreement, the Guarantor hereby
agrees as follows:
<PAGE>
2
Section 1. Guaranty. The Guarantor hereby unconditionally
guarantees (a) the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of each Loan Party now or
hereafter existing under the Loan Documents, whether for principal, interest
(including, without limitation, interest after the filing of a petition
initiating a proceeding of the type referred to in Section 6.01(e) of the Credit
Agreement, whether or not such interest constitutes an allowed claim for
purposes of such proceeding), fees, expenses or otherwise (such Obligations
being the "Guaranteed Payment Obligations") and (b) the performance when due of
all other Obligations of each Loan Party now or hereafter existing under the
Loan Documents, whether affirmative or negative (such Obligations being the
"Guaranteed Performance Obligations" and, together with the Guaranteed Payment
Obligations, the "Guaranteed Obligations"), and agrees to pay any and all
reasonable expenses (including reasonable counsel fees and expenses) incurred by
the Agent or the Lenders in enforcing any rights under this Guaranty. Without
limiting the generality of the foregoing, the Guarantor's liability shall extend
to all amounts that constitute part of the Guaranteed Payment Obligations and
would be owed by each Loan Party to the Agent or the Lenders under the Loan
Documents but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
such Loan Party.
Section 2. Guaranty Absolute. The Guarantor guarantees that
the Guaranteed Payment Obligations will be paid, and the Guaranteed Performance
Obligations will be performed, strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent or
the Lenders with respect thereto. The Obligations of the Guarantor under this
Guaranty are independent of the Guaranteed Obligations, and a separate action or
actions may be brought and prosecuted against the Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against any Loan Party
or whether the Loan Parties are joined in any such action or actions. The
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of, and the Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any and all of the
following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower or any of its
Subsidiaries or otherwise;
<PAGE>
3
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral for all or any of the Guaranteed Obligations
or any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the
corporate structure or existence of the Borrower, any other Loan Party or any of
their respective Subsidiaries; or
(f) any other circumstance (including, without limitation,
any statute of limitations or any existence of or reliance on any representation
by the Agent or any Lender) that might otherwise constitute a defense available
to, or a discharge of, the Borrower, the Guarantor, any other Loan Party or any
other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or any Lender upon the insolvency,
bankruptcy or reorganization of the Borrower or any other Loan Party or
otherwise, all as though such payment had not been made.
Section 3. Waivers. (a) The Guarantor hereby waives, to the
extent permitted by applicable law, promptness, diligence, notice of acceptance
and any other notice with respect to any of the Guaranteed Obligations and this
Guaranty and any requirement that the Agent or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against the Borrower, any other Loan Party or any other
Person or any Collateral.
(b) The Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
(c) The Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in this
Section 3 are knowingly made in contemplation of such benefits.
<PAGE>
4
Section 4. Subrogation. The Guarantor will not exercise any
rights that it may now or hereafter acquire against the Borrower or any other
insider guarantor that arise from the existence, payment, performance or
enforcement of the Guarantor's Obligations under this Guaranty or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Agent or any Lender against the
Borrower or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Payment
Obligations in respect of the Guaranteed Obligations and this Guaranty shall
have been Fully Satisfied. If any amount shall be paid to the Guarantor in
violation of the preceding sentence at any time prior to the later of the date
on which the Payment Obligations in respect of the Guaranteed Obligations and
this Guaranty have been Fully Satisfied and the Termination Date, such amount
shall be held in trust for the benefit of the Agent and the Lenders and shall
forthwith be paid to the Agent to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising. If (i) the Guarantor shall make payment to the
Agent or any other Lender of all or any part of the Guaranteed Obligations, (ii)
all of the Payment Obligations in respect of the Guaranteed Obligations and this
Guaranty shall be Fully Satisfied and (iii) the Termination Date shall have
occurred, the Agent and the Lenders will, at the Guarantor's request and
expense, execute and deliver to the Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by the Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and
all payments made by the Guarantor hereunder shall be made, in accordance with
Section 2.12 of the Credit Agreement, free and clear of and without deduction
for any and all present or future Taxes. If the Guarantor shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section) such Lender or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Guarantor shall make such deductions and
(iii) the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided,
however, that any such Lender shall designate a different Applicable Lending
Office if, in the judgment of such Lender, such designation would avoid the need
for, or reduce the amount of, any Taxes required to be deducted from or in
respect of any sum payable hereunder to such Lender or the Agent and would not,
in the judgment of such Lender, be otherwise disadvantageous to such Lender.
<PAGE>
5
(b) In addition, the Guarantor agrees to pay any present or
future Other Taxes.
(c) The Guarantor will indemnify each Lender and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto; provided that, in the event such Lender or the Agent, as the case may
be, successfully contests the assessment of such Taxes or Other Taxes or any
liability arising therefrom or with respect thereto, such Lender or the Agent
shall refund, to the extent of any refund thereof made to such Lender or the
Agent, any amounts paid by the Guarantor under this Section in respect of such
Taxes, Other Taxes or liabilities arising therefrom or with respect thereto.
Each Lender and the Agent agree that it will contest such Taxes, Other Taxes or
liabilities if (i) the Guarantor furnishes to it an opinion of reputable tax
counsel acceptable to such Lender or the Agent to the effect that such Taxes or
Other Taxes were wrongfully or illegally imposed and (ii) such Lender or the
Agent determines, in its sole discretion, that it would not be disadvantaged or
prejudiced in any manner whatsoever as a result of such contest. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes,
the Guarantor will furnish to the Agent, at its address referred to in the
Credit Agreement, appropriate evidence of payment thereof. If no Taxes are
payable in respect of any payment hereunder by the Guarantor through an account
or branch outside the United States or on behalf of the Guarantor by a payor
that is not a United States person, the Guarantor will furnish, or will cause
such payor to furnish, to the Agent a certificate from each appropriate taxing
authority or authorities, or an opinion of counsel acceptable to the Agent, in
either case stating that such payment is exempt from or not subject to Taxes.
For purposes of this Section, the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the Code.
(e) Each Lender organized under the laws of a jurisdiction
outside the United States and the Agent, if organized under the laws of a
jurisdiction outside the United States, shall, if requested in writing by the
Guarantor or the Agent (but only so long as such Lender or the Agent remains
lawfully able to do so and only so long as Guarantor is making payments under
this Guaranty), provide the Guarantor and (in the case of any such Lender other
than the Agent) the Agent with two duly completed copies of Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender or the Agent is
entitled to benefits under an income tax treaty to which the United States is a
party that reduces the rate of withholding tax on payments under this Agreement
or the Notes or certifying that the income receivable
<PAGE>
6
pursuant to this Agreement or the Notes is effectively connected with the
conduct of a trade or business in the United States.
(f) For any period with respect to which the Agent or a
Lender has failed to provide the Guarantor with the appropriate forms described
in subsection (e) above (other than if such failure is due to a change in law
occurring after the date on which such person was originally required to provide
such forms, or if such forms are otherwise not required under subsection (e)
above), the Agent or such Lender shall not be entitled to increased payments or
indemnification under subsection (a) or (c) above with respect to Taxes imposed
by the United States; provided, however, that should the Agent or a Lender
become subject to Taxes because of its failure to deliver a form required
hereunder, the Guarantor shall take such steps as the Agent or such Lender shall
reasonably request to assist the Lender to recover such Taxes if, in the
judgment of the Guarantor such steps would avoid the need for, or reduce the
amount of, any Taxes required to be deducted from or in respect of any sum
payable hereunder to the Agent or such Lender and would not, in the judgment of
the Guarantor, be disadvantageous to the Guarantor.
(g) Without prejudice to the survival of any other agreement
of the Guarantor hereunder, the agreements and obligations of the Guarantor
contained in this Section 5 shall survive the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty.
(h) If a Lender shall change its Applicable Lending Office
other than (i) at the request of the Guarantor or (ii) at a time when such
change would not result in this Section 5 requiring the Guarantor to make a
greater payment than if such change had not been made, such Lender shall not be
entitled to receive any greater payment under this Section 5 than such Lender
would have been entitled to receive had it not changed its Applicable Lending
Office.
Section 6. Representations and Warranties. The Guarantor
hereby represents and warrants as follows:
(a) Each of the Relevant Parties (as defined below) (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it owns or
leases property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be licensed
would not have a Material Adverse Effect (with respect to clause (a) of the
definition thereof, the term "Person" shall refer to such Relevant Party) and
(iii) has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted. The Bank is duly and validly organized and is an
existing federal savings bank in good standing under the laws of the United
States
<PAGE>
7
of America with full power and authority to own, lease and operate its
properties and conduct its business as now conducted and as proposed to be
conducted. For purposes of this Guaranty, the term "Relevant Party" shall mean
the Guarantor, M&F, Andrews, Four Star, New Coleman, FN Holdings and FN Parent
(FN Holdings and FN Parent shall collectively be referred to as the "Designated
Relevant Parties").
(b) Set forth on Schedule I hereto is a complete and
accurate list of each Designated New World Subsidiary, the Bank, the Borrower
Parent, C&F Guarantor (collectively, the "Relevant Subsidiaries"), and each
Relevant Party, showing as of the date hereof (as to each such Relevant Party
and Relevant Subsidiary) the jurisdiction of its incorporation or organization,
the number of shares of each class of capital stock authorized, and the number
outstanding, on the date hereof and the percentage of the outstanding shares of
each such class owned (directly or indirectly) in the case of the Guarantor, as
set forth on Schedule I, and in the case of the other Relevant Parties and the
Relevant Subsidiaries, by the Guarantor, and the number of shares covered by all
outstanding options, warrants, rights of conversion or purchase and similar
rights at the date hereof. All of the outstanding capital stock of all of such
Relevant Parties and such Relevant Subsidiaries has been validly issued, is
fully paid and non-assessable and is owned, in the case of the Guarantor, as set
forth on Schedule I, and in the case of the other Relevant Parties and the
Relevant Subsidiaries, by the Guarantor or one or more of its Subsidiaries
(except as set forth in Schedule I) free and clear of all Liens, except those
created by the Collateral Documents and those set forth on Schedule II hereto.
Each such Relevant Subsidiary (other than the Bank) (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed would not have a
Material Adverse Effect (with respect to clause (a) of the definition thereof,
the term "Person" shall refer to the Guarantor) and (iii) has all requisite
corporate power and authority to own or lease and operate its properties and to
carry on its business as now conducted and as proposed to be conducted.
(c) The execution, delivery and performance by each Relevant
Party of this Guaranty, each other Loan Document and each Related Document to
which it is or is to be a party, the execution, delivery and performance by each
Relevant Party and the Bank of each FN Document to which it is or is to be a
party and the consummation by each Relevant Party and the Bank of the
transactions contemplated hereby and thereby, are within such Person's corporate
powers, have been duly authorized by all necessary corporate action, and do not
(i) contravene such Person's charter or by-laws, (ii) violate any law
(including, without limitation, the Exchange Act), rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination or
award, (iii) conflict with or result in the breach of, or constitute a default
under, any loan agreement, contract, indenture, mortgage, deed of trust, lease
or
<PAGE>
8
other instrument binding on or affecting such Person, any of its Subsidiaries or
any of its or their properties, the effect of which conflict, breach or default
is reasonably likely to have a Material Adverse Effect (with respect to clause
(a) of the definition thereof, the term "Person" shall refer to such Relevant
Party or the Bank, as the case may be) or (iv) except for the liens created by
the Collateral Documents and the voting trust agreements referred to in Sections
3.01(g)(xvi)(B), 3.01(g)(xvi)(C), 3.02(i)(xv)(B), 3.02(i)(xv)(C) and
3.02(i)(xv)(D) of the Original Credit Agreement, result in or require the
creation or imposition of any Lien upon or with respect to any of the properties
of such Relevant Party or the Bank, as the case may be. Neither any Relevant
Party nor the Bank is in violation of any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach of any
such contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which would be reasonably likely to
have a Material Adverse Effect (with respect to clause (a) of the definition
thereof, the term "Person" shall refer to such Relevant Party or the Bank, as
the case may be).
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for (i) the due execution, delivery and performance by any Relevant
Party of this Guaranty, each other Loan Document and each Related Document to
which it is or is to be a party, the due execution, delivery and performance by
any Relevant Party or the Bank of each FN Document to which it is or is to be a
party or for the consummation by such Relevant Party or the Bank of the
transactions contemplated hereby and thereby, (ii) the grant by any Relevant
Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the
perfection or maintenance of the Liens created by the Collateral Documents
(including the first priority nature thereof) or (iv) the exercise by the Agent
or any Lender of its rights under the Loan Documents or the remedies in respect
of the Collateral pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on Schedule III
hereto pertaining to each Relevant Party or the Bank, as the case may be, all of
which (other than as described in such Schedule) have been duly obtained, taken,
given or made and are in full force and effect and except as may be required in
connection with the disposition of any portion of the Collateral by laws
affecting the offering and sale of securities generally; provided, however, that
no representation or warranty is made as to any consent of, authorization,
approval or other action by, or notice to or filing with, any banking agency or
regulatory body applicable to the Agent. All applicable waiting periods in
connection with the transactions contemplated hereby will have expired without
any action having been taken by any competent authority restraining, preventing
or imposing materially adverse conditions upon the rights of the Relevant
Parties freely to transfer or otherwise dispose of, or to create any Lien on,
any properties now owned or hereafter acquired by any of them.
(e) (i) This Guaranty has been, and each other Loan
Document and each Related Document to which any Relevant Party is a party when
delivered under the Original
<PAGE>
9
Credit Agreement, the Existing Credit Agreement or the Credit Agreement has been
or will have been, as the case may be, duly executed and delivered by each
Relevant Party thereto. This Guaranty is, and each other Loan Document and each
Related Document to which any Relevant Party is a party when delivered under the
Original Credit Agreement, the Existing Credit Agreement or the Credit Agreement
is or will be, as the case may be, the legal, valid and binding obligations of
such Relevant Party, enforceable against such Relevant Party in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditor's rights
generally.
(ii) Each FN Document and each Related Document to which each
FN Party is a party will be the legal, valid and binding obligation of such FN
Party, enforceable against such FN Party in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditor's rights generally.
(f) The Consolidated balance sheets of the Bank and its
Subsidiaries as at December 31, 1994, and the related Consolidated and
consolidating statements of income and cash flows of the Bank and its
Subsidiaries for the fiscal year then ended, accompanied in the case of the
aforementioned Consolidated balance sheets and related Consolidated statements
of income and cash flows by an opinion of KPMG Peat Marwick, independent public
accountants, and the Consolidated balance sheets of the Bank and its
Subsidiaries as at September 30, 1995, and the related Consolidated statements
of income and cash flows of the Bank and its Subsidiaries for the nine months
then ended, duly certified by the chief financial officer of the Bank, copies of
which have been furnished to each Lender, fairly present, subject, in the case
of said balance sheets as at September 30, 1995, and said statements of income
and cash flows for the three months then ended, to year-end audit adjustments,
the Consolidated financial condition of the Bank and its Subsidiaries as at such
dates and the Consolidated results of the operations of the Bank and its
Subsidiaries for the periods ended on such dates, all in accordance with
generally accepted accounting principles applied on a consistent basis, and
since December 31, 1994, there has been no Material Adverse Change relating to
the Bank.
(g) There is no pending or threatened action, proceeding,
governmental investigation or arbitration affecting any Relevant Party or the
Bank before any court, governmental agency or arbitrator, which is reasonably
likely to have a Material Adverse Effect (with respect to clause (a) of the
definition thereof, the term "Person" shall refer to such Relevant Party or the
Bank, as the case may be) or that purports to affect the legality, validity or
enforceability of this Guaranty, any other Loan Document, any Related Document
or any Transaction Document or the consummation of the Transaction and the other
transactions contemplated hereby or thereby.
<PAGE>
10
(h) The Guarantor and its ERISA Affiliates are in
compliance in all material respects with the applicable provisions of ERISA and
the Code with respect to each Plan thereof. No ERISA Event has occurred or is
reasonably expected to occur with respect to any Plan of the Guarantor or any of
its ERISA Affiliates. The amount of all Unfunded Pension Liabilities under all
Plans of the Guarantor and its ERISA Affiliates does not exceed $60,000,000.
Neither the Guarantor nor any of its ERISA Affiliates has made contributions or
incurred any Withdrawal Liability to any Multiemployer Plan within the past five
years, and it is not reasonably expected that such contributions shall be made
or required or that such liability shall be incurred in any such case in amounts
or under circumstances that would be reasonably likely to result in a material
liability to such Relevant Party or any of its ERISA Affiliates. Schedule B
(Actuarial Information) to the 1992 annual report (Form 5500 Series) for each
Plan of each Relevant Party and each of its ERISA Affiliates, copies of which
have been filed with the Internal Revenue Service and furnished to the Lenders,
is complete and accurate in all material respects and fairly presents the
funding status of such Plan, and since the date of such Schedule B there has
been no material adverse change in such funding status. The obligations of each
Relevant Party and its Subsidiaries for postretirement benefits to be provided
under Plans which are welfare benefit plans (as defined in Section 3(l) of
ERISA) are not reasonably likely to have a Material Adverse Effect (in the case
of the clause (a) of the definition thereof, the term "Person" shall refer to
such Relevant Party).
(i) The operations and properties of the Guarantor, each
Relevant Party and the Bank are in substantial compliance with all Environmental
Laws, all necessary Environmental Permits have been obtained and are in effect
for the operations and properties of each such Person and each such Person is in
compliance with all such Environmental Permits, except, as to all of the above,
where the failure to do so would not be reasonably likely to have a Material
Adverse Effect (in the case of clause (a) of the definition thereof, the term
"Person" shall mean such Person); and no circumstances exist that are reasonably
likely to (i) form the basis of an Environmental Action against such Person or
any of its properties or (ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law that would, in the case of either (i) or (ii) above, be
reasonably likely to have a Material Adverse Effect (in the case of clause (a)
of the definition thereof, the term "Person" shall mean such Person).
(j) Each A Company, each Designated Operating Company, the
Bank and each of the Subsidiaries of the foregoing (i) except with respect to
MacAndrews & Forbes Group, Incorporated and its Subsidiaries, has filed all tax
returns (Federal, state, local or foreign) required to be filed, (ii) except
with respect to MacAndrews & Forbes Group, Incorporated and its Subsidiaries,
has caused to be filed all tax returns (Federal, state, local or foreign)
required to be filed or (iii) has been included in all tax returns (Federal,
state, local or foreign) required to be filed by each A Company, each Designated
Operating Company, the Bank and each of the Subsidiaries of the foregoing (other
than state, local and
<PAGE>
11
foreign tax returns required to be filed by MacAndrews & Forbes Group,
Incorporated and its Subsidiaries) in which it is required to be included and
has paid all taxes shown to be due on all of the returns referred to in this
Section 6(j), together with applicable interest and penalties.
(k) Set forth on Schedule IV hereto is a complete and
accurate list, as of the date hereof, of each taxable year of the Guarantor for
which Federal income tax returns have been filed and for which the expiration of
the applicable statute of limitations for assessment or collection has not
occurred by reason of extension or otherwise (an "Open Year").
(l) The aggregate unpaid amount, as of the date hereof, of
adjustments to the Federal income tax liability of the Guarantor and its
Subsidiaries proposed by the Internal Revenue Service with respect to Open Years
does not exceed $0. No issues have been raised by the Internal Revenue Service
in respect of Open Years that, in the aggregate, would be reasonably likely to
have a Material Adverse Effect (with respect to clause (a) of the definition
thereof, the term "Person" shall refer to the Guarantor).
(m) The aggregate unpaid amount, as of the date hereof, of
adjustments to the state, local and foreign tax liability of each A Company,
each Designated Operating Company and the Bank and each of the Subsidiaries of
the foregoing required to be or actually included with such A Company or
Designated Operating Company for any taxable year in any consolidated, combined
or unitary state, local and foreign tax return proposed by all state, local and
foreign taxing authorities (other than amounts arising from adjustments to
Federal income tax returns) does not exceed $12,000,000. No issues have been
raised by such taxing authorities that, in the aggregate, would be reasonably
likely to have a Material Adverse Effect (with respect to clause (a) of the
definition thereof, the term "Person" shall refer to the Guarantor).
(n) As of the date hereof, based upon currently available
information pertaining to the consolidated federal income tax return for the
year ended December 31, 1994 to be filed by the affiliated group of corporations
with respect to which Mafco files a consolidated federal income tax return (the
"Group"), as of December 31, 1994 the consolidated net operating loss (including
carryforwards) of the Group for federal income tax purposes, free of the
limitations under Sections 382 and 383 of the Code and the separate return
limitation year rules and the consolidated return change of ownership rules
under Section 1502 of the Code and the regulations thereunder, is not less than
$2,200,000,000 for regular tax purposes and is not less than $1,000,000,000 for
alternative minimum tax purposes.
(o) Neither the Guarantor nor any Relevant Party nor the
Bank is an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter"
<PAGE>
12
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. Neither the making of any Advances, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate any
provision of such Act or any rule, regulation or order of the Securities and
Exchange Commission thereunder.
(p) Each Relevant Party is, individually and together with
its Subsidiaries, Solvent, and the Bank is, individually and together with its
Subsidiaries, Solvent.
(q) Set forth on Schedule V hereto is a complete and
accurate list of all Debt (other than intercompany Debt and Debt under the Loan
Documents) of each Relevant Party that imposes any material obligation or
material restriction on such Relevant Party, showing as of the date hereof the
principal amount outstanding thereunder, and there is no other agreement,
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument evidencing Debt that imposes any material Obligation or material
restriction on any Relevant Party.
(r) Set forth on Schedule VI hereto is a complete and
accurate list of all Investments (other than intercompany Debt) held by each
Relevant Party, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
(s) There are no conditions precedent to the effectiveness
of this Guaranty that have not been satisfied or waived.
(t) The Guarantor has, independently and without reliance
upon the Agent or any Lender and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Guaranty.
(u) Marvel is entitled to be included in the consolidated
return of Mafco pursuant to Section 1504(a)(3) of the Code and has been so
included since March 26, 1993.
Section 7. Affirmative Covenants. The Guarantor covenants and
agrees that, so long as any part of the Advances shall remain unpaid or any
Lender shall have any Commitment, the Guarantor will:
(a) Compliance with Laws, Etc. Comply, and cause each
other Relevant Party to comply, in all material respects with all applicable
laws, rules, regulations and orders (such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property except to the extent
contested in good faith), the failure to comply with which would, individually
or in the aggregate, be reasonably likely to have a Material Adverse
<PAGE>
13
Effect (with respect to clause (a) of the definition thereof, the term "Person"
shall refer to the Guarantor).
(b) Compliance with Environmental Laws. Comply and cause
each other Relevant Party and all lessees and all other Persons occupying its
properties to comply, in all material respects, with all Environmental Laws and
Environmental Permits applicable to its operations and properties; obtain and
renew all Environmental Permits necessary for its operations and properties; and
conduct, and cause each other Relevant Party to conduct, any investigation,
study, sampling and testing, and undertake any cleanup, removal, remedial or
other action necessary to remove and clean up all Hazardous Materials from any
of its properties, in accordance with the requirements of all Environmental
Laws; provided, however, that neither the Guarantor nor any Relevant Party shall
be required to undertake any such cleanup, removal, remedial or other action to
the extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(c) Maintenance of Insurance. Maintain, and cause each
other Relevant Party to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which the Guarantor or such other
Relevant Party operates.
(d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each Relevant Party to preserve and maintain, its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that neither the Guarantor nor any other Relevant Party shall be required to
preserve any right or franchise if the Board of Directors of the Guarantor or
such other Relevant Party shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Guarantor or such other
Relevant Party, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to the Guarantor, such other Relevant
Party or the Lenders.
(e) Visitation Rights. At any reasonable time and from time
to time, upon reasonable prior notice, permit the Agent or any of the Lenders or
any agents or representatives thereof, to the extent reasonably requested to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Guarantor and any other Relevant Party, and
to discuss the affairs, finances and accounts of the Guarantor and any of the
Relevant Parties with any of their officers or directors and with their
independent certified public accountants.
(f) Keeping of Books. Keep, and cause each other Relevant
Party to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and business
of the Guarantor and each such other
<PAGE>
14
Relevant Party to the extent necessary to permit the preparation of the
financial statements required to be delivered hereunder.
(g) Maintenance of Properties, Etc. Maintain and preserve,
and cause each other Relevant Party to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(h) Performance of Related Documents and FN Documents.
Perform and observe, and cause each other Relevant Party to perform and observe,
all of the terms and provisions of each Related Document to which it is a party
and each FN Document to which it is a party to be performed or observed by it,
maintain, and cause each other Relevant Party to maintain, each such Related
Document and each such FN Document in full force and effect, enforce, and cause
each other Relevant Party to enforce, each such Related Document and each such
FN Document in accordance with its terms, take, and cause each other Relevant
Party to take, all such action to such end as may be from time to time requested
by the Agent and, upon request of the Agent, make, and cause each other Relevant
Party to make, to each other party to each such Related Document and each such
FN Document such demands and requests for information and reports or for action
as such Relevant Party is entitled to make under such Related Document or such
FN Document, as the case may be.
(i) Collateral Accounts. Maintain the Mafco Collateral
Accounts with Citibank pursuant to the terms of the Mafco Security Agreement.
(j) Reporting Requirements. Furnish to the Lenders through
the Agent:
(i) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each fiscal year of the
Bank, Consolidated balance sheets of the Bank and its Subsidiaries as of the end
of such quarter and Consolidated statements of earnings, cash flows and
stockholders' equity of the Bank and its Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter,
certified (subject to normal year-end audit adjustment and the absence of
footnotes) on behalf of the Bank by the chief financial officer of the Bank;
(ii) as soon as available and in any event within 105 days
after the end of each fiscal year of the Bank, a copy of the annual audit report
for such year for the Bank and its Subsidiaries, containing financial statements
for such year certified in a manner reasonably acceptable to the Required
Lenders by KPMG Peat Marwick or other independent public accountants reasonably
acceptable to the Required Lenders;
<PAGE>
15
(iii) as soon as available and in any event no later than
February 1 of each fiscal year of the Bank, forecasts prepared by management of
the Bank for such fiscal year, in form satisfactory to the Agent, of balance
sheets, income statements and cash flow statements of the Bank on a quarterly
basis for the term of the Facility;
(iv) promptly after the sending or filing thereof, copies of
any filings and statements that any Relevant Party files with the Securities and
Exchange Commission or any national securities exchange;
(v) promptly and in any event within (A) thirty days after
the Guarantor knows or has reason to know that any ERISA Event with respect to
the Guarantor or any of its ERISA Affiliates has occurred, a statement
describing such ERISA Event and the action, if any, that the Guarantor or such
ERISA Affiliate proposes to take with respect thereto, (B) thirty days either
after receipt thereof by the Guarantor or after the Guarantor knows or has
reason to know of the receipt thereof by any of its ERISA Affiliates from the
sponsor of a Multiemployer Plan of the Guarantor or any of its ERISA Affiliates,
a copy of each notice received by any such Person concerning the imposition of
Withdrawal Liability upon such Person, the reorganization or termination of such
Multiemployer Plan, or the amount of the liability incurred, or that may be
incurred, by the Guarantor or any of its ERISA Affiliates in connection with any
such event and (C) ten Business Days after either receipt thereof by the
Guarantor or after the Guarantor knows or has reason to know of the receipt
thereof by any of its ERISA Affiliates, copies of each notice from the PBGC
stating its intention to terminate any Plan of the Guarantor or any of its ERISA
Affiliates or to have a trustee appointed to administer any such Plan; provided
that, in the case of any event that occurs in clause (A), (B) or (C) hereof,
such event has a Material Adverse Effect (in the case of clause (a) of the
definition thereof, "Person" shall refer to the Guarantor);
(vi) in the event of any change in GAAP from the date of the
financial statements referred to in Section 6(f) and upon delivery of any
financial statement required to be furnished under clauses (i) or (ii) of this
Section 7(j), a statement of reconciliation conforming any information contained
in such financial statement with GAAP as in effect on the date of the financial
statements referred to in Section 6(f);
(vii) promptly upon any officer of any Relevant Party or the
Bank obtaining knowledge thereof, written notice of (A) the institution or non-
frivolous threat of any action, suit, proceeding, governmental investigation or
arbitration against or affecting such Relevant Party or the Bank or any property
of such Relevant Party or the Bank (any such action, suit, proceeding,
investigation or arbitration being a "Proceeding") or (B) any material
development in any proceeding that is already pending, where such Proceeding or
development has not previously been disclosed by any Relevant
<PAGE>
16
Party or the Bank to the Lenders and would be reasonably likely to have a
Material Adverse Effect (in the case of clause (a) of the definition of Material
Adverse Effect, the term "Person" shall refer to such Relevant Party or the
Bank, as the case may be); together in each case with such other information as
any Lender through the Agent may reasonably request to enable the Lenders and
their counsel to evaluate such matters;
(viii) promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities of any
Relevant Party pursuant to the terms of any indenture, loan or credit or similar
agreement and not otherwise required to be furnished to the Lenders pursuant to
any other clause of this Section 7(j);
(ix) promptly upon receipt thereof, copies of all notices,
requests and other documents received by the Guarantor or any Relevant Party
under or pursuant to any Related Document and, from time to time upon request by
the Agent, such information and reports regarding the Related Documents as the
Agent may reasonably request;
(x) within 10 days after receipt, copies of all Revenue
Agent Reports (Internal Revenue Service Form 886), or other written proposals of
the Internal Revenue Service, that propose, determine or otherwise set forth
positive adjustments to the Federal income tax liability of the affiliated group
(within the meaning of Section 1504(a)(1) of the Code) of which the Guarantor is
a member aggregating $10,00,000 or more;
(xi) promptly, and in any event within five Business Days
after the due date (with extensions) for filing the final Federal income tax
return in respect of each taxable year, a certificate of the Guarantor (a "Tax
Certificate"), signed on behalf of the Guarantor by the President or the chief
financial officer of the Guarantor, stating that the Guarantor, as the common
parent of the affiliated group (within the meaning of Section 1504(a)(1) of the
Code) of which the Guarantor is a member, has paid to the Internal Revenue
Service the full amount shown as due on such final Federal income tax return;
(xii) promptly after the occurrence thereof, notice of any
condition or occurrence on any property of the Guarantor or any other Relevant
Party or the Bank that results in a material noncompliance by the Guarantor or
such other Relevant Party or the Bank with any Environmental Law or
Environmental Permit or would be reasonably likely to (i) form the basis of an
Environmental Action against the Guarantor or any other Relevant Party or the
Bank or any such property that would be reasonably likely to have a Material
Adverse Effect (in the case of clause (a) of the definition of Material Adverse
Effect, the term "Person" shall refer to the Guarantor
<PAGE>
17
and the Bank) or (ii) cause any such property to be subject to any restrictions
on ownership, occupancy, use or transferability under any Environmental Law or
Environmental Permit or would be reasonably likely to (i) form the basis of an
Environmental Action against the Guarantor or any Relevant Party or the Bank or
such property that could have a Material Adverse Effect (in the case of clause
(a) of the definition of Material Adverse Effect, the term "Person" shall refer
to the Guarantor and the Bank) or (ii) cause any such property to be subject to
any restrictions on ownership, occupancy, use or transferability under any
Environmental Law;
(xiii) promptly after the execution thereof, copies of any
regulatory agreement entered into by the Bank;
(xiv) promptly upon any officer of the Bank or the Guarantor
obtaining knowledge thereof, written notice of any regulatory action or any
proposed regulatory actions that relates specifically to the Bank or any of its
Subsidiaries and promptly upon receipt thereof, copies of any notices made by
any regulatory agency having supervisory authority over the Bank that relates
specifically to the Bank or any of its Subsidiaries;
(xv) promptly, and in any event within 30 days after the end
of each fiscal quarter of the Guarantor, a certificate of the chief financial
officer of the Guarantor stating that as of the end of such fiscal quarter the
Guarantor is not required to take any of the actions described in Section 7(o)
hereof, together with a schedule in form and substance reasonably satisfactory
to the Agent setting forth in reasonable detail the computations and other
information upon which such certification is based (including, without
limitation, computations of the Defeased Debt Amount and Net Equity Value with
respect to each Designated Person);
(xvi) promptly after the making of any payment to Mafco by any
Person under any FN Tax Agreement, a certificate signed on behalf of the
Guarantor by the president or chief financial officer of the Guarantor, stating
the amount of such payment, together with a schedule in form and substance
reasonably satisfactory to the Agent setting forth in reasonable detail the
computations and other information on which the amount of such payment was
calculated; and
(xvii) such other information respecting the condition
(financial or otherwise), operations, assets or business of the Guarantor or any
other Relevant Party or the Bank as any Lender through the Agent may from time
to time reasonably request.
(k) Transactions with Affiliates. Conduct, and cause each
of the Relevant Parties to conduct, all transactions otherwise permitted under
the Loan Documents with any
<PAGE>
18
of their Affiliates (other than between any Relevant Party and any Subsidiary of
such Relevant Party) on terms that are fair and reasonable and no less favorable
to the Guarantor or such other Relevant Party than it would obtain in a
comparable arm's-length transaction with a Person that is not an Affiliate;
provided, however, that for purposes of this Section 7(k), the term "Affiliate"
shall not include any officer or director of the Guarantor or such Subsidiary,
as the case may be, who does not possess directly or indirectly the power to
vote 5% or more of the Voting Stock of the Guarantor or its Subsidiaries;
provided further that nothing in this Section 7(k) shall restrict the
performance by the parties to the Related Documents of their respective
obligations thereunder.
(l) Mafco Tax Group. Cause each A Company and each of the
domestic Subsidiaries of Borrower Parent (other than the Subsidiaries of
Marvel), Coleman Guarantor (other than the Subsidiaries of Coleman) and First
Gibraltar (Parent) Holdings Inc. (other than the Subsidiaries of the Bank) to
maintain, its status as a member of the affiliated group (within the meaning of
Section 1504(a)(1) of the Code) of which the Guarantor is the common parent.
(m) Notices. Furnish to the Borrower each of the notices
required to be delivered by the Borrower pursuant to Section 5.01(k) of the
Credit Agreement relating to the Guarantor or any of its Subsidiaries (other
than the Borrower and its Subsidiaries) within the time periods specified for
the delivery of such notices in such Section 5.01(k).
(n) Certain Payments. Cause any advance made by FN Holdings
or FN Parent to Borrower Parent to be subordinated to all Obligations of the
Borrower Parent under the Loan Documents upon the terms and conditions set forth
in Exhibit A hereto.
(o) Prepayment of Advances and Additional Collateral. (i)
At any time that the ratio of (A) Net Residual Value plus the amount, if any, on
deposit in the Second Mafco Collateral Account plus the value (as shall be
determined in a manner agreed upon by the Guarantor and the Supermajority
Lenders at the time of the pledge of such collateral) of the collateral, if any,
previously pledged pursuant to the proviso in this Section 7(o)(i), in each case
at such time to (B) the aggregate principal amount of all Advances then
outstanding is less than 3 to 1, the Guarantor shall, on the Business Day
immediately following the date of such event, either (x) cause the Borrower to
prepay the Advances, (y) deposit cash in the Second Mafco Collateral Account, or
(z) take any combination of the actions specified in clauses (x) and (y), in any
such case in an amount such that the ratio of the sum of Net Residual Value at
such time plus the amount, if any, on deposit in the Second Mafco Collateral
Account plus the value (as shall be determined in a manner agreed upon by the
Guarantor and the Supermajority Lenders at the time of the pledge of such
collateral) of the collateral, if any, previously pledged pursuant to the
proviso in this Section 7(o)(i), in each case at such time, to the aggregate
principal amount of all Advances then outstanding shall be 3 to 1 or greater;
provided, however, that notwithstanding the foregoing, if, following the
<PAGE>
19
date of any such deposit, the Guarantor and the Supermajority Lenders shall have
agreed to substitute for the cash collateral on deposit in the Second Mafco
Collateral Account, other real and/or personal property of the Guarantor and its
Subsidiaries to secure the Obligations of the Borrower and the other Loan
Parties under the Loan Documents, the Guarantor shall, or shall cause the
appropriate Subsidiary to, take all action necessary to pledge, assign or grant
a security interest in such other collateral as the Supermajority Lenders may
reasonably request. Upon the pledge, assignment and granting of a security
interest in such other collateral, the Agent shall pay and release, free of the
Lien created under the Mafco Security Agreement to Mafco or at its order and at
the request of Mafco, the amount on deposit in the Second Mafco Collateral
Account.
(ii) At any time that the Net Equity Value of at least two of
Coleman, Marvel, MCG or New World, on an individual basis, is not greater than
or equal to $150,000,000 (each such Person necessary to meet such requirement
whose Net Equity Value is less than such minimum amount being referred to herein
as a "Clause (ii) Person"), the Guarantor shall on the Business Day immediately
following the date of such event, either (x) deposit cash in the Second Mafco
Collateral Account, (y) pledge, or cause one of its Subsidiaries to pledge, upon
terms and conditions reasonably satisfactory to the Supermajority Lenders,
shares of common stock of a corporation that is publicly traded on a national
stock exchange or on the Nasdaq National Market System or (z) take any
combination of the actions specified in clauses (x) and (y), in any such case in
an aggregate amount such that the sum of (A) the aggregate amount of all
deposits made pursuant to clause (x) in connection with the failure of the Net
Equity Value of such Clause (ii) Person to satisfy such minimum amount and the
aggregate amount of all previous deposits, if any, made pursuant to clause (x)
in connection with the failure of the Net Equity Value of such Clause (ii)
Person to satisfy such minimum amount, plus (B) 50% of the aggregate value
(based on the average of the closing prices of such shares on a national stock
exchange or on the Nasdaq National Market System during the relevant Calculation
Period) of the common stock pledged pursuant to clause (y) in connection with
the failure of the Net Equity Value of such Clause (ii) Person to satisfy such
minimum amount and 50% of the aggregate value (based on the average of the
closing prices of such shares on a national stock exchange or the Nasdaq
National Market System during the relevant Calculation Period) of all prior
pledges of common stock, if any, made pursuant to clause (y) in connection with
the failure of the Net Equity Value of such Clause (ii) Person to satisfy such
minimum amount, plus (C) the Net Equity Value of such Clause (ii) Person, plus
(D) at the option of Mafco, the Net Equity Value of the Person listed above
which is not satisfying either the minimum amount requirements in this Section
7(o)(ii) or in Section 7(o)(iii) below (but only in the event that such Net
Equity Value is not being added to the Net Equity Value of another Person to
satisfy the requirements of this Section 7(o)(ii) or the requirements of Section
7(o)(iii) below), equals $150,000,000. Such cash collateral or pledged shares
shall secure the obligations of the Loan Parties under the Loan Documents.
