<PAGE>
Page 1 of 21
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14399
WESTERN PUBLISHING GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1104930
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
444 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 688-4500
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, par value $.01 per share: 20,958,524 shares
outstanding as of May 27, 1994.
<PAGE>
WESTERN PUBLISHING GROUP, INC. AND
SUBSIDIARIES
TABLE OF CONTENTS
Page
Number
------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Independent Accountants' Report 3
Condensed Consolidated Balance Sheets--
April 30, 1994 (Unaudited) and January 29, 1994 4
Condensed Consolidated Statements of Operations--
Three months ended April 30, 1994
and May 1, 1993 (Unaudited) 6
Condensed Consolidated Statements of Cash Flow--
Three months ended April 30, 1994
and May 1, 1993 (Unaudited) 7
Notes to Condensed Consolidated Financial
Statements (Unaudited) 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
EXHIBITS
Exhibit 10.85 - Amended and Restated Credit Agreement
dated as of May 31, 1994 20
Exhibit 15 - Letter re: unaudited interim financial
information 21
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Western Publishing Group, Inc.
New York, New York
We have reviewed the accompanying condensed consolidated balance sheet
of Western Publishing Group, Inc. and subsidiaries as of April 30, 1994,
and the related condensed consolidated statements of operations and cash
flows for the three-month periods ended April 30, 1994 and May 1, 1993.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and of making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of
an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Western Publishing
Group, Inc. and subsidiaries as of January 29, 1994, and the related
consolidated statements of operations, common stockholders' equity and
cash flows for the year then ended (not presented herein); and in our
report dated May 13, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of
January 29, 1994 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
Deloitte & Touche
Milwaukee, Wisconsin
June 13, 1994
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except for Share and Per Share Data)
APRIL 30, JANUARY 29,
ASSETS 1994 1994
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $ 7,847 $ 9,513
Accounts receivable 95,711 137,921
Inventories 121,660 121,178
Prepublication and prepaid advertising costs 8,253 7,720
Royalty advances 3,140 2,970
Recoverable income taxes 24,191 12,830
Deferred income taxes 20,983 20,823
Net assets held for sale 94,985 88,523
Other current assets 7,406 10,361
-------- --------
Total current assets 384,176 411,839
-------- --------
OTHER ASSETS 12,363 12,447
-------- --------
PROPERTY, PLANT AND EQUIPMENT 112,146 108,601
Less accumulated depreciation and amortization 42,908 41,351
-------- --------
Total property, plant and equipment 69,238 67,250
-------- --------
IDENTIFIED INTANGIBLES AND COST IN EXCESS OF NET
ASSETS ACQUIRED (GOODWILL), less accumulated
amortization of $17,592 and $17,066,
respectively 13,054 13,580
-------- --------
$478,831 $505,116
-------- --------
-------- --------
See Notes to Condensed Consolidated Financial Statements.
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except for Share and Per Share Data)
April 30, January 29,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1994
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $ 18,766 $ 40,532
<PAGE>
Accrued compensation and fringe benefits 7,917 10,644
Income taxes 340 342
Other current liabilities 19,626 27,342
-------- --------
Total current liabilities 46,649 78,860
-------- --------
NONCURRENT LIABILITIES AND CREDITS:
Long-term debt 249,816 229,812
Accumulated postretirement benefit obligation 26,368 25,949
Other 1,778 1,837
-------- --------
Total noncurrent liabilities and credits 277,962 257,598
-------- --------
CONVERTIBLE PREFERRED STOCK - Series A, 20,000
shares authorized, no par value, 19,970
shares issued and outstanding; at mandatory
redemption amount 9,985 9,985
-------- --------
COMMON STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, 30,000,000 shares
authorized, 21,167,324 shares issued 212 212
Additional paid-in capital 80,213 80,213
Retained earnings 68,485 82,714
Cumulative translation adjustments (1,853) (1,644)
-------- --------
147,057 161,495
Less cost of Common Stock in treasury -
208,800 shares 2,822 2,822
-------- --------
Total common stockholders' equity 144,235 158,673
-------- --------
$478,831 $505,116
-------- --------
-------- --------
See Notes to Condensed Consolidated Financial Statements.
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except for Per Share Data)
THREE MONTHS ENDED
----------------------
APRIL 30, MAY 1,
1994 1993
(UNAUDITED)
REVENUES: $ 68,083 $110,963
-------- --------
COSTS AND EXPENSES:
Cost of sales 56,679 76,560
Selling, general and administrative 30,209 44,711
Provision for writedown of division 28,180
<PAGE>
-------- --------
Total costs and expenses 86,888 149,451
-------- --------
LOSS BEFORE INTEREST EXPENSE, INCOME TAX
BENEFIT, AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE (18,805) (38,488)
INTEREST EXPENSE 4,098 3,561
-------- --------
LOSS BEFORE INCOME TAX BENEFIT
AND CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE (22,903) (42,049)
INCOME TAX BENEFIT (8,886) (11,737)
-------- --------
LOSS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE (14,017) (30,312)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (14,800)
-------- --------
NET LOSS $(14,017) $(45,112)
-------- --------
-------- --------
LOSS PER COMMON SHARE:
BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $(0.68) $(1.45)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (0.71)
------ ------
NET LOSS $(0.68) $(2.16)
------ ------
------ ------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 20,959 20,950
------ ------
------ ------
See Notes to Condensed Consolidated Financial Statements.
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
THREE MONTHS ENDED
--------------------
APRIL 30, MAY 1,
1994 1993
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(14,017) $(45,112)
Adjustments to reconcile net loss
<PAGE>
to net cash used in operating activities:
Depreciation and amortization 3,254 2,752
Amortization of intangibles arising from
acquisition 1,201 1,222
Provision for losses on accounts receivable 1,466 1,403
Cumulative effect of change in accounting
principle (before income tax benefit) 24,300
Provision for writedown of division 28,180
Other 410 (228)
Changes in assets and liabilities:
Accounts receivable 40,571 18,682
Inventories 482 (14,646)
Prepublication, prepaid advertising
costs and royalty advances (2,253) (5,661)
Net assets held for sale (6,187)
Other current assets 2,533 (683)
Accounts payable (22,111) (19,954)
Accrued compensation and fringe benefits (2,664) (2,966)
Income taxes (11,346) (16,745)
Deferred income taxes 19 (11,154)
Other current liabilities (7,981) (10,354)
-------- --------
Net cash used in operating activities (16,623) (50,964)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property, plant and equipment (4,817) (3,372)
Return of investment in joint venture 1,400
-------- --------
Net cash used in investing activities (4,817) (1,972)
-------- --------
(Continued on Next Page)
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
THREE MONTHS ENDED
--------------------
APRIL 30, MAY 1,
1994 1993
(UNAUDITED)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes payable $ 20,000 $ 45,000
Proceeds from issuance of common stock (exercise
of options) 233
Dividends paid on preferred stock (212) (212)
Other (19) (35)
-------- --------
Net cash provided by financing activities 19,769 44,986
-------- --------
Effect of Exchange Rate Changes on Cash 5 25
<PAGE>
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,666) (7,925)
-------- --------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,513 10,441
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,847 $ 2,516
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest $ 6,846 $ 6,320
-------- --------
-------- --------
Income Taxes $ 129 $ 405
-------- --------
-------- --------
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
WESTERN PUBLISHING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - Basis of Presentation
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the
financial position as of April 30, 1994 and the results of operations
and cash flows for the three month periods ended April 30, 1994 and May
1, 1993.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for the full fiscal year.
These financial statements should be read in conjunction with the
consolidated financial statements of the Company contained in the
Company's Annual Report on Form 10-K for the year ended January 29,
1994.
