<PAGE> 1
THIS DOCUMENT IS A COPY OF THE FORM 10-Q
FILED ON NOVEMBER 15, 1995 PURSUANT TO A
TEMPORARY HARDSHIP EXEMPTION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
September 30, 1995 0-10737
Stuart Entertainment, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-0402207
- ------------------------ ----------------------
(State of incorporation) (I.R.S. Employer
Identification Number)
3211 Nebraska Avenue, Council Bluffs, IA 51501
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (712) 323-1488
------------------
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 [ ]
As of November 13, 1995 there were 6,694,715 shares of the Registrant's common
stock, $.01 par value, outstanding.
<PAGE> 2
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION:
Item 1:
Consolidated Statements of Operations for the
Three And Nine Months Ended September 30, 1995 and 1994.... 3
Consolidated Balance Sheets as of September 30, 1995 and
December 31, 1994......................................... 4- 5
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1995 and 1994........... 6- 7
Notes to Consolidated Financial Statements................. 8-13
Item 2:
Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 14-20
PART II. OTHER INFORMATION.................................. 21-22
Signatures................................................. 23
Exhibit Index.............................................. 24
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Amounts In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET SALES $27,031 $13,660 $83,916 $43,939
COST OF GOODS SOLD 17,825 9,856 57,142 31,485
------- ------ ------- -------
GROSS MARGIN 9,206 3,804 26,774 12,454
OTHER EXPENSES AND INCOME:
Selling, general and
administrative expenses 6,752 2,946 20,101 9,202
Equity in (earnings) losses
of joint ventures 29 282 (15) 644
Amortization of goodwill 211 15 630 46
Interest expense, net 1,050 224 3,365 659
United Kingdom charge (Note 6) 0 0 800 0
------- ------- ------- -------
Other expenses and income - net 8,042 3,467 24,881 10,551
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 1,164 337 1,893 1,903
INCOME TAX PROVISION 645 126 1,657 697
------- ------- ------- -------
NET EARNINGS $ 519 $ 211 $ 236 $ 1,206
======= ======= ======= =======
EARNINGS PER SHARE $ 0.08 $ 0.06 $ 0.04 $ 0.34
======= ======= ======= =======
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 6,717 3,491 6,682 3,491
======= ======= ======= =======
</TABLE>
Note: No dividends were paid or declared during the nine months
ended September 30, 1995 and September 30, 1994.
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE> 4
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(Amounts In Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1995 1994
- ------ -------- --------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,178 $ 2,116
Trade and notes receivables, less allowances
for doubtful accounts of $1,998 and $1,797,
respectively 19,392 15,762
Inventories (Note 3) 20,722 16,103
Refundable income taxes 0 225
Deferred income taxes 1,913 1,513
Prepaid expenses and other 760 388
-------- --------
Total Current Assets 43,965 36,107
PROPERTY, PLANT AND EQUIPMENT:
Land and buildings 4,892 4,710
Equipment 29,254 24,520
-------- --------
Total 34,146 29,230
Less accumulated depreciation 12,317 9,387
-------- --------
Property, Plant And Equipment - Net 21,829 19,843
OTHER ASSETS:
Goodwill, net of accumulated amortization
of $1,024 and $426, respectively 29,815 28,958
Deferred financing costs, net of accumulated
amortization of $280 and $16, respectively 1,617 1,613
Notes receivable, less allowance for doubtful
accounts of $423 and $423, respectively 1,387 1,366
Other assets 1,362 938
-------- --------
Total Other Assets 34,181 32,875
-------- --------
TOTAL ASSETS $ 99,975 $ 88,825
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE> 5
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(Amounts In Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- ------------------------------------ -------- --------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt (Note 5) $ 6,289 $ 6,482
Trade payables 12,767 10,456
Accrued liabilities and others 5,900 4,715
-------- --------
Total Current Liabilities 24,956 21,653
LONG-TERM DEBT (Note 5)
Related party 5,000 5,000
Other 35,054 29,416
-------- --------
Total Long-Term Debt 40,054 34,416
DEFERRED INCOME TAXES 2,835 2,270
DEFERRED INCOME 391 333
-------- --------
TOTAL LIABILITIES 68,236 58,672
STOCKHOLDERS' EQUITY:
Common stock 68 66
Additional paid-in capital 26,329 25,776
Retained earnings 4,975 4,739
Treasury stock (At cost) (189) (189)
Cumulative translation adjustment,
net of deferred taxes 556 (239)
-------- --------
Total Stockholders' Equity 31,739 30,153
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 99,975 $ 88,825
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE> 6
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994
(Amounts In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------
1995 1994
------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 236 $ 1,206
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Payment on termination of Consulting Agreement (1,150) 0
United Kingdom charge 800 0
Depreciation and amortization 3,155 1,460
Provision for doubtful accounts 432 325
Equity in (earnings) losses of joint ventures (15) 644
Deferred income taxes (550) (422)
Other noncash expenses - net 1,232 321
Change in operating working capital items, net (4,095) (1,571)
------- --------
Net cash provided by (used in) operating activities 45 1,963
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,815) (449)
Payments received on notes receivable 711 739
Investment in joint ventures (128) (615)
Costs of acquisition of LSA (324) (441)
Investment in distributor (116) 0
Acquisition of Reliable (295) 0
------- --------
Net cash used in investing activities (2,967) (766)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Revolving Facility 6,169 0
Net borrowings on previous line of credit 0 528
Payments on Term Facility (2,261) 0
Payments on other long-term debt (2,189) (1,669)
Payments on LSA Purchase Price Adjustment (929) 0
Proceeds from issuance of long-term debt 1,140 0
Cost of debt financing paid (200) 0
Proceeds from exercise of stock options 238 0
Costs on issuance of stock (17) 0
Proceeds from sale of stock 0 9
------- --------
Net cash provided by (used in) financing activities 1,951 (1,132)
Effect of currency exchange rate changes on cash
of foreign subsidiaries 33 0
------- --------
NET CHANGE IN CASH (938) 65
CASH AT BEGINNING OF PERIOD 2,116 512
------- --------
CASH AT END OF PERIOD $ 1,178 $ 577
======= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
6
<PAGE> 7
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 30,1994
(Amounts In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1995 1994
-------- --------
<S> <C> <C>
CHANGE IN OPERATING WORKING CAPITAL ITEMS:
Trade receivables $ (3,372) $ (1,244)
Inventories (4,379) (1,565)
Trade payables 1,523 360
Other, net 2,133 878
-------- --------
Total $ (4,095) $ (1,571)
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ (3,486) $ (741)
Income taxes paid $ (1,440) $ (1,087)
Income tax refunds received 63 412
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the first nine months of 1995 and 1994, the Company financed
the acquisition of equipment totalling $106,000 and $416,000,
respectively, through the assumption of obligations under capital
leases.
In connection with the Reliable Acquisition, the Company i) assumed
Reliable's line of credit and term loan credit facility with a
Michigan bank, which totalled $1,237,000, ii) assumed another note
payable of $250,000, iii) issued a note payable to the shareholders'
of Reliable for $780,000 and iv) issued 55,652 shares of the Company's
common stock, which was valued at $320,000 or $5.75 per share.
See accompanying Notes to Consolidated Financial Statements.
7
<PAGE> 8
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements of Stuart
Entertainment, Inc. and subsidiaries (collectively, the "Company")
have been prepared in accordance with generally accepted accounting
principles for interim financial statements and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and notes required by generally
accepted accounting principles for annual financial statements.
In the opinion of the Company's management, the foregoing consolidated
financial statements reflect all adjustments considered necessary for
a fair presentation of the results of the Company for the periods
shown. Operating results for the three and nine months ended
September 30, 1995 and 1994 are not necessarily indicative of the
results that may be expected for the full year ending December 31,
1995. These financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto for
the year ended December 31, 1994, filed with the Securities and
Exchange Commission on the Company's Annual Report on Form 10-K.
Certain reclassifications have been made to the 1994 financial
statements to conform to those classifications used in 1995.
2. EARNINGS PER SHARE:
The number of shares used in earnings per share calculations for the
three month and nine month periods ended September 30, 1995 and 1994
are based on the weighted average number of shares of common stock
outstanding and, if dilutive, common stock equivalents (stock options
and warrants) of the Company using the treasury stock method.
8
<PAGE> 9
3. INVENTORIES:
Inventories consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
----------- -----------
<S> <C> <C>
Raw Materials $ 5,636,000 $ 4,380,000
Work-In-Process 3,112,000 2,418,000
Finished Goods 11,974,000 9,305,000
----------- -----------
Total $20,722,000 $16,103,000
=========== ===========
</TABLE>
4. ACQUISITIONS AND FINANCING:
On December 13, 1994, the Company completed the acquisition (the "LSA
Acquisition") of Len Stuart & Associates Limited ("LSA") for a total
purchase price of $36,786,000, which includes a subsequent purchase
price adjustment of $1,642,000. LSA was the holding company for (i)
Bingo Press & Specialty Limited, an Ontario, Canada corporation and a
major manufacturer of bingo supplies and related products in Canada,
which operates under the trade name Bazaar & Novelty ("Bazaar"), and
(ii) Niagara Bazaar and Novelty Limited, an Ontario, Canada
corporation and a retailer of bingo supplies and related products.
The LSA Acquisition was financed through the sale of equity (the
"Equity Financing") and amounts borrowed under the Company's new
Credit Agreement (the "Credit Agreement") (See Note 5).
In addition, effective January 1, 1995, the Company acquired (i)
substantially all the assets and assumed substantially all of the
existing liabilities (the "Net Assets") of The Reliable Corporation of
America ("Reliable") and (ii) two presses owned by Reliable's
shareholders (collectively, the "Reliable Acquisition") for a total
purchase price of $1,300,000.
9
<PAGE> 10
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)
PRO FORMA INFORMATION:
The following pro forma condensed consolidated statements of operations for the
three-month and nine-month periods ended September 30, 1995 and 1994 give
effect to the LSA Acquisition and the Reliable Acquisition, the Equity
Financing and borrowings on the Credit Agreement as if such transactions had
occurred as of January 1, 1994. The pro forma consolidated statements of
operations do not purport to represent what the Company's results of operations
would have been if such transactions had in fact occurred on such dates and
should not be viewed as predictive of the Company's financial results of the
future. Amounts are in thousands, except per share information.
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ----------------------
1995 1994 1995 1994
------- ------ ------ ------
<S> <C> <C> <C> <C>
Net Sales:
"Core Business" $26,354 $23,165 $81,126 $72,888
Video King 272 309 1,535 2,130
England 405 168 1,255 551
------- ------- ------ -------
Total $27,031 $23,642 $83,916 $75,569
======= ======= ======= =======
Net Earnings (Loss):
"Core Business" $ 1,113 $ 473 $ 2,797 $ 2,274
Video King (189) (219) (486) (245)
England (405) (249) (2,075) (510)
------- ------- ------- -------
Total $ 519 $ 5 $ 236 $ 1,519
======= ======= ======= =======
Earnings per Share:
"Core Business" $ 0.17 $ 0.07 $ 0.42 $ 0.34
Video King (0.03) (0.03) (0.07) (0.04)
England (0.06) (0.04) (0.31) (0.08)
------- ------- ------- -------
Total $ 0.08 $ 0.00 $ 0.04 $ 0.22
======= ======= ======= =======
Average Common and
Common Equivalent
Shares Outstanding 6,717 6,688 6,682 6,688
======= ======= ====== =======
EBITDA
"Core Business" $ 3,808 $ 2,483 $10,906 $ 8,722
Video King (224) (315) (556) (297)
England (364) (217) (1,937) (468)
-------- ------- ------- ------
Total $ 3,220 $ 1,951 $ 8,413 $ 7,957
</TABLE>
10
<PAGE> 11
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)
"Core Business" includes the operations of Stuart Entertainment, Inc.
(doing business as Bingo King), LSA and Reliable.
"EBITDA" is defined as earnings before interest, taxes, depreciation
and amortization.