<PAGE>
20
(iii) At any time that the Net Equity Value of at least one
of Coleman, Marvel, MCG or New World (other than the two Persons satisfying the
requirements specified in Section 7(o)(ii) above), on an individual basis, is
not greater than or equal to $200,000,000 (the Person necessary to meet such
requirement whose Net Equity Value is less than such minimum amount being
referred to herein as the "Clause (iii) Person"), the Guarantor shall on the
Business Day immediately following the date of such event, either (x) deposit
cash in the Second Mafco Account, (y) pledge, or cause one of its Subsidiaries
to pledge, upon terms and conditions reasonably satisfactory to the
Supermajority Lenders, shares of common stock of a corporation that is publicly
traded on a national stock exchange or on the Nasdaq National Market System or
(z) take any combination of the actions specified in clauses (x) and (y), in any
such case in an aggregate amount such that the sum of (A) the aggregate amount
of all deposits made pursuant to clause (x) in connection with the failure of
the Net Equity Value of such Clause (iii) Person to satisfy such minimum amount
and the aggregate amount of all previous deposits, if any, made pursuant to
clause (x) in connection with the failure of the Net Equity Value of such Clause
(iii) Person to satisfy such minimum amount, plus (B) 50% of the aggregate value
(based on the average of the closing prices of such shares on a national stock
exchange or on the Nasdaq National Market System during the relevant Calculation
Period) of the common stock pledged pursuant to clause (y) in connection with
the failure of the Net Equity Value of such Clause (iii) Person to satisfy such
minimum amount and 50% of the aggregate value (based on the average of the
closing prices of such shares on a national stock exchange or the Nasdaq
National Market System during the relevant Calculation Period) of all prior
pledges of common stock, if any, made pursuant to clause (y) in connection with
the failure of the Net Equity Value of such Clause (iii) Person to satisfy such
minimum amount, plus (C) the Net Equity Value of such Clause (iii) Person, plus
(D) at the option of Mafco, the Net Equity Value of the Person listed above
which is not satisfying either the minimum amount requirements in this Section
7(o)(iii) or in Section 7(o)(ii) above (but only in the event that such Net
Equity Value is not being added to the Net Equity Value of another Person to
satisfy the requirements of Section 7(o)(ii) above), equals $200,000,000. Such
cash collateral or pledged shares shall secure the obligations of the Loan
Parties under the Loan Documents.
(p) Termination of Financing Statements. Upon the request
of the Agent, and at the expense of the Guarantor, within 10 days after such
request, furnish to the Agent proper termination statements on Form UCC-3
covering such financing statements as the Agent may reasonably request that were
listed in the completed requests for information referred to in Sections
3.01(g)(viii)(3), 3.01(g)(ix) and 3.02(j)(viii) of the Original Credit Agreement
and Sections 3.01(f)(vii) and 3.01(f)(viii) of the Existing Credit Agreement.
Section 8. Negative Covenants. The Guarantor covenants and
agrees that, so long as any of the Advances shall remain unpaid or any Lender
shall have any Commitment, the Guarantor will not:
<PAGE>
21
(a) Liens, Etc. Create or suffer to exist, or permit any
Relevant Party to create or suffer to exist, any Lien, upon or with respect to
any of its properties, whether now owned or hereafter acquired, or sign or file,
or permit any Relevant Party to sign or file, under the Uniform Commercial Code
of any jurisdiction, a financing statement that names the Guarantor or any other
Relevant Party as debtor, or sign, or permit any Relevant Party to sign, any
security agreement authorizing any secured party thereunder to file such
financing statement, or assign, or permit any other Relevant Party to assign,
any right to receive income, other than the following Liens: (i) Liens created
by the Loan Documents; (ii) the Liens described on Schedule II hereto, provided
that, in the event any property subject to any such Lien is released from such
Lien, such released property may not thereafter be subjected to any Lien other
than Liens created by the Loan Documents; (iii) mechanics', materialmen's,
carriers' and similar Liens arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30 days or which are
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained; (iv) Liens for taxes, assessments and
governmental charges or levies not yet due and payable or which are being
contested in good faith and by proper proceedings and as to which appropriate
reserves are being maintained; (v) judgment or other similar Liens, provided
that there shall be no period of more than 10 consecutive days during which a
stay of enforcement of the related judgment shall not be in effect; and (vi)
Liens on shares of common stock of Marvel required to be pledged by Four Star
pursuant to the terms of the Letter of Credit and Reimbursement Agreement listed
on Schedule V hereto.
(b) Lease Obligations. Permit the Designated Relevant
Parties to create, incur, assume or suffer to exist, any obligations as lessee
(i) for the rental or hire of real or personal property in connection with any
sale and leaseback transaction, or (ii) for the rental or hire of other real or
personal property of any kind under leases or agreements to lease having an
original term of one year or more.
(c) Mergers, Etc. Merge into or consolidate with any Person
or permit any Person to merge into it, or permit any other Relevant Party to do
so.
(d) Sales, Etc. of Assets. (i) Sell, lease, transfer or
otherwise dispose of, or permit any other Relevant Party (other than a
Designated Relevant Party) to sell, lease, transfer or otherwise dispose of, any
assets or grant any option or other right to purchase, lease or otherwise
acquire any assets except (x) for dispositions of obsolete, worn out or surplus
property disposed of in the ordinary course of business and (y) for sales,
leases, transfers or other dispositions of assets (other than the capital stock
of any of the A Companies that such Relevant Party owns directly) by such
Relevant Party for cash and for no less than fair market value.
(ii) Permit any Designated Relevant Party to sell, lease,
transfer or otherwise dispose of any assets or grant any option or other right
to purchase, lease or
<PAGE>
22
otherwise acquire any assets except for dispositions of obsolete, worn out or
surplus property disposed of in the ordinary course of business.
(e) Dividends, Repurchases, Etc. Declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its capital stock or any warrants, rights or options to acquire such capital
stock, now or hereafter outstanding, return any capital to its stockholders as
such, make any distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such except that the Guarantor
may (i) declare and deliver dividends and distributions payable only in common
stock or warrants, rights or options to acquire common stock and (ii) declare
and pay cash dividends to its stockholders unless, at the time of such payment
and after giving effect to such payment, (x) a Default set forth in Section
6.01(a) of the Credit Agreement shall have occurred and be continuing, (y) a
Default set forth in Section 7(o) hereof shall have occurred and be continuing
or (z) no amount on deposit at such time in the Borrower Collateral Account or
the Mafco Collateral Account (including, without limitation, (A) equity
contributions arising from any dividend, distribution, loan or advance made by
the Bank, (B) amounts paid under or in connection with any Related Document and
(C) other amounts required to be applied to a prepayment of the Advances
pursuant to the terms of the Credit Agreement) is being released solely as a
result of the application of the provisions of Section 2.05(b)(vi) of the Credit
Agreement (it being understood and agreed that Section 2.05(b)(vi) shall be
deemed inapplicable to any amounts released from the Borrower Collateral Account
or the Mafco Collateral Account pursuant to a consent of the Lenders or Required
Lenders, as applicable, delivered in accordance with the Credit Agreement).
(f) Investments. (i) Make, or permit any other Relevant
Party (other than a Designated Relevant Party) to make, any Investment in any
holder of capital stock of the Guarantor except that the Guarantor or any
Relevant Party may make such an Investment unless, at the time of such
Investment and after giving effect to such Investment, (x) a Default set forth
in Section 6.01(a) of the Credit Agreement shall have occurred and be
continuing, (y) a Default set forth in Section 7(o) hereof shall have occurred
and be continuing or (z) no amount on deposit at such time in the Borrower
Collateral Account or the Mafco Collateral Account (including, without
limitation, (A) equity contributions arising from any dividend, distribution,
loan or advance made by the Bank, (B) amounts paid under or in connection with
any Related Document and (C) other amounts required to be applied to a
prepayment of the Advances pursuant to the terms of the Credit Agreement) is
being released solely as a result of the application of the provisions of
Section 2.05(b)(vi) of the Credit Agreement (it being understood and agreed that
Section 2.05(b)(vi) shall be deemed inapplicable to any amounts released from
the Borrower Collateral Account or the Mafco Collateral Account pursuant to a
consent of the Lenders or Required Lenders, as applicable, delivered in
accordance with the Credit Agreement).
<PAGE>
23
(ii) Permit any Designated Relevant Party to make or hold
any Investment in any Person other than (x) Investments in Cash Equivalents, (y)
the Investments set forth on Schedule VI hereto and (z) Investments by FN
Holdings in the Bank in an amount up to $15,000,000 at any time outstanding
as permitted by the certificate of incorporation of FN Holdings.
(g) Change in Nature of Business. Permit any Designated
Relevant Party to engage in any business or activities other than (i) the
ownership of the capital stock of its Subsidiaries owned as of the date hereof
as set forth on Schedule VI hereof and (ii) the execution of any Loan Documents,
Related Documents or FN Documents to which it is a party.
(h) Accounting Changes. Make or permit, or permit any other
Relevant Party to make or permit, any change in accounting policies affecting
(i) the presentation of financial statements or (ii) reporting practices, except
in either case as required or permitted by GAAP.
(i) Debt. Create, incur, assume or suffer to exist, or
permit any other Relevant Party to create, incur, assume or suffer to exist, any
Debt other than (i) in the case of the Guarantor, loans pursuant to the terms of
the Related Documents, Debt under this Guaranty and the Debt set forth on
Schedule V hereto, (ii) in the case of the other Relevant Parties, Debt set
forth on Schedule V hereto and Debt under the Loan Documents, (iii) in the case
of all of the Relevant Parties, (x) intercompany Debt and (y) endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business and (iv) in the case of FN Holdings, the issuance of
Debt pursuant to the FN Holdings Debt Document, Debt under the FN Management
Incentive Plan and the issuance of the New FN Holdings Debt pursuant to the New
FN Holdings Debt Documents; provided, however, that (1) any obligation of FN
Holdings under the FN Management Incentive Plan that is entered into on and
after the date hereof shall be subordinated to all obligations of the Loan
Parties under the Loan Documents upon the terms and conditions set forth in
Exhibit B hereto (which terms and conditions shall be included under or
incorporated by reference in the heading "Subordination" in each Award Agreement
(as defined in the FN Management Incentive Plan) entered into pursuant to the FN
Management Incentive Plan) and each executive of the Bank entitled to any
benefits under the FN Management Incentive Plan shall acknowledge in writing his
agreement to such subordination terms and (2) each Award Agreement in existence
on the date hereof shall be amended in writing within 30 days of the date hereof
to include under the heading "Subordination" the subordination terms and
conditions set forth in Exhibit B hereto and each executive of the Bank entitled
to any benefits under the FN Management Incentive Plan and such Award Agreements
shall acknowledge in writing his agreement to such subordination terms within 30
days of the date hereof; provided, further, that the New FN Holdings Debt may
only be issued on the terms and conditions set forth on Exhibit C hereto.
<PAGE>
24
(j) Charter Amendments. Amend, or permit any other Relevant
Party to amend, its certificate of incorporation or bylaws other than (i) the
amendment to the certificate of incorporation of FN Holdings in substantially
the form of Exhibit G to the Credit Agreement and (ii) the amendment to the
certificate of incorporation of FN Parent in substantially the form of Exhibit H
to the Credit Agreeement.
(k) Prepayments, Etc. of Debt. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Debt, or amend, modify or change in any manner any term or condition of any Debt
or any agreement relating to such Debt, or permit any other Relevant Party to do
any of the foregoing other than to make regularly scheduled or required
repayments or redemptions of the Debt set forth on Schedule V hereto.
(l) Amendment, Etc. of Related Documents. Cancel or
terminate any Related Document to which it is a party or consent to or accept
any cancellation or termination thereof, amend, modify or change in any manner
any term or condition of or give any consent, waiver or approval thereunder,
waive any default under or any breach of any term or condition of any such
Related Document, agree in any manner to any other amendment, modification or
change of any term or condition of any Related Document, or take any other
action in connection with any such Related Document that would impair the value
of the interest or rights of the Guarantor thereunder or that would impair the
interest or rights of the Agent or any Lender or permit any of its Subsidiaries
to do any of the foregoing.
(m) Negative Pledge. Enter into or suffer to exist, or
permit any other Relevant Party to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any of
its property or assets other than (i) in favor of the Agent and the Lenders,
(ii) any prohibition or condition existing on the date hereof or (iii) in the
case of FN Holdings, any prohibition or condition set forth in the New FN
Holdings Debt Documents so long as such prohibition or condition is no more
onerous than the prohibition or condition set forth in the FN Holdings Debt
Document (except as otherwise set forth on Exhibit B hereto).
(n) Partnerships. Permit any other Relevant Party to become
a general partner in any general or limited partnership.
(o) Capital Expenditures. Permit any Designated Relevant
Party to make any Capital Expenditures.
(p) Issuance of Capital Stock. Issue any capital stock if
(i) such issuance would cause a Default under the Loan Documents or (ii) such
issuance would cause any adverse change in the tax position of the Guarantor,
any A Company, any Designated
<PAGE>
25
Operating Party or the Bank, (including without limitation the inability of any
such Person to maintain its status as a member of the affiliated group (within
the meaning of Section 1504(a)(1) of the Code) of which the Guarantor is the
common parent).
(q) Payment Restrictions. Permit any other Relevant Party
to create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any such
Relevant Party to (i) pay dividends or make any other distributions on any of
such Relevant Party's capital stock, (ii) make loans or advances to the
Guarantor or any Subsidiary of the Guarantor or (iii) repay or prepay any Debt
owed by such Relevant Party other than any (x) consensual encumbrances or
restrictions existing on the date hereof and (y) in the case of any Relevant
Party other consensual encumbrances or restrictions that are no more onerous
than those encumbrances and restrictions in existence on the date hereof with
respect to such Relevant Party (except, in the case of FN Holdings, as otherwise
set forth on Exhibit B hereto).
(r) Restriction on the Revlon Companies. (i) Create or
suffer to exist, any Lien, upon or with respect to any or all of the capital
stock of Revlon Worldwide Corporation, a Delaware corporation ("Revlon
Worldwide"), whether now owned or hereafter acquired, or sign or file, or permit
any of its Subsidiaries to sign or file, under the Uniform Commercial Code of
any jurisdiction, a financing statement that names the Guarantor or any of its
Subsidiaries as debtor, or sign, or permit any of its Subsidiaries to sign, any
security agreement authorizing any secured party thereunder to file such
financing statement, in each case in respect of any or all of the capital stock
of Revlon Worldwide.
(ii) Use or apply, or permit any of its Subsidiaries to use
or apply, any Net Cash Proceeds from (x) any sale, public offering or issuance
or private placement of any capital stock of Revlon Inc. or (y) the sale, lease,
transfer or other disposition of any assets of Revlon Worldwide or any of the
Subsidiaries of Revlon Worldwide, other than (A) to repay Debt of Revlon
Worldwide or any of the Subsidiaries of Revlon Worldwide, (B) to use in the
business of Revlon Worldwide or any of the Subsidiaries of Revlon Worldwide or
(C) to prepay the Advances in accordance with the terms of the Credit Agreement.
Section 9. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders (other than any Lender
that is, at such time, a Defaulting Lender), (a) release or limit the liability
of the Guarantor hereunder, (b) postpone any date fixed for payment hereunder or
(c) change the number of Lenders required to take any action hereunder; provided
further that no amendment or waiver of Section 7(o) of this Guaranty and no
consent to any departure by the Guarantor
<PAGE>
26
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Supermajority Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
Section 10. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered to it, if to the Guarantor, addressed to it at 38 East 63rd
Street, New York, New York 10021, Attention: Secretary if to the Agent or any
Lender, at its address specified in the Credit Agreement, or as to any party at
such other address as shall be designated by such party in a written notice to
each other party. All such notices and other communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively.
Section 11. No Waiver; Remedies. No failure on the part of the
Agent or any Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
Section 12. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said Section 6.01, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Guarantor against any and all of the
Obligations of the Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender shall have made any demand under this Guaranty and
although such Obligations may be unmatured. Each Lender agrees promptly to
notify the Guarantor after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set- off) that such Lender may have.
Section 13. Indemnification. Without limitation on any other
Obligations of the Guarantor or remedies of the Lenders under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Lenders from and against, and shall pay on demand,
any and all losses, liabilities, damages, costs, expenses and charges (including
the reasonable and documented fees and disbursements of
<PAGE>
27
the legal counsel of the Lenders and the reasonable and documented charges of
the internal legal counsel of the Lenders) suffered or incurred by the Lenders
as a result of (a) any failure of any Guaranteed Obligations to be the legal,
valid and binding obligations of the Borrower enforceable against the Borrower
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the rights of creditors
generally, or (b) any failure of the Borrower to pay and perform any Guaranteed
Obligations in accordance with the terms of such Guaranteed Obligations.
Section 14. Continuing Guaranty; Assignments Under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the date on which the Payment Obligations in respect of
the Guaranteed Obligations and this Guaranty have been Fully Satisfied, (b) be
binding upon the Guarantor, its successors and assigns and (c) inure to the
benefit of and be enforceable by the Lenders, the Agent and their successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), any Lender may assign or otherwise transfer all or any portion of
its rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement.
Section 15. Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial. (a) This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party, or for recognition or enforcement
of any judgment, and the Guarantor hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York State or, to the extent permitted by law, in
such federal court. The Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Guaranty or any of the
other Loan Documents to which it is or is to be a party in the courts of any
jurisdiction.
(c) The Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this
<PAGE>
28
Guaranty or any of the other Loan Documents to which it is or is to be a party
in any New York State or federal court. The Guarantor hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE AGENT OR
ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
Section 16. Execution in Counterparts; Delivery by Telecopier.
This Guaranty 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 one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Guaranty by telecopier shall be effective as delivery of a manually
executed counterpart of this Guaranty.
<PAGE>
29
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
MAFCO HOLDINGS INC.
By /s/
-----------------------------
Title:
<PAGE>
SECOND AMENDED AND RESTATED MAFCO GUARANTY
SCHEDULE I
Subsidiaries
Mafco Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage of Outstanding
Shares Owned by Ronald O. Perelman: 100%
Options, Warrants and Similar Rights: None
MacAndrews & Forbes Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage of Outstanding Shares
Owned by Guarantor: 100%
Options, Warrants and Similar Rights: None
Andrews Group Incorporated
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 100%
Options, Warrants and Similar Rights: None
Four Star Holdings Corp.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
and 10,000 shares of Preferred Stock
Shares Outstanding: 1,000 shares of Common Stock
and 5,127 shares of Preferred Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 100% of shares
of Common Stock and 0% of shares of Preferred
Stock
Options, Warrants and Similar Rights: None
New Coleman Holdings Inc.
Jurisdiction of Incorporation: Kansas
Authorized Capital Stock: 1,000 shares of Common Stock
and 10,000 shares of Preferred Stock
Shares Outstanding: 1,000 shares of Common Stock and
10,000 shares of Preferred Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 100% of shares
of Common Stock and 100% of shares of Preferred
Stock
<PAGE>
2
Options, Warrants and Similar Rights: None
Marvel V Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common
Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 99.5%
Options, Warrants and Similar Rights: None
NWCG (Parent) Holdings Corporation
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
and 1,000 shares of Preferred Stock
Shares Outstanding: 100 shares of Common Stock and
0 shares of Preferred Stock
Percentage of Outstanding Shares
Owned (Indirectly) by Guarantor: 100% of shares
of Common Stock
Options, Warrants and Similar Rights: None
NWCG Holdings Corporation
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
and 1,000 shares of Preferred Stock
Shares Outstanding: 100 shares of Common Stock and
0 shares of Preferred Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 100% of shares of
Common Stock
Options, Warrants and Similar Rights: None
New World Communications Group Incorporated
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 400,000,000 shares of
Class A Common Stock, 400,000,000 shares of Class
B Common Stock and 100,000,000 shares of Preferred
Stock
Shares Outstanding: 28,003,448 Class A Common
Stock, 40,579,610 Class B Common Stock,
1,200,000 Series A Preferred Stock, 250,000 Series
B Preferred Stock, 25,000 Series C Preferred Stock
and 300,000 Series E Preferred Stock (as of
12/14/95)
Percentage of Outstanding Shares
Owned (Indirectly) by Guarantor: 54%
Options, Warrants and Similar Rights: 5,000,000
Class A Warrants (converts at $16 to Class A Common
Stock), 4,625,000 Class A Warrants (converts at $50 to
Class A Common Stock), 1,000,000 Class A Warrants
(converts at $11.50 to Class A Common Stock), 500,000
Class A Warrants (converts at $25 to Class A Common
Stock), 1,250,000 Class A warrants (converts at $15 per
<PAGE>
3
share to Class A Common Stock), 1,000,000 Class A
Warrants (converts at $11.875 per share to Class A
Common Stock), 1,830,706 Class B Warrants (converts at
$8.47 per share to Class B Common Stock) and 4,940,276
employee stock options (converts at $8.47 to Class A
Common Stock) (as of 12/14/95)
C&F (Parent) Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 99.4%
Options, Warrants and Similar Rights: None
First Nationwide (Parent) Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
Shares Outstanding: 1,000 shares of Common Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 99.5%
Options, Warrants and Similar Rights: None
First Nationwide Holdings Inc.
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 800 shares of Class A Common
Stock, 200 shares of Class B Common Stock and 250
shares of Class C Common Stock
Shares Outstanding: 800 shares of Class A Common
Stock, 200 shares of Class B Common Stock and 230.3
shares of Class C Common Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 100% of Class A
Common Stock and 100% of Class C Common Stock
Options, Warrants and Similar Rights: None
First Nationwide Bank, FSB
Jurisdiction of Organization: Dallas, Texas
Authorized Capital Stock: 50,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock
Shares Outstanding: 800 shares of Common Stock and
3,007,300 shares of Preferred Stock
Percentage of Outstanding Shares
Owned (indirectly) by Guarantor: 100%
Options, Warrants and Similar Rights: None
<PAGE>
SECOND AMENDED AND RESTATED MAFCO GUARANTY
SCHEDULE II
LIENS
MACANDREWS & FORBES HOLDINGS INC.
1. UCC-1 Financing Statement filed March 26, 1993
with the City Register New York County naming
MacAndrews & Forbes Holdings Incorporated as
Lessee and AT&T Credit Corporation as Lessor. UCC-
1 sets forth that such financing statement is for
notification purposes only.
FOUR STAR HOLDINGS CORP.
1. Pledge Agreement dated as of April 20, 1994
between Four Star Holdings Corp. ("Four Star") and
NationsBank of North Carolina, National
Association, with respect to the capital stock of
Marvel Entertainment Group, Inc. entered into to
secure Four Star's obligations under the Letter of
Credit and Reimbursement Agreement dated as of
April 20, 1994 between Four Star and NationsBank
of North Carolina, National Association.
NEW COLEMAN HOLDINGS INC.
1. UCC-1 Financing Statement filed June 7, 1993
with the Secretary of State of California naming
New Coleman Holdings Inc. as Debtor and Credit
Suisse, as Agent and Collateral Holder, as Secured
Party. The underlying indebtedness has been
discharged; UCC-3 Termination Statement to be
filed promptly.
NWCG HOLDINGS CORPORATION
1. 34,510,000 shares of Class B Common Stock of
New World Communications Group Incorporated
pledged to secure NWCG Holdings Corporation Senior
Secured Discount Notes due 1999.
ANDREWS GROUP INCORPORATED
1. Aircraft Chattel Mortgage dated March 3, 1995
with respect to 12.5% interest of Andrews Group
<PAGE>
2
Incorporated in Hawker 1000 Aircraft S/N 259045
and security interest in related ancillary rights
securing $1,200,000 Promissory Note dated March 3,
1995 made by Andrews payable to GECC.
<PAGE>
SECOND AMENDED AND RESTATED MAFCO GUARANTY
SCHEDULE III
Authorizations
None.
<PAGE>
SECOND AMENDED AND RESTATED MAFCO GUARANTY
SCHEDULE IV
OPEN YEARS
Tax Year Extended Expiration Date
----------------- ---------------
Mafco Holdings Inc. December 31, 1991 December 31, 1996
December 31, 1992 December 31, 1996
December 31, 1993 September 15, 1997
December 31, 1994 September 15, 1998
<PAGE>
SECOND AMENDED AND RESTATED MAFCO GUARANTY
SCHEDULE V
DEBT
A. MAFCO HOLDINGS INC.
*1. Guaranty dated as of July 27, 1994 executed by
Mafco Holdings Inc. in favor of Smith Barney
Holdings Inc. in respect of the obligations of
First Nationwide Holdings Inc. ("FN Holdings")
under the Promissory Note dated July 27, 1994 made
by FN Holdings in favor of Smith Barney Holdings
Inc.
*2. Guaranty dated as of July 27, 1994 executed
by Mafco Holdings Inc. in favor of CS First Boston
Securities Corporation in respect of the
obligations of FN Holdings under the Promissory
Note dated July 27, 1994 made by FN Holdings in
favor of CS First Boston Securities Corporation.
*3. Guaranty dated as of August 18, 1994 executed by
Mafco Holdings Inc. in favor of Smith Barney
Holdings Inc. in respect of the obligations of
First Nationwide (Parent) Holdings Inc. under the
Promissory Note dated August 18, 1994 made by
First Nationwide (Parent) Holdings Inc. in favor
of Smith Barney Holdings Inc.
4. Guaranty made by Mafco Holdings Inc. in favor of
First Nationwide Bank, A Federal Savings Bank, in
connection with the obligations of First Madison
Bank, FSB, under the Asset Purchase Agreement
dated as of April 14, 1994 between the Guarantor
and First Nationwide Bank, a Federal Savings Bank.
(Acquisition was consummated on October 3, 1994).
B. MACANDREWS & FORBES HOLDINGS INC.
1. 13% $110,000,000 Subordinated Debentures due
March 1, 1999 (Indenture dated as of March 1, 1984
with the United States Trust Company of New York).
_______________________________
* Underlying indebtedness was discharged as of the date
of the second Borrowing under the Existing Credit
Agreement.
<PAGE>
2
- principal amount outstanding as of June 29,
1995: $110,000,000 ($54,355,000 of which is
held by Revlon Group Incorporated and
$650,000 of which is held by Andrews Group
Incorporated)
2. Guarantee of Four Star Holdings Corp.'s obliga
tions under Reimbursement Agreement dated as of
June 5, 1989, as amended as of December 31, 1991,
with Manufacturers Hanover Trust Company relating
to letters of credit issued by Manufacturers
Hanover Trust Company to former shareholders.
C. ANDREWS GROUP INCORPORATED
1. 10% $32,200,000 Senior Subordinated Debentures due
1999 (Indenture dated as of June 4, 1990 with
Security Pacific National Trust Company (New
York)).
- principal amount outstanding as of June 29,
1995: $21,292,071.25 (approximately)
2. 12-3/4% $80,000,000 Subordinated Debentures due
1996 (Indenture dated as of July 1, 1986, with the
United States Trust Company of New York,
as amended on June 13, 1988).
- principal amount outstanding as of June 29,
1995: $14,320,000 (approximately)
3. Guaranty executed by Andrews Group
Incorporated in favor of a bank lender in
connection with $3,400,000 principal amount of
indebtedness of a wholly-owned Subsidiary of
Andrews Group Incorporated.
4. Guaranty executed by Andrews Group
Incorporated in favor of The Bank of New York in
connection with $4,250,000 principal amount of
indebtedness of 924 Bel Aire Corp., a Subsidiary
of Andrews Group Incorporated.
5. $1,200,000 Promissory Note dated March 3,
1995 made by Andrews Group Incorporated payable to
GECC secured by Aircraft Chattel Mortgage dated
March 3, 1995 on 12.5% interest of Andrews Group
Incorporated in Hawker 1000 Aircraft S/N 259045.
D. FOUR STAR HOLDINGS CORP.
4. Guaranty executed by Andrews Group Incorporated in
favor of The Bank of New York in connection with
$4,250,000 principal amount of indebtedness of 924 Bel
Aire Corp., a Subsidiary of Andrews Group Incorporated.
5. $1,200,000 Promissory Note dated March 3, 1995
made by Andrews Group Incorporated payable to GECC
secured by Aircraft Chattel Mortgage dated March 3, 1995
on 12.5% interest of Andrews Group Incorporated in
Hawker 1000 Aircraft S/N 259045.
<PAGE>
3
D. Four Star Holdings Corp. ;
1. Amended and Restated Reimbursement Agreement dated
as of July 18, 1994, with Chemical Bank (formerly
Manufacturers Hanover Trust Company) relating to
letters of credit issued by Manufacturers Hanover
Trust Company to former shareholders.
- undrawn commitments as of June 29, 1995:
$49,154,542
2. $46,154,000 Senior Notes due June 7, 1999 payable
to former shareholders.
- principal amount outstanding as of June 29,
1995: $46,154,000
3. Series A Adjustable Rate Cumulative Preferred
Stock mandatorily redeemable on June 8, 1999 for
$5,127,000 or Promissory Notes in the aggregate of
$5,127,000, maturity on June 8, 1995, providing
for no prior installments and interest at a rate
equal to the dividend rate on the Series A
Adjustable Rate Cumulative Preferred Stock.
4. Exchange Agreement dated April 10, 1989, as
amended, among former shareholders (Lawrence L.
Kuppin, Robert C. Rehme and Harry Evans Sloan) and
Andrews Group Incorporated, Four Star Holdings
Corp. and Four Star Acquisition Corp.
5. Letter of Credit and Reimbursement Agreement
dated as of April 20, 1994 between Four Star
Holdings Corp. and NationsBank of North Carolina,
N.A., providing for issuance of $1,638,456 face
amount standby letter of credit.
E. FIRST NATIONWIDE HOLDINGS INC.
1. 12-1/4% Senior Notes Due 2001 and 12-1/4% Senior
Exchange Notes Due 2001, pursuant to Indenture
dated July 15, 1994 with The First National Bank
of Boston, as trustee.
2. Escrow Agreement, dated as of July 27, 1994,
among First Nationwide Holdings Inc., First
Madison Bank, FSB and The First National Bank of
Boston, as escrow agent, with respect to the 11-
1/2% Noncumulative Perpetual Preferred Stock of
First Madison Bank, FSB.
<PAGE>
4
3. Management Incentive Plan for Certain Employees of
First Nationwide Bank.
<PAGE>
SECOND AMENDED AND RESTATED MAFCO GUARANTY
SCHEDULE VI
INVESTMENTS
INVESTMENT
PERSON ISSUER TYPE AMOUNT
- ------ ------ ---- ----------
MAFCO HOLDINGS MacAndrews & Forbes Common 100%
INC. Holdings Inc. Stock
Consolidated Cigar Common 100%
II Holdings Inc. Stock
Flavors (Parent) Common 100%
Holdings Inc. Stock
MACANDREWS & Andrews Group Common 100%
FORBES HOLDINGS Incorporated Stock
INC.
Trans Network Common 100%
Insurance Services Stock
Inc.
New Coleman Holdings Common 100%
Inc. Stock and
Preferred
Stock
MacAndrews & Forbes Common 100%
Group, Incorporated Stock
MFH Holding Corp. Common 100%
Stock
RV Acquisition Corp. Common 100%
Stock
ANDREWS GROUP NWCG (Parent) Common 100%
INCORPORATED Holdings Corporation Stock
Four Star Holdings Common 100%(1)
Corp. Stock
L.C. Holding Common 100%
Corporation Stock
924 Bel Aire Corp. Common 100%
Stock
100%
- ---------------
(1) 5,127 shares of Preferred Stock, in the aggregate, owned by Messrs. Kuppin,
Sloan and Rehme.
<PAGE>
2
INVESTMENT
PERSON ISSUER TYPE AMOUNT
- ------ ------ ---- ----------
1001 Holdings Corp. Common 100%
Stock
AGI Management Corp. Common 100%
Stock
NEW COLEMAN Coleman (Parent) Common 100%
HOLDINGS INC. Holdings Inc. Stock
Coleman Cutlery Co. Voting 100%
Shares and
Nonvoting
shares
California Cooperage Common 100%
Stock
Coleman Benelux, Common 100%
Inc. Stock
Coleman France, Inc. Common 100%
Stock
CP Coleman Common 100%
Acquisition, Inc. Stock
Coast Catamaran Common 100%
Corp. Stock
Coleman Lighting, Common 100%
Inc. Stock
Coleman Coil Co., Common 100%
Inc. Stock
Canadian Coleman Common 100%
Properties Inc. Stock and
Preferred
Stock
LaSalle Lighting, Common 100%
Inc. Stock
Coleman Airguns, Common 100%
Inc. Stock
FOUR STAR Marvel V Holdings Common 100%
HOLDINGS CORP. Inc. Stock
<PAGE>
3
INVESTMENT
PERSON ISSUER TYPE AMOUNT
- ------ ------ ---- ----------
First Nationwide First Nationwide Class A 100%
(Parent) Holdings Holdings Inc. Common
Inc. Stock and
Class C
Common
Stock
Subordinated loans that may be issued from time
to time to Marvel V Holdings Inc. in accordance with the
Restated Certificate of Incorporation of First Nationwide
(Parent) Holdings Inc., as the same may be amended from time
to time, and/or the FN Parent Loan Agreement.
FIRST NATIONWIDE First Nationwide Common 100%
HOLDINGS INC. Bank, FSB Stock and
Preferred
Stock
Subordinated loans that may be issued from time to time to
Marvel V Holdings Inc., in accordance with the Second
Restated Certificate of Incorporation of First Nationwide
Holdings Inc., as the same may be amended from time to time.
Madison Financial Common 100%
Inc. Stock
<PAGE>
EXHIBIT A
to
MAFCO GUARANTY
TERMS OF SUBORDINATION
1. Reference is made to (i) the Second Amended and Restated
Credit Agreement dated as of December 15, 1995 (said Agreement, as the same may
be amended or otherwise modified from time to time, the "Credit Agreement";
terms defined therein are used herein as therein defined) among Marvel IV
Holdings Inc., the Lenders party thereto and Citibank, N.A. as agent (the
"Agent") for such Lenders, and (ii) [the loans and advances made by FN Parent to
the Borrower Parent pursuant to the terms of the FN Parent Loan Agreement] [the
loans and advances made by FN Holdings to the Borrower Parent].* Such loans and
advances are referred to herein as the "Subordinated Debt", and [FN Parent] [FN
Holdings]* is referred to herein as the "Subordinated Creditor".
2. The Subordinated Debt is, and shall be, subordinate to
the extent and in the manner hereinafter set forth, to the Payment Obligations
(as hereinafter defined) until such time as the Payment Obligations have been
Fully Satisfied. For purposes hereof, the term "Payment Obligations" shall mean
all principal, interest (including, without limitation, interest accruing after
the filing of a petition initiating any proceeding referred to in paragraph 5,
whether or not such interest accrues after the filing of such petition for
purposes of the Bankruptcy Code or is an allowed claim in such proceeding),
fees, charges, expenses, attorney's fees and expenses, indemnities and any other
amounts payable by the Loan Parties under the Loan Documents.
3. So long as the Payment Obligations shall not have been
Fully Satisfied, the Subordinated Creditor shall not (i) ask, demand, sue for,
take or receive from the Borrower Parent, directly or indirectly, in cash or
other property or by set-off or in any other manner (including, without
limitation, from or by way of collateral), payment of all or any of the
Subordinated Debt, or (ii) commence, or join with any creditor other than the
Agent or any Lender in commencing, directly or indirectly cause the Borrower
Parent to commence, or assist the Borrower Parent in commencing, any proceeding
referred to in paragraph 5.
4. No payment (including any payment that may be payable by
reason of any other Debt of the Borrower Parent being subordinated to payment of
the Subordinated Debt) shall be made by or on behalf of the Borrower Parent for
or on account of any Subordinated Debt, and the Subordinated Creditor shall not
take or receive from the Borrower Parent, directly or indirectly, in cash or
other property or by set-off or in any other manner, including, without
limitation, from or by way of collateral, payment of all or any of the
Subordinated Debt, unless and until the Payment Obligations shall have been
Fully Satisfied.
<PAGE>
2
5. In the event of any dissolution, winding up,
liquidation, arrangement, reorganization, adjustment, protection, relief or
composition of the Borrower Parent or its debts, whether voluntary or
involuntary, in any bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or other similar case or proceeding under any Federal or
State bankruptcy or similar law or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of the Borrower
Parent or otherwise, the Agent, for its benefit and for the ratable benefit of
the Lenders, shall be entitled to have the Payment Obligations be Fully
Satisfied before the Subordinated Creditor is entitled to receive any payment of
all or any of the Subordinated Debt, and any payment or distribution of any kind
(whether in cash, property or securities) that otherwise would be payable or
deliverable upon or with respect to the Subordinated Debt in any such case,
proceeding, assignment, marshalling or otherwise (including any payment that may
be payable by reason of any other indebtedness of the Borrower Parent being
subordinated to payment of the Subordinated Debt) shall be paid or delivered
directly to the Agent, for its benefit and for the ratable benefit of the
Lenders, for application (in the case of cash) to, or as collateral (in the case
of non-cash property or securities) for, the payment or prepayment of the
Payment Obligations until the Payment Obligations shall have been Fully
Satisfied.
6. In the event that any Subordinated Debt is declared due
and payable before its stated maturity, the Agent, for its benefit and for the
ratable benefit of the Lenders, shall be entitled to have all amounts due or to
become due on or in respect of all Payment Obligations be Fully Satisfied before
the Subordinated Creditor is entitled to receive any payment (including any
payment which may be payable by reason of the payment of any other indebtedness
of the Borrower Parent being subordinated to the payment of the Subordinated
Debt) by the Borrower Parent on account of the Subordinated Debt.