NOTE B - Inventories
Inventories consisted of the following:
APRIL 30, 1994 JANUARY 29, 1994
-------------- ----------------
(IN THOUSANDS)
Raw materials $ 14,609 $ 14,913
Work in process 33,192 28,783
Finished goods 73,859 77,482
-------- --------
$121,660 $121,178
NOTE C - Sale and Phase Out of Operations; Provision for Write-down
of Division; Net Assets Held for Sale
Sale and Phase Out of Operations
On November 29, 1993, the Company announced that it had recently been
approached by several companies expressing a desire to discuss a
business combination. The Board of Directors of the Company authorized
the retention of two investment banking firms as its advisors to explore
alternatives to maximize shareholder value. Based on an analysis of
various alternatives, the Company adopted a plan designed to improve its
competitive position and reduce its cost structure through the sale or
phase out of certain operations, property divestitures and
consolidations, and a workforce reduction.
The plan includes the following major components:
o An agreement in principle to sell the game and puzzle operation
<PAGE>
(including certain inventories) to Hasbro, Inc. (Hasbro) for
approximately $103,000,000. This transaction is subject to customary
conditions and is expected to be completed in the second quarter of
fiscal 1995.
o The decision to exit the direct marketing continuity clubs and school
book club businesses. It is anticipated that this will be completed by
the end of fiscal 1995.
o The closedown and sale of the Company's Fayetteville, North Carolina
manufacturing and distribution facility, which is primarily dedicated to
the game and puzzle operation but will not be included in the sale to
Hasbro.
o The decision to streamline the Company's publishing business so as to
focus on its core competencies. This will include a reduction in the
management, administrative and direct labor workforces.
The Company will use the net cash proceeds arising from the Plan to
repay outstanding debt under its Revolving Credit Agreement. It is
anticipated that the Plan, which commenced in the first quarter of
fiscal 1995, will result in a pre-tax net gain of approximately
$20,000,000, inclusive of operating losses of the game, puzzle, direct
marketing and school book club operations from January 30, 1994 through
the expected disposition dates. Accordingly, the anticipated gain will
be reflected in the consolidated statement of operations when realized.
The net assets of the game, puzzle, direct marketing and school book
club operations and the Fayetteville facility are included as a
component of Net Assets Held for Sale at April 30, 1994. For the first
quarter of fiscal 1994, the game, puzzle, direct marketing and school
book club operations had revenues of approximately $21,500,000.
Subsequent to January 29, 1994, the statement of operations does not
include the results of these businesses.
Provision for Write-Down of Division
On May 12, 1993, the Board of Directors of the Company directed
management to review the operations of the Advertising Specialty
Division of the Company's Penn Corporation subsidiary and evaluate
various strategic alternatives, including its disposition. Accordingly,
the Company established a provision, including operating losses through
the expected disposition date, to write-down the assets of the Division
to net realizable value.
On April 29, 1994, the Company entered into a letter of intent to sell
this Division for approximately $14,000,000, subject to customary
conditions. On June 10, 1994, the Company announced that negotiations
with one of the two buyers of this Division had terminated. However,
certain other industry participants, who had expressed a strong interest
in the Vitronic and K-Studio portion of the Division, are considering
its acquisition. The transaction is expected to be completed in the
second quarter of fiscal 1995. The net cash proceeds from the sale of
this Division will be utilized to repay outstanding debt under the
<PAGE>
Revolving Credit Agreement.
Revenues and losses before interest expense and income taxes of the
Division, exclusive of the provision for write-down, included in the
accompanying statements of operations for the three months ended May 1,
1993 were $7,202,000 and $(2,083,000), respectively. Subsequent to May
1, 1993, the statements of operations do not include the results of the
Division.
Net Assets Held for Sale
As of April 30, 1994 and January 29, 1994, net assets held for sale
consisted of the following:
APRIL 30, 1994 JANUARY 29, 1994
-------------- ----------------
(IN THOUSANDS)
Current assets (including accounts
receivable and inventories of
$47,758,000 and $48,768,000,
respectively) $ 60,932 $ 60,020
Property, plant and equipment, net 32,371 32,655
Other assets (primarily identified
intangibles and goodwill), net 31,048 27,933
-------- --------
124,351 120,608
Less:
Current liabilities (5,056) (5,680)
Provision for write-down, net of
Division operations subsequent
to May 1, 1993 (24,310) (26,405)
-------- --------
Net assets held for sale $ 94,985 $ 88,523
-------- --------
-------- --------
NOTE D - Postretirement Benefits
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards ("FASB") No. 106, "Employers' Accounting For
Postretirement Benefits Other Than Pensions". FASB No. 106 requires the
Company to accrue the estimated cost of retiree benefit payments during
the years the employee provides services. The Company elected to
recognize the cumulative effect of this obligation on the immediate
recognition basis. For the three months ended May 1, 1993, the
cumulative effect of this change in accounting principle reduced net
earnings by $24,300,000 ($14,800,000, net of income taxes).
NOTE E - Loss Per Common Share
Loss per common share was computed as follows:
THREE MONTHS ENDED
---------------------------
<PAGE>
APRIL 30, 1994 MAY 1, 1993
-------------- -----------
(IN THOUSANDS,
EXCEPT FOR PER SHARE DATA)
Net loss $(14,017) $(45,112)
Preferred dividend requirements (212) (212)
-------- --------
Loss applicable to common stock $(14,229) $(45,324)
-------- --------
-------- --------
Weighted average common shares outstanding 20,959 20,950
------ ------
------ ------
Loss per common share $(0.68) $(2.16)
------ ------
------ ------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Revenues for the quarter ended April 30, 1994 decreased $42.9 million
(38.6%) to $68.1 million as compared to $111.0 million for the quarter
ended May 1, 1993. On May 12, 1993, the Board of Directors of the
Company directed management to review the operations of the Advertising
Specialty Division of the Company's Penn Corporation subsidiary and
evaluate various strategic alternatives, including its disposition.
Further, on April 7, 1994, the Company announced the adoption of a plan
(the "Plan") to improve the Company's competitive position and reduce
its operating cost structure through the sale or closedown of certain
operations, property divestitures and consolidations, and a reduction in
the management, administrative and direct labor workforces. The Plan
includes the sale of the game and puzzle operation, the exiting of the
direct marketing continuity clubs and school book club business, the
closure and sale of the Company's Fayetteville, North Carolina
manufacturing and distribution facility and streamlining the Company's
publishing business so as to focus on its core competencies. Therefore,
subsequent to the Company's quarter ended May 1, 1993, the results of
operations do not include the results of the Advertising Specialty
Division and subsequent to January 29, 1994, the results of operations
do not include the results of those businesses to be sold or closed as
part of the aforementioned Plan. Excluding revenues of the operations
described above for both periods, revenues decreased 17.2% or $14.2
million as compared to the prior year. Consumer Products Segment
revenues of the ongoing operations decreased $13.7 million (19.2%) for
the quarter ended April 30, 1994. The decrease was primarily due to the
decline in domestic consumer product sales caused by distractions
resulting from the contemplated sale of the Company; market
uncertainties and employee concerns associated with announced overhead
reduction measures and the pending sales of certain of the Company's
businesses as outlined in the Plan; reduced customer traffic in the
<PAGE>
Company's primary retail accounts resulting from the unusually severe
weather conditions in most of the country; and the continued desire of
the retailer to reduce on-hand inventories, resulting in delays in the
receipt of restocking and future orders. Commercial product segment
revenues, other than revenues of the Advertising Specialty Division, is
comprised of printing services which decreased $.5 million (4.5%) for
the quarter ended April 30, 1994. The decline for the quarter was due
to an increase in sales of graphic products, offset by decreases in the
sale of kits and software products.
There were no price increases in the Consumer Products Segment. Sales
of printing services are the result of individual agreements entered
into with customers as to price and services performed. Accordingly,
the effects on inflation cannot be determined on the sales of printing
services.