The pro forma results above do not include the following non-recurring
charge that was included in the results of operations after the date
of the LSA Acquisition:
i) In accordance with the application of purchase accounting to
the assets of LSA, the finished goods of Bazaar were recorded
at sales value less costs to sell and a reasonable margin on
the costs to sell. This resulted in the write-up of finished
goods inventory of Bazaar which was included in costs of goods
sold in 1994 and 1995 as the finished goods were sold during
the periods. The amount charged to cost of goods sold in the
nine months ended September 30, 1995 was $489,000 and the
reduction of net income, net of taxes of $191,000, was
$298,000.
5. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ -----------
<S> <C> <C>
Borrowings under Credit Agreement:
Revolving Facility $19,203,000 $12,601,000
Term Facility 13,039,000 14,840,000
Subordinated note payable
to Mr. Stuart 5,000,000 5,000,000
Other term loans and
mortgages payable to banks 2,161,000 1,208,000
Obligations under
capital leases 4,058,000 4,211,000
Notes payable to others 2,882,000 3,038,000
----------- -----------
Total 46,343,000 40,898,000
Less current portion 6,289,000 6,482,000
----------- -----------
Total long-term debt $40,054,000 $34,416,000
=========== ===========
</TABLE>
11
<PAGE> 12
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)
CREDIT AGREEMENT:
In connection with the LSA Acquisition, on December 13, 1994, the
Company entered into the Credit Agreement with a national bank
("Bank") for a financing facility of $35,000,000, with a senior
secured revolving line of credit of $20,000,000 (the "Revolving
Facility") and a senior secured term loan facility of $15,000,000 (the
"Term Facility"). On December 13, 1994, i) the Revolving Facility was
separated into a U.S. Facility for $10,000,000 and a Canadian
Revolving Facility for C$13,875,000 ($10,000,000) and ii) the Term
Facility was separated into a U.S. Term Facility for $5,000,000 and a
Canadian Term Facility for C$13,875,000 ($10,000,000).
At September 30, 1995, loans outstanding on the U.S. Revolving
Facility totalled $9,590,000 (Offshore and Base Rate Loans at a
weighted average interest rate of 8.27%) and loans outstanding on the
Canadian Revolving Facility totalled C$12,900,000($9,613,000) (an
Offshore Loan at an interest rate of 8.85%). At September 30, 1995,
loans outstanding on the U.S. Term Facility totalled $4,250,000 (an
Offshore Loan at an interest rate of 8.24%) and loans outstanding on
the Canadian Term Facility totalled C$11,794,000 ($8,789,000) (an
Offshore Loan at an interest rate of 8.85%).
The Credit Agreement contains various covenants, such as minimum net
worth, fixed coverage ratio, leverage ratio and restrictions on
additional borrowings, cash dividends and capital expenditures. On
August 14, 1995 a Second Amendment to the Credit Agreement was signed.
The Company was in compliance with the amended covenants as of
September 30, 1995.
12
<PAGE> 13
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)
FINANCING ASSUMED WITH THE RELIABLE ACQUISITION
In connection with the Reliable Acquisition, the Company assumed (i) a
line of credit and term loan credit facility with a Michigan bank
which had been the primary bank for Reliable and (ii) a note payable
from an equipment supplier (see Note 4).
6. UNITED KINGDOM CHARGE:
The Company has signed a licensing and marketing agreement with
Playprint Limited, headquartered in Dublin, Ireland. This
relationship has permitted the Company to discontinue its
manufacturing operation in the United Kingdom.
Under the agreement, Playprint Limited will pay royalties to the
Company for use of certain of the Company's trademark, technologies
and equipment for the production of bingo paper and ink markers.
The Company recorded a one-time pre-tax charge of $800,000 in the
second quarter of 1995 related to the estimated costs to shutdown the
manufacturing facility in the United Kingdom and consolidate its
activities with Playprint Limited.
13
<PAGE> 14
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
INTRODUCTION
On December 13, 1994, the Company completed the acquisition (the "LSA
Acquisition") of Len Stuart & Associates Limited ("LSA"). LSA was the holding
company for (i) Bingo Press & Specialty Limited, an Ontario, Canada corporation
and a major manufacturer of bingo supplies and related products in Canada,
which operates under the trade name Bazaar & Novelty ("Bazaar"), and (ii)
Niagara Bazaar and Novelty Limited, an Ontario, Canada corporation and a
retailer of bingo supplies and related products. In addition, effective
January 1, 1995, the Company acquired (i) substantially all the assets and
assumed substantially all of the existing liabilities (the "Net Assets") of The
Reliable Corporation of America ("Reliable") and (ii) two presses owned by
Reliable's shareholders (collectively, the "Reliable Acquisition"). The
results of operations of Bazaar and Reliable have been consolidated since the
date of the LSA Acquisition and the Reliable Acquisition.
Results for the current year include two one-time charges, including (i) a
charge of $489,000 to cost of goods sold related to the application of purchase
accounting to the finished goods of Bazaar that were sold in the first quarter
of 1995 (see Note 4 to the Consolidated Financial Statements) and (ii) a charge
of $800,000 related to the estimated costs to shutdown the manufacturing
facility in the United Kingdom (see Note 6 to the Consolidated Financial
Statements).
The Company's subsidiary, Stuart Entertainment Limited ("Stuart Entertainment
England"), has recorded losses in the current year in the amount of $405,000
and $2,075,000 for the three month and nine months ended September 30, 1995,
respectively, including the $800,000 one-time charge described above. The
manufacturing operations of this subsidiary have been discontinued in
conjunction with a licensing and marketing agreement with Playprint Limited of
Dublin, Ireland and no further losses are anticipated.
On a pro forma basis (see Note 4 to the Consolidated Financial Statements), net
earnings for the Company's "Core Business" for the nine months ended September
30, 1995 increased to $2,797,000 ($0.42 per share) from $2,274,000 ($0.34 per
share) for the nine months ended September 30, 1994.
14
<PAGE> 15
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NET SALES - Net sales in the third quarter of 1995 increased $13,371,000
(97.8%) to $27,031,000 in the third quarter of 1995 from $13,660,000 in the
third quarter of 1994. The sales growth in the third quarter of 1995 was
primarily attributable to the inclusion of sales from Bazaar, Reliable and
Stuart Entertainment England, which collectively increased sales by
$11,681,000 (87.4% of the total increase). Excluding the effect of sales from
Bazaar, Reliable and Stuart Entertainment England, comparable sales for the
third quarter increased $1,690,000 (12.4% increase over the third quarter of
1994). Sales of bingo paper increased $1,494,000 (21.3%), break-open tickets
sales increased $118,000 (4.1%) and sales of ink products increased slightly.
These increases were partially offset by slight decreases in sales of Video
King, bingo electrical equipment and general merchandise. Bingo paper units
increased 4.5% in the three-month period ended September 30, 1995 as compared
to the three-month period ended September 30, 1994. Break-open ticket units
decreased 6.2% and ink products experienced unit increases of 17.2% during
these same periods.
Overall sale price levels increased for bingo paper and break-open tickets
while sale price levels for ink products decreased during the three-month
period ended September 30, 1995 compared to the same period in 1994. Bingo
paper sale price increased approximately 14.0%. This increase was the result
of raw material price increases on newsprint paper. Break-open ticket prices
increased 6.8% during the three month period ending September 30, 1995. Ink
product prices decreased 6.4% due primarily to a shift in the mix of ink
products sold to lower priced products.
COST OF GOODS SOLD - Cost of goods sold, as a percentage of sales, decreased
from 72.2% for the three months ended September 30, 1994 to 65.9% for the three
months ended September 30, 1995. The decrease in the cost of goods sold
percentage is due to i) a lower cost of goods sold percentage for Bazaar sales
versus the historical percentage for the Company and ii) improvements in
manufacturing efficiencies. These improvements were partially offset by
increases in raw material, newsprint paper and general labor rates.
During 1994 and the first nine months of 1995, the Company experienced
significant increases in the price of paper products purchased for the
manufacturing of bingo paper and for packaging. The Company initiated sales
price increases on bingo paper during this period that approximated the amount
of the increase in the paper products purchased.
The Company anticipates further increases in the price of paper products
purchased during 1995. Management expects to continue to increase the sales
price on bingo paper during 1995 to largely offset these expected increases in
costs, subject to market conditions at that time. Management does not believe,
but has no assurances, that these increases in the sales price of bingo paper
will place the Company at a competitive disadvantage.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative ("SG&A") expenses increased $3,806,000 from $2,946,000 for the
three months ended September 30, 1994 to $6,752,000 for the three months ended
September 30, 1995. SG&A expenses, as a percent of sales, increased to 25.0%
for the three months ended September 30, 1995 from 21.6% during the same period
of 1994. The increase in SG&A expenses was due primarily to two
15
<PAGE> 16
factors. First, approximately $2,935,000 of the increase was a result of the
consolidation of Bazaar, Reliable and Stuart Entertainment England for the
three-month period ended September 30, 1995. Second, excluding the effect of
Bazaar, Reliable and Stuart Entertainment England, the Company experienced
increases in (i) salaries and related costs, due to increases in number of
employees and salary levels, (ii) business-related travel and (iii) marketing
and sales promotion costs.
EQUITY EARNINGS (LOSSES) IN JOINT VENTURES - Equity loss in joint ventures
totalled $29,000 for the third quarter of 1995 compared with a loss of
$282,000 for the same period in 1994. Under the joint venture agreement, the
earnings or loss for Stuart Entertainment Mexico was allocated to the Company
based on the percentage of total production that was sold to the Company. The
Company recognized earnings or losses related to its investment in Stuart
Entertainment Mexico as SG&A expense. The equity income for Stuart
Entertainment England represented 50% of the net operating income of Stuart
Entertainment England for the period April 1, 1994 through September 30, 1994.
With the LSA Acquisition, Stuart Entertainment England and Stuart Entertainment
Mexico became, in effect, wholly owned subsidiaries of the Company.
INTEREST EXPENSE, NET - Interest expense (net of interest income) for the three
month period ended September 30, 1995 totalled $1,050,000 compared with
$224,000 in the same period in 1994. The increase of $826,000 was due to i)
the consolidation of Bazaar, Stuart Entertainment England and Reliable which
increased interest expense by $627,000, ii) higher interest rates experienced
for the three months ended September 30, 1995 compared to the same period in
1994 and iii) significantly higher borrowing levels at September 30, 1995
compared to September 30, 1994, largely related to the LSA and Reliable
acquisitions and higher working capital requirements.
NET INCOME - Net income for the three month period ended September 30,
1995 was $519,000 ($.08 per share) compared with $211,000 ($.06 per share)
for the same period of 1994. The increase in net income and earnings per share
was largely due to consolidation of Bazaar and Reliable.
INFLATION - Other than the increases in the cost of paper products described
above, inflation did not have a material effect on the Company's operations for
the three months and nine months ended September 30, 1995.
16
<PAGE> 17
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
NET SALES - Net sales for the first nine months of 1995 increased $39,977,000
(91.0%) to $83,916,000 for the first nine months of 1995 from $43,939,000 in
the first nine months of 1994. The sales growth for the first nine months of
1995 was primarily attributable to the inclusion of sales from Bazaar, Reliable
and Stuart Entertainment England which collectively increased sales by
$36,208,000 (90.5% of the total increase). Excluding the effect of sales
from Bazaar, Reliable and Stuart Entertainment England, comparable sales for
the first nine months of 1995 increased $3,769,000 (8.6% increase over the
first nine months of 1994). Sales of bingo paper increased $3,764,000 (17.2%),
break-open tickets sales increased $400,000 (4.6%) and sales of ink products
increased $362,000 (7.2%). These increases were partially offset by decreases
in sales of both Video King of $581,000 and electrical bingo equipment of
$514,000. A modest decrease in the sales of general merchandise also occurred.
Bingo paper units increased 5.2% in the nine month period ending September 30,
1995 as compared to the nine month period ended September 30, 1994. Break-open
ticket units decreased 1.7% and ink products increased 12.4% during these same
periods.