7. Until such time as the Payment Obligations have been
Fully Satisfied, if any proceeding referred to in paragraph 5 above is commenced
by or against the Borrower Parent,
(i) the Agent is hereby irrevocably authorized and empowered
(in its own name or in the name of the Subordinated Creditor or
otherwise), but shall have no obligation, to demand, sue for, collect
and receive every payment or distribution referred to in paragraph 5
above and give acquittance therefor and to file claims and proofs of
claim and take such other action (including, without limitation, voting
the Subordinated Debt or enforcing any security interest or other lien
securing payment of the Subordinated Debt) as it may deem necessary or
advisable for the exercise or enforcement of any of the rights or
interests of the Agent and the Lenders hereunder; and
(ii) the Subordinated Creditor shall duly and promptly take
such action as the Agent may request (A) to collect the Subordinated
Debt for the account of the
<PAGE>
3
Agent, for its benefit and for the ratable benefit of the Lenders, and
to file appropriate claims or proofs of claim in respect of the
Subordinated Debt, (B) to execute and deliver to the Agent such powers
of attorney, assignments, or other instruments as the Agent may request
in order to enable the Agent to enforce any and all claims with respect
to, and any security interests and other liens securing payment of, the
Subordinated Debt, and (C) to collect and receive any and all payments
or distributions which may be payable or deliverable upon or with
respect to the Subordinated Debt.
8. All payments or distributions upon or with respect to
the Subordinated Debt which are received by the Subordinated Creditor contrary
to the provisions of these Terms of Subordination shall be received in trust for
the benefit of the Agent, for its benefit and for the ratable benefit of the
Lenders, shall be segregated from other funds and property held by the
Subordinated Creditor and shall be forthwith paid over to the Agent, for its
benefit and for the ratable benefit of the Lenders, in the same form as so
received (with any necessary indorsement) to be applied (in the case of cash)
to, or held as collateral (in the case of non-cash property or securities) for,
the payment or prepayment of the Payment Obligations in accordance with the
terms of the Loan Documents.
9. The Agent is hereby authorized to demand specific
performance of these provisions, whether or not the Borrower Parent shall have
complied with any of the provisions hereof applicable to it, at any time when
the Subordinated Creditor shall have failed to comply with any of these
provisions. The Subordinated Creditor hereby irrevocably waives any defense
based on the adequacy of a remedy at law, which might be asserted as a bar to
such remedy of specific performance.
10. No payment or distribution to the Agent pursuant to
these provisions shall entitle the Subordinated Creditor to exercise any rights
of subrogation in respect thereof until the Payment Obligations shall have been
Fully Satisfied.
11. The holders of the Payment Obligations may, at any time
and from time to time, without any consent of or notice to the Subordinated
Creditor or any other holder of the Subordinated Debt and without impairing or
releasing the obligations of the Subordinated Creditor under these Terms of
Subordination: (i) change the manner, place or terms of payment or change or
extend the time of payment of, or renew payment or change or extend the time or
payment of, or renew or alter, the Payment Obligations (including any change in
the rate of interest thereon), or amend in any manner any agreement under which
any of the Payment Obligations is outstanding; (ii) sell, exchange, release, not
perfect and otherwise deal with any property at any time pledged, assigned or
mortgaged to secure the Payment Obligations; (iii) release anyone liable in any
manner under or in respect of the Payment Obligations; (iv) exercise or refrain
from exercising any rights against the Borrower Parent and others; and (v) apply
any sums form time to time received to the Payment Obligations.
<PAGE>
4
12. The Subordinated Creditor will not without the consent
of the Required Lenders:
(i) Cancel or otherwise discharge any of the Subordinated
Debt (except upon the Payment Obligations being Fully Satisfied),
convert or exchange any of the Subordinated Debt into or for any other
indebtedness or equity interest or subordinate any of the Subordinated
Debt to any indebtedness of the Borrower Parent other than the Payment
Obligations;
(ii) Sell, assign, pledge, encumber or otherwise dispose of
any of the Subordinated Debt unless such sale, assignment, pledge,
encumbrance or disposition (i) is to a person or entity other than the
Borrower Parent or any of its affiliates and (ii) is made expressly
subject to these provisions; or
(iii) Permit the terms of any of the Subordinated Debt to be
changed in such a manner as to have an adverse effect upon the rights or
interests of the Agent or the Lenders hereunder.
13. The foregoing provisions regarding subordination are and
are intended solely for the purpose of defining the relative rights of the
holders of the Payment Obligations on the one hand and the holders of any
Subordinated Debt on the other hand. Such provisions are for the benefit of the
holders of the Payment Obligations and shall be enforceable by them directly
against the holders of any Subordinated Debt, and no holder of the Payment
Obligations shall be prejudiced in its right to enforce subordination of any of
the Subordinated Debt by any act or failure to act by the Borrower Parent or
anyone in custody of its assets or property. Nothing contained in the foregoing
provisions is intended to or shall impair, as between the Borrower Parent and
the holders of any Subordinated Debt, the obligations of the Borrower Parent to
such holders.
<PAGE>
EXHIBIT B
to
MAFCO GUARANTY
TERMS OF SUBORDINATION FOR THE FN MANAGEMENT INCENTIVE PLAN
1. Reference is made to (i) the Second Amended and Restated
Credit Agreement dated as of December 15, 1995 (said Agreement, as the same may
be amended or otherwise modified from time to time, being the "Credit
Agreement"; terms defined therein are used herein as therein defined) among
Marvel IV Holdings Inc., the Lenders party thereto and Citibank, N.A. as agent
(the "Agent") for such Lenders, and (ii) the obligations of FN Holdings (FN
Holdings, together with any other Person making a payment under or in connection
with the FN Management Incentive Plan, being the "Specified Parties") under the
FN Management Incentive Plan. Such obligations are referred to herein as the
"Subordinated Debt", and each executive of the Bank or any other Person who is
entitled to any benefit under the FN Management Incentive Plan is referred to
herein as a "Subordinated Creditor".
2. The Subordinated Debt is, and shall be, subordinate to
the extent and in the manner hereinafter set forth, to the Payment Obligations
(as hereinafter defined) until such time as the Payment Obligations have been
Fully Satisfied. For purposes hereof, the term "Payment Obligations" shall mean
all principal, interest (including, without limitation, interest accruing after
the filing of a petition initiating any proceeding referred to in paragraph 5,
whether or not such interest accrues after the filing of such petition for
purposes of the Bankruptcy Code or is an allowed claim in such proceeding),
fees, charges, expenses, attorney's fees and expenses, indemnities and any other
amounts payable by the Loan Parties under the Loan Documents; provided, however,
that in no event shall the Payment Obligations include an aggregate principal
amount of Advances greater than $430,000,000 at any one time outstanding.
3. So long as the Payment Obligations shall not have been
Fully Satisfied, the Subordinated Creditor shall not (i) ask, demand, sue for,
take or receive from any Specified Party, directly or indirectly, in cash or
other property or by set-off or in any other manner (including, without
limitation, from or by way of collateral), payment of all or any of the
Subordinated Debt, or (ii) commence, or join with any creditor other than the
Agent or any Lender in commencing, directly or indirectly, or cause any
Specified Party to commence, or assist any Specified Party in commencing, any
proceeding referred to in paragraph 5.
4. No payment (including any payment that may be payable by
reason of any other Debt of any Specified Party being subordinated to payment of
the Subordinated Debt) shall be made by or on behalf of any Specified Party for
or on account of any Subordinated Debt, and no Subordinated Creditor shall take
or receive from any Specified
<PAGE>
2
Party, directly or indirectly, in cash or other property or by set-off or in any
other manner, including, without limitation, from or by way of collateral,
payment of all or any of the Subordinated Debt, unless and until the Payment
Obligations shall have been Fully Satisfied.
5. In the event of any dissolution, winding up,
liquidation, arrangement, reorganization, adjustment, protection, relief or
composition of any Specified Party or its debts, whether voluntary or
involuntary, in any bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or other similar case or proceeding under any Federal or
state bankruptcy or similar law or upon an assignment for the benefit of
creditors or any other marshalling of the assets and liabilities of such
Specified Party or otherwise, the Agent, for its benefit and for the ratable
benefit of the Lenders, shall be entitled to have the Payment Obligations be
Fully Satisfied before any Subordinated Creditor is entitled to receive any
payment of all or any of the Subordinated Debt, and any payment or distribution
of any kind (whether in cash, property or securities) that otherwise would be
payable or deliverable upon or with respect to the Subordinated Debt in any such
case, proceeding, assignment, marshalling or otherwise shall be paid or
delivered directly to the Agent, for its benefit and for the ratable benefit of
the Lenders, for application (in the case of cash) to, or as collateral (in the
case of non-cash property or securities) for, the payment or prepayment of the
Payment Obligations until the Payment Obligations shall have been Fully
Satisfied.
6. In the event that any Subordinated Debt is declared due
and payable before its stated maturity, the Agent, for its benefit and for the
ratable benefit of the Lenders, shall be entitled to have all amounts due or to
become due on or in respect of all Payment Obligations be Fully Satisfied before
any Subordinated Creditor is entitled to receive any payment (including any
payment which may be payable by reason of the payment of any other indebtedness
of any Specified Party being subordinated to the payment of the Subordinated
Debt) by any Specified Party on account of the Subordinated Debt.
7. Until such time as the Payment Obligations have been
Fully Satisfied, if any proceeding referred to in paragraph 5 above is commenced
by or against any Specified Party,
(i) the Agent is hereby irrevocably authorized and empowered (in its
own name or in the name of any Subordinated Creditor or otherwise), but shall
have no obligation, to demand, sue for, collect and receive every payment or
distribution referred to in paragraph 5 above and give acquittance therefor and
to file claims and proofs of claim and take such other action (including,
without limitation, voting the Subordinated Debt or enforcing any security
interest or other lien securing payment of the Subordinated Debt) as it may deem
necessary or advisable for the exercise or enforcement of any of the rights or
interests of the Agent and the Lenders hereunder; and
(ii) each Subordinated Creditor shall duly and promptly take such
action as the Agent may request (A) to collect the Subordinated Debt for the
account of the Agent, for its benefit and for the ratable benefit of the
Lenders, and to file appropriate claims or proofs of claim in respect of the
Subordinated Debt, (B) to
<PAGE>
3
execute and deliver to the Agent such powers of attorney, assignments, or other
instruments as the Agent may request in order to enable the Agent to enforce any
and all claims with respect to, and any security interests and other liens
securing payment of, the Subordinated Debt, and (C) to collect and receive any
and all payments or distributions which may be payable or deliverable upon or
with respect to the Subordinated Debt.
8. All payments or distributions upon or with respect to
the Subordinated Debt which are received by any Subordinated Creditor contrary
to the provisions of this Agreement shall be received in trust for the benefit
of the Agent, for its benefit and for the ratable benefit of the Lenders, shall
be segregated from other funds and property held by such Subordinated Creditor
and shall be forthwith paid over to the Agent, for its benefit and for the
ratable benefit of the Lenders, in the same form as so received (with any
necessary indorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of noncash property or securities) for, the payment or
prepayment of the Payment Obligations in accordance with the terms of the Loan
Documents.
9. The Agent is hereby authorized to demand specific
performance of these provisions, whether or not the Specified Parties shall have
complied with any of the provisions hereof applicable to it, at any time when
any Subordinated Creditor shall have failed to comply with any of these
provisions. Each Subordinated Creditor hereby irrevocably waives any defense
based on the adequacy of a remedy at law, which might be asserted as a bar to
such remedy of specific performance.
10. No payment or distribution to the Agent pursuant to
these provisions shall entitle any Subordinated Creditor to exercise any rights
of subrogation in respect thereof until the Payment Obligations shall have been
paid in full.
11. The holders of the Payment Obligations may, at any time
and from time to time, without any consent of or notice to any Subordinated
Creditor or any other holder of the Subordinated Debt and without impairing or
releasing the obligations of any Subordinated Creditor under these Terms of
Subordination: (i) change the manner, place or terms of payment or change or
extend the time of payment of, or renew payment or change or extend the time or
payment of, or renew or alter, the Payment Obligations (including any change in
the rate of interest thereon), or amend in any manner any agreement under which
any of the Payment Obligations is outstanding; (ii) sell, exchange, release, not
perfect and otherwise deal with any property at any time pledged, assigned or
mortgaged to secure the Payment Obligations; (iii) release anyone liable in any
manner under or in respect of the Payment Obligations; (iv) exercise or refrain
from exercising any rights against any Specified Party and others; and (v) apply
any sums from time to time received to the Payment Obligations; provided,
however, that nothing in this paragraph 11 shall be construed to permit the
holders of the Payment Obligations to increase the aggregate principal amount of
Advances under the Credit Agreement to an amount greater than $430,000,000 at
any one time outstanding.
12. No Subordinated Creditor will, without the consent of
the Required Lenders, permit any amendment or modification to these Terms of
Subordination in such a
<PAGE>
4
manner as to have an adverse effect upon the rights or interests of the Agent or
the Lenders hereunder.
13. The foregoing provisions regarding subordination are and
are intended solely for the purpose of defining the relative rights of the
holders of the Payment Obligations on the one hand and the holders of any
Subordinated Debt on the other hand. Such provisions are for the benefit of the
holders of the Payment Obligations and shall be enforceable by them directly
against the holders of any Subordinated Debt, and no holder of the Payment
Obligations shall be prejudiced in its right to enforce subordination of any of
the Subordinated Debt by any act or failure to act by a Specified Party or
anyone in custody of its assets or property. Nothing contained in the foregoing
provisions is intended to or shall impair, as between such Specified Party and
the holders of any Subordinated Debt, the obligations of such Specified Party to
such holders.
<PAGE>
EXECUTION COPY
AMENDED AND RESTATED BORROWER PARENT GUARANTY
Dated December 15, 1995
From
MARVEL V HOLDINGS INC.
as Guarantor
in favor of
THE LENDERS PARTY TO THE CREDIT AGREEMENT REFERRED TO HEREIN
and
CITIBANK, N.A.
as Agent
<PAGE>
T A B L E O F C O N T E N T S
SECTION PAGE
1. Guaranty ................................................... 1
2. Guaranty Absolute .......................................... 2
3. Waivers .................................................... 3
4. Subrogation ................................................ 3
5. Payments Free and Clear of Taxes, Etc. ..................... 4
6. Representations and Warranties ............................. 6
7. Affirmative Covenants ...................................... 9
(a) Compliance with Laws, Etc .......................... 9
(b) Compliance with Environmental Laws ................. 9
(c) Maintenance of Insurance ........................... 10
(d) Preservation of Corporate Existence, Etc ........... 10
(e) Visitation Rights .................................. 10
(f) Keeping of Books ................................... 10
(g) Maintenance of Properties, Etc ..................... 10
(h) Performance of Related Documents ................... 11
(i) Transactions with Affiliates ....................... 11
(j) Mafco Tax Group .................................... 11
8. Negative Covenants ......................................... 11
(a) Liens, Etc ......................................... 11
(b) Lease Obligations .................................. 12
(c) Mergers, Etc ....................................... 12
(d) Sales, Etc. of Assets .............................. 12
(e) Dividends, Repurchases, Etc ........................ 12
(f) Investments ........................................ 13
(g) Change in Nature of Business ....................... 13
(h) Accounting Changes ................................. 13
(i) Debt ............................................... 13
(j) Charter Amendments ................................. 13
(k) Prepayments, Etc. of Debt .......................... 14
<PAGE>
(l) Amendment, Etc. of Related Documents ............... 14
(m) Negative Pledge .................................... 14
(n) Partnerships ....................................... 14
(o) Capital Expenditures ............................... 14
(p) Issuance of Capital Stock .......................... 14
(q) Payment Restrictions ............................... 15
9. Amendments, Etc ............................................ 15
10. Notices, Etc .............................................. 15
11. No Waiver; Remedies ....................................... 15
12. Right of Set-off .......................................... 15
13. Indemnification ........................................... 16
14. Continuing Guaranty; Assignments under the Credit Agreement 16
15. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial ............................................... 16
16. Execution in Counterparts; Delivery by Telecopier ......... 17
Schedule I -Debt
Schedule II - Investments
<PAGE>
AMENDED AND RESTATED GUARANTY
AMENDED AND RESTATED GUARANTY dated as of December 15,
1995 made by Marvel V Holdings Inc., a Delaware corporation (the "Guarantor"),
in favor of the Lenders (the "Lenders") party to the Credit Agreement (as
defined below) and Citibank, N.A. ("Citibank"), as agent (the "Agent") for the
Lenders.
PRELIMINARY STATEMENTS. (1) Marvel IV Holdings Inc., a Delaware
corporation (the "Borrower"), entered into a Credit Agreement dated as of July
20, 1994, as amended by the First Amendment dated as of March 10, 1995 (as so
amended, the "Original Credit Agreement"), with financial institutions and other
institutional lenders party thereto (the "Original Lenders") and Citibank, as
agent for the Original Lenders. In consideration of the premises and in order
to induce the Original Lenders to make advances under the Original Credit
Agreement, the Guarantor entered into a Guaranty dated July 27, 1994 (the
"Original Guaranty") in favor of the Orignal Lenders and Citibank, as agent for
the Original Lenders.
(2) Subsequently, the Borrower entered into an Amended and
Restated Credit Agreement dated as of June 29, 1995, as amended by the First
Amendment dated as of October 27, 1995 (said Agreement, as so amended, being the
"Existing Credit Agreement") with the financial institutions and other
institutional Lenders party thereto (the "Existing Lenders") and Citibank, as
agent for the Existing Lenders.
(3) The Borrower has entered into a Second Amended and
Restated Credit Agreement dated as of December 15, 1995 (said Agreement, as it
may hereafter be amended or otherwise modified from time to time, being the
"Credit Agreement"; the terms defined therein and not otherwise defined herein
being used herein as therein defined) with the Lenders and the Agent which
amends and restates the Existing Credit Agreement in its entirety.
(4) It is a condition precedent to the effectiveness of the
Credit Agreement that the Guarantor, as direct owner of 100 percent of the
outstanding shares of stock of the Borrower, shall have executed and delivered
this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to enter into the Credit Agreement, the Guarantor hereby
agrees as follows:
Section 1. Guaranty. The Guarantor hereby unconditionally
guarantees (a) the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of
<PAGE>
2
all Obligations of the Borrower now or hereafter existing under the Loan
Documents to which it is a party, whether for principal, interest (including,
without limitation, interest after the filing of a petition initiating a
proceeding of the type referred to in Section 6.01(e) of the Credit Agreement,
whether or not such interest constitutes an allowed claim for purposes of such
proceeding), fees, expenses or otherwise (such Obligations being the "Guaranteed
Payment Obligations") and (b) the performance when due of all other Obligations
of the Borrower now or hereafter existing under the Loan Documents, whether
affirmative or negative (such Obligations being the "Guaranteed Performance
Obligations" and together with the Guaranteed Payment Obligations, the
"Guaranteed Obligations"), and agrees to pay any and all reasonable expenses
(including reasonable counsel fees and expenses) incurred by the Agent or the
Lenders in enforcing any rights under this Guaranty. Without limiting the
generality of the foregoing, the Guarantor's liability shall extend to all
amounts that constitute part of the Guaranteed Payment Obligations and would be
owed by the Borrower to the Agent or the Lenders under the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Borrower.
Section 2. Guaranty Absolute. The Guarantor guarantees that
the Guaranteed Payment Obligations will be paid, and the Guaranteed Performance
Obligations will be performed, strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent or
the Lenders with respect thereto. The Obligations of the Guarantor under this
Guaranty are independent of the Guaranteed Obligations, and a separate action or
actions may be brought and prosecuted against the Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against the Borrower or
whether the Borrower is joined in any such action or actions. The liability of
the Guarantor under this Guaranty shall be absolute and unconditional
irrespective of, and the Guarantor hereby irrevocably waives any defenses it may
now or hereafter have in any way relating to, any and all of the following:
(a) any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other amendment
or waiver of or any consent to departure from any Loan Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to the Borrower or any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
<PAGE>
3
(d) any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations or
any other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance (including, without limitation, any
statute of limitations or any existence of or reliance on any representation by
the Agent or any Lender) that might otherwise constitute a defense available to,
or a discharge of, the Borrower, the Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or any Lender upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, all as though such
payment had not been made.
Section 3. Waivers. (a) The Guarantor hereby waives, to the
extent permitted by applicable law, promptness, diligence, notice of acceptance
and any other notice with respect to any of the Guaranteed Obligations and this
Guaranty and any requirement that the Agent or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against the Borrower or any other Person or any Collateral.
(b) The Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
Section 4. Subrogation. The Guarantor will not exercise any
rights that it may now or hereafter acquire against the Borrower or any other
insider guarantor that arise from the existence, payment, performance or
enforcement of the Guarantor's Obligations under this Guaranty or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Agent or any Lender against the
Borrower or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Payment
Obligations in respect of the Guaranteed Obligations and this Guaranty shall
have been Fully Satisfied. If any amount shall be paid to the Guarantor in
violation of the preceding sentence at any time prior to the later of the date
on which the Payment Obligations in respect of the Guaranteed Obligations and
this Guaranty have been Fully Satisfied and the Termination Date, such amount
shall be held in trust for the benefit of
<PAGE>
4
the Agent and the Lenders and shall forthwith be paid to the Agent to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Guaranty, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter arising. If
(i) the Guarantor shall make payment to the Agent or any other Lender of all or
any part of the Guaranteed Obligations, (ii) all of the Payment Obligations in
respect of the Guaranteed Obligations and this Guaranty shall be Fully Satisfied
and (iii) the Termination Date shall have occurred, the Agent and the Lenders
will, at the Guarantor's request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Guarantor of
an interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and
all payments made by the Guarantor hereunder shall be made, in accordance with
Section 2.10 of the Credit Agreement, free and clear of and without deduction
for any and all present or future Taxes. If the Guarantor shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section) such Lender or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Guarantor shall make such deductions and
(iii) the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided,
however, that any such Lender shall designate a different Lending Office if, in
the judgment of such Lender, such designation would avoid the need for, or
reduce the amount of, any Taxes required to be deducted from or in respect of
any sum payable hereunder to such Lender or the Agent and would not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.
(b) In addition, the Guarantor agrees to pay any present or
future Other Taxes.
(c) The Guarantor will indemnify each Lender and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto; provided that, in the event such Lender or the Agent, as the case may
be, successfully contests the assessment of such Taxes or Other Taxes or any
liability arising therefrom or with respect thereto, such Lender or the Agent
shall refund, to the extent of any refund thereof made to such Lender or the
Agent, any amounts paid by the Guarantor under this Section in respect of such
Taxes, Other Taxes or liabilities arising therefrom or with respect thereto.
Each Lender and the Agent agree that it
<PAGE>
5
will contest such Taxes, Other Taxes or liabilities if (i) the Guarantor
furnishes to it an opinion of reputable tax counsel acceptable to such Lender or
the Agent to the effect that such Taxes or Other Taxes were wrongfully or
illegally imposed and (ii) such Lender or the Agent determines, in its sole
discretion, that it would not be disadvantaged or prejudiced in any manner
whatsoever as a result of such contest. This indemnification shall be made
within 30 days from the date such Lender or the Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes,
the Guarantor will furnish to the Agent, at its address referred to in the
Credit Agreement, appropriate evidence of payment thereof. If no Taxes are
payable in respect of any payment hereunder by the Guarantor through an account
or branch outside the United States or on behalf of the Guarantor by a payor
that is not a United States person, the Guarantor will furnish, or will cause
such payor to furnish, to the Agent a certificate from each appropriate taxing
authority or authorities, or an opinion of counsel acceptable to the Agent, in
either case stating that such payment is exempt from or not subject to Taxes.
For purposes of this Section, the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the Code.
(e) Each Lender organized under the laws of a jurisdiction
outside the United States and the Agent, if organized under the laws of a
jurisdiction outside the United States, shall, if requested in writing by the
Guarantor or the Agent (but only so long as such Lender or the Agent remains
lawfully able to do so and only so long as Guarantor is making payments under
this Guaranty), provide the Guarantor and (in the case of any such Lender other
than the Agent) the Agent with two duly completed copies of Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender or the Agent is
entitled to benefits under an income tax treaty to which the United States is a
party that reduces the rate of withholding tax on payments under this Agreement
or the Notes or certifying that the income receivable pursuant to this Agreement
or the Notes is effectively connected with the conduct of a trade or business in
the United States.
(f) For any period with respect to which the Agent or a
Lender has failed to provide the Guarantor with the appropriate forms described
in subsection (e) above (other than if such failure is due to a change in law
occurring after the date on which such person was originally required to provide
such forms, or if such forms are otherwise not required under subsection (e)
above), the Agent or such Lender shall not be entitled to increased payments or
indemnification under subsection (a) or (c) above with respect to Taxes imposed
by the United States; provided, however, that should the Agent or a Lender
become subject to Taxes because of its failure to deliver a form required
hereunder, the Guarantor shall take such steps as the Agent or such Lender shall
reasonably request to assist the Lender to recover such Taxes if, in the
judgment of the Guarantor such steps would avoid the need for,
<PAGE>
6
or reduce the amount of, any Taxes required to be deducted from or in respect of
any sum payable hereunder to the Agent or such Lender and would not, in the
judgment of the Guarantor, be disadvantageous to the Guarantor.
(g) Without prejudice to the survival of any other agreement
of the Guarantor hereunder, the agreements and obligations of the Guarantor
contained in this Section 5 shall survive the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty.
(h) If a Lender shall change its Applicable Lending Office
other than (i) at the request of the Guarantor or (ii) at a time when such
change would not result in this Section requiring the Guarantor to make a
greater payment than if such change had not been made, such Lender shall not be
entitled to receive any greater payment under this Section than such Lender
would have been entitled to receive had it not changed its Applicable Lending
Office.
Section 6. Representations and Warranties. The Guarantor
hereby represents and warrants as follows:
(a) The Guarantor (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property or in
which the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed would not have a Material
Adverse Effect (with respect to clause (a) of the definition thereof, the term
"Person" shall refer to the Guarantor) and (iii) has all requisite corporate
power and authority to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted. All of the
outstanding capital stock of the Guarantor has been validly issued, is fully
paid and non-assessable. Four Star is the legal and beneficial owner of all of
the outstanding capital stock of the Guarantor (other than the shares issued in
the name of the voting trustee (the "Voting Trustee") under the voting trust
agreement described in Section 3.01(g)(xvii)(B) of the Original Credit Agreement
(the "Voting Trust Agreement") and the Voting Trustee is the legal owner of the
Voting Trust Stock, in each case free and clear of all Liens except for the
Liens created by the Collateral Documents and the Voting Trust Agreement.
(b) The execution, delivery and performance by the Guarantor
of this Guaranty, each Loan Document and each Related Document to which it is or
is to be a party and the consummation by the Guarantor of the transactions
contemplated hereby, are within the Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene the
Guarantor's charter or by-laws, (ii) violate any law (including, without
limitation, the Exchange Act), rule, regulation (including, without
<PAGE>
7
limitation, Regulation X of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination or award,
(iii) conflict with or result in the breach of, or constitute a default under,
any loan agreement, contract, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting the Guarantor, any of its Subsidiaries or any
of its or their properties, the effect of which conflict, breach or default is
reasonably likely to have a Material Adverse Effect (with respect to clause (a)
of the definition thereof, the term "Person" shall refer to the Guarantor) or
(iv) except for the liens created by the Collateral Documents and the Voting
Trust Agreement, result in or require the creation or imposition of any Lien
upon or with respect to any of the properties of the Guarantor or any of its
Subsidiaries. Neither the Guarantor nor any of its Subsidiaries is in violation
of any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or in breach of any such contract, loan agreement,
indenture, mortgage, deed of trust, lease or other instrument, the violation or
breach of which would be reasonably likely to have a Material Adverse Effect
(with respect to clause (a) of the definition thereof, the term "Person" shall
refer to such the Guarantor).
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for (i) the due execution, delivery and performance by the Guarantor of
this Guaranty or any other Loan Document or any Related Document to which it is
or is to be a party or for the consummation by the Guarantor of the transactions
contemplated hereby, (ii) the grant by the Guarantor of the Liens granted by it
pursuant to the Collateral Documents, (iii) the perfection or maintenance of the
Liens created by the Collateral Documents (including the first priority nature
thereof) or (iv) the exercise by the Agent or any Lender of its rights under the
Loan Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents, except for the filing of financing statements in
accordance with Section 3.01(g)(viii) of the Original Credit Agreement and
except as may be required in connection with the disposition of any portion of
the Collateral by laws affecting the offering and sale of securities generally;
provided, however, that no representation or warranty is made as to any consent
of, authorization, approval or other action by, or notice to or filing with, any
banking agency or regulatory body applicable to the Agent. All applicable
waiting periods in connection with the transactions contemplated hereby will
have expired without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions upon the
rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties now owned or hereafter
acquired by any of them.
(d) This Guaranty has been, and each other Loan Document to
which the Guarantor is a party when delivered under the Original Credit
Agreement, the Existing Credit Agreement or the Credit Agreement will have been,
duly executed and delivered by the Guarantor. This Guaranty is, and each other
Loan Document to which the Guarantor is a party when delivered under under the
Original Credit Agreement, the Existing Credit
<PAGE>
8
Agreement or the Credit Agreement will be, the legal, valid and binding
obligations of the Guarantor, enforceable against the Guarantor in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditor's rights
generally.
(e) There is no pending or threatened action, proceeding,
governmental investigation or arbitration affecting the Guarantor or any of its
Subsidiaries before any court, governmental agency or arbitrator, which is
reasonably likely to have a Material Adverse Effect (with respect to clause (a)
of the definition thereof, the term "Person" shall refer to the Guarantor) or
that purports to affect the legality, validity or enforceability of this
Guaranty, any other Loan Document or any Related Document or the consummation of
the transactions contemplated hereby or thereby.
(f) The Guarantor and its ERISA Affiliates are in compliance
in all material respects with the applicable provisions of ERISA and the Code
with respect to each Plan thereof. No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan of the Guarantor or any of its ERISA
Affiliates. The amount of all Unfunded Pension Liabilities under all Plans of
the Guarantor and its ERISA Affiliates does not exceed $60,000,000. None of the
Guarantor or any of its ERISA Affiliates has made contributions or incurred any
Withdrawal Liability to any Multiemployer Plan within the past five years, and
it is not reasonably expected that such contributions shall be made or required
or that such liability shall be incurred in any such case in amounts or under
circumstances that would be reasonably likely to result in a material liability
to the Guarantor or any of its ERISA Affiliates. Schedule B (Actuarial
Information) to the 1992 annual report (Form 5500 Series) for each Plan of the
Guarantor and each of its ERISA Affiliates, copies of which have been filed with
the Internal Revenue Service and furnished to the Lenders, is complete and
accurate in all material respects and fairly presents the funding status of such
Plan, and since the date of such Schedule B there has been no material adverse
change in such funding status. The Guarantor and its Subsidiaries have no
material liability with respect to "expected postretirement benefit obligations"
within the meaning of Statement of Financial Accounting Standards No. 106.
(g) The operations and properties of the Guarantor and each
of its Subsidiaries are in substantial compliance with all Environmental Laws,
all necessary Environmental Permits have been obtained and are in effect for the
operations and properties of the Guarantor and its Subsidiaries and the
Guarantor and its Subsidiaries are in compliance with all such Environmental
Permits, except, as to all of the above, where the failure to do so would not be
reasonably likely to have a Material Adverse Effect (in the case of clause (a)
of the definition thereof, the term "Person" shall mean the Guarantor); and no
circumstances exist that are reasonably likely to (i) form the basis of an
Environmental Action against the Guarantor or any of its Subsidiaries or any of
their respective properties or (ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or
<PAGE>
9
transferability under any Environmental Law that would, in the case of either
(i) or (ii) above, be reasonably likely to have a Material Adverse Effect (in
the case of clause (a) of the definition thereof, the term "Person" shall be the
Guarantor).
(h) The Guarantor and each of its Subsidiaries has filed,
has caused to be filed or has been included in all tax returns (Federal, state,
local and foreign) required to be filed and has paid all taxes shown thereon to
be due, together with applicable interest and penalties.
(i) Neither the Guarantor nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(j) The Guarantor is, individually and together with its
Subsidiaries, Solvent.
(k) Set forth on Schedule I hereto is a complete and
accurate list of all Debt of the Guarantor, showing as of the date hereof the
principal amount outstanding thereunder and there is no other agreement,
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting the Guarantor that imposes any material
Obligation or material restriction on the Guarantor.
(l) Set forth on Schedule II is a complete and accurate list
of all Investments held by the Guarantor, showing as of the date hereof the
amount, obligor or issuer and maturity, if any, thereof.
Section 7. Affirmative Covenants. The Guarantor covenants and
agrees that, so long as any part of the Advances shall remain unpaid or any
Lender shall have any Commitment, the Guarantor will:
(a) Compliance with Laws, Etc. Comply, and cause each of
its Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations and orders (such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent contested in
good faith), the failure to comply with which would, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect (with respect
to clause (a) of the definition thereof, the term Person shall refer to the
Guarantor).
(b) Compliance with Environmental Laws. Comply and cause
each of its Subsidiaries and all lessees and all other Persons occupying its
properties to comply, in all material respects, with all Environmental Laws and
Environmental Permits applicable to its
<PAGE>
10
operations and properties; obtain and renew all Environmental Permits necessary
for its operations and properties; and conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties, in accordance with
the requirements of all Environmental Laws; provided, however, that neither the
Guarantor nor any of its Subsidiaries shall be required to undertake any such
cleanup, removal, remedial or other action to the extent that its obligation to
do so is being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances.
(c) Maintenance of Insurance. Maintain, and cause each of
its Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Guarantor or such Subsidiary operates.
(d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries (other than any Subsidiaries of
Marvel) to preserve and maintain, its corporate existence, rights (charter and
statutory) and franchises; provided, however, that neither the Guarantor nor any
of its Subsidiaries shall be required to preserve any of its rights or franchise
if the Board of Directors of the Guarantor or such Subsidiary (or, in the case
of Marvel, the executive committee of the Board of Directors of Marvel) shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Guarantor or such Subsidiary, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to the
Guarantor, such Subsidiary or the Lenders.
(e) Visitation Rights. At any reasonable time and from time
to time, upon reasonable prior notice permit the Agent or any of the Lenders or
any agents or representatives thereof, to the extent reasonably requested to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Guarantor and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of the Guarantor and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants.
(f) Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Guarantor and each such Subsidiary to the extent necessary to
permit the preparation of the financial statements required to be delivered
hereunder.
(g) Maintenance of Properties, Etc. Maintain and preserve,
and cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the
<PAGE>
11
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
(h) Performance of Related Documents. Perform and observe,
and cause each of its Subsidiaries to perform and observe, all of the terms and
provisions of each Related Document to which such Person is a party to be
performed or observed by it, maintain each such Related Document in full force
and effect, enforce such Related Document in accordance with its terms, take all
such action to such end as may be from time to time requested by the Agent and,
upon request of the Agent, make to each other party to each such Related
Document such demands and requests for information and reports or for action as
the Guarantor is entitled to make under such Related Document and cause its
Subsidiaries to do all of the foregoing with respect to any Related Document it
is party to.
(i) Transactions with Affiliates. Conduct, and cause each
of its Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates (other than the Guarantor or any of
its Subsidiaries) on terms that are fair and reasonable and no less favorable to
the Guarantor or such Subsidiary than it would obtain in a comparable arm's-
length transaction with a Person that is not an Affiliate; provided, however,
that for purposes of this Section 7(i), the term "Affiliate" shall not include
any officer or director of the Guarantor or such Subsidiary, as the case may be,
who does not possess directly or indirectly the power to vote 5% or more of the
Voting Stock of the Guarantor or its Subsidiaries; provided further that nothing
in this Section 7(i) shall restrict the performance by the parties to the Marvel
Tax Agreements of their respective obligations thereunder.
(j) Mafco Tax Group. Maintain, and cause each of its
domestic Subsidiaries (other than the subsidiaries of Marvel) to maintain, its
status as a member of the affiliated group (within the meaning of Section
1504(a)(1) of the Code) of which Mafco is the common parent.
Section 8. Negative Covenants. The Guarantor covenants and
agrees that, so long as any part of the Advances shall remain unpaid or any
Lender shall have any Commitment, the Guarantor will not:
(a) Liens, Etc. Create or suffer to exist, or permit the
Borrower or any of its Non-Operating Subsidiaries to create or suffer to exist,
any Lien, upon or with respect to any of its properties, whether now owned or
hereafter acquired, or sign or file, or permit the Borrower or its Non-Operating
Subsidiaries to sign or file, under the Uniform Commercial Code of any
jurisdiction, a financing statement that names the Guarantor, the Borrower or
any of its Non-Operating Subsidiaries as debtor, or sign, or permit the Borrower
or any of its Non-Operating Subsidiaries to sign, any security agreement
authorizing any secured party thereunder to file such financing statement, or
assign, or permit any of its Non- Operating Subsidiaries to assign, any right to
receive income, other than the following Liens: (i) Liens
<PAGE>
12
created by the Loan Documents; (ii) the Liens described on Schedule V to the
Credit Agreement provided, that in the event any property subject to any such
Lien is released from such Lien, such released property may not thereafter be
subjected to any Lien other than Liens created by the Loan Documents; (iii)
mechanics', materialmen's, carriers' and similar Liens arising in the ordinary
course of business securing obligations that are not overdue for a period of
more than 30 days or which are being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained; (iv)
Liens for taxes, assessments and governmental charges or levies not yet due and
payable or which are being contested in good faith and by proper proceedings and
as to which appropriate reserves are being maintained; and (v) judgment or other
similar Liens, provided that there shall be no period of more than 10
consecutive days during which a stay of enforcement of the related judgment
shall not be in effect.