The loss before the provision for write-down of Division, interest
expense, income tax benefit and the cumulative effect of change in
accounting principle for the quarter ended April 30, 1994 was $18.8
million as compared to a loss of $10.3 million for the quarter ended May
1, 1993. This change of $8.5 million was the result of a $23.0 million
decrease in gross profit, offset by a $14.5 million decrease in selling,
general and administrative expenses. In addition, in the quarter ended
May 1, 1993, the Company recorded a $28.2 million provision to
write-down the carrying value of the assets of the Advertising Specialty
Division to their estimated net realizable value.
Gross profit decreased $23.0 million (66.9%) to $11.4 million for the
quarter ended April 30, 1994, as compared to $34.4 million for the
quarter ended May 1, 1993. As a percentage of revenues, the gross
profit margin decreased to 16.8% for the quarter ended April 30, 1994
from 31.0% for the quarter ended May 1, 1993. For ongoing operations,
gross profit for the quarter ended April 30, 1994 decreased $13.6
million (54.4%), as compared to $25.0 million for the quarter ended May
1, 1993. As a percentage of revenues, the gross profit margin decreased
to 16.8% for fiscal 1995 as compared to 30.4% for fiscal 1994. In the
Consumer Products Segment, gross profit decreased $13.1 million (54.8%)
to $10.8 million for the quarter ended April 30, 1994 as compared to the
quarter ended May 1, 1993. As a percentage of revenues, the consumer
gross profit margin decreased to 18.7% for fiscal 1995 as compared to
33.4% for fiscal 1994. A substantial portion of the decrease in gross
profit margin was due to lower production in response to the Company's
continued efforts to reduce inventories, resulting in negative
manufacturing variances. Additionally, the decrease in gross profit was
attributable to an unfavorable change in product mix and increased
freight costs associated with category management and direct store ship
programs. In the Commercial Products Segment, the gross profit margin
of printing services decreased to 5.9% from 10.7% of revenues for the
quarter, as compared to the prior year. The decrease was primarily due
to unfavorable manufacturing variances and the change in sales mix to
lower margin services.
Selling, general and administrative expenses for the quarter ended April
30, 1994 decreased $14.5 million (32.4%) to $30.2 million as compared to
<PAGE>
$44.7 million for the quarter ended May 1, 1993. For ongoing
operations, selling, general and administrative expenses for the quarter
ended April 30, 1994 decreased $.9 million (2.9%) to $30.2 million as
compared to $31.1 million for the quarter ended May 1, 1993. This
decrease was primarily attributable to decreased costs associated with
the start up of the category management program at Toys "R" Us and
lower payroll costs associated with workforce reductions, partially
offset by increased creative costs.
Interest expense for the quarter increased $.5 million to $4.1 million
as compared to $3.6 million in fiscal 1994. The increase was due to
higher average debt outstanding and higher interest rates. Total
average outstanding debt increased to $240 million in fiscal 1995 from
$206 million in fiscal 1994 (see Financial Condition, Liquidity and
Capital Resources), while average interest rates increased to 7.1% for
fiscal 1995 as compared to 6.9% for fiscal 1994. The increase in
average interest rates resulted primarily from the increase in short
term market rates.
The effective income tax benefit rate of 38.8% in fiscal 1995 represents
the Company's estimate of the effective tax rate for the full year,
without regard to expected dispositions under the Plan. The income tax
impact of Plan dispositions will be reflected upon their consummation.
For the first quarter ended May 1, 1993, the income tax benefit rate was
27.9%, as certain capital losses associated with the Advertising
Specialty Division were not expected to be realized.
The loss for the quarter ended April 30, 1994, before the provision for
write-down of Division and the cumulative effect of a change in
accounting principle (postretirement benefits other than pensions) was
$14.0 million or $0.68 per share, compared to a loss of $8.5 million or
$0.41 per share for the quarter ended May 1, 1993. During the first
quarter of fiscal 1994, the Company adopted Statement of Financial
Accounting Standards ("FASB") No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions", using the immediate
recognition method. As a result, the Company recorded a pre-tax
non-cash charge of $24.3 million ($14.8 million, net of income taxes) or
$.71 per share as a cumulative effect of a change in accounting
principle in the statement of operations. The Company's provision for
write-down of Division was $28.2 million ($21.8 million, net of income
taxes) or $1.04 per share. Therefore, the net loss for the quarter
ended May 1, 1993 was $45.1 million or $2.16 per share.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Operations for the quarter ended April 30, 1994, excluding non-cash
charges for depreciation, amortization and the provision for losses on
accounts receivable utilized cash of approximately $8.1 million. The
operations for the quarter ended May 1, 1993, excluding depreciation,
amortization, provision for losses on accounts receivable, the adoption
of FASB No. 106 and the provision for the write-down of Division
provided cash of approximately $12.7 million. During the quarters ended
April 30, 1994 and May 1, 1993, other changes in assets and liabilities,
resulting from operating activities, amounted to cash utilization of
<PAGE>
$8.5 million and $63.7 million, respectively, resulting in net cash used
in operating activities of $16.6 million and $51.0 million,
respectively.
Acquisitions of property, plant and equipment were $4.8 million during
the quarter ended April 30, 1994 as compared to $3.4 million during the
quarter ended May 1, 1993. The increase in capital expenditures
includes costs associated with the Company's new order processing,
customer service and inventory management system and the completion of
its third Golden Books Showcase store which opened in New York City, NY
in April 1994. The Company is currently reconsidering its previously
announced plans to undertake a facility expansion of its paper tableware
and party goods operations in Kalamazoo, Michigan in conjunction with
the Company's plan to improve its competitive position and reduce its
overall operating cost structure. As yet, no material commitments for
this facility expansion have been made.
Cash provided by financing activities during the quarters ended April
30, 1994 and May 1, 1993 were primarily from borrowings under the
Company's Revolving Credit Agreement.
Working capital increased to $337.5 million from $333.0 million at
January 29, 1994. Accounts receivable at April 30, 1994 decreased $42.2
million (30.6%) as compared to January 29, 1994, consistent with
historical trends. The income tax effect of the fiscal 1995 operating
results increased recoverable and current deferred income taxes by $11.3
million. Additionally, accounts payable, accrued compensation and
fringe benefits and other current liabilities decreased $32.2 million
(40.8%), consistent with historical trends. The balance of loans
outstanding under the Revolving Credit Agreement at April 30, 1994 as
compared with January 29, 1994, increased $20 million to a total of $100
million.
The Company's Revolving Credit Agreement, dated November 12, 1992,
initially provided for a line of credit totaling $200 million. The
facility provides for the seasonal working capital requirements of the
Company. In October, 1993, the Revolving Credit Agreement was amended
to provide credit availability of $140 million from December 28, 1993
until the third quarter of fiscal 1995. Subsequently, the Revolving
Credit Agreement was further amended to provide for borrowings up to
$125 million through July 31, 1994 and $140 million thereafter; in each
case, including letters of credit of $10 million. Concurrent with the
completion of the sale of the game and puzzle operation (the "Sale"),
the Revolving Credit Agreement facility will be $90 million, including
letters of credit of $10 million. Additionally, the provision that
borrowings not exceed $115 million during any thirty day period in the
first quarter of each fiscal year will be $15 million after the Sale.
The Revolving Credit Agreement expires May 31, 1995.
The Company's management believes that the credit facilities available
under the Revolving Credit Agreement are sufficient to meet the
Company's seasonal borrowing needs.
The sale of the game and puzzle operation, along with the implementation
<PAGE>
of the balance of the Plan is expected to have a favorable effect on the
Company's financial position, results of operations and future capital
requirements. Annual operating costs savings associated with the Plan,
exclusive of the impact of the sale of the game, puzzle, direct
marketing and school book club operations, will begin to be realized in
the second quarter of fiscal 1995. The Company will continue to
evaluate opportunities for other cost savings through fiscal 1995,
including possible additional facility consolidations and further
headcount reductions. It is anticipated that the Plan will be
substantially completed by the fourth quarter of fiscal 1995.