Overall sale price levels increased for bingo paper and break-open tickets
while sale price levels for ink products decreased slightly during the nine
month period of 1995 compared to the same period in 1994. Bingo paper sale
price increased approximately 10.7%. This increase was the result of raw
material price increases on newsprint paper. Break-open ticket prices
increased 5.9% during the nine month period of 1995. Ink product prices
decreased 4.7% due primarily to a shift in the mix of ink products sold to
lower priced products.
COST OF GOODS SOLD - Cost of goods sold, as a percentage of sales, decreased
from 71.7% for the nine months ended September 30, 1994 to 68.1% for the nine
months ended September 30, 1995. The decrease in the cost of goods sold
percentage is due to i) a lower cost of goods sold percentage for Bazaar sales
versus the historical percentage for the Company and ii) improvements in
manufacturing efficiencies. These improvements were partially offset by
increases in raw material, newsprint paper and general labor rates.
During 1994 and the first nine months of 1995, the Company experienced
significant increases in the price of paper products purchased for the
manufacturing of bingo paper and for packaging. The Company initiated sales
price increases on bingo paper during this period that approximated the amount
of the increase in the paper products purchased.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative ("SG&A") expenses increased $10,899,000 from $9,202,000 for the
nine months ended September 30, 1994 to $20,101,000 for the nine months ended
September 30, 1995. SG&A expenses, as a percent of sales, increased to 24.0%
for the nine months ended September 30, 1995 from 20.9% during the same
17
<PAGE> 18
period of 1994. The increase in SG&A expenses was due primarily to two
factors. First, approximately $8,530,000 of the increase was a result of the
consolidation of Bazaar, Reliable and Stuart Entertainment England for the nine
months ended September 30, 1995. Second, excluding the effect of Bazaar,
Reliable and Stuart Entertainment England, the Company experienced increases in
(i) salaries and related costs, due to increases in number of employees and
salary levels,(ii) business-related travel (iii) marketing and sales
promotion costs and (iv) approximately $700,000 in expenses largely related to
the consolidation of Bazaar, Reliable and Stuart Entertainment England. SG&A
cost reductions have been implemented through the consolidation of these
companies which are anticipated to result in annualized improvement in excess
of $1,000,000.
EQUITY EARNINGS (LOSSES) IN JOINT VENTURES - Equity earnings in joint
ventures totalled $15,000 for the first nine months of 1995 compared with a
loss of $644,000 for the same period in 1994. Under the joint venture
agreement, the earnings or loss for Stuart Entertainment Mexico was allocated
to the Company based on the percentage of total production that was sold to the
Company. The Company recognized earnings or losses related to its investment in
Stuart Entertainment Mexico as SG&A expenses. The equity loss for Stuart
Entertainment England represented 50% of the net operating loss of Stuart
Entertainment England for the period January 1, 1994 through September 30,
1994. With the LSA Acquisition, Stuart Entertainment England and Stuart
Entertainment Mexico became, in effect, wholly owned subsidiaries of the
Company.
INTEREST EXPENSE, NET - Interest expense (net of interest income) for the nine
month period ended September 30, 1995 totalled $3,365,000 compared with
$659,000 in the same period in 1994. The increase of $2,706,000 was due to i)
the consolidation of Bazaar, Stuart Entertainment England and Reliable which
increased interest expense by $2,100,000, ii) higher interest rates experienced
for the nine months ended September 30, 1995 compared to the same period in
1994 and iii) significantly higher borrowing levels at September 30, 1995
compared to September 30, 1994, largely related to the LSA Acquisition and
Reliable Acquisition and higher working capital requirements.
NET INCOME - Net income for the nine month period ended September 30,
1995 was $236,000 ($.04 per share) compared with $1,206,000 ($.34 per share)
for the same period of 1994. The decrease in net income and earnings per share
was largely due to i) increased losses (including the $800,000 one-time charge
described above) of Stuart Entertainment England of $2,075,000 ($.31 per
share), and ii) the purchase accounting adjustment required for Bazaar's
finished goods inventory of $298,000 ($.04 per share).
LIQUIDITY AND CAPITAL RESOURCES
The Company completed the LSA Acquisition during the fourth quarter of 1994.
As a result of a subsequent purchase price adjustment (the "Purchase Price
Adjustment"), the Company was obligated to pay Mr. Stuart an additional
$1,642,000. The Company made payments to and on behalf of Mr. Stuart of
$929,000 of the Purchase Price Adjustment in April, 1995, and the remaining
18
<PAGE> 19
balance will accrue interest payable monthly at 2.25% over the prime rate shown
in The Wall Street Journal beginning March 6, 1995.
The Company's long-term debt at September 30, 1995, including the current
portion thereof, totalled $46,343,000 compared to $40,898,000 at December 31,
1994 (see Note 5 to the Consolidated Financial Statements). Cash payments on
long-term debt during the first nine months of 1995 totalled approximately
$4,500,000 compared to $1,669,000 for the same period in 1994. Additions to
long-term debt in 1995 were related to the Reliable Acquisition, new capital
lease financing and additional borrowings under the Revolving Facility to
finance normal operations.
The Credit Agreement contains various covenants, such as minimum net
worth, fixed coverage ratio, leverage ratio and restrictions on additional
Waiver and borrowings, cash dividends and capital expenditures. On August 14,
1995, a Second Amendment to the Credit Agreement was signed. The Company was in
compliance with the amended covenants as of September 30, 1995. On August 31,
1995, a Third Amendment to the Credit Agreement was signed which assigned 50%
of the Revolving Commitment and Term Commitment under the Credit Agreement to
a second national bank.
In the Reliable Acquisition, the Company assumed a line of credit and term loan
credit facility with a Michigan bank which had been the primary bank for
Reliable (see Note 5 of the Notes to Consolidated Financial Statements).
Capital expenditures during the first nine months of 1995 totalled
$2,815,000. In October 1995, the Company completed a lease line of credit
with its primary bank. The facility provides lease financing on capitalized
equipment purchased through December 31, 1996. The maximum available under
this facility is $5 million. Capital expenditures for fiscal 1995 are
projected to be $3,600,000.
The $2,075,000 in losses recorded by the Company's United Kingdom subsidiary
in the current year, higher working capital requirements (see Change in Balance
Sheet Accounts) and other one-time cash transactions not anticipated when the
Credit Agreement was completed in December 1994 have resulted in the Company
utilizing the maximum available under its revolving facility. The Company
holds regular discussions with its banks and others regarding working capital
needs to maintain its flexibility.
The Company core business continues to be profitable with nine month
net earnings of $2,797,000. The Company believes the large ongoing losses in
the United Kingdom subsidiary will be eliminated beginning in the fourth
quarter of 1995 (see Note 6) which they anticipate will improve the Company's
cash flow position. In addition, the Company is continuing to work with its
banks to provide additional financing alternatives in order to maintain its
flexibility. The Company believes, but has no assurances, that it will be able
to obtain additional financing to fund the Company's future financial
requirements.
19
<PAGE> 20
CHANGE IN BALANCE SHEET ACCOUNTS
Total trade receivables increased $5,346,000 from $15,001,000 at
December 31, 1994 to $20,347,000 at September 30, 1995. The increase is due
primarily to the consolidation of Reliable ($1,340,000), normal seasonal
fluctuations, price increases and overall sales increases. Total notes
receivable (including current and long-term portions) increased $726,000 from a
balance of $2,127,000 at December 31, 1994, to $2,853,000 at September 30,
1995. During the nine months ended September 30, 1995, trade receivables
totaling $696,000 were converted to notes receivable from non-related parties.
The conversions were made to assist customers in resolving cash flow
deficiencies and to aid customers in accomplishing their long term growth
plans.
Inventories increased $4,619,000 from $16,103,000 at December 31, 1994, to
$20,722,000 at September 30, 1995. The increase was due to (i) the
consolidation of Reliable ($1,395,000), (ii) increased cost of paper products
used to manufacture bingo paper and (iii) increased inventory quantities on
hand.
Trade payable and accrued liabilities increased a combined $3,496,000 from
$15,171,000 at December 31, 1994 to $18,667,000 at September 30, 1995. The
increase was due to (i) the consolidation of Reliable ($967,000), (ii)
increased accounts payable from inventory levels related to increased cost of
paper products purchased and (iii) price increases and overall sales increases.
20
<PAGE> 21
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits:
Exhibit 10.1 Waiver and Second Amendment to Credit Agreement, dated as of
August 14, 1995.
Exhibit 10.2 Third Amendment to Credit Agreement, dated as of August 31,
1995.
Exhibit 10.3 Assignment and Assumption Agreement dated August 31, 1995
between Stuart Entertainment, Inc., Bank of America Illinois,
The Chase Manhattan Bank (National Association) and Bank of
America National Trust and Savings Association.
Exhibit 10.4 Assignment and Assumption Agreement dated August 31, 1995
between Bingo Press & Specialty Limited, Bank of America
Canada, The Chase Manhattan Bank of Canada and Bank of America
Canada, as agent.
Exhibit 10.5 Revolving Note dated August 31, 1995 in the principal amount
of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to The
Chase Manhattan Bank (National Association).
Exhibit 10.6 Term Note dated August 31, 1995 in the principal amount of
U.S. $2,250,000 issued by Stuart Entertainment, Inc. to The
Chase Manhattan Bank (National Association).
Exhibit 10.7 Revolving Note dated August 31, 1995 in the principal amount
of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to
Bank of America Illinois.
Exhibit 10.8 Term Note dated August 31, 1995 in the principal amount of
U.S. $2,250,000 issued by Stuart Entertainment, Inc. to Bank
of America Illinois.
Exhibit 10.9 Revolving Note dated August 31, 1995 in the principal amount
of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited
to The Chase Manhattan Bank of Canada.
Exhibit 10.10 Term Note dated August 31, 1995 in the principal amount of
Cdn. $6,243,750 issued by Bingo Press & Specialty Limited to
The Chase Manhattan Bank of Canada.
Exhibit 10.11 Revolving Note dated August 31, 1995 in the principal amount
of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited
to Bank of America Canada.
21
<PAGE> 22
Exhibit 10.12 Term Note dated August 31, 1995 in the principal amount of
U.S. $2,250,000 issued by Bingo Press & Specialty Limited to
Bank of America Canada.
Exhibit 11 Statement Regarding Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K:
The Company did not file any reports on Form
8-K for the quarter ended September 30, 1995.
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STUART ENTERTAINMENT, INC.
Date: November 13, 1995 /s/ Timothy R. Stuart
----------------------------
Timothy R. Stuart
President
Date: November 13, 1995 /s/ Paul C. Tunink
----------------------------
Paul C. Tunink
Vice President and Chief
Financial Officer
23
<PAGE> 24
EXHIBIT INDEX
Exhibit Description
- ------- -----------
Exhibit 10.1 Waiver and Second Amendment to Credit Agreement, dated as of
August 14, 1995.
Exhibit 10.2 Third Amendment to Credit Agreement, dated as of August 31,
1995.
Exhibit 10.3 Assignment and Assumption Agreement dated August 31, 1995
between Stuart Entertainment, Inc., Bank of America Illinois,
The Chase Manhattan Bank (National Association) and Bank of
America National Trust and Savings Association.
Exhibit 10.4 Assignment and Assumption Agreement dated August 31, 1995
between Bingo Press & Specialty Limited, Bank of America
Canada, The Chase Manhattan Bank of Canada and Bank of America
Canada, as agent.
Exhibit 10.5 Revolving Note dated August 31, 1995 in the principal amount
of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to The
Chase Manhattan Bank (National Association).
Exhibit 10.6 Term Note dated August 31, 1995 in the principal amount of
U.S. $2,250,000 issued by Stuart Entertainment, Inc. to The
Chase Manhattan Bank (National Association).
Exhibit 10.7 Revolving Note dated August 31, 1995 in the principal amount
of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to
Bank of America Illinois.
Exhibit 10.8 Term Note dated August 31, 1995 in the principal amount of
U.S. $2,250,000 issued by Stuart Entertainment, Inc. to Bank
of America Illinois.