(b) Lease Obligations. Create, incur, assume or suffer to
exist, or permit the Borrower or any of its Non-Operating Subsidiaries to
create, incur, assume or suffer to exist, any obligations as lessee (i) for the
rental or hire of real or personal property in connection with any sale and
leaseback transaction, or (ii) for the rental or hire of other real or personal
property of any kind under leases or agreements to lease having an original term
of one year or more.
(c) Mergers, Etc. Merge into or consolidate with any Person
or permit any Person to merge into it, or permit the Borrower or any of its Non-
Operating Subsidiaries to do so.
(d) Sales, Etc. of Assets. Sell, lease, transfer or
otherwise dispose of, or permit the Borrower or any of its Non-Operating
Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets or
grant, or permit the Borrower or any of its Non- Operating Subsidiaries to
grant, any option or other right to purchase, lease or otherwise acquire any
assets except (i) dispositions of obsolete, worn out or surplus property
disposed of in the ordinary course of business, (ii) sales, leases, transfers or
other dispositions of assets by the Borrower or a wholly-owned Non-Operating
Subsidiary of the Guarantor to the Borrower or any other wholly owned Non-
Operating Subsidiary of the Guarantor and (iii) sales, leases, transfers or
other dispositions of assets (other than the capital stock of the Borrower or
any Non-Operating Subsidiary that the Guarantor, the Borrower or any other Non-
Operating Subsidiary owns directly) for cash and for no less than fair market
value.
(e) Dividends, Repurchases, Etc. Declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its capital stock or any warrants, rights or options to acquire such capital
stock, now or hereafter outstanding, return any capital to its stockholders as
such, make any distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such, or permit the Borrower or
any of its Non-Operating Subsidiaries to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of the Guarantor or any warrants,
rights or
<PAGE>
13
options to acquire such capital stock, except that the Guarantor may (i) declare
and deliver dividends and distributions payable only in common stock or
warrants, rights or options to acquire common stock and (ii) declare and pay
cash dividends to its stockholders in an amount not to exceed the amount of cash
dividends received by the Guarantor from the Borrower in accordance with the
terms of the Credit Agreement.
(f) Investments. Make or hold, or permit the Borrower or
any of its Non-Operating Subsidiaries to make or hold, any Investment in any
Person, other than (i) Investments by the Guarantor and its Subsidiaries in Cash
Equivalents, (ii) a loan by the Borrower to Mafco of up to $430,000,000 out of
the proceeds of the Advances, (iii) Investments by the Borrower or the Guarantor
in Mafco or any of its Subsidiaries in an amount not to exceed the amount
released by the Agent from the Borrower Collateral Account pursuant to the
provisions of Section 7 of the Borrower Security Agreement or the amount
released by the Agent from the Mafco Collateral Accounts pursuant to Section
7 of the Mafco Security Agreement, (iv) loans or advances by Marvel III to Mafco
in connection with payments to be made pursuant to the terms of the Marvel Tax
Agreements, (v) Investments existing on the date hereof and (vi) contributions
by the Guarantor, the Borrower or any of its Non-Operating Subsidiaries of
common stock of Marvel to any Non-Operating Subsidiary.
(g) Change in Nature of Business. (i) Engage in any
business other than the ownership of the capital stock of the Borrower or (ii)
permit the Borrower or a Non Operating Subsidiary to make any change in the
nature of the business carried on at the date hereof by the Borrower or such
Non-Operating Subsidiary, as the case may be.
(h) Accounting Changes. Make or permit, or permit any of
its Non-Operating Subsidiaries to make or permit, any change in accounting
policies affecting (i) the presentation of financial statements or (ii)
reporting practices, except in either case as required or permitted by GAAP.
(i) Debt. Create, incur, assume or suffer to exist, or
permit the Borrower or any of its Non-Operating Subsidiaries to create, incur,
assume or suffer to exist, any Debt other than: (i) in the case of the
Guarantor, Debt under loans made to the Guarantor by FN Holdings and FN Parent;
(ii) in the case of the Guarantor and the Borrower, Debt under the Loan
Documents; (iii) in the case of any of its Non-Operating Subsidiaries, (A) in
the case of Marvel III, the Marvel III Debt, (B) in the case of Marvel Parent,
the guaranty of the Marvel III Debt and the Marvel Parent Debt and (C) in the
case of Marvel Holdings, the Marvel Holdings Debt; and (iv) in the case of the
Guarantor, the Borrower and any of its Non-Operating Subsidiaries, endorsement
of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business.
(j) Charter Amendments. Amend, or permit the Borrower or
any of its Non-Operating Subsidiaries to amend, its certificate of incorporation
or bylaws.
<PAGE>
14
(k) Prepayments, Etc. of Debt. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Debt, or amend, modify or change in any manner any term or condition of any Debt
or any agreement relating to such Debt, or permit the Borrower or any of its
Non-Operating Subsidiaries to do any of the foregoing other than (i) in the case
of the Borrower, the prepayment of the Advances in accordance with the terms of
the Credit Agreement, (ii) in the case of Marvel III, Marvel Parent and Marvel
Holdings, to make regularly scheduled or required repayments or redemptions of
the Marvel III Debt, the Marvel Parent Debt and the Marvel Holdings Debt,
respectively and (iii) in the case of the Guarantor, the prepayment of Debt
owing to FN Parent and FN Holdings from the proceeds of dividends received by
the Guarantor from the Borrower or from capital contributions from Four Star in
an amount not to exceed the amount released by the Agent from the Mafco
Collateral Accounts pursuant to the provisions of Section 7 of the Mafco
Security Agreement.
(l) Amendment, Etc. of Related Documents. Cancel or
terminate any Related Document to which it is a party or consent to or accept
any cancellation or termination thereof, amend, modify or change in any manner
any term or condition of or give any consent, waiver or approval thereunder,
waive any default under or any breach of any term or condition of any such
Related Document, agree in any manner to any other amendment, modification or
change of any term or condition of any Related Document, or take any other
action in connection with any such Related Document that would impair the value
of the interest or rights of the Guarantor thereunder or that would impair the
interest or rights of the Agent or any Lender or permit any of its Subsidiaries
to do any of the foregoing.
(m) Negative Pledge. Enter into or suffer to exist, or
permit the Borrower or any of its Non-Operating Subsidiaries to enter into or
suffer to exist, any agreement prohibiting or conditioning the creation or
assumption of any Lien upon any of its property or assets other than (i) in
favor of the Agent and the Lenders or (ii) any prohibition or condition existing
on the date hereof.
(n) Partnerships. Become a general partner in any general
or limited partnership, or permit the Borrower or any of its Non-Operating
Subsidiaries to do so.
(o) Capital Expenditures. Make, or permit the Borrower or
any Non-Operating Subsidiary to make, any Capital Expenditures.
(p) Issuance of Capital Stock. Issue, or permit the
Borrower or any Non-Operating Subsidiary to issue, any capital stock or
warrants, rights or options to acquire such capital stock.
<PAGE>
15
(q) Payment Restrictions. Create or otherwise cause or
suffer to exist or become effective, or permit the Borrower or any of its Non-
Operating Subsidiaries to create or otherwise cause or suffer to exist or become
effective, any consensual encumbrance or restriction of any kind on the ability
of the Guarantor, the Borrower or such Non- Operating Subsidiary to (i) pay
dividends or make any other distributions on any of the Guarantor's, the
Borrowers or such Non-Operating Subsidiary's capital stock, (ii) make loans or
advances to Mafco or any subsidiary of Mafco or (iii) repay or prepay Debt owed
by the Guarantor, the Borrower or a Non-Operating Subsidiary other than any (x)
consensual encumbrances or restrictions existing on the date hereof and (y)
other consensual encumbrances or restrictions that are no more onerous than
those encumbrances and restrictions in existence on the date hereof with respect
to the Guarantor, the Borrower or such Non-Operating Subsidiary, as the case may
be.
Section 9. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders (other than any Lender
that is, at such time, a Defaulting Lender), (a) release or limit the liability
of the Guarantor hereunder, (b) postpone any date fixed for payment hereunder or
(c) change the number of Lenders required to take any action hereunder.
Section 10. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered to it, if to the Guarantor, addressed to it at 38 East 63rd
Street, New York, New York 10021 Attention: Secretary, if to the Agent or any
Lender, at its address specified in the Credit Agreement, or as to any party at
such other address as shall be designated by such party in a written notice to
each other party. All such notices and other communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answerback or delivered to the cable company, respectively.
Section 11. No Waiver; Remedies. No failure on the part of the
Agent or any Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
Section 12. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Agent to declare
<PAGE>
16
the Notes due and payable pursuant to the provisions of said Section 6.01, each
Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of the Guarantor against any and all of the Obligations of the Guarantor
now or hereafter existing under this Guaranty, whether or not such Lender shall
have made any demand under this Guaranty and although such Obligations may be
unmatured. Each Lender agrees promptly to notify the Guarantor after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) that such Lender may have.
Section 13. Indemnification. Without limitation on any other
Obligations of the Guarantor or remedies of the Lenders under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Lenders from and against, and shall pay on demand,
any and all losses, liabilities, damages, costs, expenses and charges (including
the reasonable and documented fees and disbursements of the legal counsel of the
Lenders and the reasonable and documented charges of the internal legal counsel
of the Lenders) suffered or incurred by the Lenders as a result of (a) any
failure of any Guaranteed Obligations to be the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the rights of creditors generally, or (b) any
failure of the Borrower to pay and perform any Guaranteed Obligations in
accordance with the terms of such Guaranteed Obligations.
Section 14. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the date on which the Payment Obligations in respect of
the Guaranteed Obligations and this Guaranty have been Fully Satisfied, (b) be
binding upon the Guarantor, its successors and assigns and (c) inure to the
benefit of and be enforceable by the Lenders, the Agent and their successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), any Lender may assign or otherwise transfer all or any portion of
its rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement.
Section 15. Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial. (a) This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
<PAGE>
17
(b) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party, or for recognition or enforcement
of any judgment, and the Guarantor hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York State or, to the extent permitted by law, in
such federal court. The Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Guaranty or any of the
other Loan Documents to which it is or is to be a party in the courts of any
jurisdiction.
(c) The Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court. The Guarantor hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.
(d) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE AGENT OR
ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
Section 16. Execution in Counterparts; Delivery by Telecopier.
This Guaranty 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 one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Guaranty by telecopier shall be effective as delivery of a manually
executed counterpart of this Guaranty.
<PAGE>
18
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
MARVEL V HOLDINGS INC.
By /s/
----------------------------
Title:
<PAGE>
AMENDED AND RESTATED BORROWER PARENT GUARANTY
SCHEDULE I
DEBT
1. Borrower Parent Guaranty (as defined in the Credit
Agreement)
2. Subordinated loans that may be issued from time to time
to Borrower Parent by First Nationwide (Parent)
Holdings Inc. pursuant to the FN Parent Loan Agreement
(as defined in the Credit Agreement).
3. Subordinated loans that may be issued from time to time
to Borrower Parent by First Nationwide Holdings Inc. in
accordance with the Second Restated Certificate of
First Nationwide Holdings Inc., as the same may be
amended from time to time, and in accordance with the
terms thereof.
<PAGE>
AMENDED AND RESTATED BORROWER PARENT GUARANTY
SCHEDULE II
Investments
INVESTMENT
PERSON ISSUER TYPE AMOUNT
- ------ ------ ---- ----------
Marvel V Holdings Marvel IV Holdings Common 100%
Inc. Inc. Stock
<PAGE>
EXECUTION COPY
SECOND AMENDED AND RESTATED NEW WORLD GUARANTY
Dated as of December 15, 1995
From
NWCG (PARENT) HOLDINGS CORPORATION
as Guarantor
in favor of
THE LENDERS PARTY TO THE AMENDED AND RESTATED CREDIT AGREEMENT
REFERRED TO HEREIN
and
CITIBANK, N.A.
as Agent
<PAGE>
T A B L E O F C O N T E N T S
Section Page
1. Guaranty; Limitation of Liability ................................. 2
2. Guaranty Absolute ................................................. 2
3. Waivers ........................................................... 3
4. Subrogation ....................................................... 4
5. Payments Free and Clear of Taxes, Etc. ........................... 4
6. Representations and Warranties ................................... 6
7. Affirmative Covenants ........................................... 11
(a) Compliance with Laws, Etc. .......................... 11
(b) Compliance with Environmental Laws .................. 11
(c) Maintenance of Insurance ............................ 12
(d) Preservation of Corporate Existence, Etc. ........... 12
(e) Visitation Rights ................................... 12
(f) Keeping of Books .................................... 12
(g) Maintenance of Properties, Etc. ..................... 12
(h) Reporting Requirements .............................. 13
(i) Transactions with Affiliates ........................ 15
(j) Mafco Tax Group ..................................... 15
8. Negative Covenants .............................................. 15
(a) Liens, Etc. ......................................... 15
(b) Lease Obligations ................................... 16
(c) Mergers, Etc. ....................................... 16
(d) Sales, Etc. of Assets ............................... 16
(e) Dividends, Repurchases, Etc ......................... 16
(f) Investments ......................................... 17
(g) Change in Nature of Business ........................ 17
(h) Accounting Changes .................................. 17
(i) Debt ................................................ 17
(j) Charter Amendments .................................. 17
(k) Prepayments, Etc. of Debt ........................... 17
(l) Negative Pledge ..................................... 17
<PAGE>
(m) Partnerships ........................................ 17
(n) Capital Expenditures ................................ 17
(o) Issuance of Capital Stock ........................... 18
(p) Payment Restrictions ................................ 18
9. Amendments, Etc. ................................................ 18
10. Notices, Etc. .................................................. 18
11. No Waiver; Remedies ............................................ 18
12. Right of Set-off ............................................... 19
13. Indemnification ................................................ 19
14. Continuing Guaranty; Assignments under the Credit Agreement .... 19
15. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. 20
16. Execution in Counterparts, Delivery by Telecopier .............. 20
Schedule I - Subsidiaries
Schedule II - Liens
Schedule III - Debt
Schedule IV - Investments
<PAGE>
SECOND AMENDED AND RESTATED GUARANTY
SECOND AMENDED AND RESTATED GUARANTY dated as of December 15, 1995
made by NWCG (Parent) Holdings Corporation, a Delaware corporation (the
"Guarantor"), in favor of the Lenders (the "Lenders") party to the Credit
Agreement (as defined below) and Citibank, N.A. ("Citibank"), as agent (the
"Agent") for the Lenders.
PRELIMINARY STATEMENTS.
(1) Marvel IV Holdings Inc., a Delaware corporation (the
"Borrower"), entered into a Credit Agreement dated as of July 20, 1994, as
amended by the First Amendment dated as of March 10, 1995 (as so amended, the
"Original Credit Agreement"), with the financial institutions and other
institutional lenders party thereto (the "Original Lenders") and Citibank, as
agent for the Original Lenders. In consideration of the premises and in order
to induce the Original Lenders to make advances under the Original Credit
Agreement, the Guarantor entered into a Guaranty dated September 30, 1994 in
favor of the Original Lenders and Citibank, as agent for the Original Lenders.
(2) Subsequently, the Borrower entered into an Amended and
Restated Credit Agreement dated as of June 29, 1995, as amended by the First
Amendment dated as of October 27, 1995 (said Agreement, as amended, being the
"Existing Credit Agreement") with the financial institutions and other
institutional lenders party thereto (the "Existing Lenders") and Citibank, as
agent for the Existing Lenders. In consideration of the premises and in order
to induce the Existing Lenders to make advances under the Existing Credit
Agreement, the Guarantor entered into an Amended and Restated Guaranty dated as
of June 29, 1995 in favor of the Existing Lenders and Citibank, as agent for the
Existing Lenders.
(3) The Borrower has entered into a Second Amended and
Restated Credit Agreement dated as of December 15, 1995 (said Agreement, as it
may hereafter be amended or otherwise modified from time to time, being the
"Credit Agreement"; the terms defined therein and not otherwise defined herein
being used herein as therein defined) with the Lenders and the Agent which
amends and restates the Existing Credit Agreement in its entirety.
(4) It is a condition precedent to the effectiveness of the
Credit Agreement that the Guarantor shall have executed and delivered this
Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to enter into the Credit Agreement, the Guarantor hereby
agrees as follows:
<PAGE>
2
Section 1. Guaranty; Limitation of Liability. (a) The
Guarantor hereby unconditionally guarantees (x) the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations of
Mafco now or hereafter existing under the Loan Documents to which it is a party,
whether for principal, interest (including, without limitation, interest after
the filing of a petition initiating a proceeding of the type referred to in
Section 6.01(e) of the Credit Agreement, whether or not such interest
constitutes an allowed claim for purposes of such proceeding), fees, expenses or
otherwise (such Obligations being the "Guaranteed Payment Obligations") and (y)
the performance when due of all other Obligations of Mafco now or hereafter
existing under the Loan Documents, whether affirmative or negative (such
Obligations being the "Guaranteed Performance Obligations" and together with the
Guaranteed Payment Obligations, the "Guaranteed Obligations"), and agrees to pay
any and all reasonable expenses (including reasonable counsel fees and expenses)
incurred by the Agent or the Lenders in enforcing any rights under this
Guaranty. Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Payment Obligations and would be owed by Mafco to the Agent or the Lenders under
the Loan Documents but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving Mafco.
(b) The liability of the Guarantor under this Guaranty in
respect of the Guaranteed Obligations shall not exceed the greater of (i) 95% of
the Adjusted Net Assets of the Guarantor on the date hereof and (ii) 95% of the
Adjusted Net Assets of the Guarantor on the date of any payment hereunder.
"Adjusted Net Assets" of the Guarantor at any date means the lesser of (x) the
amount by which the fair value of the property of the Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities, but excluding any liabilities or obligations under this Guaranty,
of the Guarantor at such date and (y) the amount by which the present fair
salable value of the assets of the Guarantor at such date exceeds the amount
that will be required to pay the probable liability of the Guarantor on its
debts, excluding debt in respect of this Guaranty, as they become absolute and
matured.
Section 2. Guaranty Absolute. The Guarantor guarantees that the
Guaranteed Payment Obligations will be paid, and the Guaranteed Performance
Obligations will be performed, strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent or
the Lenders with respect thereto. The Obligations of the Guarantor under this
Guaranty are independent of the Guaranteed Obligations, and a separate action or
actions may be brought and prosecuted against the Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against Mafco or whether
Mafco is joined in any such action or actions. The liability of the Guarantor
under this Guaranty shall be absolute and unconditional irrespective of, and the
Guarantor hereby irrevocably waives
<PAGE>
3
any defenses it may now or hereafter have in any way relating to, any and all of
the following:
(a) any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to the Borrower or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other assets of Mafco, the Borrower or any of their Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of Mafco, the Borrower or any of their Subsidiaries;
or
(f) any other circumstance (including, without limitation, any
statute of limitations or any existence of or reliance on any
representation by the Agent or any Lender) that might otherwise constitute
a defense available to, or a discharge of, the Borrower, the Guarantor or
any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent or any Lender upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, all as though such
payment had not been made.
Section 3. Waivers. (a) The Guarantor hereby waives, to the extent
permitted by applicable law, promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this Guaranty
and any requirement that the Agent or any Lender protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take any
action against Mafco, the Borrower or any other Person or any Collateral.
<PAGE>
4
(b) The Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
Section 4. Subrogation. The Guarantor will not exercise any
rights that it may now or hereafter acquire against the Borrower or any other
insider guarantor that arise from the existence, payment, performance or
enforcement of the Guarantor's Obligations under this Guaranty or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Agent or any Lender against the
Borrower or any other insider guarantor, directly or indirectly, in cash or
other property, or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until the date on which all
of the Payment Obligations in respect of the Guaranteed Obligations and this
Guaranty shall have been Fully Satisfied. If any amount shall be paid to the
Guarantor in violation of the preceding sentence at any time prior to the later
of the date on which the Payment Obligations in respect of the Guaranteed
Obligations and this Guaranty shall have been Fully Satisfied and the
Termination Date, such amount shall be held in trust for the benefit of the
Agent and the Lenders and shall forthwith be paid to the Agent to be credited
and applied to the Guaranteed Obligations and all other amounts payable under
this Guaranty, whether matured or unmatured, in accordance with the terms of the
Loan Documents, or to be held as Collateral for any Guaranteed Obligations or
other amounts payable under this Guaranty thereafter arising. If (i) the
Guarantor shall make payment to the Agent or any other Lender of all or any part
of the Guaranteed Obligations, (ii) all of the Payment Obligations in respect of
the Guaranteed Obligations and this Guaranty shall have been Fully Satisfied and
(iii) the Termination Date shall have occurred, the Agent and the Lenders will,
at the Guarantor's request and expenses, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and
all payments made by the Guarantor hereunder shall be made, in accordance with
Section 2.12 of the Credit Agreement, free and clear of and without deduction
for any and all present or future Taxes. If the Guarantor shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section) such Lender or the Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Guarantor shall make such deductions and
(iii) the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law; provided,
however, that any such Lender shall designate a different Applicable Lending
Office if, in the judgment of such Lender, such
<PAGE>
5
designation would avoid the need for, or reduce the amount of, any Taxes
required to be deducted from or in respect of any sum payable hereunder to such
Lender or the Agent and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
(b) In addition, the Guarantor agrees to pay any present or
future Other Taxes.
(c) The Guarantor will indemnify each Lender and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto; provided that, in the event such Lender or the Agent, as the case may
be, successfully contests the assessment of such Taxes or Other Taxes or any
liability arising therefrom or with respect thereto, such Lender or the Agent
shall refund, to the extent of any refund thereof made to such Lender or the
Agent, any amounts paid by the Guarantor under this Section in respect of such
Taxes, Other Taxes or liabilities arising therefrom or with respect thereto.
Each Lender and the Agent agree that it will contest such Taxes, Other Taxes or
liabilities if (i) the Guarantor furnishes to it an opinion of reputable tax
counsel acceptable to such Lender or the Agent to the effect that such Taxes or
Other Taxes were wrongfully or illegally imposed and (ii) such Lender or the
Agent determines, in its sole discretion, that it would not be disadvantaged or
prejudiced in any manner whatsoever as a result of such contest. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes,
the Guarantor will furnish to the Agent, at its address referred to in theCredit
Agreement, appropriate evidence of payment thereof. If no Taxes are payable in
respect of any payment hereunder by the Guarantor through an account or branch
outside the United States or on behalf of the Guarantor by a payor that is not a
United States person, the Guarantor will furnish, or will cause such payor to
furnish, to the Agent a certificate from each appropriate taxing authority or
authorities, or an opinion of counsel acceptable to the Agent, in either case
stating that such payment is exempt from or not subject to Taxes. For purposes
of this Section, the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Code.
(e) Each Lender organized under the laws of a jurisdiction
outside the United States and the Agent, if organized under the laws of a
jurisdiction outside the United States, shall, if requested in writing by the
Guarantor or the Agent (but only so long as such Lender or the Agent remains
lawfully able to do so and only so long as Guarantor is making payments under
this Guaranty), provide the Guarantor and (in the case of any such Lender other
than the Agent) the Agent with two duly completed copies of Internal Revenue
Service
<PAGE>
6
form 1001 or 4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender or the Agent is entitled
to benefits under an income tax treaty to which the United States is a party
that reduces the rate of withholding tax on payments under this Agreement or the
Notes or certifying that the income receivable pursuant to this Agreement or the
Notes is effectively connected with the conduct of a trade or business in the
United States.
(f) For any period with respect to which the Agent or a
Lender has failed to provide the Guarantor with the appropriate forms described
in subsection (e) above (other than if such failure is due to a change in law
occurring after the date on which such person was originally required to provide
such forms, or if such forms are otherwise not required under subsection (e)
above), the Agent or such Lender shall not be entitled to increased payments or
indemnification under subsection (a) or (c) above with respect to Taxes imposed
by the United States; provided, however, that should the Agent or a Lender
become subject to Taxes because of its failure to deliver a form required
hereunder, the Guarantor shall take such steps as the Agent or such Lender shall
reasonably request to assist the Lender to recover such Taxes if, in the
judgment of the Guarantor such steps would avoid the need for, or reduce the
amount of, any Taxes required to be deducted from or in respect of any sum
payable hereunder to the Agent or such Lender and would not, in the judgment of
the Guarantor, be disadvantageous to the Guarantor.
(g) Without prejudice to the survival of any other agreement
of the Guarantor hereunder, the agreements and obligations of the Guarantor
contained in this Section 5 shall survive the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty.
(h) If a Lender shall change its Applicable Lending Office
other than (i) at the request of the Guarantor or (ii) at a time when such
change would not result in this Section 5 requiring the Guarantor to make a
greater payment than if such change had not been made, such Lender shall not be
entitled to receive any greater payment under this Section
5 than such Lender would have been entitled to receive had it not changed its
Applicable Lending Office.
Section 6. Representations and Warranties. The Guarantor
hereby represents and warrants as follows:
(a) The Guarantor (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it
to so qualify or be licensed except where the failure to so qualify or be
licensed would not have a Material Adverse Effect (with respect to clause
(a) of the definition
<PAGE>
7
thereof, the term "Person" shall refer to the Guarantor) and (iii) has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to
be conducted. All of the outstanding capital stock of the Guarantor has
been validly issued, is fully paid and non-assessable. Andrews is the
legal and beneficial owner of all of the outstanding capital stock of the
Guarantor (other than the shares (the "Voting Trust Stock") issued in the
name of the voting trustee (the "Voting Trustee") under the voting trust
agreement described in Section 3.02(i)(xv)(A) of the Original Credit
Agreement (the "Voting Trust Agreement") and the Voting Trustee is the
legal owner of the Voting Trust Stock, in each case free and clear of all
Liens except for the Liens created by the Collateral Documents and the
Voting Trust Agreement.
(b) Set forth on Schedule I hereto is a complete and accurate list
of the Guarantor and NWCG Holdings, showing as of the date hereof (as to
each such Person) the jurisdiction of its incorporation, the number of
shares of each class of capital stock authorized, and the number
outstanding, on the date hereof and the percentage of the outstanding
shares of each such class owned (directly or indirectly), in the case of
the Guarantor, by Andrews, and in the case of NWCG Holdings, by the
Guarantor, and the number of shares covered by all outstanding options,
warrants, rights of conversion or purchase and similar rights at the date
hereof. All of the outstanding capital stock of the Guarantor and NWCG
Holdings has been validly issued, is fully paid and non-assessable and is
owned, in the case of the Guarantor, by Andrews or in the case of NWCG
Holdings, by the Guarantor (except as set forth on Schedule I) free and
clear of all Liens, except those created by the Collateral Documents and
those set forth on Schedule II hereto. NWCG Holdings (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it
to so qualify or be licensed except where the failure to so qualify or be
licensed would not have a Material Adverse Effect (with respect to clause
(a) of the definition thereof, the term "Person" shall refer to the
Guarantor) and (iii) has all requisite corporate power and authority to own
or lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(c) The execution, delivery and performance by the Guarantor of
this Guaranty, each Loan Document and each Related Document to which it is
or is to be a party and the consummation by the Guarantor of the
transactions contemplated hereby, are within the Guarantor's corporate
powers, have been duly authorized by all necessary corporate action, and do
not (i) contravene the Guarantor's charter or bylaws, (ii) violate any law
(including, without limitation, the Exchange Act), rule, regulation
(including, without limitation, Regulation X of the Board of Governors of
<PAGE>
8
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of, or
constitute a default under, any loan agreement, contract, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting
the Guarantor, any of its Subsidiaries or any of its or their properties,
the effect of which conflict, breach or default is reasonably likely to
have a Material Adverse Effect (with respect to clause (a) of the
definition thereof, the term "Person" shall refer to the Guarantor) or (iv)
except for the liens created by the Collateral Documents, result in or
require the creation or imposition of any Lien upon or with respect to any
of the properties of the Guarantor or any of its Subsidiaries. Neither the
Guarantor nor any of its Subsidiaries is in violation of any such law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award or in breach of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument, the violation or breach
of which would be reasonably likely to have a Material Adverse Effect (with
respect to clause (a) of the definition thereof, the term "Person" shall
refer to such the Guarantor).
(d) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for (i) the due execution, delivery and performance by the
Guarantor of this Guaranty or any other Loan Document or any Related
Document to which it is or is to be a party or for the consummation by the
Guarantor of the transactions contemplated hereby, (ii) the grant by the
Guarantor of the Liens granted by it pursuant to the Collateral Documents,
(iii) the perfection or maintenance of the Liens created by the Collateral
Documents (including the first priority nature thereof) or (iv) the
exercise by the Agent or any Lender of its rights under the Loan Documents
or the remedies in respect of the Collateral pursuant to the Collateral
Documents, except for the filing of financing statements in accordance with
Section 3.02(i)(viii) of the Original Credit Agreement and except as may be
required in connection with the disposition of any portion of the
Collateral by laws affecting the offering and sale of securities generally;
provided, however, that no representation or warranty is made as to any
consent of, authorization, approval or other action by, or notice to or
filing with, any banking agency or regulatory body applicable to the Agent.
As of the date of the Consummation of the Transaction, all applicable
waiting periods in connection with the Transaction and the other
transactions contemplated hereby will have expired without any action
having been taken by any competent authority restraining, preventing or
imposing materially adverse conditions upon the Transaction or the rights
of the Loan Parties or their Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties now owned or hereafter
acquired by any of them.
(e) This Guaranty has been, and each other Loan Document to which
the Guarantor is a party when delivered hereunder will have been duly
executed and
<PAGE>
9
delivered by the Guarantor. This Guaranty is, and each other Loan Document
to which the Guarantor is a party when delivered hereunder will be, the
legal, valid and binding obligations of the Guarantor, enforceable against
the Guarantor in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditor's rights generally.
(f) The Consolidated and consolidating balance sheets of the
Guarantor and its Subsidiaries as at December 31, 1994, and the related
Consolidated and consolidating statements of income and cash flows of the
Guarantor and its Subsidiaries for the fiscal year then ended, accompanied,
in the case of the aforementioned Consolidated balance sheets and
Consolidated statements of income and cash flows, by an opinion of Ernst &
Young, independent public accountants, and the Consolidated and
consolidating balance sheets of the Guarantor and its Subsidiaries as at
September 30, 1995 and the related Consolidated and consolidating
statements of income and cash flows of the Guarantor and its Subsidiaries
for the nine months then ended, duly certified by the chief financial
officer of the Guarantor, copies of which have been furnished to each
Lender, fairly present, subject, in the case of said balance sheets as at
September 30, 1995, and said statements of income and cash flows for the
nine months then ended, to year-end audit adjustments, the Consolidated and
consolidating financial condition of the Guarantor and its Subsidiaries as
at such dates and the Consolidated and consolidating results of the
operations of the Guarantor and its Subsidiaries for the periods ended on
such dates, all in accordance with generally accepted accounting principles
applied on a consistent basis, and since December 31, 1994, there has been
no Material Adverse Change relating to the Guarantor.
(g) There is no pending or threatened action, proceeding,
governmental investigation or arbitration affecting the Guarantor or any of
its Subsidiaries before any court, governmental agency or arbitrator, which
is reasonably likely to have a Material Adverse Effect (with respect to
clause (a) of the definition thereof, the term "Person" shall refer
to the Guarantor), or that purports to affect the legality, validity
or enforceability of this Guaranty, any other Loan Document or
any Related Document or the consummation of the transactions
contemplated hereby or thereby.
(h) The Guarantor and its ERISA Affiliates are in compliance in all
material respects with the applicable provisions of ERISA and the Code with
respect to each Plan thereof. No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan of the Guarantor or any of its
ERISA Affiliates. The amount of all Unfunded Pension Liabilities under all
Plans of the Guarantor and its ERISA Affiliates does not exceed
$60,000,000. None of the Guarantor or any of its ERISA Affiliates has made
contributions or incurred any Withdrawal Liability to any Multiemployer
Plan within the past five years, and it is not reasonably expected that
<PAGE>
10
such contributions shall be made or required or that such liability shall
be incurred in any such case in amounts or under circumstances that would
be reasonably likely to result in a material liability to the Guarantor or
any of its ERISA Affiliates. Schedule B (Actuarial Information) to the 1992
annual report (Form 5500 Series) for each Plan of the Guarantor and each of
its ERISA Affiliates, copies of which have been filed with the Internal
Revenue Service and furnished to the Lenders, is complete and accurate in
all material respects and fairly presents the funding status of such Plan,
and since the date of such Schedule B there has been no material adverse
change in such funding status. The obligations of the Guarantor and its
Subsidiaries for post-retirement benefits to be provided under Plans which
are welfare benefit plans (as defined in Section 3(l) of ERISA) are not
reasonably likely to have a Material Adverse Effect (in the case of clause
(a) of the definition thereof, the term "Person" shall refer to the
Guarantor).
(i) The operations and properties of the Guarantor and each of its
Subsidiaries are in substantial compliance with all Environmental Laws, all
necessary Environmental Permits have been obtained and are in effect for
the operations and properties of the Guarantor and its Subsidiaries and the
Borrower and its Subsidiaries are in compliance with all such Environmental
Permits, except, as to all of the above, where the failure to do so would
not be reasonably likely to have a Material Adverse Effect (in the case of
clause (a) of the definition thereof, the term "Person" shall mean the
Guarantor); and no circumstances exist that are reasonably likely to (i)
form the basis of an Environmental Action against the Guarantor or any of
its Subsidiaries or any of their respective properties or (ii) cause any
such property to be subject to any restrictions on ownership, occupancy,
use or transferability under any Environmental Law that would, in the case
of either (i) or (ii) above, be reasonably likely to have a Material
Adverse Effect (in the case of clause (a) of the definition thereof, the
term "Person" shall be the Guarantor).
(j) The Guarantor and each of its Subsidiaries has filed, has caused
to be filed or has been included in all tax returns (Federal, state, local
and foreign) required to be filed and has paid all taxes shown thereon to
be due, together with applicable interest and penalties.
(k) Neither the Guarantor nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
(l) The Guarantor is, individually and together with its
Subsidiaries, Solvent.
<PAGE>
11
(m) Set forth on Schedule III hereto is a complete and accurate
list of all Debt (other than intercompany Debt and Debt under the Loan
Documents) of the Guarantor and its Subsidiaries, showing as of the date
hereof the principal amount outstanding thereunder and there is (i) no
other agreement, contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting the Guarantor or
NWCG Holdings that imposes any material Obligation or material restriction
on the Guarantor or any of its Subsidiaries (other than the Related
Documents), (ii) no other agreement, contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument (A) evidencing Debt of
New World or any of its Subsidiaries, (B) governing the terms of Debt of
New World or any of its Subsidiaries or (C) containing any commitment or
other agreement by any Person to extend credit that would constitute Debt
to New World or any of its Subsidiaries, in each case that imposes or will
impose material Obligations or material restrictions on New World and its
Subsidiaries taken as a whole, and (iv) no other agreement or contract
binding on or affecting New World or any of its Subsidiaries that contains
provisions that would restrict any Loan Party from performing or impair the
ability of any Loan Party to perform any of the obligations of such Loan
Party under the Loan Documents.
(n) Set forth on Schedule IV is a complete and accurate list of all
Investments (other than intercompany Debt) held by the Guarantor or NWCG
Holdings, showing as of the date hereof the amount, obligor or issuer and
maturity, if any, thereof.
Section 7. Affirmative Covenants. The Guarantor covenants and agrees
that, so long as any part of the Advances shall remain unpaid or any Lender
shall have any Commitment, the Guarantor will:
(a) Compliance with Laws, Etc. Comply, and cause each of
its Subsidiaries to comply, in all material respects with all applicable
laws, rules, regulations and orders (such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments
and governmental charges imposed upon it or upon its property except to the
extent contested in good faith), the failure to comply with which would,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect (with respect to clause (a) of the definition thereof, the
term "Person" shall refer to the Guarantor).
(b) Compliance with Environmental Laws. Comply and cause each of
its Subsidiaries and all lessees and all other Persons occupying its
properties to comply, in all material respects, with all Environmental Laws
and Environmental Permits applicable to its operations and properties;
obtain and renew all Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its
<PAGE>
12
Subsidiaries to conduct, any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action necessary to
remove and clean up all Hazardous Materials from any of its properties, in
accordance with the requirements of all Environmental Laws; provided,
however, that neither the Guarantor nor any of its Subsidiaries shall be
required to undertake any such cleanup, removal, remedial or other action
to the extent that its obligation to do so is being contested in good faith
and by proper proceedings and appropriate reserves are being maintained
with respect to such circumstances.
(c) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Guarantor or such
Subsidiary operates.
(d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries (other than any Subsidiaries
of New World) to preserve and maintain, its corporate existence, rights
(charter and statutory) and franchises; provided, however, that neither the
Guarantor nor any of its Subsidiaries shall be required to preserve any of
its rights or franchise if the Board of Directors of the Guarantor or such
Subsidiary (or, in the case of New World, the executive committee of the
Board of Directors of New World) shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the
Guarantor or such Subsidiary, as the case may be, and that the loss thereof
is not disadvantageous in any material respect to the Guarantor, such
Subsidiary or the Lenders.
(e) Visitation Rights. At any reasonable time and from time to
time, upon reasonable prior notice permit the Agent or any of the Lenders
or any agents or representatives thereof, to the extent reasonably
requested to examine and make copies of and abstracts from the records and
books of account of, and visit the properties of, the Guarantor and any of
its Subsidiaries, and to discuss the affairs, finances and accounts of the
Guarantor and any of its Subsidiaries with any of their officers or
directors and with their independent certified public accountants.
(f) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
the Guarantor and each such Subsidiary to the extent necessary to permit
the preparation of the financial statements required to be delivered
hereunder.
(g) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or
<PAGE>
13
useful in the conduct of its business in good working order and condition,
ordinary wear and tear excepted.