<PAGE>
PART II OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K:
a. Exhibit 10.85 - Amended and Restated Credit Agreement
dated as of May 31, 1994
b. Exhibit 15 - Letter re: unaudited interim financial
information.
c. No reports were filed on Form 8-K during the quarter
for which this report is filed.
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WESTERN PUBLISHING GROUP, INC.
June 13, 1994 /s/ Richard A. Bernstein
Richard A. Bernstein
Chairman
June 13, 1994 /s/ Steven M. Grossman
Steven M. Grossman
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
NUMBER NUMBER
a. Exhibit 10.85 - Amended and Restated Credit Agreement
dated as of May 31, 1994
b. Exhibit 15 - Letter re: unaudited interim financial
information.
c. No reports were filed on Form 8-K during the quarter
for which this report is filed.
<PAGE>
*****************************************************************
*********
WESTERN PUBLISHING GROUP, INC.
---------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 31, 1994
---------------------------------------------------------
FLEET BANK,
as Agent
---------------------------------------------------------
THE BANK OF NEW YORK,
as Co-Agent
*****************************************************************
*********
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it
is attached but is inserted for convenience only.
Page
-----
Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . 1
1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . 1
1.02. Accounting Terms and Determinations. . . . . . . . . . . . . 14
1.03. Types of Loans and Commitments . . . . . . . . . . . . . . . 15
Section 2. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . 15
2.01. Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.02. Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.03. Letters of Credit. . . . . . . . . . . . . . . . . . . . . . 16
2.04. Changes of Commitments; Mandatory Prepayments. . . . . . . . 21
2.05. Commitment Fees. . . . . . . . . . . . . . . . . . . . . . . 22
2.06. Lending Offices. . . . . . . . . . . . . . . . . . . . . . . 22
2.07. Several Obligations; Remedies Independent. . . . . . . . . . 22
2.08. Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.09. Prepayments of Loans . . . . . . . . . . . . . . . . . . . . 23
Section 3. Payments of Principal and Interest . . . . . . . . . . . . . 24
3.01. Repayment of Loans . . . . . . . . . . . . . . . . . . . . . 24
3.02. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . 24
4.01. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.02. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . 25
4.03. Computations . . . . . . . . . . . . . . . . . . . . . . . . 26
4.04. Minimum Amounts. . . . . . . . . . . . . . . . . . . . . . . 26
4.05. Certain Notices. . . . . . . . . . . . . . . . . . . . . . . 26
4.06. Non-Receipt of Funds by the Agent. . . . . . . . . . . . . . 27
4.07. Sharing of Payments, Etc . . . . . . . . . . . . . . . . . . 27
Section 5. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . 28
5.01. Additional Costs . . . . . . . . . . . . . . . . . . . . . . 28
5.02. Additional Costs in Respect of Letters of Credit . . . . . . 30
5.03. Option to Replace Banks. . . . . . . . . . . . . . . . . . . 30
Section 6. Conditions Precedent . . . . . . . . . . . . . . . . . . . . 32
6.01. Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . 32
6.02. Additional Conditions. . . . . . . . . . . . . . . . . . . . 34
Section 7. Representations and Warranties . . . . . . . . . . . . . . . 35
7.01. Corporate Existence. . . . . . . . . . . . . . . . . . . . . 35
7.02. Financial Condition. . . . . . . . . . . . . . . . . . . . . 35
7.03. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.04. No Breach. . . . . . . . . . . . . . . . . . . . . . . . . 36
7.05. Action. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.06. Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 36
7.07. Use of Loans. . . . . . . . . . . . . . . . . . . . . . . . 36
7.08. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.09. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.10. Investment Company Act. . . . . . . . . . . . . . . . . . . 37
7.11. Public Utility Holding Company Act. . . . . . . . . . . . . 37
7.12. Credit Agreements. . . . . . . . . . . . . . . . . . . . . 37
7.13. Hazardous Materials. . . . . . . . . . . . . . . . . . . . 37
7.14. Subsidiaries, Etc. . . . . . . . . . . . . . . . . . . . . 40
7.15. No Offsets, Etc. . . . . . . . . . . . . . . . . . . . . . 41
Section 8. Covenants of the Company. . . . . . . . . . . . . . . . . . 41
8.01. Financial Statements. . . . . . . . . . . . . . . . . . . . 41
8.02. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 44
8.03. Existence, Access, Etc. . . . . . . . . . . . . . . . . . . 44
8.04. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 45
8.05. Prohibition of Fundamental Changes. . . . . . . . . . . . . 45
8.06. Limitation on Liens. . . . . . . . . . . . . . . . . . . . 46
8.07. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . 48
8.08. Investments. . . . . . . . . . . . . . . . . . . . . . . . 48
8.09. Dividend Payments. . . . . . . . . . . . . . . . . . . . . 49
8.10. Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . 50
8.11. Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . 50
8.12. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . 50
8.13. Lines of Business. . . . . . . . . . . . . . . . . . . . . 50
8.14. Transactions with Affiliates. . . . . . . . . . . . . . . . 51
8.15. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . 51
8.16. Limitation on Payment Restrictions Affecting
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . 51
8.17. Clean-Down . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.18. Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.19. Loans Outstanding. . . . . . . . . . . . . . . . . . . . . . 52
8.20. Capital Expenditures . . . . . . . . . . . . . . . . . . . . 54
8.21. Guarantee and Pledge . . . . . . . . . . . . . . . . . . . . 54
Section 9. Events of Default. . . . . . . . . . . . . . . . . . . . . 54
Section 10. The Agent and Co-Agent. . . . . . . . . . . . . . . . . . . 58
10.01. Appointment, Powers and Immunities. . . . . . . . . . . . 58
10.02. Reliance by Agent and Co-Agent. . . . . . . . . . . . . . . 59
10.03. Defaults. . . . . . . . . . . . . . . . . . . . . . . . . 59
10.04. Rights as a Bank. . . . . . . . . . . . . . . . . . . . . 59
10.05. Indemnification. . . . . . . . . . . . . . . . . . . . . . 60
10.06. Non-Reliance on Agent, Co-Agent and Other
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.07. Failure to Act. . . . . . . . . . . . . . . . . . . . . . 61
10.08. Resignation or Removal of Agent or Co-Agent. . . . . . . . 61
Section 11. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . 62
11.01. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.03. Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . 62
11.04. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . 63
11.05. Successors and Assigns. . . . . . . . . . . . . . . . . . 64
11.06. Assignments and Participations. . . . . . . . . . . . . . . 64
11.07. Survival. . . . . . . . . . . . . . . . . . . . . . . . . 66
11.08. Captions. . . . . . . . . . . . . . . . . . . . . . . . . 66
11.09. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 66
11.10. Governing Law; Submission to Jurisdiction. . . . . . . . . 66
11.11. Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . 67
11.12. Confidentiality. . . . . . . . . . . . . . . . . . . . . . 67
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of May
31, 1994, among: WESTERN PUBLISHING GROUP, INC., a corporation
duly organized and validly existing under the laws of the State
of Delaware (the "Company"); each of the banks that is a
signatory hereto or which, pursuant to Section 11.06(b) hereof,
shall become a "Bank" hereunder (individually, a "Bank" and,
collectively, the "Banks"); FLEET BANK, a New York bank, as agent
for the Banks (in such capacity, together with its successors in
such capacity, the "Agent"); and THE BANK OF NEW YORK, a New York
bank, as co-agent for the Banks (in such capacity, together with
its successors in such capacity, the "Co-Agent").
The Banks have extended credit to the Company by making
loans and by issuing (or acquiring participations in) letters of
credit under the Credit Agreement dated as of November 12, 1992,
among the Company, the Banks, the Agent and the Co-Agent, as
amended (the "Old Credit Agreement"). The Company, the Banks,
the Agent and the Co-Agent desire to amend and restate in its
entirety the Old Credit Agreement pursuant to this Agreement.
Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01. Certain Defined Terms. As used herein, the
following terms shall have the following meanings (all terms
defined in this Section 1.01 or in other provisions of this
Agreement in the singular to have the same meanings when used in
the plural and vice versa):
"Affiliate" shall mean any Person which directly or
indirectly controls, or is under common control with, or is
controlled by, the Company. As used in this definition,
"control" (including, with its correlative meanings, "controlled
by" and "under common control with") shall mean possession,
directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of
securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person
which owns directly or indirectly 5% or more of the securities
having ordinary voting power for the election of directors or
other governing body of a corporation or 5% or more of the
partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.
Notwithstanding the foregoing, no individual shall be deemed to
be an Affiliate solely by reason of his or her being a director,
officer or employee of the Company or any of its Subsidiaries and
the Company and its Subsidiaries shall not be deemed to be
Affiliates of each other.
"Applicable Margin" shall mean a rate per annum equal
to 1.00%; provided, however, that if the aggregate principal
amount of outstanding Facility B Loans at any time exceeds
$100,000,000, the Applicable Margin shall be increased to 2.00%
per annum with respect to Facility B Loans in principal amount
equal to the amount by which such aggregate principal amount of
Facility B Loans outstanding exceeds $100,000,000. The
Applicable Margin shall be increased by 0.50% per annum above the
margins specified above for the period (if any) from the earlier
of (a) the thirtieth day after the Disposition of the assets of
the Games and Puzzles division of Western, and (b) September 30,
1994, until the date on which (i) Western issues a guarantee of
all of the Company's obligations to the Banks, the Agent and the
Co-Agent hereunder, in substantially the form set forth as
Exhibit B to this Credit Agreement and (ii) the Company shall
have pledged for the ratable benefit of the Banks and the holders
(the "Holders") of the Company's 7.65% Debentures due 2002 (the
"Debentures"), all of the issued and outstanding capital stock of
Western.
"Base Rate" shall mean, for any day, the higher of (a)
the Federal Funds Rate for such day plus 0.50% per annum and (b)
the Prime Rate for such day. Each change in any interest rate
provided for herein based upon the Base Rate resulting from a
change in the Base Rate shall take effect on the Business Day on
which such change in the Base Rate is effective.
"Business Day" shall mean any day on which commercial
banks are not authorized or required to close in New York City.
"Capital Expenditures" shall mean all payments for or
Indebtedness incurred in connection with fixed assets or
improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and which
are required to be capitalized under GAAP.
"Capital Lease Obligations" shall mean, for any Person,
the obligations of such Person to pay rent or other amounts under
a lease of (or other agreement conveying the right to use) real
and/or personal property which obligations are required to be
classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP.
"Cash Flow" shall mean, for any period, the sum, for
the Company and its Consolidated Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP),
of the following: (a) net operating income (calculated before
income taxes, Interest Expense and extraordinary and unusual
items and without deducting any commitment fees payable pursuant
to Section 2.05(b) hereof, the amendment fee payable pursuant to
Section 6.01(h) hereof or the fees and expenses payable pursuant
to 6.01(i) or Section 11.03 hereof) for such period plus (b)
depreciation and amortization (to the extent deducted in
determining net operating income) for such period.
"Closing Date" shall mean the date upon which the
conditions precedent to the effectiveness hereof set forth in
Section 6 hereof have been satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute of the United
States.
"Commitment" shall mean as to each Bank, the Facility A
Commitment, Facility B Commitment or Letter of Credit Commitment
of such Bank, all of which for each Bank are collectively
referred to herein as the "Commitments".
"Commitment Percentage" shall mean, with respect to any
Bank, the ratio of (a) the amount of the Commitments of such Bank
to (b) the aggregate amount of the Commitments of all of the
Banks.
"Commitment Termination Date" shall mean the last
Business Day of May, 1995.
"Consolidated Subsidiary" shall mean, for any Person,
each Subsidiary of such Person (whether now existing or hereafter
created or acquired) the financial statements of which shall be
(or should have been) consolidated with the financial statements
of such Person in accordance with GAAP.
"Default" shall mean an Event of Default or an event
which with notice or lapse of time or both would become an Event
of Default.
"Disposition" shall mean, with respect to any Person,
any sale, assignment, transfer or other disposition by such
Person of any tangible or intangible assets (but excluding any
inventory or Permitted Investments or other assets, including
obsolete or worn-out equipment, sold or disposed of in the
ordinary course of business), whether now owned or hereafter
acquired.
"Dividend Payment" shall mean dividends (in cash,
property or obligations) on, or other payments or distributions
on account of, or the setting apart of money for a sinking or
other analogous fund for, or the purchase, redemption, retirement
or other acquisition of, any shares of any class of stock of the
Company, but excluding (i) dividends payable solely in shares of
common stock of the Company (or in warrants, options or similar
rights to acquire shares of common stock of the Company), (ii)
dividends on and mandatory redemptions of the Company's presently
outstanding Series A Preferred Stock, (iii) any dividends (in
cash, property or obligations) on or other payments or
distributions on account of any class of stock of any Subsidiary
of the Company and (iv) the purchase, redemption or retirement of
any shares of any class of capital stock of the Company made with
the proceeds of a concurrent or substantially concurrent sale of
other shares of the capital stock of the Company.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"Environmental Claim" shall mean any written notice,
claim, demand or other communication, or any oral notice, claim,
demand or other communication of which the Company has knowledge,
alleging or asserting liability for investigatory costs, cleanup
costs, governmental response costs, damages to natural resources
or other property, personal injuries, fines or penalties arising
out of, based on or resulting from (a) the presence, or Release
into the environment of any Hazardous Material at any location or
(b) any violation or alleged violation of any Environmental Law.
"Environmental Laws" shall mean any and all applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits, licenses,
codes, injunctions or other governmental restrictions,
requirements or prohibitions relating to the environment or to
emissions, discharges, Releases or threatened Releases of
Hazardous Materials, pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Materials,
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes. Environmental Laws does not
include the Occupational Safety and Health Act of 1970 or similar
state statutes.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade
or business which is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code)
as the Company or is under common control (within the meaning of
Section 414(c) of the Code) with the Company.
"Event of Default" shall have the meaning assigned to
such term in Section 9 hereof.
"Facility A Commitment" shall mean, as to each Bank,
the obligation of such Bank to make Facility A Loans in an
aggregate amount at any one time outstanding up to but not
exceeding the amount set opposite such Bank's name on the
signature pages hereof under the caption "Facility A Commitment"
(as the same may be reduced at any time or from time to time
pursuant to Section 2.04 hereof). On the date hereof, the
aggregate amount of the Facility A Commitments is $15,000,000.
"Facility A Loans" shall mean loans provided for by
Section 2.01 hereof which are specified by the Company pursuant
to Section 4.05 to be Facility A Loans, subject to the provisions
of Sections 2.01 and 2.09 hereof.
"Facility A Notes" shall mean the promissory notes
evidencing the Facility A Loans as provided for in Section 2.08
hereof.
"Facility B Commitment" shall mean, as to each Bank,
the obligation of such Bank to make Facility B Loans in an
aggregate amount at any one time outstanding up to but not
exceeding the amount set opposite such Bank's name on the
signature pages hereof under the caption "Facility B Commitment"
(as the same may be reduced at any time or from time to time
pursuant to Section 2.04 hereof). On the date hereof, the
aggregate amount of the Facility B Commitments is $115,000,000
(subject to the limitations on the availability thereof set forth
in Section 2.01).
"Facility B Loans" shall mean loans provided for by
Section 2.01 hereof which are specified by the Company pursuant
to Section 4.05 to be Facility B Loans, subject to the provisions
of Sections 2.01 and 2.09 hereof.
"Facility B Notes" shall mean the promissory notes
evidencing the Facility B Loans as provided for in Section 2.08
hereof.
"Federal Funds Rate" shall mean, for any day, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if the day for
which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published
on the next succeeding Business Day, and (ii) if such rate is not
so published for any day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent on such day on
such transactions as reasonably determined by the Agent.