Exhibit 10.9 Revolving Note dated August 31, 1995 in the principal amount
of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited
to The Chase Manhattan Bank of Canada.
Exhibit 10.10 Term Note dated August 31, 1995 in the principal amount of
Cdn. $6,243,750 issued by Bingo Press & Specialty Limited to
The Chase Manhattan Bank of Canada.
Exhibit 10.11 Revolving Note dated August 31, 1995 in the principal amount
of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited
to Bank of America Canada.
<PAGE> 25
Exhibit 10.12 Term Note dated August 31, 1995 in the principal amount of
U.S. $2,250,000 issued by Bingo Press & Specialty Limited to
Bank of America Canada.
Exhibit 11 Statement Regarding Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT
This Waiver and Second Amendment to Credit Agreement, dated as of
August 14, 1995 (the "Agreement") is among Stuart Entertainment, Inc., a
Delaware corporation (the "U.S. Company"), Bingo Press & Specialty Limited
(formerly known as 1089350 Ontario Inc.), an Ontario corporation (the "Canadian
Company"), Bank of America National Trust and Savings Association, as U.S.
Agent, Bank of America Illinois, as U.S. Lender, and Bank of America Canada, as
Canadian Agent and Canadian Lender.
W I T N E S S E T H:
WHEREAS, the U.S. Company, the Canadian Company, the U.S. Agent, the
U.S. Lender, the Canadian Agent and the Canadian Lender are parties to that
certain Credit Agreement dated as of December 13, 1994 (as amended, the "Credit
Agreement") and to certain other documents executed in connection with the
Credit Agreement;
WHEREAS, the U.S. Company and the Canadian Company have requested
certain waivers and amendments and the U.S. Lender and Canadian Lender have
agreed to such waivers and amendments as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein shall have the meanings given to such terms in the Credit Agreement.
2. WAIVER. Subject to the conditions to effectiveness set forth
in Section 4 below, the Lenders hereby waive any Event of Default arising under
Section 8.01(c) solely as a result of (a) a breach of Section 7.14 of the
Credit Agreement as of March 31, 1995 and (b) a breach of Section 7.17 of the
Credit Agreement for the period ending on March 31, 1995. The foregoing waiver
shall not constitute a waiver of any other Event of Default now or hereafter
existing, including any Event of Default arising under Section 8.01(c) as a
result of a (i) breach of Section 7.14 for any date after March 31, 1995 or
(ii) a breach of Section 7.17 for any period ending after March 31, 1995.
3. AMENDMENT TO THE CREDIT AGREEMENT. Subject to the conditions
to effectiveness set forth in Section 4 below:
(a) A new defined term "Adjusted EBITDA Losses" is hereby
added to Section 1.01 of the Credit Agreement immediately prior to the
defined term "Adjusted Restructuring Costs" as follows:
"Adjusted EBITDA Losses" means (i) losses of up to One Million
Six Hundred Thousand U.S. Dollars (U.S. $1,600,000) incurred by the
U.S. Company, on a consolidated basis, during fiscal year 1995 (and
affecting fiscal year 1995 consolidated
<PAGE> 2
earnings of the U.S. Company) as a result of the operations of the
Companies in the United Kingdom and (ii) losses of up to Four Hundred
Eighty-Nine Thousand U.S. Dollars (U.S. $489,000) incurred by the U.S.
Company, on a consolidated basis, during fiscal year 1994 (and
affecting fiscal year 1995 consolidated earnings of the U.S. Company)
as a result of purchase accounting on the finished goods inventory of
the Canadian Company at the date of the acquisition by the U.S.
Company of the Canadian Company.
(b) The pricing grid and the first sentence following the
pricing grid in the definition of "Applicable Margin" set forth in
Section 1.01 of the Credit Agreement are amended and restated in their
entirety as follows:
<TABLE>
<CAPTION>
Applicable
Margin for
Applicable Base Rate/ Applicable Applicable Applicable
Margin for Canadian Margin for Margin for Margin for
Leverage Offshore Base Rate BA Rate Letter of Non-Use
Ratio Rate Loans Loans Loans Credit Fee Fee
----- ---------- ----- ----- ---------- ---
<S> <C> <C> <C> <C> <C>
Less than or 1.000% 0% 1.000% 1.000% .250%
equal to
1.50:1.0
Greater than 1.500 .250 1.500 1.500 .250
1.50:1.0 but
less than or
equal to
2.00:1.0
Greater than 1.750 .500 1.750 1.750 .375
2.00:1.0 but
less than or
equal to
2.75:1.0
Greater than 2.000 .750 2.000 2.000 .375
2.75:1.0 but
less than or
equal to
3.25:1.0
Greater than 2.500 1.250 2.500 2.500 .500
3.25:1.0
</TABLE>
The initial Applicable Margin for Offshore Rate Loans shall be 2.50%,
the initial Applicable Margin for Base Rate Loans and Canadian Base Rate Loans
shall be 1.25%, the initial Applicable Margin for BA Rate Loans shall be 2.50%,
the initial Applicable Margin for the Letter of Credit fee shall be 2.50% and
the initial Applicable Margin for the non- use fee
2
<PAGE> 3
shall be 0.50%, and each initial Applicable Margin shall remain in effect until
the delivery of a Compliance Certificate with respect to the fiscal year ending
December 31, 1995.
(c) The definition of "Fixed Charge Ratio" set forth in
Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
"Fixed Charge Ratio" means, for any period the ratio of (a) the
difference of (i) EBITDA for such period, less (ii) the consolidated
Capital Expenditures of the U.S. Company for such period; to (b) the
sum of (i) Consolidated Net Interest Expense for such period, plus
(ii) taxes paid in cash by the U.S. Company and its Subsidiaries
during such period, plus (iii) scheduled principal payments of the
consolidated Indebtedness of the U.S. Company during such period
(including principal payments made to Stuart by the U.S. Company under
the Stock Purchase Agreement); provided, that for any period ending in
fiscal year 1995, Fixed Charge Ratio means, for any such period, the
ratio of (a) the sum of (i) EBITDA for such period, plus, (ii)
Adjusted EBITDA Losses for such period, less (iii) the consolidated
Capital Expenditures of the U.S. Company for such period; to (b) the
sum of (i) Consolidated Net Interest Expense for such period, plus
(ii) taxes paid in cash by the U.S. Company and its Subsidiaries
during such period, plus (iii) principal payments of the U.S. Company
under the Term Note from U.S. Company to U.S. Lenders scheduled to be
paid during such period, plus (iv) principal payments of the Canadian
Company under the Term Note from the Canadian Company to Canadian
Lenders scheduled to be paid during such period, plus (v) principal
payments made to Stuart by the U.S. Company under the Stock Purchase
Agreement; provided further, that for any period ending in fiscal year
1996, Fixed Charge Ratio means, for any such period, the ratio of (a)
the difference of (i) EBITDA for such period, less (ii) the
consolidated Capital Expenditures of the U.S. Company during such
period; to (b) the sum of (i) Consolidated Net Interest Expense for
such period, plus (ii) taxes paid in cash by the U.S. Company and its
Subsidiaries during such period, plus (iii) principal payments of the
U.S. Company under the Term Note from U.S. Company to U.S. Lenders
scheduled to be paid during such period, plus (iv) principal payments
of the Canadian Company under the Term Note from the Canadian Company
to Canadian Lenders scheduled to be paid during such period, plus (v)
fifty percent (50%) of scheduled principal payments of the
consolidated Indebtedness of the U.S. Company during such period
(excluding principal payments made to Stuart by the U.S. Company under
the Stock Purchase Agreement and payments scheduled to be made under
the Term Notes), plus (vi) principal payments made to Stuart by the
U.S. Company under the Stock Purchase Agreement.
(d) The definition of "Interest Coverage Ratio" set forth
in Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
3
<PAGE> 4
"Interest Coverage Ratio" means, for any period, the ratio of (a)
EBITDA for such period; to (b) Consolidated Net Interest Expense for
such period; provided, that for any period ending in fiscal year 1995,
Interest Coverage Ratio means, for any such period, the ratio of (a)
the sum of (i) EBITDA for such period, plus (ii) Adjusted EBITDA
Losses for such period; to (b) Consolidated Net Interest Expense for
such period.
(e) The definition of "Leverage Ratio" set forth in
Section 1.01 of the Credit Agreement is amended and restated in its
entirety as follows:
"Leverage Ratio" means, for any 12-month period, the ratio of (a)
total consolidated Indebtedness of the U.S. Company outstanding on the
last day of such period (excluding the Indebtedness described in
clause (c) of the definition of "Indebtedness," to the extent of the
undrawn face amount of letters of credit, clause (g) of the definition
of "Indebtedness," clause (h) of the definition of "Indebtedness," to
the extent it applies to Indebtedness of another Person and clause (i)
of the definition of "Indebtedness," to the extent it applies to
Contingent Obligations permitted under Section 7.08(e) but only with
respect to those obligations in connection with the leasing and
similar arrangements described in Section 7.08(e) that are no more
than 30 days past due); to (b) the EBITDA for such period; provided,
that for the twelve month periods ending on June 30, 1995, September
30, 1995, and December 31, 1995, Leverage Ratio means the ratio of (a)
total consolidated Indebtedness of the U.S. Company outstanding on
the last day of such period (excluding the Indebtedness described in
clause (c) of the definition of "Indebtedness," to the extent of the
undrawn face amount of letters of credit, clause (g) of the definition
of "Indebtedness," clause (h) of the definition of "Indebtedness," to
the extent it applies to Indebtedness of another Person and clause (i)
of the definition of "Indebtedness," to the extent it applies to
Contingent Obligations permitted under Section 7.08(e) but only with
respect to those obligations in connection with the leasing and
similar arrangements described in Section 7.08(e) that are no more
than 30 days past due); to (b) EBITDA plus Adjusted EBITDA Losses for
the period from January 1, 1995 through the last day of such period,
multiplied by the "Multiple" (as defined below). For purposes hereof,
"Multiple" means, with respect to the Leverage Ratio for the period
ending June 30, 1995, 2.0, with respect to the Leverage Ratio for the
period ending September 30, 1995, 1.33, and with respect to the
Leverage Ratio for the period ending December 31, 1995, 1.0.
(f) Clause (c) of Section 7.11 of the Credit Agreement is
amended and restated in its entirety as follows:
"(c) Capital Leases; provided, that the aggregate
principal amount of consolidated Capital Lease Obligations of the U.S.
Company and its Subsidiaries outstanding shall not exceed (i) Ten
Million U.S. Dollars (U.S. $10,000,000) at
4
<PAGE> 5
any time during the fiscal years ending December 31, 1995 and December
31, 1996 and (ii) Twelve Million U.S. Dollars (U.S. $12,000,000)
during any fiscal year of U.S. Company ending after December 31,
1996."