(h) Reporting Requirements. Furnish to the Lenders through the
Agent:
(i) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each fiscal year of
the Guarantor, Consolidated balance sheets of the Guarantor and its
Subsidiaries as of the end of such quarter and Consolidated statements
of earnings, cash flows and stockholders' equity of the Guarantor and
its Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified (subject
to normal year-end audit adjustment and the absence of footnotes) on
behalf of the Guarantor by the chief financial officer of the Guarantor;
(ii) as soon as available and in any event within 105 days
after the end of each fiscal year of the Guarantor, a copy of the annual
audit report for such year for the Guarantor and its Subsidiaries,
containing financial statements for such year certified in a manner
reasonably acceptable to the Required Lenders by Ernst & Young or other
independent public accountants reasonably acceptable to the Required
Lenders;
(iii) promptly after the sending or filing thereof, copies of
any filings and statements that the Guarantor or any Subsidiary files
with the Securities and Exchange Commission or any national securities
exchange;
(iv) promptly and in any event within (A) thirty days after
the Guarantor knows or has reason to know that any ERISA Event with
respect to the Guarantor or any of its ERISA Affiliates has occurred, a
statement describing such ERISA Event and the action, if any, that the
Guarantor or such ERISA Affiliate proposes to take with respect thereto,
(B) thirty days either after receipt thereof by the Guarantor or after
the Guarantor knows or has reason to know of the receipt thereof by any
of its ERISA Affiliates from the sponsor of a Multiemployer Plan of the
Guarantor or any of its ERISA Affiliates, a copy of each notice received
by any such Person concerning the imposition of Withdrawal Liability
upon such Person, the reorganization or termination of such
Multiemployer Plan, or the amount of the liability incurred, or that may
be incurred, by the Guarantor or any of its ERISA Affiliates in
connection with any such event and (C) ten Business Days either after
receipt thereof by the Guarantor or after the Guarantor knows or has
reason to know of the receipt thereof by any of its ERISA Affiliates,
copies of each notice from the PBGC stating its intention to terminate
any Plan of the
<PAGE>
14
Guarantor or any of its ERISA Affiliates or to have a trustee appointed
to administer any such Plan; provided that, in the case of any event
that occurs in (A), (B) or (C) hereof, such event has a Material Adverse
Effect (in the case of clause (a) of the definition thereof, "Person"
shall refer to the Guarantor);
(v) in the event of any change in GAAP from the date of the
financial statements referred to in Section 6(f) and upon delivery of
any financial statement required to be furnished under clauses (i) or
(ii) of this Section 7(h), a statement of reconciliation conforming any
information contained in such financial statement with GAAP as in effect
on the date of the financial statements referred to in Section 6(f);
(vi) promptly upon any officer of the Guarantor obtaining
knowledge thereof, written notice of (A) the institution or non-
frivolous threat of any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Guarantor or any
of its Subsidiaries or any property of the Guarantor or any of its
Subsidiaries (any such action, suit, proceeding, investigation or
arbitration being a "Proceeding") or (B) any material development in any
Proceeding that is already pending, where such Proceeding or development
has not previously been disclosed by the Guarantor hereunder and would
be reasonably likely to have a Material Adverse Effect (in the case of
clause (a) of the definition of Material Adverse Effect, the term
"Person" shall refer to the Guarantor); together in each case with such
other information as any Lender through the Agent may reasonably request
to enable the Lenders and their counsel to evaluate such matters;
(vii) promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities of
the Guarantor or of any Subsidiary of the Guarantor pursuant to the
terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
clause of this Section 7(h);
(viii) promptly after the occurrence thereof, notice of any
condition or occurrence on any property of the Guarantor or any
Subsidiary of the Guarantor that results in a material noncompliance by
the Guarantor or any of its Subsidiaries with any Environmental Law or
Environmental Permit or would be reasonably likely to (i) form the basis
of an Environmental Action against the Guarantor or any of its
Subsidiaries or any such property that would be reasonably likely to
have a Material Adverse Effect (in the case of clause (a) of the
definition of Material Adverse Effect, the term "Person" shall refer to
the Guarantor) or (ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
<PAGE>
15
Environmental Law or Environmental Permit or would be reasonably likely
to (i) form the basis of an Environmental Action against the Guarantor
or any of its Subsidiaries or such property that could have a Material
Adverse Effect (in the case of clause (a) of the definition of Material
Adverse Effect, the term "Person" shall refer to the Guarantor); and
(ix) such other information respecting the condition (financial
or otherwise), operations, assets or business of the Guarantor or any of
its Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
(i) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates (other than the Guarantor or
any of its Subsidiaries) on terms that are fair and reasonable and no less
favorable to the Guarantor or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person that is not an
Affiliate; provided, however, that for purposes of this Section 7(i), the
term "Affiliate" shall not include any officer or director of the Guarantor
or such Subsidiary, as the case may be, who does not possess directly or
indirectly the power to vote 5% or more of the Voting Stock of the
Guarantor or its Subsidiaries.
(j) Mafco Tax Group. Maintain, and cause NWCG Holdings to maintain,
its status as a member of the affiliated group (within the meaning of
Section 1504(a)(1) of the Code) of which Mafco is the common parent.
Section 8. Negative Covenants. The Guarantor covenants and agrees
that, so long as any part of the Advances shall remain unpaid or any Lender
shall have any Commitment, the Guarantor will not:
(a) Liens, Etc. Create or suffer to exist, or permit NWCG Holdings
to create or suffer to exist, any Lien, upon or with respect to any of its
properties, whether now owned or hereafter acquired, or sign or file, or
permit NWCG Holdings to sign or file, under the Uniform Commercial Code of
any jurisdiction, a financing statement that names the Guarantor or NWCG
Holdings as debtor, or sign, or permit NWCG Holdings to sign, any security
agreement authorizing any secured party thereunder to file such financing
statement, or assign, or permit NWCG Holdings to assign, any right to
receive income, other than the following Liens: (i) Liens created by the
Loan Documents; (ii) the Liens described on Schedule II hereto, provided
that, in the event any property subject to any such Lien is released from
such Lien, such released property may not thereafter be subjected to any
Lien other than Liens created by the Loan Documents; (iii) mechanics',
materialmen's, carriers' and similar Liens
<PAGE>
16
arising in the ordinary course of business securing obligations that are
not overdue for a period of more than 30 days or which are being contested
in good faith and by proper proceedings and as to which appropriate
reserves are being maintained; (iv) Liens for taxes, assessments and
governmental charges or levies not yet due and payable or which are being
contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained; and (v) judgment or other
similar Liens, provided that there shall be no period of more than 10
consecutive days during which a stay of enforcement of the related judgment
shall not be in effect.
(b) Lease Obligations. Create, incur, assume or suffer to exist, or
permit NWCG Holdings to create, incur, assume or suffer to exist, any
obligations as lessee (i) for the rental or hire of real or personal
property in connection with any sale and leaseback transaction, or (ii) for
the rental or hire of other real or personal property of any kind under
leases or agreements to lease having an original term of one year or more.
(c) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit NWCG Holdings to do so.
(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit NWCG Holdings to sell, lease, transfer or otherwise
dispose of, any assets or grant, or permit NWCG Holdings to grant, any
option or other right to purchase, lease or otherwise acquire any assets
except (i) dispositions of obsolete, worn out or surplus property disposed
of in the ordinary course of business, (ii) sales, leases, transfers or
other dispositions of assets (other than the capital stock of NWCG
Holdings) for cash and for no less than fair market value and (iii) the
transfer or other disposition to an Affiliate of Mafco of up to 2.7 million
shares of common stock of New World held by the Guarantor.
(e) Dividends, Repurchases, Etc. Declare or pay any dividends,
purchase, redeem, retire, defease or otherwise acquire for value any of its
capital stock or any warrants, rights or options to acquire such capital
stock, now or hereafter outstanding, return any capital to its stockholders
as such, make any distribution of assets, capital stock, warrants, rights,
options, obligations or securities to its stockholders as such, or permit
NWCG Holdings to purchase, redeem, retire, defease or otherwise acquire for
value any capital stock of the Guarantor or any warrants, rights or options
to acquire such capital stock, except that the Guarantor may (i) declare
and deliver dividends and distributions payable only in common stock or
warrants, rights or options to acquire common stock and (ii) declare and
deliver dividends and distributions to an Affiliate of Mafco consisting of
up to 2.7 million shares of common stock of New World.
<PAGE>
17
(f) Investments. Make or hold, or permit NWCG Holdings to make or
hold, any Investment in any Person, other than (i) Investments by the
Guarantor and NWCG Holdings in Cash Equivalents and (ii) Investments
existing on the date hereof.
(g) Change in Nature of Business. (i) Engage in any business other
than the ownership of the capital stock of NWCG Holdings or (ii) permit
NWCG Holdings to make any change in the nature of its business carried on
at the date hereof.
(h) Accounting Changes. Make or permit, or permit NWCG Holdings to
make or permit, any change in accounting policies affecting (i) the
presentation of financial statements or (ii) reporting practices, except in
either case as required or permitted by GAAP.
(i) Debt. Create, incur, assume or suffer to exist, or permit NWCG
Holdings to create, incur, assume or suffer to exist, any Debt other than:
(i) in the case of the Guarantor, Debt under the Loan Documents; (ii) in
the case of NWCG Holdings, the Debt listed on Schedule III hereto, and
(iii), in the case of the Guarantor and NWCG Holdings, endorsement of
negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business.
(j) Charter Amendments. Amend, or permit NWCG Holdings to amend,
its certificate of incorporation or bylaws.
(k) Prepayments, Etc. of Debt. Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Debt, or
amend, modify or change in any manner any term or condition of any Debt or
any agreement relating to such Debt, or permit NWCG Holdings to do any of
the foregoing.
(l) Negative Pledge. Enter into or suffer to exist, or permit NWCG
Holdings to enter into or suffer to exist, any agreement prohibiting or
conditioning the creation or assumption of any Lien upon any of its
property or assets other than (i) in favor of the Agent and the Lenders or
(ii) any prohibition or condition existing on the date hereof.
(m) Partnerships. Become a general partner in any general or
limited partnership, or permit NWCG Holdings to do so.
(n) Capital Expenditures. Make, or permit NWCG Holdings to make,
any Capital Expenditures.
<PAGE>
18
(o) Issuance of Capital Stock. Issue, or permit NWCG Holdings to
issue, any capital stock or warrants, rights or options to acquire such
capital stock.
(p) Payment Restrictions. Create or otherwise cause or suffer to
exist or become effective, or permit NWCG Holdings to create or otherwise
cause or suffer to exist or become effective, any consensual encumbrance or
restriction of any kind on the ability of the Guarantor or NWCG Holdings to
(i) pay dividends or make any other distributions on any of the Guarantor's
or NWCG Holdings' capital stock, (ii) make loans or advances to Mafco or
any subsidiary of Mafco or (iii) repay or prepay Debt owed by the Guarantor
or NWCG Holdings other than any (x) consensual encumbrances or restrictions
existing on the date hereof and (y) other consensual encumbrances or
restrictions that are no more onerous than those encumbrances and
restrictions in existence on the date hereof with respect to the Guarantor
or NWCG Holdings, as the case may be.
Section 9. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty and no consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent and the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders (other than any Lender
that is, at such time, a Defaulting Lender), (a) release or limit the liability
of the Guarantor hereunder, (b) postpone any date fixed for payment hereunder or
(c) change the number of Lenders required to take any action hereunder.
Section 10. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered to it, if to the Guarantor, addressed to it at c/o
MacAndrews & Forbes Holdings Inc., 38 East 63rd Street, New York, New York
10021, Attention: Secretary, if to the Agent or any Lender, at its address
specified in the Credit Agreement, or as to any party at such other address as
shall be designated by such party in a written notice to each other party. All
such notices and other communications shall, when mailed, telegraphed,
telecopied, telexed or cabled, be effective when deposited in the mails,
delivered to the telegraph company, transmitted by telecopier, confirmed by
telex answerback or delivered to the cable company, respectively.
Section 11. No Waiver; Remedies. No failure on the part of the
Agent or any Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
<PAGE>
19
Section 12. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 of the Credit Agreement
to authorize the Agent to declare the Notes due and payable pursuant to the
provisions of said Section 6.01, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the Guarantor against any and all of the
Obligations of the Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender shall have made any demand under this Guaranty and
although such Obligations may be unmatured. Each Lender agrees promptly to
notify the Guarantor after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.
Section 13. Indemnification. Without limitation on any other
Obligations of the Guarantor or remedies of the Lenders under this Guaranty, the
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Lenders from and against, and shall pay on demand,
any and all losses, liabilities, damages, costs, expenses and charges (including
the reasonable and documented fees and disbursements of the legal counsel of the
Lenders and the reasonable and documented charges of the internal legal counsel
of the Lenders) suffered or incurred by the Lenders as a result of (a) any
failure of any Guaranteed Obligations to be the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the rights of creditors generally, or (b) any
failure of the Borrower to pay and perform any Guaranteed Obligations in
accordance with the terms of such Guaranteed Obligations.
Section 14. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the date on which the Payment Obligations in respect of
the Guaranteed Obligations and this Guaranty have been Fully Satisfied, (b) be
binding upon the Guarantor, its successors and assigns and (c) inure to the
benefit of and be enforceable by the Lenders, the Agent and their successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), any Lender may assign or otherwise transfer all or any portion of
its rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by) it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement.
<PAGE>
20
Section 15. Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial. (a) This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b) The Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party, or for recognition or enforcement
of any judgment, and the Guarantor hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York State or, to the extent permitted by law, in
such federal court. The Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Guaranty or any of the
other Loan Documents to which it is or is to be a party in the courts of any
jurisdiction.
(c) The Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Guaranty or any of the other Loan
Documents to which it is or is to be a party in any New York State or federal
court. The Guarantor hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.
(d) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE AGENT OR
ANY LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
Section 16. Execution in Counterparts, Delivery by Telecopier.
This Guaranty 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 one
and the same agreement. Delivery of any executed counterpart of a signature
page to this Guaranty by telecopier shall be effective as delivery of a manually
executed counterpart of this Guaranty.
<PAGE>
21
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
NWCG (PARENT) HOLDINGS CORPORATION
By _______________________________
Title:
<PAGE>
SECOND AMENDED AND RESTATED NEW WORLD GUARANTY
SCHEDULE I
SUBSIDIARIES
NWCG (PARENT) HOLDINGS CORPORATION
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common
Stock and 1,000 shares of Preferred Stock
Shares Outstanding: 100 shares of Common Stock and
0 shares of Preferred Stock
Percentage of Outstanding Shares Owned by
Andrews Group Incorporated: 100%
Options, Warrants and Similar Rights: None
NWCG HOLDINGS CORPORATION
Jurisdiction of Incorporation: Delaware
Authorized Capital Stock: 1,000 shares of Common Stock
and 1,000 shares of Preferred Stock
Shares Outstanding: 100 shares of Common Stock
and 0 shares of Preferred Stock
Percentage of Outstanding Shares Owned by
Guarantor: 100%
Options, Warrants and Similar Rights: None
<PAGE>
SECOND AMENDED AND RESTATED NEW WORLD GUARANTY
SCHEDULE II
LIENS
NWCG HOLDINGS CORPORATION
1. Lien on 34,510,000 shares of Class B Common Stock
of New World Communications Group Incorporated in
favor of NationsBank of Georgia, pursuant to the
Indenture dated as of June 30, 1994, with respect
to the Senior Secured Discount Notes Due 1999.
<PAGE>
SECOND AMENDED AND RESTATED NEW WORLD GUARANTY
SCHEDULE III
DEBT
A. NWCG HOLDINGS CORPORATION
1. Senior Secured Discount Notes Due 1999, pursuant
to Indenture dated as of June 30, 1994, as amended
and restated as of September 30, 1994, with
NationsBank of Georgia.
- principal amount outstanding as of
12/14/95: $420,474,000 (accreted value as of
12/14/95: $252,281,000).
B. NEW WORLD COMMUNICATIONS GROUP INCORPORATED
1. 6.375% Cumulative Redeemable Convertible
Preferred Stock, Series A.
2. Series C Senior Preferred Stock.
3. Series E Preferred Stock.
4. Guaranty, dated as of August 31, 1995, of
obligations of Stephen J. Cannell Productions,
Inc. and The Cannell Studios, Inc., as borrowers
under the Credit and Guaranty Agreement, dated as
of August 31, 1995, with the Lenders parties
thereto and Chemical Bank, as Agent.
<PAGE>
2
C. NEW WORLD ENTERTAINMENT, LTD.
1. Credit Agreement dated as of March 24, 1995
between New World Entertainment, Ltd. and Chemical
Bank, as administrative agent.
- principal amount outstanding as of 12/14/95:
$73,000,000.
D. NEW WORLD TELEVISION INCORPORATED
1. Credit Agreement dated as of May 25, 1993, as
amended, with Canadian Imperial Bank of Commerce,
New York Agency, as agent.
- principal amount outstanding as of 12/14/95:
$28,820,000.
2. 11% Senior Secured Notes Due June 30, 2005,
pursuant to Indenture dated as of May 25, 1993
with Continental Bank, National Association.
- principal amount outstanding as of 12/14/95:
$373,735,000.
3. Senior Secured Notes Due June 30, 1998,
pursuant to Indenture dated May 25, 1993 with
NationsBank of Georgia, National Association.
- principal amount outstanding as of
12/14/95: $114,380,000.
4. Collateral Trust and Intercreditor Agreement
dated as of May 25, 1993 with Chemical Bank, as
collateral trustee.
E. NWC ACQUISITION CORPORATION AND SUBSIDIARIES
1. Credit Agreement dated as of September 29,
1994 (the "Chemical Credit Agreement") among NWC
Acquisition Corporation, The Chase Manhattan Bank,
N.A. and Chemical Bank.
- principal amount outstanding as of 12/14/95:
$400,000,000
<PAGE>
3
2. Subsidiaries' Guarantee dated as of
September 29, 1994 made by the corporations named
therein in favor of Chemical Bank, pursuant to the
Chemical Credit Agreement.
F. NWC INTERMEDIATE HOLDINGS CORPORATION
1. Guarantee dated as of September 29, 1994 made
by NWC Intermediate Holdings Corporation in favor
of Chemical Bank, pursuant to the Chemical Credit
Agreement.
G. NWTV INTERMEDIATE HOLDINGS CORPORATION
1. Guarantee dated as of September 29, 1994 made
by NWTV Intermediate Holdings Corporation in favor
of Chemical Bank, pursuant to the Chemical Credit
Agreement.
<PAGE>
SECOND AMENDED AND RESTATED NEW WORLD GUARANTY
SCHEDULE IV
Investments
Investment
Person Issuer Type Amount
- ------ ------ ---- ----------
NWCG (Parent) NWCG Holdings Common
Holdings Corporation Stock 100%
Corporation
New World Class B 3.91%
Communications Group Common
Incorporated Stock
NWCG Holdings New World Class B 50.32%
Corporation Communications Group Common
Incorporated Stock
<PAGE>
EXECUTION COPY
SECOND AMENDED AND RESTATED BORROWER SECURITY AGREEMENT
Dated as of December 15, 1995
from
MARVEL IV HOLDINGS INC.,
to
CITIBANK, N.A.,
as Agent
T A B L E O F C O N T E N T S
SECTION PAGE
- ------- ----
1. Grant of Security .................................................. 2
2. Security for Obligations ........................................... 3
3. Borrower Remains Liable ............................................ 3
4. Delivery of Security Collateral and Account Collateral ............. 4
5. Maintaining the Borrower Collateral Account ........................ 4
6. Investing of Amounts in the Borrower Collateral Account ............ 4
7. Release of Amounts ................................................. 5
8. Representations and Warranties ..................................... 6
9. Further Assurances ................................................. 8
10. Place of Perfection; Records ...................................... 8
11. Voting Rights; Dividends; Etc. .................................... 9
12. As to the Assigned Agreement ...................................... 10
13. Payments Under the Assigned Agreements ............................ 11
14. Transfers and Other Liens; Additional Shares ...................... 11
15. Agent Appointed Attorney-in-Fact .................................. 12
16. Agent May Perform ................................................. 12
17. The Agent's Duties ................................................ 12
18. Remedies .......................................................... 12
19. Indemnity and Expenses ............................................ 14
ii
SECTION PAGE
- ------- ----
20. Amendments; Waivers; Etc .......................................... 14
21. Addresses for Notices ............................................. 14
22. Continuing Security Interest; Assignments Under the Amended and
Restated Credit Agreement ........................................ 14
23. Release and Termination ........................................... 15
24. Governing Law; Terms .............................................. 15
25. Execution in Counterparts; Delivery by Telecopier ................. 15
Schedule I - Pledged Shares
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
SECOND AMENDED AND RESTATED SECURITY AGREEMENT dated as of
December 15, 1995 made by MARVEL IV HOLDINGS INC., a Delaware corporation (the
"Borrower"), to CITIBANK, N.A. ("Citibank") as agent (the "Agent") for the
lenders (the "Lenders") party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS.
(1) Marvel IV Holdings Inc., a Delaware corporation (the
"Borrower"), entered into a Credit Agreement dated as of July 20, 1994, as
heretofore amended (as so amended, the "Original Credit Agreement"), with
financial institutions and other institutional lenders party thereto ( the
"Original Lenders") and Citibank, as agent for the Original Lenders. In
consideration of the premises and in order to induce the Original Lenders to
make advances under the Original Credit Agreement, the Borrower entered into a
Security Agreement dated July 27, 1994 (the "Original Security Agreement") in
favor of Citibank, as agent for the Original Lenders.
(2) Subsequently, the Borrower entered into an Amended and
Restated Credit Agreement dated as of June 29, 1995, as amended by the First
Amendment dated as of October 27, 1995 (said Agreement, as so amended, being
the "Existing Credit Agreement") with the financial institutions and other
institutional lenders party thereto (the "Existing Lenders") and Citibank, as
agent for the Existing Lenders. In consideration of the premises and in order
to induce the Existing Lenders to make advances under the Existing Credit
Agreement, the Borrower entered into an Amended and Restated Security Agreement
dated as of June 29, 1995 (the "Existing Security Agreement") in favor of
Citibank as agent for the Existing Lenders.
(3) The Borrower has entered into a Second Amended and
Restated Credit Agreement dated as of December 15, 1995 (said Agreement, as it
may hereafter be amended or otherwise modified from time to time, being the
"Credit Agreement"; the terms defined therein and not otherwise defined herein
being used herein as therein defined) with the Lenders and the Agent which
amends and restates the Existing Credit Agreement in its entirety.
(4) The Borrower is the owner of the shares (the "Pledged
Shares") of stock set forth on Schedule I hereto and issued by the corporation
named therein (the
"Issuer").
2
(5) The Borrower has opened a non-interest bearing cash
collateral account (the "Borrower Collateral Account") with Citibank at its
office at 399 Park Avenue, New York, New York 10043, Account No. 40650462, in
the name of the Borrower but under the sole control and dominion of the Agent
and subject to the terms of this Agreement.
(6) It is a condition precedent to the effectiveness of the
Credit Agreement that the Borrower shall have granted the assignment and
security interest and made the pledge and assignment contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to enter into the Credit Agreement, the Borrower hereby
agrees with the Agent for its benefit and the ratable benefit of the Lenders as
follows:
Section 1. Grant of Security. The Borrower hereby assigns and
pledges to the Agent for its benefit and the ratable benefit of the Lenders, and
hereby grants to the Agent for its benefit and the ratable benefit of the
Lenders a security interest in, all of the Borrower's right, title and interest,
whether now owned or hereafter acquired, in and to the following (collectively,
the "Collateral"):
(a) all of the following (the "Security Collateral"):
(i) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(ii) all additional shares of stock of the Issuer from time to time
acquired by the Borrower in any manner, and the certificates representing such
additional shares, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
(b) the Equity Contribution Agreement, as such agreement may be
amended or otherwise modified from time to time (the "Assigned Agreement"),
including, without limitation, (i) all rights of the Borrower to receive moneys
due and to become due under or pursuant to the Assigned Agreement, (ii) all
rights of the Borrower to receive proceeds of any indemnity, warranty or
guaranty with respect to the Assigned Agreement, (iii) claims of the Borrower
for damages arising out of or for breach of or default under the Assigned
Agreement and (iv) the right of the Borrower to terminate the Assigned
Agreement, to perform thereunder and to compel performance and otherwise
exercise all remedies thereunder (all such Collateral being the "Agreement
Collateral");
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(c) all of the following (collectively, the "Account Collateral"):
(i) the Borrower Collateral Account, all funds held therein
and all certificates and instruments, if any, from time to time representing or
evidencing the Borrower Collateral Account;
(ii) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time to time
representing or evidencing the Collateral Investments;
(iii) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to or
otherwise possessed by the Agent for or on behalf of the Borrower in
substitution for or in addition to any or all of the then existing Account
Collateral; and
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral; and
(d) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the types
described in clauses (a) - (c) of this Section 1) and, to the extent not
otherwise included, all (i) payments under any indemnity, warranty or guaranty,
payable with respect to any of the foregoing Collateral and (ii) cash.
Section 2. Security for Obligations. This Agreement secures
the payment of all Obligations now or hereafter existing of the Borrower under
this Agreement and each other Loan Document to which the Borrower is or becomes
a party, whether for principal, interest (including, without limitation,
interest after the filing of a petition initiating a proceeding referred to in
Section 6.01(e) of the Credit Agreement, whether or not such interest
constitutes an allowed claim for purposes of such proceeding), fees, expenses or
otherwise (all such Obligations being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures the payment of
all amounts that constitute part of the Secured Obligations and would be owed by
the Borrower to the Agent or the Lenders under the Loan Documents but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower.
Section 3. Borrower Remains Liable. Anything herein to the
contrary notwithstanding, (a) the Borrower shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the
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exercise by the Agent of any of the rights hereunder shall not release the
Borrower from any of its duties or obligations under the contracts and
agreements included in the Collateral and (c) none of the Agent or any Lender
shall have any obligation or liability under the contracts and agreements
included in the Collateral by reason of this Agreement, nor shall the Agent or
any Lender be obligated to perform any of the obligations or duties of the
Borrower thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
Section 4. Delivery of Security Collateral and Account
Collateral. All certificates or instruments representing or evidencing Security
Collateral or Account Collateral shall be delivered to and held by or on behalf
of the Agent pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent. The
Agent shall have the right, at any time upon the occurrence and during the
continuance of an Event of Default in its discretion and without notice to the
Borrower, to transfer to or to register in the name of the Agent or any of its
nominees any or all of the Security Collateral and Account Collateral. In
addition, the Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Security Collateral or Account Collateral
for certificates or instruments of smaller or larger denominations.
Section 5. Maintaining the Borrower Collateral Account. At any
time prior to the termination pursuant to Section 23(b) of the pledge,
assignment and security interest granted hereby:
(a) The Borrower will maintain the Borrower Collateral Account.
(b) It shall be a term and condition of the Borrower Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the Borrower Collateral Account, and except as otherwise
provided by the provisions of Section 7 and Section 18, that no amount
(including interest on Collateral Investments) shall be paid or released to or
for the account of, or withdrawn by or for the account of, the Borrower or any
other Person from the Borrower Collateral Account.
The Borrower Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
Section 6. Investing of Amounts in the Borrower Collateral
Account. If requested by the Borrower, the Agent will, subject to the
provisions of Section 7 and Section 18, from time to time (a) invest amounts on
deposit in the Borrower Collateral Account in such Cash Equivalents, in the name
of the Agent, as the Borrower may select and
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(b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents in the name of the Agent as
the Borrower may select (the Cash Equivalents referred to in clauses (a) and (b)
above being collectively "Collateral Investments"). Interest and proceeds that
are not invested or reinvested in Collateral Investments as provided above shall
be deposited and held in the Borrower Collateral Account.
Section 7. Release of Amounts. (a) So long as no Default shall
have occurred and be continuing, and subject to the provisions of Section 7(b)
through (h) below, the Agent shall pay and release, free of the Lien created
hereunder, to the Borrower or at its order and at the request of the Borrower,
the amount, if any, on deposit (including interest on Collateral Investments) in
the Borrower Collateral Account.
(b) All amounts deposited into the Borrower Collateral
Account resulting from loans made by FN Parent to Borrower Parent pursuant to
the terms of the FN Parent Loan Agreement that relate solely to net income of
the Bank (excluding, to the extent included in net income, (A) any gains (net of
taxes) from the sale of deposits and property, plant and equipment related to
such deposits, and (B) any net income that is attributable to the recognition of
the deferred tax asset-net operating loss carry forwards of the Bank) shall be
applied to make any prepayment required pursuant to the terms of Section
2.05(b)(i) of the Credit Agreement. The excess of such amount deposited into
the Borrower Collateral Account over the amount of such prepayment shall be
released in accordance with Section 7(a), subject to the provisions of Section
7(g) below.
(c) All amounts deposited into the Borrower Collateral
Account resulting from loans made by FN Holdings to Borrower Parent pursuant to
the terms of the certificate of incorporation of FN Holdings that relate solely
to net income of the Bank (excluding, to the extent included in net income, (A)
any gains (net of taxes) from the sale of deposits and property, plant and
equipment related to such deposits, and (B) any net income that is attributable
to the recognition of the deferred tax asset-net operating loss carry forwards
of the Bank) shall be applied to make the prepayment required pursuant to the
terms of Section 2.05(b)(ii) of the Credit Agreement. The excess of such amount
deposited into the Borrower Collateral Account over the amount of such
prepayment shall be released in accordance with Section 7(a), subject to the
provisions of Section 7(g) below.
(d) All amounts deposited into the Borrower Collateral
Account resulting from loans made by FN Holdings to Borrower Parent pursuant to
the terms of the certificate of incorporation of FN Holdings that relate to
dividends, other distributions or any loans or advances from the Bank arising
out of excess capital of the Bank shall be applied to make the prepayment
required pursuant to the terms of Section 2.05(b)(iii) of the Credit Agreement.
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(e) All amounts deposited into the Borrower Collateral
Account resulting from dividends, distributions, loans or advances from the Bank
to FN Holdings arising solely from gains (net of taxes) from the sale of
deposits in California and property, plant and equipment related to such
deposits shall be applied to make the prepayment required pursuant to the terms
of Section 2.05(b)(iv) of the Credit Agreement.
(f) All amounts deposited into the Borrower Collateral
Account resulting from dividends, distributions, loans or advances from the Bank
to FN Holdings arising solely from (A) gains (net of taxes) from the sale of
deposits (other than the sale of deposits in California) and property, plant and
equipment related to such deposits and (B) any net income that is attributable
to the recognition of the deferred tax asset-net operating loss carry forwards
of the Bank shall be applied to make the prepayment required pursuant to the
terms of Section 2.05(b)(v) of the Credit Agreement. The excess of such amount
deposited into the Borrower Collateral Account over the amount of such
prepayment shall be released in accordance with Section 7(a), subject to the
provisions of Section 7(g) below; provided, however, that if no such prepayment
is required to be made, the full amount shall be released in accordance with
Section 7(a), subject to the provisions of Section 7(g) below, to the Borrower.
(g) At any time that a prepayment of the Advances is
required pursuant to Section 2.05(b)(vi) of the Credit Agreement out of amounts
deposited in the Borrower Collateral Account, the Agent shall retain in the
Borrower Collateral Account any amount otherwise permitted to be released to the
Borrower pursuant to the provisions of Section 7(b), 7(c) or 7(f) above
(including interest on Collateral Investments) and shall apply such amounts to
make the prepayment required pursuant to the provisions of Section 2.05(b)(vi)
of the Credit Agreement.
(h) All amounts deposited into the Borrower Collateral
Account resulting from the proceeds of dividends, other distributions and any
loans or advances made by the Bank (other than such amounts referred to in
Section 7(b) through (g) above) shall be applied to make the prepayment required
pursuant to the provisions of Section 2.05(b)(vii) of the Credit Agreement.
Section 8. Representations and Warranties. The Borrower
represents and warrants as follows:
(a) The chief place of business and chief executive office of the
Borrower and the office where the Borrower keeps the original copies of the
Assigned Agreement are located at the address specified opposite the name of the
Borrower on the signature page hereof. An original copy of the Assigned
Agreement has been delivered to the Agent. None of the Agreement Collateral is
evidenced by a promissory note or other instrument.
7
(b) The Borrower is the legal and beneficial owner of the
Collateral free and clear of any Lien, except for the security interest created
by this Agreement and Liens permitted by Section 5.02(a) of the Credit Agreement
and Section 8(a) of the Borrower Parent Guaranty. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Agent relating to this Agreement and such as may have been
filed in connection with Liens permitted by Section 5.02(a) of the Credit
Agreement and Section 8(a) of the Borrower Parent Guaranty. The Borrower has no
trade names.
(c) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable. As of the date hereof, the Pledged
Shares constitute the percentage of the issued and outstanding shares of stock
of the issuers thereof indicated on Schedule I.
(d) The Assigned Agreement, a true and complete copy of which has
been furnished to each Lender, has been duly authorized, executed and delivered
by all parties thereto, has not been amended or otherwise modified, is in full
force and effect and is binding upon and enforceable against all parties thereto
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally. There exists no default under the Assigned
Agreement by any party thereto. Each party to the Assigned Agreement other than
the Borrower has executed and delivered to the Borrower a Consent dated July 27,
1994 to the assignment of the Agreement Collateral to the Agent pursuant to this
Agreement.
(e) This Agreement, the pledge of the Security Collateral pursuant
hereto, the pledge and assignment of the certificates representing the Account
Collateral pursuant hereto and the making of the filings contemplated by Section
3.01(g)(viii) of the Original Credit Agreement create a valid and perfected
first priority security interest in the Collateral (subject, however, to the
Liens permitted by Section 5.02(a) of the Credit Agreement and Section 8(a) of
the Borrower Parent Guaranty), securing the payment of the Secured Obligations,
and all filings and other actions necessary or desirable to perfect and protect
such security interest have been duly taken.
(f) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body or other third party is required either (i) for the grant by the
Borrower of the assignment and security interest granted hereby, for the pledge
by the Borrower of the Security Collateral pursuant hereto or for the execution,
delivery or performance of this Agreement by the Borrower, (ii) for the
perfection or maintenance of the pledge, assignment and security interest
created hereby (including the first priority nature of
8
such pledge, assignment or security interest), except for the filing of
financing and continuation statements under the Uniform Commercial Code, which
financing statements have been duly filed, or (iii) for the exercise by the
Agent of its voting or other rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement, except as may
be required in connection with the disposition of any portion of the Security
Collateral by laws affecting the offering and sale of securities generally;
provided, however, that no representation or warranty is made as to any consent
of, authorization, approval or other action by, or notice to or filing with, any
banking agency or regulatory body applicable to the Agent.
Section 9. Further Assurances. (a) The Borrower agrees that
from time to time, at its own expense it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may request, in order to perfect and
protect any pledge, assignment or security interest granted or purported to be
granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Borrower will: (i) mark conspicuously the
Assigned Agreement and each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Agent, indicating that such
Assigned Agreement or Collateral is subject to the security interest granted
hereby; (ii) if any Collateral shall be evidenced by a promissory note or other
instrument or chattel paper, deliver and pledge to the Agent hereunder such note
or instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Agent; and (iii) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Agent may request, in order to perfect and
preserve the pledge, assignment and security interest granted or purported to be
granted hereby.
(b) The Borrower hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of the Borrower where
permitted by law. A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) The Borrower will furnish to the Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail.
Section 10. Place of Perfection; Records. The Borrower shall
keep its chief place of business and chief executive office and the office where
it keeps its records concerning the Collateral and the original copies of the
Assigned Agreement at the location therefor specified in Section 8(a) or, upon
30 days' prior written notice to the Agent, at such
9
other locations in a jurisdiction where all actions required by Section 9 shall
have been taken with respect to the Collateral. The Borrower will hold and
preserve such records and the Assigned Agreement and will permit representatives
of the Agent at any time during normal business hours to inspect and make
abstracts from such records.
Section 11. Voting Rights; Dividends; Etc. (a) So long as no
Event of Default shall have occurred and be continuing:
(i) The Borrower shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the
other Loan Documents; provided, however, that the Borrower shall not exercise or
refrain from exercising any such right if, in the Agent's reasonable judgment,
such action would have a material adverse effect on the value of the Security
Collateral or any part thereof; provided, further, that the Borrower shall give
the Agent at least five days' written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right.
(ii) The Borrower shall be entitled to receive and retain any and all
dividends paid in respect of the Security Collateral; provided, however, that
any and all
(A) dividends paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Security Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus and
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any Security
Collateral received as consideration for sales or other dispositions of assets
of the Borrower
shall be, and shall be forthwith delivered to the Agent to hold as, Security
Collateral and shall, if received by the Borrower, be received in trust for the
benefit of the Agent, be segregated from the other property or funds of the
Borrower and be forthwith delivered to the Agent as Security Collateral in the
same form as so received (with any necessary indorsement).
10
(iii) The Agent shall execute and deliver (or cause to be executed
and delivered) to the Borrower all such proxies and other instruments as the
Borrower may reasonably request for the purpose of enabling the Borrower to
exercise the voting and other rights that it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends that it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) All rights of the Borrower (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 11(a)(i) shall, upon notice to the
Borrower by the Agent, cease and (y) to receive the dividends that it would
otherwise be authorized to receive and retain pursuant to Section 11(a)(ii)
shall automatically cease, and all such rights shall thereupon become vested in
the Agent, which shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and hold as
Security Collateral such dividends and interest payments.
(ii) All dividends that are received by the Borrower contrary to the
provisions of paragraph (i) of this Section 11(b) shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of the Borrower
and shall be forthwith paid over to the Agent as Security Collateral in the same
form as so received (with any necessary indorsement).
Section 12. As to the Assigned Agreement. (a) The Borrower
shall at its expense:
(i) perform and observe all the terms and provisions of the Assigned
Agreement to be performed or observed by it, maintain the Assigned Agreement in
full force and effect, enforce the Assigned Agreement in accordance with its
terms and take all such action to such end as may be from time to time requested
by the Agent; and
(ii) furnish to the Agent promptly upon receipt thereof copies of all
notices, requests and other documents received by the Borrower under or pursuant
to the Assigned Agreement, and from time to time (A) furnish to the Agent such
information and reports regarding the Collateral as the Agent may reasonably
request and (B) upon request of the Agent make to each other party to the
Assigned Agreement such demands and requests for information and reports or for
action as the Borrower is entitled to make thereunder.