"Fleet" shall mean Fleet Bank.
"GAAP" shall mean generally accepted accounting
principles applied in the manner set forth in Section 1.02
hereof.
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any
other Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any other
Person, or an agreement on other than ordinary commercial terms
to purchase, sell or lease (as lessee or lessor) property,
products, materials, supplies or services primarily for the
purpose of enabling a debtor to make payment of his, her or its
obligations or an agreement to assure a creditor against loss,
and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or other
similar instrument for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary
course of business and obligations in connection with the
relocation of employees. The terms "Guarantee" and "Guaranteed"
used as a verb shall have a correlative meaning.
"Hazardous Material" shall mean, collectively, any
pollutant, contaminant, toxic substance, hazardous waste,
hazardous material or hazardous substance, including without
limitation, petroleum, crude oil or fractions thereof, as those
terms are defined in (i) the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Section 6901 et seq., (ii) the
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), as amended, 42 U.S.C. Section 9601 et seq., or
(iii) any other applicable federal or state Environmental Law.
"Indebtedness" shall mean, for any Person: (a)
indebtedness created, issued or incurred by such Person for
borrowed money (whether by loan or the issuance and sale of debt
securities or the sale of property (other than inventory or
intellectual property sold in the ordinary course of business and
consistent with such Person's customary trade practices) to
another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such property from such
Person); (b) obligations of such Person to pay the deferred
purchase or acquisition price of property or services, other than
trade accounts payable arising, and accrued expenses incurred in
the ordinary course of business and consistent with such Person's
customary trade practices; (c) Indebtedness of another Person
secured by a Lien on the property of such Person, whether or not
the respective Indebtedness so secured has been assumed by such
Person; (d) payment obligations of such Person in respect of
letters of credit, bankers' acceptances or similar instruments
issued or accepted by banks and other financial institutions for
account of such Person; (e) Capital Lease Obligations of such
Person; and (f) Indebtedness of others Guaranteed by such Person.
"Interest Coverage Ratio" shall mean, for any period,
the ratio of (a) Cash Flow for such period to (b) Interest
Expense for such period.
"Interest Expense" shall mean, for any period, the sum,
for the Company and its Consolidated Subsidiaries (determined on
a consolidated basis without duplication in accordance with
GAAP), of the following: (a) all interest in respect of
Indebtedness accrued or capitalized during such period (whether
or not actually paid during such period) plus (b) all
commissions, fees, discounts and other expenses accrued during
such period (whether or not actually paid during such period) in
respect of standby letters of credit (but not commercial letters
of credit) and bankers' acceptances plus (c) the net amounts
payable (or minus the net amounts receivable) under Interest Rate
Protection Agreements accrued during such period (whether or not
actually paid or received during such period).
"Interest Rate Protection Agreement" shall mean, for
any Person, an interest rate swap, cap or collar agreement or
similar arrangement providing for the transfer or mitigation of
interest rate risks either generally or under specific
contingencies.
"Investment" shall mean, for any Person: (a) the
acquisition (whether for cash, property, services or securities
or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of
any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of
any securities at a time when such securities are not owned by
the Person entering into such short sale); (b) the making of any
deposit with, or advance, loan or other extension of credit to,
any other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such Person, but excluding
any such purchase of property made in the ordinary course of
business which is consistent with such Person's customary trade
practices), excluding real estate security deposits made in the
ordinary course of business, advances to employees, obligations
in connection with relocating employees and advances to vendors
of such Person in the ordinary course of business; (c) the
entering into of any Guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of any other
Person and (without duplication) any amount committed to be
advanced, lent or extended to such Person; or (d) the entering
into of any Interest Rate Protection Agreement.
"Issuing Bank" shall mean the Agent or any other Bank
(or, with the reasonable consent of the Agent and the consent of
the Company, a bank affiliate of a Bank) that has agreed with the
Company to act as an issuer of Letters of Credit under Section
2.03 hereof, together with their respective successors and
assigns in such capacity.
"Knowledge" shall mean only matters as to which any
officer of the Company has actual knowledge, and shall not
include matters which are not actually known by any officer.
"Lending Office" shall mean, for each Bank, the
"Lending Office" of such Bank designated on the signature pages
hereof or such other office of such Bank (or of an affiliate of
such Bank) as such Bank may from time to time specify to the
Agent and the Company as the office by which its Loans are to be
made and maintained.
"Letter of Credit" shall have the meaning assigned to
such term in Section 2.03 hereof.
"Letter of Credit Commitment" shall mean, as to each
Bank, the obligation of such Bank to issue (or acquire
participations in) Letters of Credit in an aggregate amount at
any one time outstanding up to but not exceeding the amount set
opposite such Bank's name on the signature pages hereof under the
caption "Letter of Credit Commitment" (as the same may be reduced
at any time or from time to time pursuant to Section 2.04
hereof). On the date hereof, the aggregate amount of the Letter
of Credit Commitments is $10,000,000.
"Letter of Credit Documents" shall mean, with respect
to any Letter of Credit, collectively, such Letter of Credit, any
amendments thereto, any documents delivered thereunder, any
application therefor and any other agreements, instruments,
guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing
for (a) the rights and obligations of the parties concerned or at
risk or (b) any collateral security for any of such obligations,
each as the same may be modified and supplemented and in effect
from time to time.
"Letter of Credit Interest" shall mean, for each Bank,
such Bank's participation interest (or, in the case of the
Issuing Bank, the Issuing Bank's retained interest) in the
Issuing Bank's liability under a Letter of Credit and such Bank's
rights and interests in the related Reimbursement Obligations and
fees, interest and other amounts payable in connection with such
Letter of Credit and such Reimbursement Obligations.
"Letter of Credit Liability" shall mean, without
duplication, at any time and in respect of any Letter of Credit,
the sum of (a) the undrawn face amount of such Letter of Credit
plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of the Company at such time due and
payable in respect of all drawings made under such Letter of
Credit. For purposes of this Agreement, a Bank (other than the
Issuing Bank for such Letter of Credit) shall be deemed to hold a
Letter of Credit Liability in an amount equal to its
participation interest in the related Letter of Credit under
Section 2.03 hereof, and the Issuing Bank shall be deemed to hold
a Letter of Credit Liability in an amount equal to its retained
interest in the related Letter of Credit after giving effect to
the acquisition by the Banks other than the Issuing Bank of their
participation interests under said Section 2.03.
"Leverage Ratio" shall mean, at any time, the ratio of
Total Indebtedness to Tangible Net Worth at such time.
"Lien" shall mean, with respect to any property, any
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such property. For purposes of this
Agreement, the Company or any of its Subsidiaries shall be deemed
to own subject to a Lien any property which it has acquired or
holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement (other than an operating lease) relating to
such property.
"Loan Documents" shall mean this Agreement, the Pledge
Agreement, the Subsidiary Guarantee, the Subsidiary Note, the
Subsidiary Security Agreement and all other agreements,
instruments and documents, including, without limitation,
security agreements, notes, guaranties, releases, mortgages,
deeds of trust, pledges, powers of attorney, consents,
assignments, collateral assignments, letter agreements,
contracts, notices, leases, amendments, financing statements,
letter of credit applications and reimbursement agreements, and
all other writings, now or hereafter executed by or on behalf of
the Company or any Subsidiary of the Company and delivered to
Agent or the Banks pursuant to this Agreement, together with all
agreements, instruments and documents referred to therein or
contemplated thereby.
"Loans" shall mean, collectively, the Facility A Loans
and the Facility B Loans.
"Majority Banks" shall mean Banks holding more than
66-2/3% of the aggregate unpaid principal amount of the
outstanding Loans and Letter of Credit Liabilities, or, if no
Loans or Letter of Credit Liabilities are outstanding, Banks
having more than 66-2/3% of the aggregate amount of the
Commitments; provided that for such purpose there shall be
excluded any Commitments, Loans and Letter of Credit Liabilities
directly or indirectly held by the Company or any of its
Affiliates (other than a financial institution not a Subsidiary
of the Company) following an assignment or participation as
contemplated by Section 11.06 hereof.