(g) Section 7.13 of the Credit Agreement is amended and
restated in its entirety as follows:
"7.13 CAPITAL EXPENDITURES. The U.S. Company and its
consolidated Subsidiaries shall not make Capital Expenditures during
any period set forth below, or commit to make Capital Expenditures
during any such period, in an amount exceeding the amount set forth
below with respect to such period; provided, that to the extent that
the amount set forth below for any period exceeds the Capital
Expenditures of the U.S. Company and its consolidated Subsidiaries for
such period, the U.S. Company and its consolidated Subsidiaries may
make, or commit to make, Capital Expenditures in the following period
set forth below in an amount equal to the sum of the amount set forth
below for such following period and the lesser of (A) the amount of
such excess and (B) Two Million U.S. Dollars (U.S. $2,000,000):
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
From January 1, 1995 through December 31, 1995 U.S. $4,500,000
For the fiscal year ending December 31, 1996 and for each
fiscal year thereafter U.S. $5,000,000
</TABLE>
(h) Section 7.14 of the Credit Agreement is amended and
restated in its entirety as follows:
"7.14 NET WORTH. Net Worth at any time during any period set
forth below shall not be less than the applicable minimum amount set
forth below opposite such period:
<TABLE>
<CAPTION>
Minimum Net
Period Worth
------ -----
<S> <C>
From January 1, 1995 through December 30, 1996 U.S. $30,000,000
From December 31, 1996 through December 30, 1997 U.S. $33,000,000
From December 31, 1997 through December 30, 1998 U.S. $37,000,000
From December 31, 1998 through December 30, 1999 U.S. $40,000,000
From December 31, 1999 and at all times thereafter U.S. $45,000,000
</TABLE>
(i) Section 7.15 of the Credit Agreement is amended and
restated in its entirety as follows:
5
<PAGE> 6
"7.15 LEVERAGE RATIO. The Leverage Ratio, as determined for
any 12-month period ending on a date set forth below, shall not exceed
the ratio set forth below opposite such date:
<TABLE>
<CAPTION>
Maximum Leverage
Period Ratio
------ -----
<S> <C>
June 30, 1995, September 30, 1995, December 31, 1995 and March
31, 1996 3.75
June 30, 1996 and September 30, 1996 3.50
December 31, 1996, March 31, 1997, June 30, 1997 and September
31, 1997 3.25
December 31, 1997, March 31, 1998, June 30, 1998 and September
30, 1998 3.00
December 31, 1998 and the last day of each fiscal quarter
thereafter 2.75"
</TABLE>
(j) Section 7.16 of the Credit Agreement is amended and
restated as follows:
"7.16 FIXED CHARGE RATIO. The Fixed Charge Ratio for any
period set forth below shall not be less than the ratio set forth
below opposite such period:
<TABLE>
<CAPTION>
Minimum Fixed
Date Charge Coverage
---- ----------------
<S> <C>
For the periods beginning on January 1, 1995 and ending on March
31, 1995, June 30, 1995 and September 30, 1995
1.00
For the twelve-month periods ending on December 31, 1995 and on
the last day of each fiscal quarter thereafter until and
including September 30, 1998 1.00
For the twelve-month periods ending on December 31, 1998, March
31, 1999, June 30, 1999 and September 30, 1999
1.10
For the twelve-month periods ending on December 31, 1999 and on
the last day of each fiscal quarter thereafter
1.15"
</TABLE>
6
<PAGE> 7
(k) Section 7.17 of the Credit Agreement is amended and
restated in its entirety as follows:
"7.17 INTEREST COVERAGE RATIO. The Interest Coverage Ratio for any
period set forth below shall not be less than the ratio set forth
below opposite such period:
<TABLE>
<CAPTION>
Minimum Interest
Date Coverage
---- --------
<S> <C>
For the periods beginning on January 1, 1995 and ending on June
30, 1995 and September 30, 1995 2.25
For the twelve-month periods ending on December 31, 1995, March
31, 1996, June 30, 1996 and September 30, 1996 2.50
For the twelve-month periods ending on December 31, 1996, March
31, 1997, June 30, 1997 and September 30, 1997 2.75
For the twelve-month periods ending on December 31, 1997, March
31, 1998, June 30, 1998 and September 30, 1998
3.25
For the twelve-month periods ending on December 31, 1998 and on
the last day of each fiscal quarter thereafter 3.50"
</TABLE>
(l) A new Section 7.23 is hereby added to the Credit
Agreement as follows:
"7.23 MINIMUM EBITDA. EBITDA for any period set forth below shall
not be less than the amount set forth below opposite such period:
<TABLE>
<CAPTION>
Date Minimum
---- EBITDA
------
<S> <C>
For the twelve-month period ending on December 31, 1995, March
31, 1996, June 30, 1996 and September 30, 1996 U.S. $11,000,000
For the twelve-month periods ending on December 31, 1996, March
31, 1997, June 30, 1997 and September 30, 1997 U.S. $13,000,000
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
Minimum
Date EBITDA
---- ------
<S> <C>
For the twelve-month periods ending on December 31, 1997, March
31, 1998, June 30, 1998 and September 30, 1998 U.S. $14,000,000
For the twelve-month periods ending on December 31, 1998, March
31, 1999, June 30, 1999 and September 30, 1999 U.S. $15,000,00
For the twelve-month periods ending on December 31, 1999 and on
the last day of each fiscal quarter thereafter U.S. $16,000,000"
</TABLE>
(m) A new Section 7.24 is hereby added to the Credit
Agreement as follows:
"7.24 LIMITATION ON PURCHASE PRICE ADJUSTMENT PAYMENT UNDER
STOCK PURCHASE AGREEMENT. Such Company shall not, and shall not
suffer or permit any of its Subsidiaries to, make the purchase price
adjustment payment set forth in Section 3.4 of the Stock Purchase
Agreement (which payment, as of August 14, 1995, is in the maximum
principal amount of U.S. $711,000) unless prior to giving effect to
such payment (i) the Leverage Ratio set forth in the most recent
Compliance Certificate is less than 2.50 and (ii) the Aggregate
Revolving Commitment exceeds the aggregate amount of Revolving Loans
plus the aggregate face amount of all undrawn Letters of Credit (with
the amount of all Revolving Loans to the Canadian Company and Letters
of Credit issued for the account of the Canadian Company expressed in
U.S. Dollars at the Current Exchange Rate) by at least Five Million
U.S. Dollars (U.S. $5,000,000).
4. AMENDMENT FEE; CONDITIONS TO EFFECTIVENESS. The Companies
shall pay to U.S. Agent, for the sole account of BAI, an amendment fee of U.S.
$200,000 (which fee shall be fully earned as of the date hereof), U.S. $50,000
of which shall be payable on the date hereof and U.S. $150,000 of which shall
be payable on or before October 2, 1995. The waivers and amendments described
herein shall be effective retroactively as of June 30, 1995, upon (i) payment
by the Companies to U.S. Agent, for the sole account of BAI, of the U.S.
$50,000 portion of the amendment fee of U.S. $200,000, and (ii) delivery of
this fully executed Agreement to each Agent.
5. OTHER AGREEMENTS. The Companies agree to reimburse Chase
Manhattan Bank, N.A. and its Affiliates for all reasonable attorneys' fees up
to U.S. $7,500 incurred by them in connection with reviewing the Loan Documents
and obtaining an assignment of an interest in the Loans. The Companies agree
that the failure to pay any portion of the amendment fee described in Section 4
above when due shall constitute an Event of Default.
8
<PAGE> 9
6. NO WAIVER OF PAST DEFAULTS. Nothing contained herein shall be
deemed to constitute a waiver of any Event of Default that may heretofore or
hereafter occur or have occurred and be continuing, or to modify any provision
of the Credit Agreement except as expressly provided herein.
7. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter
into this Agreement, each Company represents and warrants to Lenders that the
execution, delivery and performance by such Company of this Agreement are
within its corporate powers, have been duly authorized by all necessary
corporate action (including, without limitation, shareholder approval), have
received all necessary governmental approval (if any shall be required), and do
not and will not contravene or conflict with any provision of law applicable to
such Company, the Organization Documents of such Company, or any order,
judgment or decree of any court or other agency of government or any
Contractual Obligation binding upon such Company; and the Credit Agreement as
amended as of the date hereof is the legal, valid and binding obligation of
such Company enforceable against such Company in accordance with its terms.
8. MISCELLANEOUS.
(a) Captions. Section captions used in this Agreement
are for convenience only, and shall not affect the construction of
this Agreement.
(b) Governing Law. This Agreement shall be a contract
made under and governed by the laws of the State of Illinois, without
regard to conflict of laws principles. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
(c) Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one
and the same Agreement.
(d) Successors and Assigns. This Agreement shall be
binding upon the Companies, Agents and Lenders and their respective
successors and assigns, and shall inure to the sole benefit of the
Companies, Agents and Lenders and the successors and assigns of the
Companies, Agents and Lenders.
(e) References. Any reference to the Credit Agreement
contained in any notice, request, certificate, or other document
executed concurrently with or after the execution and delivery of this
Agreement shall be deemed to include this Agreement unless the context
shall otherwise require.
9
<PAGE> 10
(f) Continued Effectiveness. Notwithstanding anything
contained herein, the terms of this Agreement are not intended to and
do not serve to effect a novation as to the Credit Agreement. The
parties hereby expressly do not intend to extinguish the Credit
Agreement. Instead, it is the express intention of the parties hereto
to reaffirm the indebtedness created under the Credit Agreement and
secured by the Collateral. The Credit Agreement is amended hereby and
each of the Loan Documents remain in full force and effect.
(g) Costs, Expenses and Taxes. Each Company affirms and
acknowledges that Section 10.04 of the Credit Agreement applies to
this Agreement and the transactions and agreements and documents
contemplated hereunder.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
STUART ENTERTAINMENT, INC.
By
------------------------------------
Title:
---------------------------------
BINGO PRESS & SPECIALTY LIMITED
By
------------------------------------
Title:
---------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as U.S. Agent
By
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA ILLINOIS, as U.S. Lender
By
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA CANADA, as Canadian
Agent
By
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA CANADA, as Canadian
Lender
By
-----------------------------------
Title:
--------------------------------
11
<PAGE> 1
EXHIBIT 10.2
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement, dated as of August 31, 1995
(the "Agreement") is among Stuart Entertainment, Inc., a Delaware corporation
(the "U.S. Company"), Bingo Press & Specialty Limited (formerly known as
1089350 Ontario Inc.), an Ontario corporation (the "Canadian Company"), Bank of
America National Trust and Savings Association, as U.S. Agent, Bank of America
Illinois, as a U.S. Lender, The Chase Manhattan Bank (National Association), as
a U.S. Lender, Bank of America Canada, as Canadian Agent and a Canadian Lender,
and The Chase Manhattan Bank of Canada, as a Canadian Lender.
W I T N E S S E T H:
WHEREAS, the U.S. Company, the Canadian Company, the U.S. Agent, the
U.S. Lenders, the Canadian Agent and the Canadian Lenders are parties to that
certain Credit Agreement dated as of December 13, 1994 (as amended, the "Credit
Agreement") and to certain other documents executed in connection with the
Credit Agreement;
WHEREAS, in connection with the assignment by BAI to The Chase
Manhattan Bank (National Association) ("U.S. Chase") of 50% of its Revolving
Commitment and Term Commitment and the assignment by BofA (Canada) to The Chase
Manhattan Bank of Canada ("Canadian Chase") of 50% of its Revolving Commitment
and Term Commitment, the Companies, the Agents and the Lenders have agreed to
the amendments as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms in the Credit
Agreement.
2. AMENDMENT TO THE CREDIT AGREEMENT. The definition of
"Commitment Percentage" set forth in Section 1.01 of the Credit Agreement is
amended and restated in its entirety as follows:
"Commitment Percentage" means, (i) as to any U.S. Lender, the
percentage equivalent of the sum of such Lender's Revolving Commitment
and Term Commitment to the U.S. Company, divided by the aggregate
amount of Revolving Commitments and Term Commitments to the U.S.
Company, and (ii) with respect to any Canadian Lender, the percentage
equivalent of the sum of such Lender's Revolving Commitment and Term
Commitment to the Canadian Company (with the Commitments of a Canadian
Lender expressed is U.S. Dollars at the Closing Date Exchange Rate),
divided by the aggregate amount of Revolving Commitments and Term
Commitments to the Canadian Company (with the aggregate amount of such
Commitments expressed in U.S. Dollars at the Closing Date Exchange
Rate).
<PAGE> 2
3. CO-AGENTS. The Companies, the Agents and the Lenders agree
that each of U.S. Chase and Canadian Chase are appointed as "co-agents" under
the Credit Agreement. Neither U.S. Chase nor Canadian Chase, as a co-agent,
shall have any right, power, obligation, liability, responsibility or duty
under the Credit Agreement or any other Loan Document other than those
applicable to all Lenders. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders so identified as co-agents in taking
or not taking action under the Credit Agreement.
4. NO WAIVER OF PAST DEFAULTS. Nothing contained herein shall be
deemed to constitute a waiver of any Event of Default that may heretofore or
hereafter occur or have occurred and be continuing, or to modify any provision
of the Credit Agreement except as expressly provided herein.
5. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter
into this Agreement, each Company represents and warrants to Lenders that the
execution, delivery and performance by such Company of this Agreement are
within its corporate powers, have been duly authorized by all necessary
corporate action (including, without limitation, shareholder approval), have
received all necessary governmental approval (if any shall be required), and do
not and will not contravene or conflict with any provision of law applicable to
such Company, the Organization Documents of such Company, or any order,
judgment or decree of any court or other agency of government or any
Contractual Obligation binding upon such Company; and the Credit Agreement as
amended as of the date hereof is the legal, valid and binding obligation of
such Company enforceable against such Company in accordance with its terms.
6. MISCELLANEOUS.
(a) Captions. Section captions used in this Agreement
are for convenience only, and shall not affect the construction of
this Agreement.
(b) Governing Law. This Agreement shall be a contract
made under and governed by the laws of the State of Illinois, without
regard to conflict of laws principles. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
(c) Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one
and the same Agreement.
(d) Successors and Assigns. This Agreement shall be
binding upon the Companies, Agents and Lenders and their respective
successors and assigns, and shall
2
<PAGE> 3
inure to the sole benefit of the Companies, Agents and Lenders and the
successors and assigns of the Companies, Agents and Lenders.
(e) References. Any reference to the Credit Agreement
contained in any notice, request, certificate, or other document
executed concurrently with or after the execution and delivery of this
Agreement shall be deemed to include this Agreement unless the context
shall otherwise require.
(f) Continued Effectiveness. Notwithstanding anything
contained herein, the terms of this Agreement are not intended to and
do not serve to effect a novation as to the Credit Agreement. The
parties hereby expressly do not intend to extinguish the Credit
Agreement. Instead, it is the express intention of the parties hereto
to reaffirm the indebtedness created under the Credit Agreement and
secured by the Collateral. The Credit Agreement is amended hereby and
each of the Loan Documents remain in full force and effect.
(g) Costs, Expenses and Taxes. Each Company affirms and
acknowledges that Section 10.04 of the Credit Agreement applies to
this Agreement and the transactions and agreements and documents
contemplated hereunder.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
STUART ENTERTAINMENT, INC. BINGO PRESS & SPECIALTY LIMITED
By By
---------------------------- ----------------------------------------
Title: Title:
------------------------- -------------------------------------
BANK OF AMERICA NATIONAL BANK OF AMERICA CANADA, as Canadian Agent
TRUST AND SAVINGS
ASSOCIATION, as U.S. Agent
By By
---------------------------- ----------------------------------------
Title: Title:
------------------------- -------------------------------------
BANK OF AMERICA ILLINOIS, as a BANK OF AMERICA CANADA, as Canadian
U.S. Lender Lender
By By
---------------------------- ----------------------------------------
Title: Title:
------------------------- -------------------------------------
THE CHASE MANHATTAN BANK THE CHASE MANHATTAN BANK OF
(NATIONAL ASSOCIATION), as a CANADA, as a Canadian Lender
U.S. Lender
By By
---------------------------- ----------------------------------------
Title: Title:
------------------------- -------------------------------------
4
<PAGE> 1
EXHIBIT 10.3
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date: August 31, 1995
To: Stuart Entertainment, Inc.
3211 Nebraska Avenue
Council Bluffs, Iowa 51501
Attn: President
and
Bank of America National Trust and
Savings Associations, as Agent
1455 Market Street, 12th Floor
San Francisco, California 94103
Attn: Agency Management Services #5596
Re: Assignment under the Credit Agreement referred to below
Ladies and Gentlemen:
We refer to Section 10.08 of the Credit Agreement, dated as of
December 13, 1994 (as amended or otherwise modified, the "Credit Agreement"),
among Stuart Entertainment, Inc., a Delaware corporation (the "U.S. Company"),
1089350 Ontario Inc. (n/k/a/ Bingo Press & Specialty Limited), an Ontario
corporation (the "Canadian Company"), the various financial lending
institutions from time to time parties thereto, Bank of America Canada, as
agent as provided therein (the "Canadian Agent"), and Bank of America National
Trust and Savings Association, as agent as provided therein (the "U.S. Agent").
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
Bank of America Illinois (the "Assignor") hereby assigns and delegates
to The Chase Manhattan Bank (National Association) (the "Assignee") an interest
of 50% of all of the rights and obligations of Assignor under the Credit
Agreement and the other Loan Documents in respect of Assignor's Revolving
Commitment, Term Commitment, outstanding Revolving Loans, outstanding Letters
of Credit and outstanding Term Loans to the U.S. Company (such interest in such
rights and obligations are hereinafter referred to as the "Assigned Interest"),
and Assignee hereby accepts such assignment and delegation. After giving
effect to such assignment and delegation, each of the Assignee's and Assignor's
Revolving Commitment and Term Commitment (which is the outstanding principal
balance of its Term Loans) to the U.S. Company for the purposes of the Credit
Agreement will be as set forth above the signatures hereof.
<PAGE> 2
The Assignor hereby instructs the U.S. Agent to make all payments from
the Effective Date (as defined below) hereof in respect of the Assigned
Interest directly to the Assignee; provided, that Assignee shall not be
entitled to any portion of the Upfront Fee set forth in Section 2.10(a) of the
Credit Agreement or the Administrative Fee set forth in Section 2.10(c) of the
Credit Agreement. The Assignor and the Assignee agree that all interest and
fees accrued up to, but not including, the Effective Date of the assignment and
delegation being made hereby are the property of the Assignor, and not the
Assignee. The Assignee agrees that, upon receipt of any such interest or fees,
the Assignee will promptly remit the same to the Assignor.
The Assignor represents and warrants to the Assignee that (a) the
Assignor is the legal and beneficial owner of the Assigned Interest and the
Assigned Interest is free and clear of any adverse claim, (b) the Assignor has
committed to make the Revolving Loans in an aggregate principal amount not to
exceed U.S. $10,000,000 of which U.S. $__________ is outstanding as of August
28, 1995 and has made a Term Loan in an aggregate principal amount of U.S.
$5,000,000, of which U.S. $4,500,000 is currently outstanding, (c) the Assignor
has full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and Assumption Agreement and any other documents
required or permitted to be executed or delivered by it in connection with this
Assignment and Assumption Agreement and to fulfill its obligations under, and
to consummate the transactions contemplated by, this Assignment and Assumption
Agreement, and no governmental authorizations or consents or other
authorizations or consents are required in connection therewith, (d) this
Assignment and Assumption Agreement constitutes the legal, valid and binding
obligation of the Assignor enforceable against the Assignor in accordance with
its terms, (e) the making and performance by the Assignor of this Assignment
and Assumption Agreement and any other documents required or permitted to be
executed or delivered by it in connection with this Assignment and Assumption
Agreement do not and will not violate any law or regulation of the jurisdiction
of its organization or any other law or regulation applicable to it and (f) the
Assignor has neither given nor received written notice of the occurrence of a
Default or an Event of Default, except as described in the Waiver and First
Amendment to Credit Agreement dated as of April 14, 1995, and the Waiver and
Second Amendment to Credit Agreement dated as of August 14, 1995.
The Assignee hereby confirms that it has received a copy of the Credit
Agreement and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the Loans thereunder. The Assignee acknowledges and
agrees that it (i) has made and will continue to make such inquiries and has
taken and will take such care on its own behalf as would have been the case had
its Commitment been granted and its Loans been made directly by such Assignee
to the U.S. Company without the intervention of the Applicable Agent of such
Company, the Assignor or any other Lender and (ii) has made and will continue
to make, independently and without reliance upon the Agents, the Assignor or
any other Lender and based on such documents and information as it has deemed
appropriate, its own credit analysis and decisions relating to the Credit
Agreement. The Assignee further acknowledges and agrees that neither the
Agents nor the Assignor has made any representations or warranties about the
creditworthiness of the Companies or any other party to the Credit Agreement or
any other Loan Document or with
2
<PAGE> 3
respect to the legality, validity, sufficiency or enforceability of the Credit
Agreement or any other Loan Document or the value of any security therefor.
This Assignment shall be made without recourse to the Assignor.
The Assignee represents and warrants to the U.S. Agent that, as of the
date hereof, the U.S. Company will not be obligated to pay any greater amount
under Section 3.01 of the Credit Agreement than the U.S. Company is obligated
to pay to the Assignor under such Sections.
Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agent:
(a) the Assignee (i) shall be deemed automatically to
have become a party to the Credit Agreement and have all the rights
and obligations of a "Lender" under the Credit Agreement as if it were
an original signatory thereto to the extent specified in the second
paragraph hereof; and (ii) agrees to be bound by the terms and
conditions set forth in the Credit Agreement as if it were an original
signatory thereto; and
(b) the Assignor shall be released from its obligations
under the Credit Agreement to the extent specified in the second
paragraph hereof.
The payment of the processing fee referred to in clause (a)(i)(C) of
Section 10.08 of the Credit Agreement is hereby waived by the U.S. Agent.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned Loans and Commitment(s):
(A) Address for Notices:
The Chase Manhattan Bank (National Association)
999 Broad Street
Bridgeport, Connecticut 06604
Attention: A. Neil Sweeny
Telephone: (203) 368-5010
Facsimile: (203) 382-6573
(B) Payment Instructions:
The Chase Manhattan Bank (National Association)
New York, New York
ABA No. 021000021
Account No. 900-9-00019
For further credit to: Commercial OPS #520
For the Account of Stuart Entertainment, Inc.
3
<PAGE> 4
(C) Effective Date of Assignment: August 31, 1995
The Assignee has delivered, if appropriate, to the U.S. Agent and such
Company's Applicable Agent the forms and certificates referred to in Section
3.01(f) of the Credit Agreement.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER,
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS.
This Assignment and Assumption Agreement may be executed in any number
of counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same agreement. Please evidence your
consent to and acceptance of the proposed assignment and delegation set forth
herein by signing and returning counterparts hereof to the Assignor and the
Assignee.
Assignee's Revolving Commitment = U.S. $5,000,000
Assignee's Term Commitment (the outstanding principal
balance of its Term Loans) = U.S. $2,250,000
Assignor's Revolving Commitment = U.S. $5,000,000
Assignor's Term Commitment (the outstanding principal
balance of its Term Loans] = U.S. $2,250,000
BANK OF AMERICA ILLINOIS
By
----------------------------------------
Title:
----------------------------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By
----------------------------------------
Title:
----------------------------------------
4
<PAGE> 5
ACCEPTED AND CONSENTED TO
this ____ day of August 1995
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS BANK ASSOCIATION, as Agent
By
----------------------------------------
Title:
------------------------------------
CONSENTED TO
this day of August 1995
----
STUART ENTERTAINMENT, INC.
By
----------------------------------------
Title:
------------------------------------
5
<PAGE> 1
EXHIBIT 10.4
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date: August 31, 1995
To: Bingo Press & Specialty Limited
301 Louth Street
St. Catharines, Ontario
and
Bank of America Canada, as Agent
Four King Street West
Toronto, Ontario M5H 1B6
Re: Assignment under the Credit Agreement referred to below
Ladies and Gentlemen:
We refer to Section 10.08 of the Credit Agreement, dated as of
December 13, 1994 (as amended or otherwise modified, the "Credit Agreement"),
among Stuart Entertainment, Inc., a Delaware corporation (the "U.S. Company"),
1089350 Ontario Inc. (n/k/a Bingo Press & Specialty Limited), an Ontario
corporation (the "Canadian Company"), the various financial lending
institutions from time to time parties thereto, Bank of America Canada, as
agent as provided therein (the "Canadian Agent"), and Bank of America National
Trust and Savings Association, as agent as provided therein (the "U.S. Agent").