11
(b) the Borrower shall not, without the Required Lenders'
prior written consent:
(i) cancel or terminate the Assigned Agreement or consent to or
accept any cancellation or termination thereof except pursuant to the terms
thereof;
(ii) amend or otherwise modify the Assigned Agreement or give any
consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned Agreement;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with the Assigned Agreement, except as
expressly provided therein; or
(v) take any other action in connection with the Assigned Agreement
that would impair the value of the interest or rights of the Borrower thereunder
or that would impair the interest or rights of the Agent.
Section 13. Payments Under the Assigned Agreements. (a) The
Borrower agrees, and has effectively so instructed each other party to the
Assigned Agreement, that all payments due or to become due under or in
connection with such Assigned Agreement shall be made directly to the Borrower
Collateral Account.
(b) Except as set forth in Section 18, all moneys received
or collected pursuant to subsection (a) above shall be applied as set forth in
Section 7.
Section 14. Transfers and Other Liens; Additional Shares. (a)
Except to the extent permitted by the Credit Agreement and the Borrower Parent
Guaranty, the Borrower shall not (i) sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, any of
the Collateral or (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral except for the pledge, assignment and security interest
created by this Agreement or any Lien permitted by Section 5.02(a) of the Credit
Agreement and Section 8(a) of the Borrower Parent Guaranty.
(b) The Borrower shall (i) cause each issuer of the Pledged
Shares not to issue any stock or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to the
Borrower, and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional shares of stock or other
securities of each issuer of the Pledged Shares.
12
Section 15. Agent Appointed Attorney-in-Fact. The Borrower
hereby irrevocably appoints the Agent the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Agent's discretion, at any time upon the
occurrence and during the continuance of an Event of Default to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce compliance with the terms and
conditions of the Assigned Agreement or the rights of the Agent with respect to
any of the Collateral.
Section 16. Agent May Perform. If the Borrower fails to
perform any agreement contained herein, the Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Agent
incurred in connection therewith shall be payable by the Borrower under Section
19(b).
Section 17. The Agent's Duties. The powers conferred on the
Agent hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the duty to
exercise reasonable care in respect of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have no
duty as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Security Collateral, whether or not the Agent or any Lender has or is deemed
to have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Citibank accords its own
property.
Section 18. Remedies. If any Event of Default shall have
occurred and be continuing, the Agent shall have the following rights and
remedies in addition to the rights of the Agent with respect to the Borrower
Collateral Account under Section 7(d):
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(a) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party upon default under the
Uniform Commercial Code in effect in the State of New York at such time (the
"N.Y. Uniform Commercial Code") (whether or not the N.Y. Uniform Commercial Code
applies to the affected Collateral) and also may (i) require the Borrower to,
and the Borrower hereby agrees that it will at its expense and upon the
reasonable request of the Agent forthwith, assemble all or part of the
Collateral as directed by the Agent and make it available to the Agent at a
place to be designated by the Agent that is reasonably convenient to both
parties and (ii) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any of
the Agent's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially reasonable. The
Borrower agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to the Borrower of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) All cash proceeds received by the Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to the Agent pursuant to Section 19) in whole or in part by the Agent
for the ratable benefit of the Lenders against, all or any part of the Secured
Obligations in such order as the Agent shall elect. Any surplus of such cash or
cash proceeds held by the Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.
(c) The Agent may exercise any and all rights and remedies of the
Borrower under or in connection with the Assigned Agreement or otherwise in
respect of the Collateral, including, without limitation, any and all rights of
the Borrower to demand or otherwise require payment of any amount under, or
performance of the provision of, the Assigned Agreement.
(d) All payments received by the Borrower under or in connection
with the Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Agent, shall be segregated from other
funds of the Borrower and shall be forthwith paid over to the Agent in the same
form as so received (with any necessary indorsement).
14
(e) The Agent may, without notice to the Borrower except as required
by law and at any time or from time to time, charge, set-off and otherwise apply
all or any part of the Secured Obligations against the Borrower Collateral
Account.
Section 19. Indemnity and Expenses. (a) The Borrower agrees
to indemnify the Agent from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or willful misconduct as determined
by a final judgment of a court of competent jurisdiction.
(b) The Borrower will upon demand pay to the Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Agent may incur
in connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent or the Lenders hereunder or (iv) the failure by
the Borrower to perform or observe any of the provisions hereof.
Section 20. Amendments; Waivers; Etc. No amendment or waiver
of any provision of this Agreement, and no consent to any departure by the
Borrower herefrom, shall in any event be effective unless the same shall be in
writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Agent to exercise, and no delay in
exercising any right hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
Section 21. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telegraphed, telecopied,
telexed, cabled or delivered to the Borrower or to the Agent, as the case may
be, in each case addressed to it at its address specified in the Credit
Agreement or, as to either party, at such other address as shall be designated
by such party in a written notice to each other party complying as to delivery
with the terms of this Section. All such notices and other communications
shall, when mailed, telecopied, telegraphed, telexed or cabled, respectively, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company, confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid.
Section 22. Continuing Security Interest; Assignments Under the
Credit Agreement. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
termination pursuant to Section 23(b) of the pledge, assignment and security
interest granted hereby, (b) be binding upon the Borrower,
15
its successors and assigns and (c) inure, together with the rights and remedies
of the Agent hereunder, to the benefit of the Agent, the Lenders and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender may assign or otherwise transfer all or
any portion of its rights and obligations under the Credit Agreement (including,
without limitation, all or any portion of its Commitment, the Advances owing to
it and the Note or Notes held by it) to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to such Lender herein or otherwise, in each case as provided in Section 8.07 of
the Credit Agreement.
Section 23. Release and Termination. (a) Upon any sale,
lease, transfer or other disposition of any item of Collateral in accordance
with the terms of the Loan Documents, the Agent will, at the Borrower's expense,
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; provided, however, that (i) at
the time of such request and such release no Default shall have occurred and be
continuing, (ii) the Borrower shall have delivered to the Agent, at least ten
Business Days prior to the date of the proposed release, a written request for
release describing the item of Collateral and the terms of the sale, lease,
transfer or other disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a form of release for
execution by the Agent and a certification by the Borrower to the effect that
the transaction is in compliance with the Loan Documents and as to such other
matters as the Agent may request, (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
2.05 of the Credit Agreement shall be paid to, or in accordance with the
instructions of, the Agent at the closing and (iv) the Agent shall have approved
such sale, lease, transfer or other disposition in writing.
(b) At such time as the Payment Obligations have been Fully
Satisfied, the pledge, assignment and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Borrower. Upon
any such termination, the Agent will, at the Borrower's expense, execute and
deliver to the Borrower such documents as the Borrower shall reasonably request
to evidence such termination.
Section 24. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
except to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New York. Unless
otherwise defined herein or in the Credit Agreement, terms used in Article 9 of
the N.Y. Uniform Commercial Code are used herein as therein defined.
Section 25. Execution in Counterparts; Delivery by Telecopier.
This Agreement may be executed in any number of counterparts and by different
parties hereto in
16
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
17
IN WITNESS WHEREOF, the Borrower has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
c/o MacAndrews & Forbes Holdings Inc. MARVEL IV HOLDINGS INC.
38 East 63rd Street
New York, New York 10021
By /s/
---------------------------
Title:
18
Schedule I
PLEDGED SHARES
<TABLE>
<CAPTION>
Percentage
of
Stock Certificate Number Outstanding
Stock Issuer Class of Stock Par Value No(s) of Shares Shares
- ------------ -------------- --------- ----------------- --------- ------------
<S> <C> <C> <C> <C> <C>
Marvel III
Holdings Inc. Common $1.00 3 1,000 100%
</TABLE>
<PAGE>
EXECUTION COPY
SECOND AMENDED AND RESTATED MAFCO SECURITY AGREEMENT
Dated as of December 15, 1995
from
MAFCO HOLDINGS INC.
to
CITIBANK, N.A.
as Agent
T A B L E O F C O N T E N T S
Section Page
1. Grant of Security 2
2. Security for Obligations 4
3. Mafco Remains Liable 4
4. Delivery of Security Collateral and Account Collateral 4
5. Maintaining the Mafco Collateral Account 4
6. Investing of Amounts in the Mafco Collateral Account 5
7. Release of Amounts 5
8. Representations and Warranties 7
9. Further Assurances 8
10. Place of Perfection; Records 9
11. Voting Rights; Dividends; Etc. 9
12. As to the Assigned Agreements 11
13. Payments Under the Assigned Agreements 12
14. Transfers and Other Liens; Additional Shares 12
15. Agent Appointed Attorney-in-Fact 12
16. Agent May Perform 12
17. The Agent's Duties 13
18. Remedies 13
19. Indemnity and Expenses 14
ii
Section Page
20. Security Interest Absolute 15
21. Amendments; Waivers; Etc. 15
22. Addresses for Notices 16
23. Continuing Security Interest; Assignments Under the
Credit Agreement 16
24. Release and Termination 16
25. Governing Law; Terms 17
26. Execution in Counterparts; Delivery by Telecopier 17
Schedule I - Pledged Shares
Schedule II - Assigned Agreements
Exhibit A-Form of Consent and Agreement
AMENDED AND RESTATED SECURITY AGREEMENT
SECOND AMENDED AND RESTATED SECURITY AGREEMENT dated as of
December 15, 1995 made by MAFCO HOLDINGS INC., a Delaware corporation ("Mafco"),
to CITIBANK, N.A. ("Citibank"), as agent (the "Agent") for the lenders (the
"Lenders") party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS.
(1) Marvel IV Holdings Inc., a Delaware corporation (the
"Borrower"), entered into a Credit Agreement dated as of July 20, 1994, as
amended by the First Amendment dated as of March 10, 1995 (as so amended, the
"Original Credit Agreement"), with the financial institutions and other
institutional lenders party thereto (the "Original Lenders") and Citibank, as
agent for the Original Lenders. In consideration of the premises and in order
to induce the Original Lenders to make advances under the Original Credit
Agreement, Mafco entered into a Guaranty dated July 27, 1994 (the "Original
Mafco Guaranty") in favor of the Original Lenders and Citibank, as agent for the
Original Lenders, and a Security Agreement dated July 27, 1994 in favor of
Citibank, as agent for the Existing Lenders.
(2) Subsequently the Borrower entered into an Amended and
Restated Credit Agreement dated as of June 29, 1995, as amended by the First
Amendment dated as of October 27, 1995 (said Agreement, as so amended, being the
"Existing Credit Agreement") with the financial institutions and other
institutional lenders party thereto (the "Existing Lenders") and Citibank, as
agent for the Existing Lenders. In consideration of the premises and in order
to induce the Existing Lenders to make advances under the Existing Credit
Agreement, the Guarantor entered into an Amended and Restated Guaranty dated as
of June 29, 1995, as heretofore amended (as so amended, the "Existing Mafco
Guaranty"), in favor of the Existing Lenders and Citibank, as agent for the
Existing Lenders, and an Amended and Restated Security Agreement dated as of
June 29, 1995 in favor of Citibank, as agent for the Existing Lenders.
(3) The Borrower has entered into a Second Amended and
Restated Credit Agreement dated as of December 15, 1995 (said Agreement, as it
may hereafter be amended or otherwise modified from time to time, being the
"Credit Agreement"; the terms defined therein and not otherwise defined herein
being used herein as therein defined) with the Lenders and the Agent which
amends and restates the Existing Credit Agreement in its entirety.
2
(4) Mafco has entered into a Second Amended and Restated
Guaranty dated as of December 15, 1995 (said Guaranty, as it may hereafter be
amended or otherwise modified from time to time, being the "Mafco Guaranty") in
favor of the Lenders and Citibank, as Agent for the Lenders, which amends and
restates the Existing Mafco Guaranty in its entirety.
(5) Mafco is the owner of the shares (the "Pledged Shares")
of stock set forth on Schedule I hereto and issued by the corporations named
therein (the "Issuers").
(6) Mafco has opened a non-interest bearing cash collateral
account (the "Mafco Collateral Account") with Citibank at its office at 399 Park
Avenue, New York, New York 10043, Account No. 40650497, in the name of Mafco
but under the sole control and dominion of the Agent and subject to the terms of
this Agreement.
(7) Mafco has opened a second non-interesting bearing cash
collateral account (the "Second Mafco Collateral Account"; together with the
Mafco Collateral Account, the "Mafco Collateral Accounts") with Citibank at its
office at 399 Park Avenue, New York, New York 10043, Account No. 40650518, in
the name of Mafco but under the sole control and dominion of the Agent and
subject to the terms of this Agreement.
(8) It is a condition precedent to the effectiveness of the
Credit Agreement that Mafco shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to enter into the Credit Agreement, Mafco hereby agrees with
the Agent for its benefit and the ratable benefit of the Lenders as follows:
Section 1. Grant of Security. Mafco hereby assigns and pledges
to the Agent for its benefit and the ratable benefit of the Lenders, and hereby
grants to the Agent for its benefit and the ratable benefit of the Lenders a
security interest in, all of Mafco's right, title and interest, whether now
owned or hereafter acquired, in and to the following (collectively, the
"Collateral"):
(a) all of the following (the "Security Collateral"):
(i) the Pledged Shares and the certificates representing the Pledged
Shares, and all dividends, cash instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
3
(ii) all additional shares of stock of the Issuers from time to time
acquired by Mafco in any manner, and the certificates representing such
additional shares, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
(b) the Related Documents, as such agreements may be amended or
otherwise modified from time to time (the "Assigned Agreements"), including,
without limitation, (i) all rights of Mafco to receive moneys due and to become
due under or pursuant to the Assigned Agreements, (ii) all rights of Mafco to
receive proceeds of any indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) claims of Mafco for damages arising out of or for
breach of or default under the Assigned Agreements and (iv) the right of Mafco
to terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder, in any case only to
the extent that such assignment and pledge is permitted under the relevant
Assigned Agreement and, to the extent applicable, under the Marvel III
Indenture, the Marvel Holdings Indenture, the Coleman Worldwide Indenture, the
FN Holdings Debt Document and the New FN Holdings Debt Document (all such
Collateral being the "Agreement Collateral");
(c) all of the following (collectively, the "Account Collateral"):
(i) the Mafco Collateral Account and the Second Mafco
Collateral Account, all funds held therein and all certificates and instruments,
if any, from time to time representing or evidencing the Mafco Collateral
Account;
(ii) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time to time
representing or evidencing the Collateral Investments;
(iii) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to or
otherwise possessed by the Agent for or on behalf of Mafco in substitution for
or in addition to any or all of the then existing Account Collateral; and
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the then existing Account
Collateral; and
(d) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the types
described in clauses (a) - (c) of this Section 1) and, to the extent not
otherwise included, all
4
(i) payments under any indemnity, warranty or guaranty, payable with respect to
any of the foregoing Collateral and (ii) cash.
Section 2. Security for Obligations. This Agreement secures
the payment of all Obligations now or hereafter existing of Mafco under the
Mafco Guaranty, whether for principal, interest (including, without limitation,
interest after the filing of a petition initiating a proceeding referred to in
Section 6.01(e) of the Credit Agreement, whether or not such interest
constitutes an allowed claim for purposes of such proceeding), fees, expenses or
otherwise (all such Obligations being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures the payment of
all amounts that constitute part of the Secured Obligations and would be owed by
Mafco to the Agent or the Lenders under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving Mafco.
Section 3. Mafco Remains Liable. Anything herein to the
contrary notwithstanding, (a) Mafco shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Agent of any of the
rights hereunder shall not release Mafco from any of its duties or obligations
under the contracts and agreements included in the Collateral and (c) none of
the Agent or any Lender shall have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall the Agent or any Lender be obligated to perform any of the obligations
or duties of Mafco thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
Section 4. Delivery of Security Collateral and Account
Collateral. All certificates or instruments representing or evidencing Security
Collateral or Account Collateral shall be delivered to and held by or on behalf
of the Agent pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Agent. The
Agent shall have the right, at any time upon the occurrence and during the
continuance of an Event of Default in its discretion and without notice to
Mafco, to transfer to or to register in the name of the Agent or any of its
nominees any or all of the Security Collateral and Account Collateral. In
addition, the Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Security Collateral or Account Collateral
for certificates or instruments of smaller or larger denominations.
Section 5. Maintaining the Mafco Collateral Accounts. At any
time prior to the termination pursuant to Section 24(b) of the pledge,
assignment and security interest granted hereby:
(a) Mafco will maintain the Mafco Collateral Accounts.
5
(b) It shall be a term and condition of each of the Mafco
Collateral Accounts, notwithstanding any term or condition to the contrary in
any other agreement relating to either of the Mafco Collateral Accounts, and
except as otherwise provided by the provisions of Section 7 and Section 18, that
no amount (including interest on Collateral Investments) shall be paid or
released to or for the account of, or withdrawn by or for the account of, Mafco
or any other Person from either of the Mafco Collateral Accounts.
The Mafco Collateral Accounts shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect.
Section 6. Investing of Amounts in the Mafco Collateral
Accounts. If requested by Mafco, the Agent will, subject to the provisions of
Section 7 and Section 18, from time to time (a) invest amounts on deposit in
each Mafco Collateral Account in such Cash Equivalents, in the name of the
Agent, as Mafco may select and (b) invest interest paid on the Cash Equivalents
referred to in clause (a) above, and reinvest other proceeds of any such Cash
Equivalents that may mature or be sold, in each case in such Cash Equivalents in
the name of the Agent as Mafco may select (Cash Equivalents referred to in
clauses (a) and (b) above being collectively "Collateral Investments").
Interest and proceeds that are not invested or reinvested in Collateral
Investments as provided above shall be deposited and held in the appropriate
Mafco Collateral Account.
Section 7. Release of Amounts. (a) So long as no Default shall
have occurred and be continuing, and subject to the provisions of Section 7(b)
below, the Agent shall pay and release, free of the Lien created hereunder, to
Mafco or at its order and at the request of Mafco, the amount, if any, on
deposit (including interest on Collateral Investments) in the Mafco Collateral
Account.
(b) At any time that a prepayment of the Advances is
required pursuant to Section 2.05(b)(vi) of the Credit Agreement out of amounts
deposited in the Mafco Collateral Account, the Agent shall retain in the Mafco
Collateral Account any amount otherwise permitted to be released to Mafco
pursuant to the provisions of Section 7(a) above (including interest on
Collateral Investments) and shall apply such amounts to the prepayment of the
Advances in accordance with the provisions of Section 2.05(b)(vi) of the Credit
Agreement.
(c) At any time that (i) no Default shall have occurred and
be continuing, (ii) amounts on deposit in the Mafco Collateral Account are not
being applied pursuant to Section 7(b) above to prepay the Advances, and (iii)
one of the following shall occur:
(w) the Supermajority Lenders and Mafco shall have agreed to accept the
substitution, pursuant to the provisions of Section 7(o)(i) of the Mafco
6
Guaranty, of other identified collateral for the cash collateral in the Second
Mafco Collateral Account,
(x) the ratio of the sum of the Net Residual Value at such time plus the
amount on deposit in the Second Mafco Collateral Account plus the value at such
time (as shall be determined in a manner agreed upon by Mafco and the
Supermajority Lenders at the time of the pledge of such collateral) of the
collateral, if any, previously pledged pursuant to the proviso to Section
7(o)(i) of the Mafco Guaranty to the sum of the aggregate principal amount of
all Advances then outstanding is equal to or exceeds 3 to 1, or
(y) in respect of a Clause (ii) Person (as defined in the Mafco
Guaranty), the sum of (A) the amount on deposit in the Second Mafco Collateral
Account in respect of such Clause (ii) Person, (B) 50% of the value on such date
of the common stock (based on the average of the closing prices of such shares
on a national stock exchange or the Nasdaq national market system during the
Calculation Period with respect to such date), if any, pledged prior to such
date pursuant to Section 7(o)(ii)(y) of the Mafco Guaranty in respect of such
Clause (ii) Person, (C) the Net Equity Value on such date of such Clause (ii)
Person and (D) at the option of Mafco and subject to the provisions of Section
7(o)(ii) of the Mafco Guaranty, the Net Equity Value of the Person listed in
Section 7(o)(ii) of the Mafco Guaranty which is not satisfying either the
minimum amount requirements in Section 7(o)(ii) or 7(o)(iii) of the Mafco
Guaranty exceeds $150,000,000,
(z) in respect of a Clause (iii) Person (as defined in the Mafco
Guaranty), the sum of (A) the amount on deposit in the Second Mafco Collateral
Account in respect of such Clause (iii) Person, (B) 50% of the value on such
date of the common stock (based on the average of the closing prices of such
shares on a national stock exchange or the Nasdaq national market system during
the Calculation Period with respect to such date), if any, pledged prior to such
date pursuant to Section 7(o)(iii)(y) of the Mafco Guaranty in respect of such
Clause (iii) Person, (c) the Net Equity Value on such date of such Clause (iii)
Person and (D) at the option of Mafco and subject to the provisions of Section
7(o)(iii) of the Mafco Guaranty, the Net Equity Value of the Person listed in
Section 7(o)(iii) of the Mafco Guaranty which is not satisfying either the
minimum amount requirements in Section 7(o)(ii) or 7(o)(iii) of the Mafco
Guaranty exceeds $200,000,000.
then the Agent shall promptly pay and release (in the case of clause (w),
promptly after delivery of the substitute collateral), free of the Lien created
hereunder, to Mafco or at its
7
order and at the request of Mafco, an amount on deposit (including interest on
the Collateral Investments) in the Second Mafco Collateral Account equal to
(1) in the case of clause (w), the amount on deposit,
(2) in the case of clause (x), an amount such that after the release
and payment of such amount, the ratio referred to in such clause (x) is equal to
3 to 1,
(3) in the case of clause (y), the excess amount referred to in such
clause (y), and
(4) in the case of clause (z), the excess amount referred to in
such clause (z).
(d) At any time that an Event of Default set forth in
Section 6.01(a) of the Credit Agreement shall have occurred and be continuing,
the Agent shall apply any amounts on deposit in the Second Mafco Collateral
Account to the prepayment of the Advances in accordance with the provisions of
Section 2.05(b)(viii) of the Credit Agreement.
(e) Upon the written request of Mafco stating that Mafco
will cause the Borrower to prepay the Advances in full pursuant to the terms of
Section 2.05(a) of the Credit Agreement, the Agent shall apply, on the date of
such prepayment, any amounts on deposit in the Mafco Collateral Accounts to such
prepayment of the Advances.
Section 8. Representations and Warranties. Mafco represents
and warrants as follows:
(a) The chief place of business and chief executive office of Mafco
and the office where Mafco keeps the original copies of the Assigned Agreements
are located at the address specified below the name of Mafco on the signature
page hereof. Original copies of the Assigned Agreements have been delivered to
the Agent. None of the Agreement Collateral is evidenced by a promissory note or
other instrument.
(b) Mafco is the legal and beneficial owner of the Collateral free
and clear of any Lien, except for the security interest created by this
Agreement and Liens permitted by the Mafco Guaranty. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Agent relating to this Agreement and such as may have been
filed in connection with Liens permitted by the Mafco Guaranty. Mafco has no
trade names.
(c) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable. As of the date hereof, the Pledged
Shares constitute
8
the percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Schedule I.
(d) The Assigned Agreements, true and complete copies of which have
been furnished to each Lender, have been duly authorized, executed and delivered
by all parties thereto, have not been amended or otherwise modified, are in full
force and effect and are binding upon and enforceable against all parties
thereto in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally. There exists no default under the
Assigned Agreements by any party thereto. Each party to the Assigned Agreements
other than Mafco has acknowledged the instruction letter of Mafco, in
substantially the form of Exhibit A, concerning payments under the Assigned
Agreements.
(e) This Agreement, the pledge of the Security Collateral pursuant
hereto, the pledge and assignment of the certificates representing the Account
Collateral pursuant hereto and the making of the filings contemplated by Section
3.01(g)(viii) of the Original Credit Agreement create a valid and perfected
first priority security interest in the Collateral (subject, however, to the
Liens permitted by the Mafco Guaranty), securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly taken.
(f) No consent of any other Person and no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body or other third party is required either (i) for the grant by
Mafco of the assignment and security interest granted hereby, for the pledge by
Mafco of the Security Collateral pursuant hereto or for the execution, delivery
or performance of this Agreement by Mafco, (ii) for the perfection or
maintenance of the pledge, assignment and security interest created hereby
(including the first priority nature of such pledge, assignment or security
interest), except for the filing of financing and continuation statements under
the Uniform Commercial Code, which financing statements have been duly filed, or
(iii) for the exercise by the Agent of its voting or other rights provided for
in this Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with the disposition of any
portion of the Security Collateral by laws affecting the offering and sale of
securities generally; provided, however, that no representation or warranty is
made as to any consent of, authorization, approval or other action by, or notice
to or filing with, any banking agency or regulatory body applicable to the
Agent.
Section 9. Further Assurances. (a) Mafco agrees that from
time to time, at its own expense it will promptly execute and deliver all
further instruments and documents, and
9
take all further action, that may be necessary or desirable, or that the Agent
may request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Mafco will: (i)
mark conspicuously the Assigned Agreements and each of its records pertaining to
the Collateral with a legend, in form and substance satisfactory to the Agent,
indicating that such Assigned Agreements or Collateral is subject to the
security interest granted hereby; (ii) if any Collateral shall be evidenced by a
promissory note or other instrument or chattel paper, deliver and pledge to the
Agent hereunder such note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Agent; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Agent may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) Mafco hereby authorizes the Agent to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of Mafco where permitted by
law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
(c) Mafco will furnish to the Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail.
Section 10. Place of Perfection; Records. Mafco shall keep its
chief place of business and chief executive office and the office where it keeps
its records concerning the Collateral and the original copies of the Assigned
Agreements at the location therefor specified in Section 8(a) or, upon 30 days'
prior written notice to the Agent, at such other locations in a jurisdiction
where all actions required by Section 9 shall have been taken with respect to
the Collateral. Mafco will hold and preserve such records and the Assigned
Agreements and will permit representatives of the Agent at any time during
normal business hours to inspect and make abstracts from such records.
Section 11. Voting Rights; Dividends; Etc. (a) So long as no
Event of Default shall have occurred and be continuing:
(i) Mafco shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Security Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the other Loan
Documents; provided, however, that Mafco shall not exercise or refrain from
10
exercising any such right if, in the Agent's reasonable judgment, such action
would have a material adverse effect on the value of the Security Collateral or
any part thereof; and, provided, further, that Mafco shall give the Agent at
least five days' written notice of the manner in which it intends to exercise,
or the reasons for refraining from exercising, any such right.
(ii) Mafco shall be entitled to receive and retain any and all
dividends paid in respect of the Security Collateral; provided, however, that
any and all
(A) dividends paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Security Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus and
(C) cash paid, payable or otherwise distributed in respect
of principal of, or in redemption of, or in exchange for, any Security
Collateral received as consideration for sales or other dispositions of assets
of Mafco
shall be, and shall be forthwith delivered to the Agent to hold as, Security
Collateral and shall, if received by Mafco, be received in trust for the benefit
of the Agent, be segregated from the other property or funds of Mafco and be
forthwith delivered to the Agent as Security Collateral in the same form as so
received (with any necessary indorsement).
(iii) The Agent shall execute and deliver (or cause to be executed and
delivered) to Mafco all such proxies and other instruments as Mafco may
reasonably request for the purpose of enabling Mafco to exercise the voting and
other rights that it is entitled to exercise pursuant to paragraph (i) above and
to receive the dividends that it is authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) All rights of Mafco (x) to exercise or refrain from exercising
the voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 11(a)(i) shall, upon notice to Mafco by the Agent,
cease and (y) to receive the dividends that it would otherwise be authorized to
receive and retain pursuant to Section 11(a)(ii) shall automatically cease, and
all such rights shall thereupon become vested in the Agent, which shall
thereupon have the sole right to exercise or refrain
11
from exercising such voting and other consensual rights and to receive and hold
as Security Collateral such dividends and interest payments.
(ii) All dividends that are received by Mafco contrary to the
provisions of paragraph (i) of this Section 11(b) shall be received in trust for
the benefit of the Agent, shall be segregated from other funds of Mafco and
shall be forthwith paid over to the Agent as Security Collateral in the same
form as so received (with any necessary indorsement).
Section 12. As to the Assigned Agreements. (a) Mafco shall at
its expense:
(i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned Agreements
in full force and effect, enforce the Assigned Agreements in accordance with
their terms and take all such action to such end as may be from time to time
requested by the Agent; and
(ii) furnish to the Agent promptly upon receipt thereof copies of all
notices, requests and other documents received by Mafco under or pursuant to the
Assigned Agreements, and from time to time (A) furnish to the Agent such
information and reports regarding the Collateral as the Agent may reasonably
request and (B) upon request of the Agent make to each other party to the
Assigned Agreements such demands and requests for information and reports or for
action as Mafco is entitled to make thereunder.
(b) Mafco shall not, without the Required Lenders' prior
written consent:
(i) cancel or terminate the Assigned Agreements or consent to or
accept any cancellation or termination thereof except pursuant to the terms
thereof;
(ii) amend or otherwise modify the Assigned Agreements or give any
consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned Agreements;
(iv) consent to or permit or accept any prepayment of amounts to
become due under or in connection with the Assigned Agreements, except as
expressly provided therein; or
(v) take any other action in connection with the Assigned Agreements
that would impair the value of the interest or rights of Mafco thereunder or
that would impair the interest or rights of the Agent.
12
Section 13. Payments Under the Assigned Agreements. (a)
Mafco agrees, and has effectively so instructed each other party to the Assigned
Agreements, that all payments due or to become due to Mafco under or in
connection with such Assigned Agreements shall be made directly to the Mafco
Collateral Account.
(b) Except as set forth in Section 18, all moneys received
or collected pursuant to subsection (a) above shall be applied as set forth in
Section 7.
Section 14. Transfers and Other Liens; Additional Shares. (a)
Except to the extent permitted by the Mafco Guaranty, Mafco shall not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Collateral or (ii) create or suffer to exist
any Lien upon or with respect to any of the Collateral except for the pledge,
assignment and security interest created by this Agreement or any Lien permitted
by the Mafco Guaranty.
(b) Mafco shall (i) cause each issuer of the Pledged Shares
not to issue any stock or other securities in addition to or in substitution for
the Pledged Shares issued by such issuer, except to Mafco, and (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of each issuer of the
Pledged Shares.
Section 15. Agent Appointed Attorney-in-Fact. Mafco hereby
irrevocably appoints the Agent Mafco's attorney-in-fact, with full authority in
the place and stead of Mafco and in the name of Mafco or otherwise, from time to
time in the Agent's discretion, at any time upon the occurrence and during the
continuance of an Event of Default to take any action and to execute any
instrument that the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral,
(b) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce compliance with the terms and
conditions of the Assigned Agreements or the rights of the Agent with respect to
any of the Collateral.
Section 16. Agent May Perform. If Mafco fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement,
13
and the reasonable expenses of the Agent incurred in connection therewith shall
be payable by Mafco under Section 19(b).
Section 17. The Agent's Duties. The powers conferred on the
Agent hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the duty to
exercise reasonable care in respect of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have no
duty as to any Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Security Collateral, whether or not the Agent or any Lender has or is deemed
to have knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Citibank accords its own
property.
Section 18. Remedies. If any Event of Default shall have
occurred and be continuing, the Agent shall have the following rights and
remedies in addition to the rights of the Agent with respect to Mafco Collateral
Account under Section 7(b) and Section 7(d):
(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the Uniform
Commercial Code in effect in the State of New York at such time (the "N.Y.
Uniform Commercial Code") (whether or not the N.Y. Uniform Commercial Code
applies to the affected Collateral) and also may (i) require Mafco to, and Mafco
hereby agrees that it will at its expense and upon the reasonable request of the
Agent forthwith, assemble all or part of the Collateral as directed by the Agent
and make it available to the Agent at a place to be designated by the Agent that
is reasonably convenient to both parties and (ii) without notice except as
specified below, sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any of the Agent's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the Agent may
deem commercially reasonable. Mafco agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to Mafco of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
14
(b) All cash proceeds received by the Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Agent, be held by the Agent as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to the Agent pursuant to Section 19) in whole or in part by the Agent
for the ratable benefit of the Lenders against, all or any part of the Secured
Obligations in such order as the Agent shall elect. Any surplus of such cash or
cash proceeds held by the Agent and remaining after payment in full of all the
Secured Obligations shall be paid over to Mafco or to whomsoever may be lawfully
entitled to receive such surplus.
(c) The Agent may, to the extent permitted under the relevant
Assigned Agreement and to the extent applicable, the Marvel III Indenture, the
Marvel Holdings Indenture, the Coleman Worldwide Indenture and the FN Holdings
Debt Document, exercise any and all rights and remedies of Mafco under or in
connection with the Assigned Agreements or otherwise in respect of the
Collateral, including, without limitation, any and all rights of Mafco to demand
or otherwise require payment of any amount under, or performance of the
provision of, the Assigned Agreements.
(d) All payments received by Mafco under or in connection with the
Assigned Agreements or otherwise in respect of the Collateral shall be received
in trust for the benefit of the Agent, shall be segregated from other funds of
Mafco and shall be forthwith paid over to the Agent in the same form as so
received (with any necessary indorsement).
(e) The Agent may, without notice to Mafco except as required by law
and at any time or from time to time, charge, set-off and otherwise apply all or
any part of the Secured Obligations against Mafco Collateral Account.
Section 19. Indemnity and Expenses. (a) Mafco agrees to
indemnify the Agent from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses or liabilities resulting
from the Agent's gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction.
(b) Mafco will upon demand pay to the Agent the amount of
any and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that the Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Agent or the Lenders hereunder or (iv) the failure by
Mafco to perform or observe any of the provisions hereof.
15
Section 20. Security Interest Absolute. The obligations of
Mafco under this Agreement are independent of the Secured Obligations, and a
separate action or actions may be brought and prosecuted against Mafco to
enforce this Agreement, irrespective of whether any action is brought against
the Borrower or whether the Borrower is joined in any such action or actions.
All rights of the Agent and the pledge, assignment and security interest
hereunder, and all obligations of Mafco hereunder, shall be absolute and
unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan Document or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment or
waiver of or any consent to any departure from any Loan Document, including,
without limitation, any increase in the Secured Obligations resulting from the
extension of additional credit to the Borrower or any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or any
other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, Mafco or a third party grantor of a security
interest.
Section 21. Amendments; Waivers; Etc. No amendment or waiver
of any provision of this Agreement, and no consent to any departure by Mafco
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No
failure on the part of the Agent to exercise, and no delay in exercising any
right hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.
16
Section 22. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telegraphed, telecopied,
telexed, cabled or delivered to Mafco or to the Agent, in each case addressed to
it at its address set forth on the signature pages hereof or as specified in the
Credit Agreement, as the case may be, or, as to either party, at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed, telecopied, telegraphed, telexed or
cabled, respectively, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively, addressed as aforesaid.
Section 23. Continuing Security Interest; Assignments Under the
Credit Agreement. This Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the
termination pursuant to Section 24(b) of the pledge, assignment and security
interest granted hereby, (b) be binding upon Mafco, its successors and assigns
and (c) inure, together with the rights and remedies of the Agent hereunder, to
the benefit of the Agent, the Lenders and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing
clause (c), any Lender may assign or otherwise transfer all or any portion of
its rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement.
Section 24. Release and Termination. (a) Upon any sale,
lease, transfer or other disposition of any item of Collateral in accordance
with the terms of the Loan Documents, the Agent will, at Mafco's expense,
execute and deliver to Mafco such documents as Mafco shall reasonably request to
evidence the release of such item of Collateral from the assignment and security
interest granted hereby; provided, however, that (i) at the time of such request
and such release no Default shall have occurred and be continuing, (ii) Mafco
shall have delivered to the Agent, at least ten Business Days prior to the date
of the proposed release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Agent and a
certification by Mafco to the effect that the transaction is in compliance with
the Loan Documents and as to such other matters as the Agent may request, (iii)
the proceeds of any such sale, lease, transfer or other disposition required to
be applied in accordance with Section 2.05 of the Credit Agreement shall be paid
to, or in accordance with the instructions of, the Agent at the closing and (iv)
the Agent shall have approved such sale, lease, transfer or other disposition in
writing.
17
(b) At such time as the Payment Obligations have been Fully
Satisfied, the pledge, assignment and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Mafco. Upon any such
termination, the Agent will, at Mafco's expense, execute and deliver to Mafco
such documents as Mafco shall reasonably request to evidence such termination.
Section 25. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
except to the extent that the validity or perfection of the security interest
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New York. Unless
otherwise defined herein or in the Credit Agreement, terms used in Article 9 of
the N.Y. Uniform Commercial Code are used herein as therein defined.
Section 26. Execution in Counterparts; Delivery by Telecopier.
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 one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
IN WITNESS WHEREOF, Mafco has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MAFCO HOLDINGS INC.
By
---------------------------
Title:
Address: 38 East 63rd Street
New York, New York 10021
Schedule I
PLEDGED SHARES
<TABLE>
Percentage
of
Stock Certificate Number Outstanding
Stock Issuer Class of Stock Par Value No(s) of Shares Shares
-------------- -------- ---------------- --------- -----------
<S> <C> <C> <C> <C> <C>
MacAndrews & Forbes Holdings Inc. Common $1.00 2 1,000 100%
</TABLE>
Schedule II
ASSIGNED AGREEMENTS
1. Tax Allocation Agreement dated as of August 24, 1990, as amended through
July 20, 1994, between the Debtor and New Coleman.
2. Tax Sharing Agreement dated as of February 26, 1992, as amended through
July 20, 1994, among the Debtor, Coleman Finance Holdings Inc.
("Coleman Finance"), Coleman and certain subsidiaries of Coleman party
thereto.
3. Tax Sharing Agreement dated as of February 26, 1992, as amended
through the date hereof, among the Debtor, New Coleman, Coleman Finance
and certain subsidiaries of Coleman Finance party thereto.