"Margin Stock" shall mean margin stock within the
meaning of Regulations U and X.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the business, operations or financial condition of
the Company and its Subsidiaries, taken as a whole, (b) the
validity or enforceability against the Company of this Agreement
or the Notes, (c) the timely payment of the principal of or
interest on the Loans or the Reimbursement Obligations or (d) the
Company's ability to pay when due other amounts payable in
connection therewith.
"Multiemployer Plan" shall mean a multiemployer plan
defined as such in Section 3(37) of ERISA to which contributions
have been made by the Company or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"Notes" shall mean, collectively, the Facility A Notes
and the Facility B Notes.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Permitted Investments" shall mean, for any Person:
(a) direct obligations of the United States of America, or of any
agency thereof, or obligations guaranteed as to principal and
interest by the United States of America, or of any agency
thereof, in either case maturing not more than one year from the
date of acquisition thereof by such Person; (b) time deposits
with, or certificates of deposit issued by, or bankers'
acceptances of, any bank or trust company organized under the
laws of the United States of America or any state thereof and
having capital, surplus and undivided profits of at least
$100,000,000 or of any bank of recognized international standing
having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of
acquisition thereof by such Person; (c) commercial paper having
the highest credit rating from Standard & Poor's Corporation or
Moody's Investors Service, Inc. and maturing not more than 270
days from the date of acquisition thereof by such Person; (d)
investments in shares of money market mutual funds having assets
in excess of $2,000,000,000 and which invest solely in
obligations of the type described in clauses (a), (b) and (c)
above; (e) repurchase obligations fully secured by investments of
the type described in clauses (a), (b), (c) or (d) above; and (f)
securities secured by standby letters of credit issued by banks
or trust companies referred to in clause (b) of this definition
and having a maturity of not more than one year.
"Person" shall mean any individual, corporation,
company, voluntary association, partnership, joint venture,
trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Plan" shall mean an employee pension plan as defined
in Section 3(2) of ERISA established or maintained by the Company
or any ERISA Affiliate and which is covered by ERISA.
"Pledge Agreement" shall mean that certain Pledge
Agreement dated as of even date herewith, by the Company in favor
of the Agent, in substantially the form attached hereto as
Exhibit C.
"Post-Default Rate" shall mean (x) in respect of any
principal of or interest on any Loan or any Reimbursement
Obligation or any commitment fee or Letter of Credit issuance fee
that is not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period
from and including the due date to but excluding the date on
which such amount is paid in full equal to 2.00% above the Base
Rate plus the Applicable Margin, each as in effect from time to
time, and (y) in respect of any other amount payable under this
Agreement or any Note that is not paid when due, a rate per annum
during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to
the Base Rate plus the Applicable Margin, each as in effect from
time to time.
"Prime Rate" shall mean the rate of interest from time
to time announced by Fleet at the Principal Office, or any
successor Agent at its principal office, as its prime commercial
lending rate.
"Principal Office" shall mean the principal office of
the Agent and Fleet, presently located at 56 East 42nd Street,
New York, New York 10017 or the principal office of any successor
Agent.
"Quarterly Dates" shall mean the last Business Day of
March, June, September and December in each year, the first of
which shall be the first such day after the date of this
Agreement.
"Regulations D, U and X" shall mean, respectively,
Regulations D, U and X of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Regulatory Change" shall mean, with respect to any
Bank, any change after the date of this Agreement in United
States Federal, state or foreign law or regulations (including,
without limitation, Regulation D) applying generally to a class
of banks including such Bank, or the adoption or making after
such date of any interpretation, directive or request applying
generally to a class of banks including such Bank of or under any
United States Federal, state or foreign law or regulations
(whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) by any court or
governmental or monetary authority charged with the
interpretation or administration thereof.
"Reimbursement Obligations" shall mean, at any time,
the obligations of the Company then outstanding, or which may
thereafter arise in respect of all Letters of Credit then
outstanding, to reimburse amounts paid by the relevant Issuing
Bank in respect of any drawings under a Letter of Credit.
"Release" shall mean any "release" as such term is
defined in 42 U.S.C. Section 9601(22).
"Significant Subsidiary" shall mean, at any time, a
Subsidiary whose assets at such time exceed 10% of the assets of
the Company and its Subsidiaries (on a consolidated basis).
"Subsidiary" shall mean, for any Person, any
corporation, partnership or other entity of which more than 50%
of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions
of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership
interests of any other class or classes of such corporation,
partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one
or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person. "Wholly-Owned Subsidiary"
shall mean any such corporation, partnership or other entity of
which all of such securities or other ownership interests (other
than, in the case of a corporation, directors' qualifying shares)
are so owned or controlled.
"Subsidiary Guarantee" shall mean the Guarantee
Agreement dated as of December 13, 1993, made by Western in favor
of the Banks and the Agent.
"Subsidiary Note" shall mean that certain promissory
note in substantially the form attached hereto as Exhibit D,
dated of even date herewith, issued by Western to the Company and
pledged to the Agent pursuant to the Pledge Agreement, which
evidences the advances by the Company to Western from time to
time of all of the proceeds of Facility A Loans made hereunder,
as required by Section 2.01 hereof.
"Subsidiary Security Agreement" shall mean that certain
Security Agreement in substantially the form attached hereto as
Exhibit E, dated as of even date herewith, between Western and
the Company, pursuant to which Western has granted to the Company
a security interest in all of its accounts receivable and
inventory to secure its obligations under the Subsidiary Note.
"Tangible Net Worth" shall mean, as at any date, the
sum for the Company and its Consolidated Subsidiaries (determined
on a consolidated basis without duplication in accordance with
GAAP), of the following:
(a) the amount of capital stock (whether preferred or
common), plus
(b) the amount of surplus and retained earnings (or,
in the case of a surplus or retained earnings deficit, minus
the amount of such deficit), plus
(c) the amount of negative goodwill, minus
(d) the sum of the following: cost of treasury shares
and the book value of all assets which should be classified
as intangibles (without duplication of deductions in respect
of items already deducted in arriving at surplus and
retained earnings) but in any event including goodwill,
research and development costs, trademarks, trade names,
copyrights, patents and franchises, unamortized debt
discount and expense and any write-up in the book value of
assets resulting from a revaluation thereof subsequent to
February 1, 1992.
"Total Indebtedness" shall mean, as at any date, the
aggregate amount of Indebtedness of the Company and its
Consolidated Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP).
"Type" shall have the meaning assigned that term in
Section 1.03 hereof.
"Western" shall mean Western Publishing Company, Inc.,
a Delaware corporation and a Subsidiary of the Company.
1.02. Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial
matters required to be delivered to the Banks hereunder shall
(subject to compliance with paragraph (b) of this Section 1.02)
be prepared, in accordance with generally accepted accounting
principles as from time to time in effect. All calculations made
for the purposes of determining compliance with the terms of
Sections 8.10, 8.11, 8.12, 8.18, 8.19 and 8.20 hereof shall be
made by application of generally accepted accounting principles
applied on a basis consistent with that used in the preparation
of the annual financial statements referred to in Section 7.02
hereof unless the Company and the Majority Banks shall have
otherwise agreed in writing. Notwithstanding the foregoing, for
purposes of this Agreement, generally accepted accounting
principles shall not give effect to FASB Statement No. 106.
(b) The Company shall deliver to the Banks at the same
time as the delivery of any annual, quarterly or monthly
financial statements under Section 8.01 hereof a description in
reasonable detail of the effect of any change in accounting
principle employed in the preparation of such statement from
those employed in the preparation of the most recent financial
statements previously furnished to the Banks and a reconciliation
of the effects thereof.