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
Bank of America Canada (the "Assignor") hereby assigns and delegates
to The Chase Manhattan Bank of Canada (the "Assignee") an interest of 50% of
all of the rights and obligations of Assignor under the Credit Agreement and
the other Loan Documents in respect of Assignor's Revolving Commitment, Term
Commitment, outstanding Revolving Loans, outstanding Letters of Credit and
outstanding Term Loans to the Canadian Company (such interest in such rights
and obligations are hereinafter referred to as the "Assigned Interest"), and
Assignee hereby accepts such assignment and delegation. After giving effect to
such assignment and delegation, each of Assignee's and Assignor's Revolving
Commitment and Term Commitment (which is the outstanding principal balance of
its Term Loans) to the Canadian Company for the purposes of the Credit
Agreement will be as set forth above the signatures thereof.
The Assignor hereby instructs the Canadian Agent to make all payments
from the Effective Date (as defined below) hereof in respect of the Assigned
Interest directly to the
<PAGE> 2
Assignee; provided, that Assignee shall not be entitled to any portion of the
Upfront Fee set forth in Section 2.10(a) of the Credit Agreement or the
Administrative Fee set forth in Section 2.10(c) of the Credit Agreement. The
Assignor and the Assignee agree that all interest and fees accrued up to, but
not including, the Effective Date of the assignment and delegation being made
hereby are the property of the Assignor, and not the Assignee. The Assignee
agrees that, upon receipt of any such interest or fees, the Assignee will
promptly remit the same to the Assignor.
The Assignor represents and warrants to the Assignee that (a) the
Assignor is the legal and beneficial owner of the Assigned Interest and the
Assigned Interest is free and clear of any adverse claim, (b) the Assignor has
committed to make the Revolving Loans in an aggregate principal amount not to
exceed Cdn. $13,875,000 of which Cdn. $__________ is outstanding as of August
28, 1995 and has made a Term Loan in an aggregate principal amount of Cdn.
$13,875,000 of which Cdn. $12,487,500 is currently outstanding, (c) the
Assignor has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption Agreement and any other
documents required or permitted to be executed or delivered by it in connection
with this Assignment and Assumption Agreement and to fulfill its obligations
under, and to consummate the transactions contemplated by, this Assignment and
Assumption Agreement, and no governmental authorizations or consents or other
authorizations or consents are required in connection therewith, (d) this
Assignment and Assumption Agreement constitutes the legal, valid and binding
obligation of the Assignor enforceable against the Assignor in accordance with
its terms, (e) the making and performance by the Assignor of this Assignment
and Assumption Agreement and any other documents required or permitted to be
executed or delivered by it in connection with this Assignment and Assumption
Agreement do not and will not violate any law or regulation of the jurisdiction
of its organization or any other law or regulation applicable to it and (f) the
Assignor has neither given nor received written notice of the occurrence of a
Default or an Event of Default, except as described in the Waiver and First
Amendment to Credit Agreement dated as of April 14, 1995, and the Waiver and
Second Amendment to Credit Agreement dated as of August 14, 1995.
The Assignee hereby confirms that it has received a copy of the Credit
Agreement and the exhibits related thereto, together with copies of the
documents which were required to be delivered under the Credit Agreement as a
condition to the making of the Loans thereunder. The Assignee acknowledges and
agrees that it (i) has made and will continue to make such inquiries and has
taken and will take such care on its own behalf as would have been the case had
its Commitment been granted and its Loans been made directly by such Assignee
to the Canadian Company without the intervention of the Applicable Agent of
such Company, the Assignor or any other Lender and (ii) has made and will
continue to make, independently and without reliance upon the Agents, the
Assignor or any other Lender and based on such documents and information as it
has deemed appropriate, its own credit analysis and decisions relating to the
Credit Agreement. The Assignee further acknowledges and agrees that neither
the Agents nor the Assignor has made any representations or warranties about
the creditworthiness of the Companies or any other party to the Credit
Agreement or any other Loan Document or with respect to the legality, validity,
sufficiency or enforceability of the Credit
2
<PAGE> 3
Agreement or any other Loan Document or the value of any security therefor.
This Assignment shall be made without recourse to the Assignor.
The Assignee represents and warrants to the Canadian Agent that, as of
the date hereof, the Canadian Company will not be obligated to pay any greater
amount under Section 3.01 of the Credit Agreement than the Canadian Company is
obligated to pay to the Assignor under such Sections.
Except as otherwise provided in the Credit Agreement, effective as of
the date of acceptance hereof by the Agent:
(a) the Assignee (i) shall be deemed automatically to
have become a party to the Credit Agreement and have all the rights
and obligations of a "Lender" under the Credit Agreement as if it were
an original signatory thereto to the extent specified in the second
paragraph hereof; and (ii) agrees to be bound by the terms and
conditions set forth in the Credit Agreement as if it were an original
signatory thereto; and
(b) the Assignor shall be released from its obligations
under the Credit Agreement to the extent specified in the second
paragraph hereof.
The payment of the processing fee referred to in clause (a)(i)(C) of
Section 10.08 of the Credit Agreement is hereby waived by the Canadian Agent.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned Loans and Commitment(s):
(A) Address for Notices:
The Chase Manhattan Bank of Canada
150 King Street West
Toronto, Ontario M5H 1J9
Attention: Timothy Wilson
Telephone: (416) 585-3367
Facsimile: (416) 585-3370
with a copy to:
The Chase Manhattan Bank (National Association)
999 Broad Street
Bridgeport, Connecticut 06604
Attention: A. Neil Sweeny
Telephone: (203) 368-5010
Facsimile: (203) 382-6573
3
<PAGE> 4
(B) Payment Instructions:
Royal Bank of Canada
Main Branch, Toronto
Correspondent Banking Division
Transit No. 07172
F/A: The Chase Manhattan Bank of Canada
Account No. 219-247-4
(C) Effective Date of Assignment: August 31, 1995
The Assignee has delivered, if appropriate, to the Canadian Agent and
such Company's Applicable Agent the forms and certificates referred to in
Section 3.01(f) of the Credit Agreement.
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER,
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF ILLINOIS.
This Assignment and Assumption Agreement may be executed in any number
of counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same agreement. Please evidence your
consent to and acceptance of the proposed assignment and delegation set forth
herein by signing and returning counterparts hereof to the Assignor and the
Assignee.
Assignee's Revolving Commitment = Cdn. $6,937,500
Assignee's Term Commitment (the outstanding principal
balance of its Term Loans) = Cdn. $6,243,750
Assignor's Revolving Commitment = Cdn. $6,937,500
Assignor's Term Commitment (the outstanding principal
balance of its Term Loans) = Cdn. $6,243,750
BANK OF AMERICA CANADA
By
------------------------------------
Title:
---------------------------------
4
<PAGE> 5
THE CHASE MANHATTAN BANK OF CANADA
By
-----------------------------------
Title:
--------------------------------
ACCEPTED AND CONSENTED
this ____ day of August 1995
BANK OF AMERICA CANADA,
as Agent
By
-------------------------------
Title:
----------------------------
CONSENTED TO
this ____ day of August 1995
BINGO PRESS & SPECIALTY LIMITED
(f/k/a 108935 Ontario Inc.)
By
-------------------------------
Title:
----------------------------
5
<PAGE> 1
EXHIBIT 10.5
REVOLVING NOTE
U.S. $5,000,000 August 31, 1995
FOR VALUE RECEIVED, the undersigned, Stuart Entertainment, Inc., a
Delaware corporation (the "Borrower"), promises to pay to the order of The
Chase Manhattan Bank (National Association) (the "Lender") on December 13, 1999
the principal sum of Five Million Dollars (U.S. $5,000,000) or, if different,
the aggregate unpaid principal amount of all Revolving Loans made by the Lender
pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, 1089350 Ontario Inc. (n/k/a
Bingo Press & Specialty Limited), the various financial institutions (including
the Lender) as are, or may from time to time become, parties thereto, Bank of
America National Trust and Savings Association, as agent as provided therein,
and Bank of America Canada, as agent as provided therein, regardless of whether
such principal amount is shown on the schedule attached hereto (or any
continuation thereof).
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the U.S. Agent pursuant to the Credit Agreement.
This Note, together with that certain Revolving Note of even date
herewith (the "BAI Revolving Note") in the principal amount of U.S. $5,000,000
issued by Borrower to Bank of America Illinois ("BAI"), replaces in its
entirety that certain Revolving Note dated December 13, 1994 (the "Original
Revolving Note") in the principal amount of U.S. $10,000,000 issued by
Borrower to BAI. This Note and the BAI Revolving Note do not constitute a
repayment or novation of the Indebtedness of Borrower under the Original Term
Note.
This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
STUART ENTERTAINMENT, INC.
By
------------------------------------
Title:
--------------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------ Applicable
Offshore
Amount of Outstanding Base Offshore Rate Notation
Amount of Principal Principal Rate Rate Interest Made
Date Term Loan Payment Balance Loan Loan Period By
- ---- --------- ------- ------- ---- ---- ------ --
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT 10.6
TERM NOTE
U.S. $2,250,000 August 31, 1995
FOR VALUE RECEIVED, the undersigned, STUART ENTERTAINMENT, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of The
Chase Manhattan Bank (National Association) (the "Lender") the principal sum of
Two Million Two Hundred Fifty Thousand Dollars (U.S. $2,250,000) or, if
different, the aggregate unpaid principal amount of all Term Loans made by the
Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, 1089350 Ontario Inc.
(n/k/a Bingo Press & Specialty Limited), the various financial institutions
(including the Lender) as are, or may from time to time become, parties
thereto, Bank of America National Trust and Savings Association, as agent as
provided therein, and Bank of America Canada, as agent as provided therein,
regardless of whether such principal amount is shown on the schedule attached
hereto (or any continuation thereof). The principal amount of this Note shall
be payable in installments as set forth in the Credit Agreement, with a final
installment (in the amount necessary to pay in full this Note) due and payable
on December 13, 1999.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the U.S. Agent pursuant to the Credit Agreement.
This Note, together with that certain Term Note of even date herewith
(the "BAI Term Note") in the principal amount of U.S. $2,250,000 issued by
Borrower to Bank of America Illinois ("BAI"), replaces in its entirety that
certain Term Note dated December 13, 1994 (the "Original Term Note") in the
principal amount of U.S. $5,000,000 (the outstanding principal balance of which
on the date hereof is U.S. $4,500,000) issued by Borrower to BAI. This Note
and the BAI Term Note do not constitute a repayment or novation of the
Indebtedness of Borrower under the Original Term Note.
This Note is one of the Term Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
STUART ENTERTAINMENT, INC.
By
-------------------------------------
Title:
---------------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------
Applicable BA
Amount of Outstanding BA Base Rate Notation
Amount of Principal Principal Rate Rate Interest Made
Date Term Loan Payment Balance Loan Loan Period By
- ---- --------- --------- ----------- ---- ---- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT 10.7
REVOLVING NOTE
U.S. $5,000,000 August 31, 1995
FOR VALUE RECEIVED, the undersigned, Stuart Entertainment, Inc.,
a Delaware corporation (the "Borrower"), promises to pay to the order of Bank
of America Illinois (the "Lender") on December 13, 1999 the principal sum of
Five Million Dollars (U.S. $5,000,000) or, if different, the aggregate unpaid
principal amount of all Revolving Loans made by the Lender pursuant to that
certain Credit Agreement, dated as of December 13, 1994 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, 1089350 Ontario Inc. (n/k/a Bingo
Press & Specialty Limited), the various financial institutions (including the
Lender) as are, or may from time to time become, parties thereto, Bank of
America National Trust and Savings Association, as agent as provided therein,
and Bank of America Canada, as agent as provided therein, regardless of whether
such principal amount is shown on the schedule attached hereto (or any
continuation thereof).
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the U.S. Agent pursuant to the Credit Agreement.
This Note, together with that certain Revolving Note of even date
herewith (the "Chase Revolving Note") in the principal amount of U.S.
$5,000,000 issued by Borrower to The Chase Manhattan Bank (National
Association), replaces in its entirety that certain Revolving Note dated
December 13, 1994 (the "Original Revolving Note") in the principal amount of
U.S. $10,000,000 issued by Borrower to Lender. This Note and the Chase
Revolving Note do not constitute a repayment or novation of the Indebtedness of
Borrower under the Original Term Note.