4. Tax Equivalent Payment Agreement dated as of March 4, 1992, as amended
through July 20, 1994, between the Debtor and Coleman Finance.
5. Tax Sharing Agreement dated as of May 27, 1993 among Mafco, Coleman
Worldwide, Coleman and certain subsidiaries party thereto.
6. Tax Sharing Agreement dated as of May 27, 1993 among the Debtor,
Coleman Worldwide and the other parties thereto.
7. Tax Sharing Agreement dated as of July 22, 1993 between the Debtor and
Coleman Holdings.
8. Tax Sharing Agreement dated as of January 1, 1994 among the Debtor, FN
Holdings, the Bank and certain subsidiaries of FN Holdings and the Bank.
9. Tax Sharing Agreement dated as of April 22, 1993 between the Debtor and
Marvel Holdings.
10. Tax Sharing Agreement dated as of October 20, 1993 between the Debtor
and Marvel Parent.
11. Amended and Restated Tax Sharing Agreement dated as of January 1, 1994
among the Debtor, Marvel III, Marvel and certain subsidiaries of Marvel
party thereto.
12. Tax Sharing Agreement dated as of June 15, 1995 among Mafco, MCG and
subsidiaries of MCG party thereto.
Exhibit A
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to
the terms and provisions of, the Second Amended and Restated Security Agreement
dated as of December__, 1995 (the "Second Security Agreement"; the terms defined
or referenced therein being used herein as therein defined or referenced) from
Mafco Holdings Inc. ("Mafco") to Citibank, N.A., as agent (the "Agent") for the
Lenders referred to therein, and hereby agrees with the Agent that:
(a) The undersigned will make all payments to be made by it to Mafco
under or in connection with the __________ Agreement dated _______________, 19__
(the "Assigned Agreement") between the undersigned and Mafco (including, without
limitation, the proceeds of any loans or advances made by the undersigned to
Mafco in connection with the Assigned Agreement) directly to the Mafco
Collateral Account or otherwise in accordance with the instructions of the
Agent.
(b) All payments referred to in paragraph (a) above shall be made by
the undersigned irrespective of, and without deduction for, any counterclaim,
defense, recoupment or set-off and shall be final, and the undersigned will not
seek to recover from the Agent or any Lender for any reason any such payment
once made.
(c) Following the occurrence and during the continuance of an Event
of Default, the Agent shall be entitled to exercise any and all rights and
remedies of Mafco under the Assigned Agreement in accordance with the terms of
the Security Agreement, and the undersigned shall comply in all respects with
such exercise.
(d) The undersigned will not, without the prior written consent of
the Agent, (i) cancel or terminate the Assigned Agreement or consent to or
accept any cancellation or termination thereof except pursuant to the terms
thereof, (ii) amend or otherwise modify the Assigned Agreement, or (iii) make
any prepayment of amounts to become due under or in connection with the Assigned
Agreement, except as expressly provided therein.
This Consent and Agreement shall be binding upon the undersigned
and its successors and assigns, and shall inure, together with the rights and
remedies of the Agent hereunder, to the benefit of the Agent and the Lenders and
their successors, transferees and assigns. This Consent and Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
2
IN WITNESS WHEREOF, the undersigned has duly executed this
Consent and Agreement as of the date set opposite its name below. Dated:
____________, 19__ [NAME OF GRANTOR]
By:
---------------------------
Title:
EXECUTION COPY
FIRST AMENDMENT
Dated as of January 9, 1996
This FIRST AMENDMENT among Marvel IV Holdings Inc., a Delaware
corporation (the "Borrower"), Mafco Holdings Inc., a Delaware corporation
("Mafco"), Marvel V Holdings Inc., a Delaware corporation ("Borrower Parent"),
the lenders parties to the Credit Agreement referred to below (the "Lenders")
and Citibank, N.A., as agent (the "Agent") for the Lenders thereunder.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Agent have entered into a
Credit Agreement dated as of December 15, 1995 (the "Credit Agreement"; the
terms defined therein being used herein as therein defined unless otherwise
defined herein).
(2) FN Holdings intends to issue up to
$125,000,000 aggregate principal amount of Senior Subordinated Notes.
(3) In order to comply with the terms of the FN Holdings Debt
Document, the New FN Holdings Debt Documents and its certificate of
incorporation, FN Holdings intends to make loans to Borrower Parent with certain
proceeds of dividends, other distributions, loans and advances made by the Bank
to FN Holdings.
(4) The Borrower has requested that the Lenders agree to amend the
Credit Agreement, the Mafco Guaranty and the Borrower Parent Guaranty to permit
the issuance of such Debt by FN Holdings and the making of such loans by FN
Holdings to Borrower Parent.
(5) The Lenders are, on the terms and conditions stated below,
willing to grant the request of the Borrower, and the Borrower and the Lenders
have agreed to amend the Credit Agreement, the Mafco Guaranty and the Borrower
Parent Guaranty as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date on which all of the conditions precedent set forth in
Section 4 hereof have been satisfied or waived, hereby amended as follows:
2
(a) the definition of "New FN Holdings Debt" in Section 1.01 shall be
amended by deleting the reference to "$100,000,000" therein and replacing such
reference with "$125,000,000".
(b) Section 5.02(i) is hereby amended by adding to the end of clause (i)
thereof "and Debt under the guaranty of all loans made by FN Holdings to
Borrower Parent, provided that such guaranty shall be subordinated to the Debt
under the Loan Documents on terms and conditions substantially identical to the
terms and conditions set forth on Exhibit A to the Mafco Guaranty subject to the
provisions set forth under the heading "Ranking" on Exhibit D to the Mafco
Guaranty."
(c) Section 6.01 shall be amended by (i) adding the word "or" at the end of
paragraph (t) thereof and (ii) adding the following paragraph (u) immediately
following paragraph (t):
"(u) On the date of each dividend, distribution, loan or advance to FN
Holdings from the Bank, FN Holdings shall fail to (i) distribute or dividend to
FN Parent the amount of the "Excess" (as such term is defined in its certificate
of incorporation), (ii) redeem its Class C common stock with such amount, (iii)
loan such amount to Borrower Parent or (iv) pay dividends to the holder of its
Class B common stock (but, in the case of clauses (i), (ii) or (iv), only to the
extent that such dividends or redemptions are permitted to be paid or made, as
the case may be, under the provisions of its certificate of incorporation)."
SECTION 2. Amendment to the Mafco Guaranty. The Mafco Guaranty is,
effective as of the date on which all of the conditions precedent set forth in
Section 4 hereof have been satisfied or waived, hereby amended as follows:
(a) Section 7(n) is hereby amended in its entirety to read "Cause any
advance made by FN Holdings to Borrower Parent to be on the terms and conditions
set forth in Exhibit D hereto and cause any advance made by FN Holdings or FN
Parent to be subordinated to all obligations of the Borrower Parent under the
Loan Documents upon the terms and conditions set forth in Exhibit A hereto
subject, in the case of FN Holdings, to the provisions set forth under the
heading "Ranking" and in the penultimate sentence under the heading "Condition
Precedent to Initial Loan" on Exhibit D hereto."
(b) Section 8(i) is hereby amended by (i) replacing clause (i) thereof with
"(i) in the case of the Guarantor, loans pursuant to the terms of the Related
Documents, Debt under this Guaranty, the Debt set forth on Schedule V hereto and
Debt under the guaranty of all loans made by FN Holdings to Borrower Parent,
3
provided that such guaranty shall be subordinated to the Debt under this
Guaranty on terms and conditions substantially identical to the terms and
conditions set forth on Exhibit A hereto subject to the provisions set forth
under the heading "Ranking on Exhibit D hereto, (ii) adding to the end of clause
(iv) thereof (but prior to the first proviso therein) the phrase "and any Debt
issued by FN Holdings in exchange for the New FN Holdings Debt" and (iii)
replacing the second proviso therein in its entirety with "; provided further
that the New FN Holdings Debt and any Debt issued by FN Holdings in exchange for
the New FN Holdings Debt may only be issued on the terms and conditions set
forth on Exhibit C hereto."
(c) Exhibit C is replaced in its entirety by Annex A hereto.
(d) Annex B hereto shall be added to the Mafco Guaranty as Exhibit D.
thereto.
SECTION 3. Amendment to the Borrower Parent Guaranty. The Borrower
Parent Guaranty is, effective as of the date on which all of the conditions
precedent set forth in Section 4 hereof have been satisfied or waived, hereby
amended as follows:
(a) Section 8(k) is hereby amended by adding to the end thereof the
following:
"and, in the case of the Guarantor, to make required prepayments of any Debt
owing to FN Holdings; provided, however, that, in the case of any required
prepayment made by the Guarantor (i) no event had occurred and is continuing, or
would result from such prepayment, which constitutes a Default or an Event of
Default and (ii) such prepayment is made solely from proceeds of dividends or
distributions made by the Borrower to the Guarantor in accordance with the terms
of the Loan Documents or from proceeds of cash contributions made to the capital
of the Guarantor."
(b) Section 8(m) is hereby amended by adding at the end thereof "or, in the
case of the Guarantor, any prohibition or condition set forth in the
documentation governing the loans made by FN Holdings to the Guarantor."
SECTION 4. Conditions of Effectiveness. This First Amendment shall
become effective on the first date (the "First Amendment Effective Date") upon
which the Agent shall have received evidence satisfactory to it that the
following conditions precedent have been satisfied:
(a) The Borrower shall have paid all accrued fees of the Agent and the
Lenders and all accrued expenses of the Agent (including the reasonable fees and
expenses of counsel to the Agent).
4
(b) The Agent shall have received on or before the First Amendment
Effective Date the following, each dated on or before the First Amendment
Effective Date, in form and substance satisfactory to the Agent (unless
otherwise specified) and in sufficient copies for each Lender:
(i) counterparts to this First Amendment duly executed by the
Borrower, the Lenders and the Agent;
(ii) counterparts to the Consent attached hereto duly executed by each
Loan Party other than the Borrower, Mafco and Borrower Parent; and
(iii) a certificate signed by a duly authorized officer of Mafco
stating that:
(A) After giving effect to this First Amendment, the representations
and warranties contained in each of the Loan Documents are correct on and as of
the First Amendment Effective Date, except to the extent such representations
and warranties specifically relate to an earlier date; and
(B) After giving effect to this First Amendment, no event has
occurred and is continuing which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be given or
time elapse or both.
SECTION 5. Reference to and Effect on the Loan Documents. (a) Upon
the effectiveness of Sections 1, 2 and 3 hereof: (i) each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended hereby; (ii) each reference in the Mafco Guaranty to
"this Agreement", "hereunder", "hereof" or words of like import referring to the
Mafco Guaranty, and each reference in the other Loan Documents to "the Mafco
Guaranty", "thereunder", "thereof" or words of like import referring to the
Mafco Guaranty, shall mean and be a reference to the Mafco Guaranty as amended
hereby; and (iii) each reference in the Borrower Parent Guaranty to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Borrower Parent Guaranty and each reference in the other Loan Documents to "the
Borrower Parent Guaranty", "thereunder", "thereof" or words of like import
referring to the Borrower Parent Guaranty, shall mean and be a reference to the
Borrower Parent Guaranty as amended.
5
(b) Except as specifically amended above, the Credit Agreement and
the Notes, and all other Loan Documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this First Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
SECTION 6. Costs, Expenses and Taxes. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery, administration, modification and amendment of this First
Amendment and the other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its rights and responsibilities hereunder and thereunder. The
Borrower further agrees to pay on demand all costs and expenses, if any
(including, without limitation, reasonable counsel fees an expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this First Amendment and the other instruments and documents to
be delivered hereunder, including, without limitation, reasonable counsel fees
and expenses in connection with the enforcement of rights under this Section 6.
In addition, the Borrower shall pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and delivery of this
First Amendment and the other instruments and documents to be delivered
hereunder, and agrees to save the Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
SECTION 7. Execution in Counterparts. This First Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
SECTION 8. Governing Law. This First Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
6
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
MARVEL IV HOLDINGS INC.
By /s/ Glenn P. Dickes
Name: Glenn P. Dickes
Title: Vice President
MAFCO HOLDINGS INC.
By /s/ Glenn P. Dickes
Name: Glenn P. Dickes
Title: Senior Vice President
MARVEL V HOLDINGS INC.
By /s/ Glenn P. Dickes
Name: Glenn P. Dickes
Title: Vice President
7
CITIBANK, N.A., as Agent
By
Name:
Title:
8
Lenders
BANK OF AMERICA ILLINOIS
By
Name:
Title:
9
THE BANK OF NEW YORK
By /s/ Catherine G. Goff
Name: Catherine G. Goff
Title: Assistant Vice President
10
THE CHASE MANHATTAN BANK, N.A.
By /s/ Thomas P. Durney
Name: Thomas P. Durney
Title: Vice President
11
CHEMICAL BANK
By
Name:
Title:
12
CITIBANK, N.A.
By
Name:
Title:
13
CREDIT LYONNAIS,
CAYMAN ISLAND BRANCH
By
Name:
Title:
14
CREDIT SUISSE
By /s/ MICHAEL C. MAST
Name: MICHAEL C. MAST
Title: Member of Senior Management
By /s/ ANNE SCHULTHEISS-JENSEN
Name: ANNE SCHULTHEISS-JENSEN
Title: ASSOCIATE
15
THE FIRST NATIONAL BANK
OF BOSTON
By /s/ Richard D. Hill, Jr.
Name: Richard D. Hill, Jr.
Title: Director
16
THE FUJI BANK, LIMITED
By /s/ KATSUNORI NOZAWA
Name: KATSUNORI NOZAWA
Title: Vice President & Manager
17
THE LONG-TERM CREDIT
BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY
By /s/ Paul B. Clifford
Name: Paul B. Clifford
Title: Deputy General Manager
18
NATIONSBANK, N.A. (CAROLINAS)
By
Name:
Title:
19
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ JEFFREY W. MAILLET
Name: JEFFREY W. MAILLET
Title: Sr. Vice Pres. - Portfolio Mgr.
20
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By /s/ Kunduck Moon
Name: Kunduck Moon
Title: Managing Director
21
PILGRIM PRIME RATE TRUST
By /s/ HOWARD TIFFEN
Name: HOWARD TIFFEN
Title: Senior Vice President
22
PRIME INCOME TRUST
By
Name:
Title:
Consent to Amendment
CONSENT
Reference is made to (a) the Credit Agreement dated as of December
15, 1995 (the "Credit Agreement"; the terms defined therein being used herein as
therein defined unless otherwise defined herein) among Marvel IV Holdings Inc.,
a Delaware corporation (the "Borrower"), the lenders parties to the Credit
Agreement (the "Lenders"), and Citibank, N.A., as agent (the "Agent") for the
Lenders, and (b) the First Amendment dated as of January [8], 1996 (the "First
Amendment") among the Borrower, Mafco Holdings Inc., a Delaware corporation
("Mafco"), Marvel V Holdings Inc., a Delaware corporation ("Borrower Parent"),
the Lenders and the Agent.
Each of the undersigned, as a Loan Party under the Credit Agreement,
hereby consents to the First Amendment and hereby confirms and agrees that (i)
each Collateral Document to which such Loan Party is a party and the Collateral
described in each such Collateral Document does, and shall continue to, secure
the payment of all of the Secured Obligations and Guaranteed Obligations, as the
case may be, described in such Collateral Document and (ii) each Loan Document
to which such Loan Party is a party is, and shall continue to be, in full force
and effect and is hereby ratified and confirmed in all respects except that, on
and after the effective date of the First Amendment, (A) each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended thereby, (B) each reference in the Mafco Guaranty to
"this Agreement", "hereunder", "hereof" or words of like import referring to the
Mafco Guaranty, and each reference in the other Loan Documents to "the Mafco
Guaranty", "thereunder", "thereof" or words of like import referring to the
Mafco Guaranty, shall mean and be a reference to the Mafco Guaranty as amended
thereby, and (C) each reference in the Borrower Parent Guaranty to "this
Agreement", "hereunder", "hereof" or words of like import referring to the
Borrower Parent Guaranty, and each reference in the other Loan Documents to "the
Borrower Parent Guaranty", "thereunder", "thereof" or words of like import
referring to the Borrower Parent Guaranty, shall mean and be a reference to the
Borrower Parent Guaranty as amended thereby.
This Consent may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same consent.
ANDREWS GROUP INCORPORATED
By_____________________
Name:
Title:
CONSOLIDATED CIGAR II HOLDINGS INC.
By_____________________
Name:
Title:
COLEMAN (PARENT) HOLDINGS INC.
By_____________________
Name:
Title:
FLAVORS (PARENT) HOLDINGS INC.
By_____________________
Name:
Title:
FOUR STAR HOLDINGS CORP.
By____________________
Name:
Title:
MACANDREWS & FORBES HOLDINGS INC.
By____________________
Name:
Title:
MAFCO HOLDINGS INC.
By____________________
Name:
Title:
NEW COLEMAN HOLDINGS, INC.
By____________________
Name:
Title:
NWCG (PARENT) HOLDINGS CORPORATION
By____________________
Name:
Title:
<PAGE>
EXHIBIT D
TO
SECOND AMENDED AND RESTATED
MAFCO GUARANTY
REVOLVING CREDIT FACILITY TERM SHEET
<TABLE>
<CAPTION>
<S> <C>
Borrower: Marvel V Holdings Inc. (the "Borrower")
Lender: First Nationwide Holdings Inc. (the "Lender")
Facility: Revolving credit facility (the "Facility") with a maximum
commitment of $125,000,000 (the "Commitment")
Termination The earlier of
(i) December 31, 1997 or
(ii) the date that is 91 days following make any Loan to the
Borrower under the the termination of the Facility unless each
of the following Second Amended and conditions precedent has
been Restated Credit satisfied: Agreement dated as of December 15,
1995 among Marvel IV Holdings Inc. ("Marvel IV"), the banks named
therein and Citibank, N.A., as agent (as amended from time to
time, the "Marvel IV Credit Agreement")
Interest: Interest shall accrue on the unpaid principal amount of loans from
time to time outstanding under the Facility (the "Loans") at a
rate established for each Loan at the time it is made equal to
10.5%over the then- prevailing yield to maturity of five-year
United States Treasury Notes. At the end of each calendar quarter,
accrued interest shall not be payable currently in cash but shall
be added to the unpaid principal amount outstanding under the
Loans and shall thereafter be treated as principal ("Additional
Principal").
Use of Proceeds: Proceeds of the Loans shall be contributed by the Borrower to the
capital of Marvel IV for use by Marvel IV in accordance with the
Marvel IV Credit Agreement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Ranking: The Facility shall be subordinated to the Borrower's obligations
under its guaranty of the Marvel IV Credit Agreement and any
Permitted Refinancing (as defined below), in each case on the
terms set forth in Exhibit A to the Mafco Guaranty (as such term
is defined in the Marvel IV Credit Agreement) as in effect at the
time of the closing of the Facility (the "Subordination
Provisions"); provided, however, that if the maturity of the
Marvel IV Credit Agreement is extended beyond September 1, 1997,
the Facility shall not be subordinated to the Borrower's
obligations under its guaranty of the Marvel IV Credit Agreement
after September 1, 1997 unless such maturity was extended pursuant
to a Permitted Extension (as defined below).
Permitted Refinancings The term "Permitted Refinancing" shall mean any refinancing of the
and Extensions: Marvel IV Credit Agreement undertaken at the request of the
lenders under the Marvel IV Credit Agreement in connection with
any Material Default (as defined below). The term "Permitted
Extension" shall mean any extension of the maturity of the Marvel
IV Credit Agreement undertaken at the request of the lenders under
the Marvel IV Credit Agreement in connection with any Material
Default.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
The term "Material Default" shall mean (i) any Event of Default
under (and as defined in) the Marvel IV Credit Agreement, (ii) any
Default under (and as defined in) the Marvel IV Credit Agreement
as in effect at the time of the closing of the Facility other than
any Default under Section 6.01(c) thereof, (iii) any Default under
the Marvel IV Credit Agreement which arises from a failure to
perform or observe any affirmative or negative covenant contained
in the Marvel IV Credit Agreement or any other Loan Document (as
defined therein), in each case as in effect at the time of the
closing of the Facility, other than any affirmative covenant under
the following headings: "Compliance with Laws, Etc.," "Compliance
with Environmental Laws," "Maintenance of Insurance,"
"Preservation of Corporate Existence, Etc.," "Maintenance of
Properties, Etc.," and "Reporting Requirements," and (iv) any
other Default under the Marvel IV Credit Agreement (including any
failure to perform or observe any affirmative covenant
specifically excluded from clause (iii) above) which the majority
lenders under the Marvel IV Credit Agreement believe in good faith
to be a material default.
Optional Prepayment: The Borrower shall have the right, at any time and from time to
time, to prepay in whole or in part the unpaid principal amount
outstanding under the Loans, without payment of any penalty or
premium; provided, however, that the Borrower shall not exercise
such right unless and until it has obtained any required consent
under the Marvel IV Credit Agreement or any Permitted Refinancing.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Mandatory Prepayment: If, at any time, the aggregate principal amount (including any
Additional Principal) of the outstanding Loans (after taking into
account any new Loans or prepayments made on such date) is greater
than the Adjusted Collateral Value (as defined below), the
Borrower shall be required within three days thereafter either (at
its option) to prepay the Loans, to cause the loans outstanding
under the Marvel IV Credit Agreement to be prepaid or to cause
additional collateral to be pledged to secure the Marvel IV Credit
Agreement, in each case such that after giving effect thereto the
aggregate principal amount (including any Additional Principal) of
the outstanding Loans on such date is less than or equal to the
Adjusted Collateral Value on such date.
Condition Precedent to Prior to the making of the initial Loan under the Facility, the
Initial Loan: Borrower shall obtain the consent of the required number of
lenders under the Marvel IV Credit Agreement to the payment by the
Borrower of Loans in whole or in part from time to time to the
extent such payment is made from cash that has been dividended to
the Borrower by Marvel IV in compliance with the provisions of the
Marvel IV Credit Agreement or cash that has been contributed to
the Borrower by its parent, unless a Default or Event of Default
under the Marvel IV Credit Agreement has occurred and is continuing
at the time such payment is to be made. (1) Such consent
shall expressly provide that the Subordination Provisions shall
not prevent any such payment which is made in accordance with the
preceding sentence. The Lender shall not be required to make any
Loans to the Borrower under the Facility unless and until such
consent has been obtained.
</TABLE>
- ------------
(1) This provision will require a waiver under Section 8(k) of the Borrower
Parent Guaranty.
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Conditions Precedent The Lender shall not be required to make any Loan to the Borrower
to Each Loan: under the Facility unless each ofthe following conditions precent
has been satisfied:
(a) on the date such Loan is to be made the sum of the principal
amount of the Loan to be made plus the aggregate principal amount
(including any Additional Principal) of all other Loans then
outstanding (after taking into account any prepayments made on
such date) is not greater than the Adjusted Collateral Value
on such date;
(b) the sum of the principal amount of the Loan to be made plus
the aggregate principal amount (not including any Additional
Principal) of all other Loans then outstanding is not greater
than the Commitment; and
(c) no default or event of default under the Facility has occurred
and is continuing.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Adjusted Collateral The term "Adjusted Collateral Value" shall mean, as of any date, an
Value: amount equal to the excess of (I) the sum of (x) 50% of the Agreed
Value (as defined below) of all stock and any other collateral
(other than cash) pledged from time to time pursuant to the Marvel
IV Credit Agreement or any Permitted Refinancing, and (y) 100% of
any cash pledged in accordance with the Marvel IV Credit Agreement
or any Permitted Refinancing (in each case, after taking into
account any additional collateral pledged on such date under the
Marvel IV Credit Agreement or any Permitted Refinancing) over (II)
the aggregate principal amount of outstanding advances under the
Marvel IV Credit Agreement or any Permitted Refinancing on such date
(after taking into account any prepayments or additional borrowings
to be made on such date under the Marvel IV Credit Agreement or any
Permitted Refinancing). The term "Agreed Value" shall mean (i) the
Net Equity Value (as defined in the Marvel IV Credit Agreement as in
effect at the time of the closing of the Facility) for any stock
referred to in such definition of Net Equity Value, and (ii) for any
other collateral, the amount at which such collateral would be
valued under the Marvel IV Credit Agreement as in effect at the time
of the closing of the Facility.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Collateral: The Facility shall be unsecured until such time as all collateral
under the Marvel IV Credit Agreement or any Permitted Refinancing
(the "Marvel IV Collateral") is released and the Credit Agreement
Termination (as defined below) has occurred. At such time, the
Borrower shall be obligated to cause assets that would have
qualified under the Marvel IV Credit Agreement (as in effect at the
time of the closing of the Facility) as Marvel IV Collateral and
valued in accordance with the definition of Adjusted Collateral
Value to be pledged to the Lender (the "Facility Collateral") to
secure the Facility such that the aggregate prin cipal amount
(including any Additional Principal) of the outstanding Loans at
such time is less than or equal to the Adjusted Collateral Value of
the assets so pledged (the "Liens"). There after, the Borrower will
have the obligation to add qualified collateral or prepay Loans in
order to maintain this relationship and will have the right to
obtain the release of any collateral not required to maintain this
relationship.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Credit Agreement The term "Credit Agreement Termination" shall mean the first day on
Termination: which all of the following shall have occurred: (1) the principal of
all outstanding loans under the Marvel IV Credit Agreement and any
Permitted Refinancing shall have been paid in full in cash; (2) all
interest accrued to the date of such payment on all such loans (the
"Payment Date") shall have been paid in full in cash; (3) all
commitments to lend under the Marvel IV Credit Agreement and any
Permitted Refinancing shall have been terminated in full; and (4)
all fees, expenses and other amounts due and payable on or before
the Payment Date which constitute Payment Obligations (as defined
below) shall have been paid in cash; provided, however, that on such
date none of the lenders or any agent thereof under the Marvel IV
Credit Agreement or any Permitted Refinancing shall have made any
claims in respect of Payment Obligations against any Loan Party (as
defined below) under any provision of any of the Loan Documents (as
defined below) that has not been cash collateralized by an amount
sufficient in the reasonable judgment of the agent and the majority
lenders under the Loan Documents and any claiming lender (if such
lender is not one of the lenders constituting the majority lenders)
to secure such claim. The term "Payment Obligations" shall mean all
principal, interest, fees, charges, expenses, attorneys' fees and
expenses, indemnities and any other amounts payable on or before the
Payment Date by any obligor (a "Loan Party") under the Marvel IV
Credit Agreement (including any document executed and delivered
pursuant thereto) or under any documents executed and delivered to
effectuate a Permitted Refinancing (collectively, the "Loan
Documents").
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Mafco Holdings Mafco Holdings Inc. ("Mafco") will guaranty the Loans, (2) which
Guaranty: guaranty will be subordinated to a maximum of $430 million in
principal amount of debt under the Marvel IV Credit Agreement or any
Permitted Refinancing or, to the extent that the maximum commitment
under the Marvel IV Credit Agreement or any Permitted Refinancing is
less than $430 million, to other debt to unaffiliated third parties
(including any guaranties of affiliate debt to unaffiliated third
parties and any other guaranties), in each case to at least the same
extent as the Loans are subordinated to the Borrower's obligations
under its guaranty of the Marvel IV Credit Agreement (as in effect
at the time of the closing of the Facility). Any other debt of Mafco
(including any guar anties) will be subordinated to this guaranty to
at least the same extent that this guaranty is subordinated to
Mafco's obligations under its guaranty of the Marvel IV Credit
Agreement (as in effect at the time of the closing of the Facility).
Mafco agrees that it will, and will cause any subsidiary pledging
Facility Collateral to, (i) cause the Liens to be perfected
immediately upon the Credit Agreement Termination and to remain
perfected thereafter until the Facility is terminated by performing
all necessary acts and preparing, executing, delivering and filing,
as appropriate, all necessary documents and (ii) from the time of
the Credit Agreement Termination and thereafter not create or permit
to exist any lien on the Facility Collateral (other than the Liens
and, in the case of assets owned by Mafco only, liens to secure debt
permitted to be senior to the Facility as provided above).
</TABLE>
- ------------
(2) This provision will require a waiver under Section 8(i)of the Mafco
Guaranty.
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Marvel IV Guaranty: Marvel IV will guaranty the Loans, (3) which guaranty will be
subordinated to the borrowings under the Marvel IV Credit
Agreement to at least the same extent as the Loans are
subordinated to the Borrower's obligations under its guaranty of
the Marvel IV Credit Agreement; provided that, upon the Credit
Agreement Termination, this guaranty will become a senior
guaranty and thereafter Marvel IV may only incur debt permitted
under "Debt" below. At the time of the closing under the
Facility, Marvel IV will irrevocably direct the collateral agent
under the Marvel IV Credit Agreement and the related security
documents to deliver the Marvel IV Collateral to the Lender or
its designee upon the Credit Agreement Termination.
</TABLE>
- ------------
(3) This provision will require a waiver under Section 5.02(i) of the
Marvel IV Credit Agreement.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Negative Covenants
Debt: The Borrower shall not incur any debt (senior or subordinated)
other than (i) Loans, (ii) loans from the Lender or First
Nationwide (Parent) Holdings Inc. which are subordinated to the
Loans to at least the same extent that the Loans are subordinated
to the Borrower's obligations under its guaranty of the Marvel IV
Credit Agreement and (iii) guaranties of the Marvel IV Credit
Agreement and any Permitted Refinancing. The Borrower shall cause
Marvel IV not to incur any debt (senior or subordinated) other
than (x) debt to unaffiliated third parties under the Marvel IV
Credit Agreement or any Permitted Refinancing in an aggregate
principal amount not to exceed $430,000,000 at any one time
outstanding, (y) the Marvel IV guaranty of the Loans and (z)
after the Credit Agreement Termination has occurred and the
Marvel IV Guaranty has become a senior guaranty, other debt
(including any guaranties) that is subordinated to this guaranty
to at least the same extent as this guaranty was originally
subordinated to the Borrower's obligations under its guaranty of
the Marvel IV Credit Agreement.
Negative Pledge: The Borrower shall not create or permit any liens (4) on (i) the
Marvel IV Collateral (other than liens to support the debt under
the Marvel IV Credit Agreement or any Permitted Refinancing as
described above and other liens that are permitted by the Marvel
IV Credit Agreement and related guaranties as in effect at the
time of the closing of the Facility) and (ii) the stock of Revlon
Worldwide Corporation. It will be a default under the Facility if
any owner of the Marvel IV Collateral creates any liens not
permitted by clause (i).
</TABLE>
- ------------
(4) This provision will require a waiver under Section 8(m) of the Borrower
Parent Guaranty.
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Sale of Assets: Neither the Borrower nor any of its non-operating subsidiaries shall
sell or otherwise dispose of any assets other than (i) obsolete, worn
out or surplus assets and (ii) sales or other dispositions (x) for cash
and for no less than fair market value or (y) by any wholly-owned
non-operating subsidiary of the Borrower to any other wholly-owned
non-operating subsidiary of the Borrower to any other wholly-owned
non-operating subsidiary; provided that, after giving effect to such
sale or disposition, no default or event of default under the Facility
would occur or be continuing.
Restricted Payments: The Borrower shall not declare or pay any dividends, purchase or
otherwise acquire for value any of its capital stock or any warrants or
options to acquire such capital stock, return any capital to its
stockholders, make any distribution of assets or capital stock to its
stockholders or permit any of its non-operating subsidiaries to
purchase or otherwise acquire for value any capital stock of the
Borrower or any warrants or options to acquire such capital stock,
except that the Borrower may declare and pay (i) stock dividends and
(ii) cash dividends to its stockholders in an amount not to exceed the
amount of cash dividends received by the Borrower from Marvel IV;
provided that, in any such case, after giving effect to any such
dividend, no default or event of default under the Facility will occur
or be continuing. It will be a default under the Facility if Marvel IV
takes any action of the type referred to in the preceding sentence with
respect to its own stock, except to the extent the proceeds thereof are
paid to the Borrower.
Line of Business: The Borrower shall not engage in any business other than the ownership
of capital stock of Marvel IV.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Additional Covenants: Covenants relating to the Borrower and Marvel IV set forth under
Section 7 and Section 8(b), (c), (f), (h) and (j) through (q) of the
Borrower Parent Guaranty and 5.01(p) of the Marvel IV Credit Agreement
(each as in effect at the time of the closing of the Facility) will be
included in the Facility (subject to permitted exceptions to be agreed
at the time of definitive documentation for the Facility).
Change of Control: Ronald O. Perelman (or in the event of his incompetence or death, his
estate, heirs, executor, administrator, committee or other personal
representative) shall cease to beneficially own at least 80% of the
Voting Stock of the Borrower.
Cross-Default: Any event of default under the Marvel IV Credit Agreement.
Other Defaults: (a) Payment default;
(b) Failure to comply with covenants;
(c) Events of bankruptcy of the Borrower;
(d) A judgment of $10 million against the Borrower, any
non-operating subsidiary or Marvel (not covered by
insurance); and
(e) At any time, the collateral arrangements set forth
above under "Collateral" shall for any reason cease to be valid or at
the time of the Credit Agreement Termination and at any time thereafter
until the Facility is terminated and the Facility Collateral released,
the Liens shall fail to be and remain perfected;
provided that the foregoing defaults will have appropriate grace periods
in certain cases.
</TABLE>
13
EXECUTION COPY
SECOND AMENDMENT
Dated as of January 24, 1996
This SECOND AMENDMENT among Marvel IV Holdings Inc., a Delaware
corporation (the "Borrower"), Mafco Holdings Inc., a Delaware corporation
("Mafco"), the lenders parties to the Credit Agreement referred to below (the
"Lenders") and Citibank, N.A., as agent (the "Agent") for the Lenders
thereunder.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Agent have entered
into a Credit Agreement dated as of December 15, 1995, as amended by the First
Amendment dated as of January 9, 1996 (said agreement, as so amended, being the
"Credit Agreement"; the terms defined therein being used herein as therein
defined unless otherwise defined herein).
(2) FN Holdings intends to issue up to $140,000,000
aggregate principal amount of Senior Subordinated Notes.
(3) The Borrower has requested that the Lenders agree to
amend the Credit Agreement and the Mafco Guaranty to permit the issuance of
such Debt by FN Holdings.
(4) The Lenders are, on the terms and conditions stated
below, willing to grant the request of the Borrower, and the Borrower and the
Lenders have agreed to amend the Credit Agreement and the Mafco Guaranty as
hereinafter set forth.
SECTION 1. Amendment to Credit Agreement. The Credit Agreement
is, effective as of the date on which all of the conditions precedent set forth
in Section 3 hereof have been satisfied or waived, hereby amended as follows:
(a) the definition of "New FN Holdings Debt" in Section 1.01
shall be amended by deleting the reference to "$125,000,000" therein and
replacing such reference with "$140,000,000".
(b) Section 6.01(n) shall be amended by adding to the end
thereof the following:
"; provided further that the Certificate of Incorporation may be amended to
permit FN Holdings to issue up to $140,000,000 aggregate principal amount
of New FN Holdings Debt".
SECTION 2. Amendment to the Mafco Guaranty. The Mafco Guaranty
is, effective as of the date on which all of the conditions precedent set forth
in Section 3 hereof have been satisfied or waived, hereby amended by replacing
Exhibit C thereto in its entirety with Annex A hereto.
<PAGE>
SECTION 3. Conditions of Effectiveness. This Second Amendment
shall become effective on the first date (the "Second Amendment Effective Date")
upon which the Agent shall have received evidence satisfactory to it that the
following conditions precedent have been satisfied:
(a) The Borrower shall have paid all accrued fees of the
Agent and the Lenders and all accrued expenses of the Agent (including the
reasonable fees and expenses of counsel to the Agent).
(b) The Agent shall have received on or before the Second
Amendment Effective Date the following, each dated on or before the Second
Amendment Effective Date, in form and substance satisfactory to the Agent
(unless otherwise specified) and in sufficient copies for each Lender:
(i) counterparts to this Second Amendment duly executed
by the Borrower, Mafco, the Lenders and the Agent;
(ii) counterparts to the Consent attached hereto duly
executed by each Loan Party other than the Borrower and Mafco; and
(iii) a certificate signed by a duly authorized officer of
Mafco stating that:
(A) After giving effect to this Second Amendment, the
representations and warranties contained in each of the Loan
Documents are correct on and as of the Second Amendment Effective Date,
except to the extent such representations and warranties specifically
relate to an earlier date; and
(B) After giving effect to this Second Amendment, no
event has occurred and is continuing which constitutes an Event of
Default or would constitute an Event of Default but for the requirement
that notice be given or time elapse or both.
SECTION 4. Reference to and Effect on the Loan Documents. (a)
Upon the effectiveness of Sections 1 and 2 hereof: (i) each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended hereby; and (ii) each reference in the Mafco
Guaranty to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Mafco Guaranty, and each reference in the other Loan Documents
to "the Mafco Guaranty", "thereunder", "thereof" or words of like import
referring to the Mafco Guaranty, shall mean and be a reference to the Mafco
Guaranty as amended hereby.
<PAGE>
(b) Except as specifically amended above, the Credit
Agreement and the Notes, and all other Loan Documents, are and shall continue to
be in full force and effect and are hereby in all respects ratified and
confirmed.
(c) The execution, delivery and effectiveness of this Second
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
SECTION 5. Costs, Expenses and Taxes. The Borrower agrees to
pay on demand all costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Second Amendment and the other instruments and documents to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Agent with respect thereto and with respect to
advising the Agent as to its rights and responsibilities hereunder and
thereunder. The Borrower further agrees to pay on demand all costs and
expenses, if any (including, without limitation, reasonable counsel fees an
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Second Amendment and the other
instruments and documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 5. In addition, the Borrower shall pay
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Second Amendment and the
other instruments and documents to be delivered hereunder, and agrees to save
the Agent and each Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
SECTION 6. Execution in Counterparts. This Second Amendment
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
SECTION 7. Governing Law. This Second Amendment shall be
governed by, and construed in accordance with, the laws of the State of New
York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
MARVEL IV HOLDINGS INC.
By
--------------------------------
Name:
Title:
MAFCO HOLDINGS INC.