This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
STUART ENTERTAINMENT, INC.
By
------------------------------
Title:
--------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------
Applicable BA
Amount of Outstanding BA Base Rate
Amount of Principal Principal Rate Rate Interest Notation
Date Term Loan Payment Balance Loan Loan Period Made
- ---- --------- ------- ------- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT 10.8
TERM NOTE
U.S. $2,250,000 August 31, 1995
FOR VALUE RECEIVED, the undersigned, STUART ENTERTAINMENT, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order of Bank of
America Illinois (the "Lender") the principal sum of Two Million Two Hundred
Fifty Thousand Dollars (U.S. $2,250,000) or, if different, the aggregate
unpaid principal amount of all Term Loans made by the Lender pursuant to that
certain Credit Agreement, dated as of December 13, 1994 (as amended,
supplemented, amended and restated or otherwise modified from time to time,
the "Credit Agreement"), among the Borrower, 1089350 Ontario Inc. (n/k/a Bingo
Press & Specialty Limited), the various financial institutions (including the
Lender) as are, or may from time to time become, parties thereto, Bank of
America National Trust and Savings Association, as agent as provided therein,
and Bank of America Canada, as agent as provided therein, regardless of
whether such principal amount is shown on the schedule attached hereto (or any
continuation thereof). The principal amount of this Note shall be payable in
installments as set forth in the Credit Agreement, with a final installment
(in the amount necessary to pay in full this Note) due and payable on
December 13, 1999.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the U.S. Agent pursuant to the Credit Agreement.
This Note, together with that certain Term Note of even date herewith
(the "Chase Term Note") in the principal amount of U.S. $2,250,000 issued by
Borrower to The Chase Manhattan Bank (National Association), replaces in its
entirety that certain Term Note dated December 13, 1994 (the "Original Term
Note") in the principal amount of U.S. $5,000,000 (the outstanding principal
balance of which on the date hereof is U.S. $4,500,000) issued by Borrower to
Lender. This Note and the Chase Term Note do not constitute a repayment or
novation of the Indebtedness of Borrower under the Original Term Note.
This Note is one of the Term Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
STUART ENTERTAINMENT, INC.
By
------------------------------
Title:
--------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------
Applicable BA
Amount of Outstanding BA Base Rate
Amount of Principal Principal Rate Rate Interest Notation
Date Term Loan Payment Balance Loan Loan Period Made
- ---- --------- ------- ------- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT 10.9
REVOLVING NOTE
Cdn. $6,937,500 August 31, 1995
FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited
(f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises
to pay to the order of The Chase Manhattan Bank of Canada (the "Lender") on
December 13, 1999 the principal sum of Six Million Nine Hundred Thirty Seven
Thousand Five Hundred Canadian Dollars (Cdn. $6,937,500) or, if different, the
aggregate unpaid principal amount of all Revolving Loans made by the Lender
pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, Stuart Entertainment, Inc.,
the various financial institutions (including the Lender) as are, or may from
time to time become, parties thereto, Bank of America National Trust and
Savings Association, as agent as provided therein, and Bank of America Canada,
as agent as provided therein, regardless of whether such principal amount is
shown on the schedule attached hereto (or any continuation thereof).
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of Canada in same day or immediately available funds to the account designated
by the Canadian Agent pursuant to the Credit Agreement.
This Note, together with that certain Revolving Note of even date
herewith (the "BAC Revolving Note") in the principal amount of Cdn. $6,937,500
issued by Borrower to Bank of America Canada ("BAC"), replaces in its entirety
that certain Revolving Note dated December 13, 1994 (the "Original Revolving
Note") in the principal amount of Cdn. $13,875,000 issued by Borrower to BAC.
This Note and the BAC Revolving Note do not constitute a repayment or novation
of the Indebtedness of Borrower under the Original Revolving Note.
This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
BINGO PRESS & SPECIALTY LIMITED
By
------------------------------------
Title:
--------------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------
Applicable BA
Amount of Outstanding BA Base Rate
Amount of Principal Principal Rate Rate Interest Notation
Date Term Loan Payment Balance Loan Loan Period Made
- ---- --------- ------- ------- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT 10.10
TERM NOTE
Cdn. $6,243,750 August 31, 1995
FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited
(f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises
to pay to the order of The Chase Manhattan Bank of Canada (the "Lender") the
principal sum of Six Million Two Hundred Forty-Three Thousand Seven Hundred
Fifty Canadian Dollars (Cdn. $6,243,750) or, if different, the aggregate unpaid
principal amount of all Term Loans made by the Lender pursuant to that certain
Credit Agreement, dated as of December 13, 1994 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, Stuart Entertainment, Inc., the various
financial institutions (including the Lender) as are, or may from time to time
become, parties thereto, Bank of America National Trust and Savings
Association, as agent as provided therein, and Bank of America Canada, as agent
as provided therein, regardless of whether such principal amount is shown on
the schedule attached hereto (or any continuation thereof). The principal
amount of this Note shall be payable in installments as set forth in the Credit
Agreement, with a final installment (in the amount necessary to pay in full
this Note) due and payable on December 13, 1999.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of Canada in same day or immediately available funds to the account designated
by the Canadian Agent pursuant to the Credit Agreement.
This Note, together with that certain Term Note of even date herewith
(the "BAC Term Note") in the principal amount of Cdn. $6,243,750 issued by
Borrower to Bank of America Canada ("BAC"), replaces in its entirety that
certain Term Note dated December 13, 1994 (the "Original Term Note") in the
principal amount of Cdn. $13,875,000 (the outstanding principal balance of
which on the date hereof is Cdn. $12,487,500) issued by Borrower to BAC. This
Note and the BAC Term Note do not constitute a repayment or novation of the
Indebtedness of Borrower under the Original Term Note.
This Note is one of the Term Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
BINGO PRESS & SPECIALTY LIMITED
By
------------------------------
Title:
---------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------
Applicable BA
Amount of Outstanding BA Base Rate
Amount of Principal Principal Rate Rate Interest Notation
Date Term Loan Payment Balance Loan Loan Period Made
- ---- --------- ------- ------- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT 10.11
REVOLVING NOTE
Cdn. $6,937,500 August 31, 1995
FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited
(f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises
to pay to the order of Bank of America Canada (the "Lender") on December 13,
1999 the principal sum of Six Million Nine Hundred Thirty-Seven Thousand Five
Hundred Canadian Dollars (Cdn. $6,937,500) or, if different, the aggregate
unpaid principal amount of all Revolving Loans made by the Lender pursuant to
that certain Credit Agreement, dated as of December 13, 1994 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Stuart Entertainment, Inc., the
various financial institutions (including the Lender) as are, or may from time
to time become, parties thereto, Bank of America National Trust and Savings
Association, as agent as provided therein, and Bank of America Canada, as agent
as provided therein, regardless of whether such principal amount is shown on
the schedule attached hereto (or any continuation thereof).
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of Canada in same day or immediately available funds to the account designated
by the Canadian Agent pursuant to the Credit Agreement.
This Note, together with that certain Revolving Note of even date
herewith (the "Chase Revolving Note") in the principal amount of Cdn.
$6,937,500 issued by Borrower to The Chase Manhattan Bank of Canada, replaces
in its entirety that certain Revolving Note dated December 13, 1994 (the
"Original Revolving Note") in the principal amount of Cdn. $13,875,000 issued
by Borrower to Lender. This Note and the Chase Revolving Note do not
constitute a repayment or novation of the Indebtedness of Borrower under the
Original Revolving Note.
This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
BINGO PRESS & SPECIALTY LIMITED
By
-------------------------------
Title:
---------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------
Applicable BA
Amount of Outstanding BA Base Rate
Amount of Principal Principal Rate Rate Interest Notation
Date Term Loan Payment Balance Loan Loan Period Made
- ---- --------- ------- ------- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT 10.12
TERM NOTE
Cdn. $6,243,750 August 31, 1995
FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited
(f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises
to pay to the order of Bank of America Canada (the "Lender") the principal sum
of Six Million Two Hundred Forty-Three Thousand Seven Hundred Fifty Canadian
Dollars (Cdn. $6,243,750) or, if different, the aggregate unpaid principal
amount of all Term Loans made by the Lender pursuant to that certain Credit
Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, Stuart Entertainment, Inc., the various financial
institutions (including the Lender) as are, or may from time to time become,
parties thereto, Bank of America National Trust and Savings Association, as
agent as provided therein, and Bank of America Canada, as agent as provided
therein, regardless of whether such principal amount is shown on the schedule
attached hereto (or any continuation thereof). The principal amount of this
Note shall be payable in installments as set forth in the Credit Agreement,
with a final installment (in the amount necessary to pay in full this Note) due
and payable on December 13, 1999.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity and/or judgment,
until paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful money
of Canada in same day or immediately available funds to the account designated
by the Canadian Agent pursuant to the Credit Agreement.
This Note, together with that certain Term Note of even date herewith
(the "Chase Term Note") in the principal amount of Cdn. $6,243,750 issued by
Borrower to The Chase Manhattan Bank of Canada, replaces in its entirety that
certain Term Note dated December 13, 1994 (the "Original Term Notes") in the
principal amount of Cdn. $13,875,000 (the outstanding principal balance of
which on the date hereof is Cdn. $12,487,500) issued by Borrower to Lender.
This Note and the Chase Term Note do not constitute a repayment or novation of
the Indebtedness of Borrower under the Original Term Note.
This Note is one of the Term Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Borrower is permitted
and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise defined, terms
used herein have the meanings provided in the Credit Agreement.
<PAGE> 2
ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE,
SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF
DISHONOR.
THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
BINGO PRESS & SPECIALTY LIMITED
By
------------------------------------
Title:
--------------------------------
2
<PAGE> 3
<TABLE>
<CAPTION>
Grid
Portion of
Principal
Balance Maintained
------------------
Applicable BA
Amount of Outstanding BA Base Rate
Amount of Principal Principal Rate Rate Interest Notation
Date Term Loan Payment Balance Loan Loan Period Made
- ---- --------- ------- ------- ---- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 1
EXHIBIT NO. 11
STUART ENTERTAINMENT, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(Amounts In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -----------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shares of common stock outstanding
at beginning of period (1) 6,695 3,405 6,539 3,405
Weighted-average shares issued
during the period 0 2 95 1
Weighted-average shares assumed
issued under stock option plans
and exercise of warrants during
the period (assuming the treasury
stock method) 22 84 48 85
------- ------- ------- ------
Average common and common equivalent
shares outstanding 6,717 3,491 6,682 3,491
======= ======== ======= ======
Net earnings $ 519 $ 211 $ 236 $1,206
======= ======= ======= ======
Earnings per share $ 0.08 $ 0.06 $ 0.04 $ 0.34
======= ======= ======= ======
</TABLE>
(1) This represents total outstanding shares of common stock less treasury
shares. See Note 2 of Notes to Consolidated Financial Statements.
See Notes to Consolidated Financial Statements in Part I.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS AND CASHFLOWS FOR THE NINE MONTHS ENDED
SEPT. 30, 1995 AND THE CONSOLIDATED BALANCE SHEET AS OF SEPT. 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPANY'S QUARTERLY REPORT ON
FROM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,178
<SECURITIES> 0
<RECEIVABLES> 21,433
<ALLOWANCES> 2,041
<INVENTORY> 20,722
<CURRENT-ASSETS> 43,965
<PP&E> 34,146
<DEPRECIATION> 12,317
<TOTAL-ASSETS> 99,975
<CURRENT-LIABILITIES> 24,956
<BONDS> 40,054
<COMMON> 68
0
0
<OTHER-SE> 31,671
<TOTAL-LIABILITY-AND-EQUITY> 99,975
<SALES> 83,916
<TOTAL-REVENUES> 83,916
<CGS> 57,142
<TOTAL-COSTS> 21,084
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 432
<INTEREST-EXPENSE> 3,365
<INCOME-PRETAX> 1,893
<INCOME-TAX> 1,657
<INCOME-CONTINUING> 236
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 236
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