By
--------------------------------
Name:
Title:
CITIBANK, N.A., as Agent
By
--------------------------------
Name:
Title:
Lenders
BANK OF AMERICA ILLINOIS
By
--------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
--------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.
By
--------------------------------
Name:
Title:
<PAGE>
CHEMICAL BANK
By
--------------------------------
Name:
Title:
CITIBANK, N.A.
By
--------------------------------
Name:
Title:
CREDIT LYONNAIS,
CAYMAN ISLAND BRANCH
By
--------------------------------
Name:
Title:
CREDIT SUISSE
By
--------------------------------
Name:
Title:
By
--------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
By
----------------------------------
Name:
Title:
THE FUJI BANK, LIMITED
By
---------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES AGENCY
By
---------------------------------
Name:
Title:
NATIONSBANK, N.A. (CAROLINAS)
By
---------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By
---------------------------------
Name:
Title:
INTERNATIONALE NEDERLANDEN (U.S.)
CAPITAL CORPORATION
By
---------------------------------
Name:
Title:
PILGRIM PRIME RATE TRUST
By
---------------------------------
Name:
Title:
PRIME INCOME TRUST
By
---------------------------------
Name:
Title:
Consent to Amendment
CONSENT
Reference is made to (a) the Credit Agreement dated as of
December 15, 1995, as heretofore amended (said agreement, as so amended, being
the "Credit Agreement"; the terms defined therein being used herein as therein
defined unless otherwise defined herein) among Marvel IV Holdings Inc., a
Delaware corporation (the "Borrower"), the lenders parties to the Credit
Agreement (the "Lenders"), and Citibank, N.A., as agent (the "Agent") for the
Lenders, and (b) the Second Amendment dated as of January 24, 1996 (the "Second
Amendment") among the Borrower, Mafco Holdings Inc., a Delaware corporation
("Mafco"), the Lenders and the Agent.
Each of the undersigned, as a Loan Party under the Credit
Agreement, hereby consents to the Second Amendment and hereby confirms and
agrees that (i) each Collateral Document to which such Loan Party is a party and
the Collateral described in each such Collateral Document does, and shall
continue to, secure the payment of all of the Secured Obligations and Guaranteed
Obligations, as the case may be, described in such Collateral Document and (ii)
each Loan Document to which such Loan Party is a party is, and shall continue to
be, in full force and effect and is hereby ratified and confirmed in all
respects except that, on and after the effective date of the Second Amendment,
(A) each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Credit Agreement, and each
reference in the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as amended thereby and (B) each
reference in the Mafco Guaranty to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Mafco Guaranty, and each reference in the
other Loan Documents to "the Mafco Guaranty", "thereunder", "thereof" or words
of like import referring to the Mafco Guaranty, shall mean and be a reference to
the Mafco Guaranty as amended thereby.
This Consent may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same consent.
ANDREWS GROUP INCORPORATED
By
---------------------------------
Name:
Title:
CONSOLIDATED CIGAR II
HOLDINGS INC.
By
---------------------
Name:
Title:
COLEMAN (PARENT) HOLDINGS INC.
By
----------------------
Name:
Title:
FLAVORS (PARENT) HOLDINGS INC.
By
-----------------------
Name:
Title:
FOUR STAR HOLDINGS CORP.
By
------------------------
Name:
Title:
MACANDREWS & FORBES HOLDINGS INC.
By
------------------------
Name:
Title:
MARVEL V HOLDINGS INC.
By
---------------------------------
Name:
Title:
NEW COLEMAN HOLDINGS, INC.
By
---------------------------------
Name:
Title:
NWCG (PARENT) HOLDINGS CORPORATION
By
---------------------------------
Name:
Title:
ANNEX A
<PAGE>
EXHIBIT C
TO
SECOND AMENDED AND RESTATED
MAFCO GUARANTY
<TABLE>
<CAPTION>
Terms and Conditions of
New FN Holdings Debt
- -------------------------
<S> <C> <C>
1. Principal Aggregate principal amount not to exceed $140,000,000.
2. Interest Not to exceed 11.5% per annum; provided, however, that if the New
FN Holdings Debt is issued in a Rule 144A placement and FN Holdings
is required to offer to exchange that debt for registered debt
having the same terms, the interest rate on the New FN Holdings
Debt may be increased by up to 50 basis points if either the
registration statement for such exchange offer is not filed by a
prescribed time or the exchange offer is not consummated by a
prescribed time.
3. Maturity Date No earlier than one year after the Termination Date.
4. Sinking Fund None.
5. Security None.
6. Optional Call period to begin no later than five years after issuance.
Redemption
7. Ranking Subordinate in right of payment to the FN Holdings Debt and other
existing and future Senior Indebtedness (as defined) of FN
Holdings.
8. Covenant and No more onerous, taken as a whole, than under the provisions of the
Default FN Holdings Debt Documents, except:
Provisions
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
i. Restricted Payments are measured by (a) 75% of the aggregate
Consolidated Net Income cumulative from January 1, 1996, plus (b)
net proceeds from sales of capital stock of FN Holdings, cash
capital contributions to FN Holdings and conversions of debt into
capital stock of FN Holdings, in each case from and after the date
of the issuance of the New FN Holdings Debt, plus (c) $44,000,000,
less an amount equal to 75% of any charge to earnings (net of
taxes) taken by the Bank in the fourth quarter of 1995 on account
of any mandatory special assessment or other similar charge imposed
in connection with the recapitalization of the Savings Association
Insurance Fund because the Bank's deposits are insured by the FDIC.
ii. Consolidated Common Shareholders Equity is measured without
reference to the amount of the capital contribution made by FN
Holdings to the Bank resulting from the net proceeds to FN Holdings
from the issuance of the Notes.
iii. Upon the happening of a Change of Control Put Event (defined,
as in the FN Holdings Debt Documents, to be limited to events
within the control, directly or indirectly, of Ronald O. Perelman),
FN Holdings may be required to repurchase the New FN Holdings Debt
at a time when such a purchase is not permitted under the FN
Holdings Debt Documents.
</TABLE>
Employment Agreement
EMPLOYMENT AGREEMENT, dated as of December 15, 1994, between
New World Communications Group Incorporated, a Delaware corporation (the
"Company"), and Arthur H. Bilger (the "Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
Employment, Duties and Acceptance.
1.1 Employment, Duties. The Company hereby employs the
Executive for the Term (as defined in Section 2.1), to render exclusive and
full-time services to the Company as President and Chief Operating Officer or in
such other executive position as may be mutually agreed upon by the Company and
the Executive, and to perform such duties consistent with such position as may
be assigned to the Executive by the Board of Directors of the Company (the
"Board") or by the Chief Executive Officer (the "CEO") of the Company.
Executive's duties will include supervision of day-to-day operations of the
Company and its wholly-owned subsidiaries. Executive will report to the CEO.
1.2 Acceptance. The Executive hereby accepts such employment
and agrees to render the services described above. During the Term, the
Executive agrees to serve the Company faithfully and to the best of the
Executive's ability, to devote the Executive's entire business time, energy and
skill to such employment (subject only to the Executive's services as Executive
Vice President and Chief Operating Officer of Andrews Group Incorporated
("Andrews")), and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer of any
subsidiary or affiliate of the Company, without any compensation therefor other
than that specified in this Agreement, if elected to any such position by the
shareholders or by the Board of Directors of the Company or of any subsidiary or
affiliate, as the case may be. The Company agrees to include the Executive in
its slate of nominees to the Board of Directors at each annual or special
meeting held during the Term for the purpose of electing directors.
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<PAGE>
1.3 Location. The duties to be performed by the Executive
hereunder shall be performed primarily at the office of the Company in Los
Angeles, California, subject to reasonable travel requirements on behalf of the
Company.
2. Term of Employment; Certain Post-Term Benefits.
2.1 The Term. The term of the Executive's employment under
this Agreement (the "Term") shall commence on December 15, 1994 and shall end on
December 14, 1997 or such other date on which the Term shall terminate or be
extended pursuant to Section 2.2.
2.2 Termination and Extension.
2.2.1 Termination Without Cause. At any time the Company may, by
written notice to the Executive, terminate the Term for reasons other than those
specified in Sections 4.1, 4.2 and 4.3 hereof ("Termination Without Cause"). In
such event, such termination will be treated in the same manner as a termination
by the Executive under Section 4.4 hereof and the Executive and the Company,
following the delivery of such notice of termination under this Section 2.2.1,
shall have the same rights and obligations provided for under such Section 4.4.
2.2.2 Extension of the Term. Unless either the Executive or the
Company gives the other written notice of non-extension of the Term prior to
December 15, 1996, commencing on that date the Term will automatically extend on
a daily basis for each day after such date that neither the Executive nor the
Company gives the other written notice of the termination of any further
extension of the Term. The effect of this provision is to extend the Term daily
so that, if extended, it may be terminated by delivery of a twelve-month notice
of termination or pursuant to another provision of this Agreement.
2.3 Special Curtailment. The Term also shall end earlier than
the original December 14, 1997 termination date provided in Section 2.1 or any
extended termination date provided in Section 2.2.2, in either case if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a wrongful termination of the Term or this Agreement by the Company
pursuant to Section 4.4.
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<PAGE>
3. Compensation; Benefits.
3.1 Salary. The Company agrees to pay the Executive during the
Term a base salary, payable semi-monthly in arrears, at the annual rate of not
less than $1,000,000, less such deductions or amounts to be withheld as required
by applicable law and regulations (the "Base Salary"). In the event that the
Company, in its sole discretion beyond the requirements of this Agreement, from
time to time determines to increase the Base Salary, such increased amount
shall, from and after the effective date of the increase, constitute "Base
Salary" for purposes of this Agreement.
3.2 Bonus. In addition to the amounts to be paid to the
Executive pursuant to Section 3.1, the Executive shall receive any bonus or
bonuses which the Board or the CEO in its or his discretion may award to the
Executive for services performed during the Term.
3.3 Business Expenses. The Company shall provide the Executive
with an office, secretary and other support services commensurate with his
position and responsibilities. The Company shall pay or reimburse the Executive
for all reasonable expenses actually incurred or paid by the Executive during
the Term in the performance of the Executive's services under this Agreement
upon presentation of expense statements or vouchers or such other supporting
information as the Company customarily may require of its officers; provided,
however, that the maximum amount available for such expenses during any period
may be fixed in advance by the Chairman of the Board of Directors, the Board of
Directors or the CEO. The Company shall also pay for the travel costs of
Executive's spouse from time to time when accompanying Executive on business
trips. All travel and overnight accommodation expenses paid or reimbursed under
this Section 3.3 may be first class as elected and actually incurred by
Executive.
3.4 Vacation. During the Term, the Executive shall be entitled
to a vacation period or periods of four weeks taken in accordance with the
vacation policy of the Company during each year of the Term. Vacation time not
used by the end of a year shall be forfeited.
3.5 Fringe Benefits. During the Term and except as specified
in Paragraph 8 of Appendix I hereto, the Executive shall be entitled to all
benefits for which the Executive shall be eligible under any qualified pension
plan, 401(k) plan, group insurance or other so-called "fringe" benefit plan
which the Company provides to its employees generally, together with executive
medical bene-
3
<PAGE>
fits for the Executive, the Executive's spouse and the Executive's children as
from time to time in effect for officers of the Company generally; provided,
however, that to the extent that Executive is being provided any substantially
similar benefit or a more beneficial benefit of the same nature, in either case
by or through Andrews, the Executive shall not be entitled to also receive such
benefit under this section 3.5 or Appendix I hereto.
3.6 Stock Options. The Executive has concurrently with the
commencement of his employment received an award of non-qualified options to
acquire 225,000 shares of the Company's Class A Common Stock under the Company's
1994 Stock Option Plan at the exercise price (subject to adjustment in
accordance with the terms of such options) of $11.875 per share pursuant to a
Stock Option Agreement in the form of Exhibit A.
3.7 Additional Benefits. During the Term, the Executive shall
be entitled to such other benefits as are specified in Appendix I to this
Agreement.
3.8 Warrants. As an inducement to his acceptance of the
Executive's employment with the Company, the Executive concurrently with the
commencement of his employment received on December 15, 1994, subject only to
approval (as hereinafter described) by holders of a majority of the outstanding
Class A Common Stock voting at the Company's 1995 Annual Meeting of Stockholders
or by written consent, an award of Warrants to acquire 1,000,000 shares of the
Company's Class A Common Stock at an initial exercise price of $11.875 per share
(with the number of shares and exercise price being subject to adjustment in
accordance with the terms of such warrants) pursuant to a Warrant Agreement in
the form of Exhibit B (the "Warrants"). The warrants are issued and granted
pursuant to the Company's 1994 Executive Stock Warrant Plan (the "Plan") which
was adopted subject to approval of the Plan by the Company's stockholders. The
Company covenants and agrees that (i) in its proxy statement for its 1995 Annual
Meeting of Stockholders (which will be held not later than July 31, 1995) the
Company will solicit approval of the Plan and the award of the Warrants to the
Executive thereunder in satisfaction of the requirements of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), and will recommend
approval of such Plan and award by its stockholders and (ii) in the event that a
written consent approving the Plan and such award is delivered pursuant to
Section 228 of the Delaware General Corporation Law, it will promptly comply
with the requirement of such Section. The award of the Warrants shall be
governed by the Plan and the Warrant Agreement and
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<PAGE>
shall not be affected by (and this Section 3.8 shall survive) the termination
for any reason of the Executive's employment with the Company or Andrews or of
this Agreement or the Employment Agreement, dated as of December 15, 1994,
between the Executive and Andrews.
4. Termination.
4.1 Death. If the Executive shall die during the Term, the
Term shall terminate and no further amounts or benefits shall be payable
hereunder, except that the Executive's beneficiary designated by the Executive
in writing or, in the absence of such designation, the Executive's estate shall
be entitled to receive continued payments in an amount equal to 60% of the Base
Salary in the manner specified in Sections 3.1 and 3.2, until the end of the
Term (as in effect under Section 2 hereof (with Executive's death being treated
as a notice of non-renewal under Section 2.2.2) immediately prior to the
Executive's death).
4.2 Disability. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equaled an aggregate of six months, by
written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall be
payable hereunder, except that the Executive shall be entitled to receive (i)
continued payments in an amount equal to 60% of the Base Salary in the manner
specified in Section 3.1 until the end of the Term (as in effect under Section 2
hereof (with the Company's notice of termination being treated also as a notice
of non-renewal under Section 2.2.2) immediately prior to such termination), and
(ii) such amounts and benefits, if any, specified in Appendix I other than
Paragraphs 2, 4 and 7. If the Executive shall die before receiving all payments
to be made by the Company in accordance with the foregoing, such payments shall
be made to a beneficiary designated by the Executive on a form prescribed for
such purpose by the Company, or in the absence of such designation, to the
Executive's estate.
4.3 Cause. The Company, acting through its Board of Directors,
may terminate the Executive's employment hereunder for Cause. For purposes of
this
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<PAGE>
Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:
(i) conviction of the commission of a felony; or
(ii) willful and continuing failure substantially to perform his
duties hereunder (other than such failure resulting from the Executive's
incapacity due to physical or mental illness) after demand for substantial
performance is delivered by the Company in writing that specifically identifies
the manner in which the Company believes the Executive has not substantially
performed his duties; or
(iii) willful misconduct that is demonstrably and materially
injurious to the Company or its subsidiaries, whether monetarily or otherwise;
or
(iv) willful breach of the provisions of Section 5 hereof.
Upon such termination, this Agreement shall terminate and the Executive shall be
entitled to receive no further amounts or benefits hereunder, except any as
shall have been earned or otherwise vested to the date of such termination.
4.4 Company Breach. In the event of the breach of any material
provision of this Agreement by the Company, the Executive shall be entitled to
terminate the Term upon 45 days' prior written notice to the Company. Upon such
termination, or in the event the Company terminates the Term or this Agreement
Without Cause, the Company shall by written notice to the Executive provide the
Executive with an option, exercisable by the Executive within no more than
fifteen (15) days after delivery of the Company's option notice to Executive, to
receive payment from the Company in satisfaction of the balance of the Company's
obligation to the Executive in one of the following methods: (i) promptly, in
one lump sum payment, an amount equal to the sum of (a) all amounts of Base
Salary payable to the date of termination, and (b) an amount equal to one year's
Base Salary at the rate in effect on the termination date; or (ii) payment of
the amounts described in (i)(a) promptly and thereafter continued payment as and
when otherwise due of the Base Salary for the balance of the Term ("Damage
Period") as would otherwise then be in effect but for termination (with the
notice of termination being deemed a notice of non-renewal under Section 2.2.2)
and the
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<PAGE>
continuation during the Damage Period of payment or provision of such amounts
and benefits, if any, specified in Section 3.5 and in Appendix I (other than
Paragraphs 2, 4 and 7.) Should Executive fail during the fifteen day option
period to select by written notice to the Company either option (i) or (ii), the
Company may select one of such options for him. The Executive shall have no duty
to mitigate damages through the acceptance of other employment or otherwise,
provided that to the extent that the Executive shall accept employment in an
executive capacity and shall receive the salary and benefit of plans and
benefits similar to or commensurate with those provided for hereunder during the
Damage Period from other employer(s) (without regard to when benefits are paid),
salary and the benefits provided by the Company pursuant to this Section 4.4
shall be correspondingly reduced.
4.5 Change of Control. Within the first ninety (90) days
following the Executive's being given written notice of any Change of Control,
(as hereinafter defined), the Executive shall be entitled to terminate the Term.
Such termination of the Term shall be made by written notice given by the
Executive to the Company not less than 30 days prior to the termination date
(which 30-day notice period may be waived, in whole or in part, by the Company
in its discretion). Upon such termination, the Company shall be obligated to pay
the Executive on the date of termination all amounts of Base Salary and all
accrued benefits to the date of termination but shall have no further
obligations to the Executive under this Agreement except that for the lesser
period of one year following the date of termination or the end of the Term then
in effect the Company shall continue to provide Executive the benefits specified
in Section 3.5 and in Appendix I (other than paragraphs 2, 3, 4, 5 and 7
thereof), unless Executive (without any duty to do so) accepts other employment
during such period and receives in such capacity the benefit of plans and
benefits (without regard to when benefits are paid), similar to or commensurate
with those provided for by this sentence, in which event such benefits provided
by the Company pursuant to this sentence shall be correspondingly reduced. For
purposes of this Agreement, a "Change of Control" of the Company shall be deemed
to occur if during the Term, Ronald O. Perelman, individually, or his estate,
heirs or personal representatives or any trust created for the benefit of his
children, or any corporation or other entity which such persons control directly
or indirectly, cease to maintain beneficial ownership (as defined in Rule 13d-3
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
individually or in the aggregate, of securities of the Company representing a
combined voting power of the Company's then outstanding
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<PAGE>
securities greater than the voting power of securities of the Company
beneficially owned by any other "person" or "group" (as such terms are defined
in Rule 13d-5 of the Exchange Act); provided; however, that no Change of Control
shall be deemed to occur unless such other person or group shall beneficially
own securities of the Company representing 25% or more of the combined voting
power of the Company's voting securities. The Company shall be obligated to give
Executive written notice promptly upon the occurrence of a Change of Control.
4.6 Litigation Expenses. If the Company and the Executive
become involved in any action, suit or proceeding relating to the alleged breach
of this Agreement by the Company or the Executive, and if a judgment as to such
matter in such action, suit or proceeding is rendered in favor of the Executive,
the Company shall reimburse the Executive for all expenses (including reasonable
attorneys' fees) incurred by the Executive in connection with such action, suit
or proceeding. Such costs shall be paid to the Executive promptly upon
presentation of expense statements or other supporting information evidencing
the incurrence of such expenses.
5. Protection of Confidential Information;
Non-Competition; Non-Solicitation
The Executive acknowledges that the Executive's work for the
Company (i) will necessarily bring the Executive into close contact with many
confidential, proprietary and non-public matters relating to the Company, its
subsidiaries and affiliates, including (without limitation) financial and
contractual matters and other proposals and plans, (ii) will attach a measure of
the Company's valuable goodwill to the Executive, and (iii) will expose the
Executive to business opportunities which rightfully belong to the Company. The
Executive further acknowledges that the Company would suffer damage to its
business and goodwill should Executive fail to maintain the confidentiality of
information, compete with the Company or solicit Company employees in violation
of the Agreement.
5.1 The Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company (where "Company" includes for purposes of
this Section 5.1 any subsidiary or parent of the Company), including, without
limitation, "know how", trade secrets, customer lists, pricing policies,
operational methods, technical processes, formulae, inventions and research
projects, and other business affairs of the Company, learned by the Executive
8
<PAGE>
heretofore or hereafter, and not to disclose them to anyone outside of the
Company, either during or after the Executive's employment with the Company,
except in the course of performing the Executive's duties hereunder or with the
Company's express written consent; and
5.1.2 To deliver promptly to the Company on termination of the
Executive's employment by the Company, or at any time the Company may so
request, all memoranda, files, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the
Company's business and all property associated therewith, which the Executive
may then possess or have under the Executive's control.
5.2 The Executive further agrees:
5.2.1 For so long as the Executive is employed by the Company,
the Executive shall not, directly or indirectly, enter the employ of, or without
the consent of the Company, render any services to, any person, firm or
corporation engaged in any business competitive with the business of the Company
or any of its subsidiaries or affiliates; the Executive shall not engage in such
business on the Executive's own account, and the Executive shall not become
interested in any such business, directly or indirectly, as an individual,
partner, shareholder, director, officer, principal, agent, employee, trustee,
consultant or in any other relationship or capacity; provided that nothing
contained in this Section 5.2.1 shall be deemed to prohibit the Executive from
retaining or acquiring, solely as a passive investment, up to five (5%) percent
of the outstanding shares of capital stock or partnership interest of any
corporation or partnership. In the event of termination for Cause, for a period
of one year following the date of termination of the Executive's employment with
the Company, the Executive shall not serve in an executive capacity with (or as
a director of) any business involved in the (i) development, production or
distribution (through licensing or otherwise) domestically or internationally of
television programming, (ii) broadcasting of television programming or ownership
or control of FCC-granted licenses to broadcast television signals anywhere in
the U.S. or (iii) solicitation, sale or placement of media advertising or
advertising availabilities in connection with programming. Notwithstanding the
foregoing, the provisions of this Section 5.2.1 shall have no force and effect
following a Termination Without Cause or a termination by the Executive of this
Agreement pursuant to Sections 4.4 or 4.5.
9
<PAGE>
5.2.2 During the Term and for a period of one year thereafter
(or during the Term, the Damage Period and for a period of one year thereafter
if Option (ii) of Section 4.4 is elected), the Executive shall not, directly or
indirectly, (i) induce or encourage any management employee of the Company or
any subsidiary or affiliate of the Company on the termination date to leave
employment with the Company or such subsidiary or affiliate, or (ii) employ,
hire, or establish a business with, or cause or encourage any third person to
employ, hire, or establish a business with, any person who is (or was within the
period of three months preceding such action by the Executive) employed by the
Company or any subsidiary or affiliate of the Company in a management capacity.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company and all of such rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2,
or any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall be
given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2,
or any part thereof, are held to be unenforceable because of the duration of
such provision, or the breadth thereof, the parties agree that the court making
such determination shall have the power to reduce the duration or breadth of
such provision, as the case may be, and, in its reduced form, said provision
shall then be enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction
to enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of
any state within the geographical scope of such covenants. In the event that the
courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in
10
<PAGE>
any way affect the Company's right to the relief provided above in the courts of
any other states within the geographical scope of such covenants as to breaches
of such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
6. Intellectual Property.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's right
to receive payments hereunder). The Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the
Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
7. Indemnification.
The Company will indemnify the Executive, to the maximum extent
permitted by applicable law, against all costs, liabilities, charges and
expenses incurred or sustained by the Executive in connection with any action,
suit or proceeding (whether civil or criminal) to which the Executive may be
made a party by reason of the Executive being an officer, director or employee
of the Company or of any subsidiary or affiliate of the Company or having
provided services to the Company or any subsidiary or affiliate of the Company,
whether before or after the execution of this Agreement. To the extent permitted
by law, expenses so incurred by the Executive in defending a civil or criminal
action, suit or proceeding shall at his request be paid by the Company in
advance of the final disposition of such action, suit or proceeding upon receipt
of a written undertaking by or on behalf of the Executive to repay such amount
if it shall be ultimately determined that he is not entitled to be indemnified
by the Company under applicable law. This Section 7 shall survive any
termination or expiration of this Agreement or the Term.
11
<PAGE>
8. Notices.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, sent by overnight courier or mailed
first class, postage prepaid, by registered or certified mail (notices mailed
shall be deemed to have been given on the date mailed), as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
If to the Company, to:
New World Communications Group
Incorporated
35 East 62nd Street
New York, New York 10021
Attention: William C. Bevins, CEO
If to the Executive, to:
Arthur H. Bilger
1060 Laurel Way
Beverly Hills, California 90210
9. General.
9.1 This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely in New York.
9.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
9.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
9.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder to any party in connection with
any sale, transfer or other disposition of all or the substantial portion of its
business or assets to such
12
<PAGE>
party; in any event the obligations of the Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
9.5 This Agreement may be amended, modified, superseded, canceled,
renewed or extended and the terms or covenants hereof may be waived, only by a
written instrument executed by both of the parties hereto, or in the case of a
waiver, by the party waiving compliance. The failure of either party at any time
or times to require performance of any provision hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
10. Subsidiaries and Affiliates.
10.1 As used herein, the term "subsidiary" shall mean any corporation
or other business entity controlled directly or indirectly by the corporation or
other business entity in question, and the term "affiliate" shall mean and
include any corporation or other business entity directly or indirectly
controlling, controlled by or under common control with the corporation or other
business entity in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NEW WORLD COMMUNICATIONS GROUP
INCORPORATED
By: /s/William C. Bevins
---------------------
William C. Bevins
/s/Arthur H. Bilger
--------------------
Arthur H. Bilger
13
<PAGE>
APPENDIX I
Additional Benefits:
1. Medical Examination. The Executive shall be reimbursed by the
Company for the reasonable cost of one annual medical examination upon
presentation of an expense statement.
2. Automobile. The Company shall afford the Executive the right to
use an automobile on a continuing basis and shall provide garaging near the
Executive's business office in Los Angeles all on the following basis. The
Company shall pay, upon presentation of an expense statement, all reasonable
expenses associated with the operation of such automobile and the rental of such
garage space in the same manner as is, from time to time, in effect with respect
to executive officers of the Company generally, including, without limitation,
all reasonable maintenance and insurance expenses. The automobile furnished by
the Company shall be a late model Mercedes 500S or other vehicle of similar or
lesser cost to be reasonably selected by the Executive. Upon the expiration of
the Term, the Executive promptly shall return the automobile to the Company.
3. Tax Advisor. The Executive shall be reimbursed by the Company,
upon presentation of an expense statement, for the reasonable fees and
disbursements of a personal tax advisor to be selected by the Executive.
4. Country Club Membership. The Company shall reimburse the
Executive, upon presentation of an expense statement, for all reasonable
initiation fees and periodic dues for membership of one country or city club in
the Los Angeles metropolitan area of the Executive's choice.
5. Estate Planning. The Executive shall be reimbursed by the
Company, upon presentation of an expense statement, for the reasonable fees and
disbursements of an estate planning advisor to be selected by the Executive.
6. Disability. If the Company elects to terminate the Term
pursuant to Section 4.2 of the Agreement, in addition to the amounts payable
under such Section, for the shorter of the period the Executive remains disabled
or until the Executive has attained the age of 65, the Company shall continue to
provide benefits for the Executive, his spouse and children under the corporate
group medical (including the executive medical plan) insurance plan, to the
extent permitted by such plans and to the extent such benefits continue to be
provided to the Company's employees
14
<PAGE>
or officers, as applicable, generally.
7. Aircraft. The Company shall make available to Executive (at no
cost to Executive) a late model Hawker 1000 or other jet aircraft of comparable
or superior capability for the Executive's business travel by air during the
Term in the performance of his services under this Agreement.
8. Split-dollar Insurance. For the lesser of (A) five (5) years,
or (B)the later of (i) the expiration of the Term other than pursuant to Section
4.4 or pursuant to a Termination Without Cause and (ii) one (1) year following
the date the Term terminates pursuant to Section 4.4 or pursuant to a
Termination Without Cause ("Program Termination Date") and in lieu of any other
life insurance which would otherwise have been provided to Executive pursuant to
Section 3.5 or any other plan, arrangement or program of the Company or its
affiliates, the Company shall pay the premiums on and provide to Executive (or
his designees) the life insurance policy and program described on Schedule II to
this Agreement. On the Program Termination Date, Executive will repay (or cause
to be repaid) to the Company the amount of premiums (without interest)
theretofore paid by the Company with respect to such policy and the Company will
release to the Executive (or his designee) the Company's collateral assignment
on such policy.
15
ANDREWS GROUP INCORPORATED
As of December 15, 1994
Arthur Bilger
1060 Laurel Way
Beverly Hills, California 90210
Dear Mr. Bilger:
Reference is made to the Employment Agreement between you and New
World Communications Group Incorporated ("New World") dated as of December 15,
1994 (the "New World Agreement") pursuant to which you will be employed by New
World as its President and Chief Operating Officer. Andrews Group Incorporated
("Andrews") hereby agrees that you will be appointed its Executive Vice
President and Chief Operating Officer. In such capacity you will perform on a
part-time basis (subject only to your performance under the New World
agreement) such duties consistent with such positions as may be assigned to
you by the Board of Directors or Chief Executive Officer of Andrews. You
hereby accept such appointment and agree to serve in such capacity on the
terms and conditions set forth herein or incorporated herein by reference to
the New World Agreement. (To the extent that provisions of the New World
Agreement are incorporated herein by reference, Andrews shall be deemed to be
substituted for New World).
1. This agreement will extend or terminate automatically upon,
and on the same basis as, any extension or termination of the New World
Agreement.
2. Section 1.3, 3.3 and 3.4 of the New World Agreement are hereby
incorporated herein as if set forth in full herein, except that any vacation
hereunder shall be taken coincident with vacation under the New World
Agreement.
3. You shall receive no salary from Andrews but you shall be eligible
to receive a bonus at the discretion of the Chief Executive Officer and the
Board.
4. During the term, you, your spouse and children shall be entitled
to executive medical benefits as provided to other senior executives of
Andrews and you shall receive the additional benefits set forth on Appendix I
attached to this letter.
5. As an inducement to your acceptance of employment with Andrews and
New World, you concurrently with the commencement of your employment received
on December 15, 1994, subject only to approval (as hereinafter described) by
holders of a majority of the outstanding New World Class A Common Stock voting
at New World's 1995 Annual Meeting of Stockholders or by written consent, an
award of warrants to acquire 1,000,000 shares of New World's Class A Common
Stock at an initial exercise price of $11.875 per share (with the number of
shares and exercise price being subject to adjustment in accordance with the
terms of such warrants) pursuant to a Warrant Agreement in the form of Exhibit
A (the "Warrants"). The warrants are issued and granted pursuant
<PAGE>
MR. BILGER
AS OF DECEMBER 15, 1994
PAGE 2
to New World's 1994 Executive Stock Warrant Plan (the "Plan") which was
adopted subject to approval of the Plan by New World stockholders. Andrews
covenants and agrees that Andrews will, and it will cause any of its
subsidiaries or affiliates that now or hereafter own any New World voting
securities to, vote all of the voting securities beneficially owned by it and
them in favor of approval of the Plan and the award of the Warrants to you
thereunder (i) at New World's 1995 Annual Meeting of Stockholders if
stockholder approval of such grant is sought at such meeting, (ii) by written
consent delivered pursuant to Section 228 of the Delaware General Corporation
Law within one business day following the dissemination of New World's proxy
statement for its 1995 Annual Meeting of Stockholders, if such approval is not
so sought and (iii) in any event prior to the sale or disposition by New World
or any of its subsidiaries or affiliates, including by grant of proxy or
otherwise, of any New World voting securities, or the issuance by New World of
New World voting securities, such that Andrews and its subsidiaries or
affiliates shall cease to have sole voting power with respect to New World
voting securities representing at least a majority of the combined voting
power of New World's then outstanding securities. The provisions of this
paragraph 5 shall survive the termination for any reason of your employment
with New World or Andrews or of this Agreement or the Agreement dated as of
December 15, 1994, between you and New World.
6. Sections 5, 6, 7, 8, 9 and 10 of the New World Agreement shall be
incorporated herein.
Very truly yours,
William C. Bevins
Acknowledged and Agreed this
day of , 1995
- --------------------------------
Arthur H. Bilger
exh\abilg
<PAGE>
APPENDIX I
1. Aircraft Use.
-------------
The Company shall make available a late model Hawker 1000 or
other jet aircraft of comparable or superior capability for
the Executive's business travel under this Agreement and
personal travel during the Term. The Company shall pay all
costs, including manning, insurance, fuel, maintenance and
hangerage associated with such aircraft.
2. Summer House.
-------------
The Company shall reimburse the Executive for the rental of
a furnished summer home in the Los Angeles metropolitan area
at a rental cost not to exceed $80,000 per annum.
3. Ski House.
----------
The Executive shall be entitled to the benefits specified in
Appendix II relating to a ski house in Colorado.
exh/abilg
<PAGE>
APPENDIX II
Revised 041395
ARTHUR H. BILGER
SKI HOME
TERM SHEET
Structure: Andrews Group, Incorporated (the
- --------- "Company") to purchase, remodel and
furnish a ski house in Colorado selected
by the Executive, at an aggregate cost
not exceeding $4,000,000.
Maintenance: The Company to maintain, insure and pay
- ----------- property taxes and mortgage (if any) on home.
Rental: Home to be available for use on a year-round
- ------ basis by the Executive on a priority basis
for a fair market rental based on use. Home
to be available for use by other Andrews
executives.
Purchase Option: Executive to have option to purchase home
- --------------- free and clear of all mortgages and other
liens, for the Purchase Price (as defined
below) commencing on the date of purchase by
the Company. The option will be evidenced
by a recorded option against the property
and shall survive (i) the termination
of the Term under the Andrews Employment
Agreement or the NWCG Employment Agreement,
in either case pursuant to Section 2.2.1
thereof for a period of six months, (ii) the
termination by the Executive of the Andrews
Employment Agreement or the NWCG Employment
Agreement, in either case pursuant to Section
4.4 thereof, for a period of six months,
(iii) the termination of the Term under the
Andrews Employment Agreement or NWCG
Employment Agreement, in either case pursuant
to Section 4.3 thereof, for a period of six
months and (iv) the termination by the
Executive of his employment following a Change
of Control for a period of one year. The
option shall survive any other termination of
employment (including because of expiration
of the Term) for a period of six months.
Purchase Price: The Purchase Price shall be (w) the aggregate
- -------------- cost of the house if the option is exercised
prior to December
14, 1995; (x) two-thirds of the aggregate cost
of the house if the option is exercised on or
after December 14, 1995 and prior to December
14, 1996; (y) one-third of the aggregate
cost of the house if the option is exercised
on or after December 14, 1996 and prior to
December 14, 1997; and (z) $10,000 if the
option is exercised on or after December 14,
1997, or earlier, if the option is exercised
following any of the events specified in
clauses (i), (ii) or (iv) above.
Appraisal Upon Exercise: Upon exercise of the purchase option, fair
- ----------------------- market value of home and furnishings to
be determined by reputable appraiser selected
by the Executive. Appraised value to be used
for federal and state income tax reporting.
exh/abilg
ANDREWS GROUP INCORPORATED
LIST OF SUBSIDIARIES
AS OF MARCH 28, 1996
COMPANY NAME STATE OF INCORPORATION
- ------------ ----------------------
Four Star Holdings Corp. Delaware (DE)
Marvel V Holdings Inc. DE
Marvel IV Holdings Inc. DE
Marvel III Holdings Inc. DE
Marvel (Parent) Holdings Inc. DE
Marvel Holdings Inc. DE
Marvel Entertainment Group, Inc. (79% owned) DE
NWCG (Parent) Holdings Corporation DE
NWCG Holdings Corporation DE
New World Communications Group Incorporated (42% owned) DE
Exhibit 21
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Paul E. Shapiro, Glenn P. Dickes, Laurence
Winoker and Joram C. Salig or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with the ANDREWS GROUP INCORPORATED (the "Corporation") Annual Report on Form
10-K for the year ended December 31, 1995 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this ___ day of March 1996.
/s/WILLIAM C. BEVINS
--------------------
WILLIAM C. BEVINS
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Paul E. Shapiro, Glenn P. Dickes, Laurence
Winoker and Joram C. Salig or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with the ANDREWS GROUP INCORPORATED (the "Corporation") Annual Report on Form
10-K for the year ended December 31, 1995 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this ____ day of March 1996.
/s/DONALD G. DRAPKIN
--------------------
DONALD G. DRAPKIN
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Paul E. Shapiro, Glenn P. Dickes, Laurence
Winoker and Joram C. Salig or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with the ANDREWS GROUP INCORPORATED (the "Corporation") Annual Report on Form
10-K for the year ended December 31, 1995 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this day of March 1996.
/s/HOWARD GITTIS
--------------------
HOWARD GITTIS
<PAGE>
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints each of Paul E. Shapiro, Glenn P. Dickes, Laurence
Winoker and Joram C. Salig or any of them, each acting alone, his true and
lawful attorney-in-fact and agent, with full power of substitution, for him
and in his name, place and stead, in any and all capacities, in connection
with the ANDREWS GROUP INCORPORATED (the "Corporation") Annual Report on Form
10-K for the year ended December 31, 1995 under the Securities Exchange Act of
1934, as amended, including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the Corporation or on
behalf of the undersigned as a director or officer of the Corporation, and any
amendments to the Form 10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, including this power of attorney, with the Securities and Exchange
Commission and any applicable securities exchange or securities
self-regulatory body, granting unto said attorneys-in-fact and agents, each
acting alone, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, each
acting alone, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has signed these presents
this ____ day of March 1996.
/s/BRUCE SLOVIN
--------------------
BRUCE SLOVIN
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