(c) To enable the ready and consistent determination
of compliance with the covenants set forth in Section 8 hereof,
the Company will not, without the prior written consent of the
Majority Banks (which consent shall not be unreasonably
withheld), change the last day of its fiscal year from the
Saturday nearest to January 31 of each year, or the last days of
the first three fiscal quarters in each of its fiscal years from
the Saturday nearest to each April 30, July 31 and October 31 of
each year, respectively, unless the Majority Banks and the
Company shall have agreed to amend the covenants set forth in
Section 8 hereof to take account of such change. Each of the
Banks agrees that if the Company proposes to change the last day
of its fiscal year or any of its fiscal quarters, such Bank will
negotiate in good faith to amend the covenants set forth in
Section 8 hereof so as to preserve, as nearly as practicable, the
economic effect of such covenants as in effect immediately prior
to such proposed change.
1.03. Types of Loans and Commitments. Loans and
Commitments hereunder are distinguished by "Type". The "Type" of
a Loan or Commitment refers to whether such Loan is a Facility A
Loan or a Facility B Loan, or whether such Commitment is a
Facility A Commitment, a Facility B Commitment or a Letter of
Credit Commitment, each of which constitutes a Type.
Section 2. Commitments.
2.01. Loans. Each Bank severally agrees, on the terms
of this Agreement, to make Loans to the Company in Dollars during
the period from and including the Closing Date to but not
including the Commitment Termination Date in an aggregate
principal amount at any one time outstanding up to but not
exceeding (i) in the case of Facility A Loans, the amount of the
Facility A Commitment of such Bank as in effect from time to
time, and (ii) in the case of Facility B Loans, the amount of the
Facility B Commitment of such Bank in effect from time to time.
In no event shall the aggregate principal amount of all Facility
A Loans or Facility B Loans exceed the aggregate amount of the
respective Facility A Commitments or Facility B Commitments, as
the case may be, as in effect from time to time. Subject to the
terms of this Agreement, during such period the Company may
borrow, repay and reborrow the amount of the Facility A
Commitments by means of Facility A Loans and the Facility B
Commitments by means of Facility B Loans; provided that no
Facility B Loans shall be made unless the entire aggregate amount
of the Facility A Commitments has been borrowed, and no Facility
A Loans shall be repaid unless there are no Facility B Loans then
outstanding. Notwithstanding the foregoing, at all times prior
to the delivery by the Company to the Agent of the compliance
certificate described in Section 8.01 hereof required to be
delivered at the time the Company delivers to the Agent financial
statements for the Company's fiscal quarter ending on or about
July 31, 1994, the aggregate amount of Facility B Loans
outstanding shall not at any time exceed $100,000,000 (less the
aggregate amount of any reductions in the Commitments pursuant to
Section 2.04 hereof), and in any event subject to the provisions
of Section 8.19 hereof. The Company shall immediately advance
all proceeds of Facility A Loans made hereunder to Western, to
fund the working capital needs of such Subsidiary. All Loans
outstanding under the Old Credit Agreement shall be Facility B
Loans hereunder from and after the Closing Date, in principal
amount equal to the principal amount thereof outstanding under
the Old Credit Agreement.
2.02. Borrowings. The Company shall give the Agent
(which shall promptly notify the Banks) notice of each borrowing
hereunder as provided in Section 4.05 hereof. Not later than
12:00 noon New York time on the date specified for each borrowing
hereunder, each Bank shall make available the amount of the Loan
to be made by it on such date to the Agent, in immediately
available funds, for account of the Company. The amount so
received by the Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Company by depositing
the same, in immediately available funds, in an account of the
Company maintained with the Agent designated by the Company.
2.03. Letters of Credit. Subject to the terms and
conditions hereof, the Commitments may be utilized, upon the
request of the Company, in addition to the Loans provided for by
Section 2.01 hereof, by the issuance by any Issuing Bank of
letters of credit (herein collectively called "Letters of
Credit") for account of the Company or any of its Subsidiaries
(as specified by the Company), provided that in no event shall
(i) the aggregate amount of all Letter of Credit Liabilities
exceed at any time the aggregate amount of the Letter of Credit
Commitments as in effect at such time and (ii) the expiration
date of any Letter of Credit extend beyond the earlier of (A) the
date occurring one year following the issuance of such Letter of
Credit or the final expiry date of such Letter of Credit as
renewed if such Letter of Credit provides for renewal terms of
not more than one year each and permits the Issuing Bank (at the
direction of the Majority Banks) to elect prior to the date on
which such renewal term would otherwise commence that such Letter
of Credit shall not be renewed and (B) the date which is three
Business Days prior to the Commitment Termination Date. The
following additional provisions shall apply to Letters of Credit:
(a) The Company shall give the Agent and the relevant
Issuing Bank at least one Business Day's irrevocable prior
notice (effective upon receipt) specifying the date (which
shall be no later than thirty days preceding the Commitment
Termination Date) each Letter of Credit is to be issued, the
Issuing Bank for such Letter of Credit and the account party
or parties therefor and describing in reasonable detail the
proposed terms of such Letter of Credit (including the
beneficiary thereof) and the nature of the transactions or
obligations proposed to be supported thereby.
(b) On each day during the period commencing with the
issuance by any Issuing Bank of any Letter of Credit and
until such Letter of Credit shall have expired or been
terminated, the Commitment of each Bank shall be deemed to
be utilized for all purposes hereof in an amount equal to
such Bank's Commitment Percentage of the then undrawn
portion of the face amount of such Letter of Credit. Each
Bank (other than the Issuing Bank for such Letter of Credit)
agrees that, upon the issuance of any Letter of Credit
hereunder, it shall automatically acquire a participation in
such Issuing Bank's liability under such Letter of Credit in
an amount equal to such Bank's Commitment Percentage of such
liability, and each Bank (other than the Issuing Bank)
thereby shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and shall be
unconditionally obligated to such Issuing Bank to pay and
discharge when due, its Commitment Percentage of the Issuing
Bank's liability under such Letter of Credit.
(c) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment under such Letter of Credit
which the Issuing Bank has determined to honor (without
consulting the Company, the Agent or any other Person), the
Issuing Bank for such Letter of Credit shall promptly notify
the Company and the Agent of the amount to be paid by the
Issuing Bank as a result of such demand and the date on
which payment is to be made by the Issuing Bank to such
beneficiary in respect of such demand. Notwithstanding the
identity of the account party of any Letter of Credit, the
Company hereby unconditionally agrees to pay and reimburse
the Issuing Bank for the amount of each demand for payment
under such Letter of Credit at or prior to the date on which
payment is to be made by the Issuing Bank to the beneficiary
thereunder, without presentment, demand, protest or other
formalities of any kind.
(d) The Company agrees that neither the Issuing Bank
for any Letter of Credit, nor any of its officers or
directors (unless otherwise provided in the relevant Letter
of Credit Documents), shall be liable or responsible for,
and the obligations of the Company to the Issuing Bank and
the Banks hereunder shall not in any manner be affected by:
(i) the use which may be made of such Letter of Credit or
the proceeds thereof by the beneficiary or any other Person;
(ii) the validity, sufficiency or genuineness of documents
other than such Letter of Credit, or of any endorsements
thereon, even if such documents should, in fact, prove to be
in any or all respects, invalid, insufficient, fraudulent or
forged; or (iii) any other circumstances whatsoever in
making or failing to make payment under such Letter of
Credit, except that (unless otherwise provided in the
relevant Letter of Credit Documents) the Company shall have
a claim against the Issuing Bank (and not against any other
Bank), and the Issuing Bank shall be liable to the Company,
to the extent, but only to the extent, of any direct, as
opposed to consequential, damages suffered by the Company
which the Company proves are caused by the Issuing Bank's
willful misconduct or gross negligence in determining
whether documents presented under such Letter of Credit
substantially complied with the terms of such Letter of
Credit or the Bank's willful failure to pay under such
Letter of Credit after the presentation to it of documents
strictly complying with the terms and conditions of such
Letters of Credit. In furtherance of and not in limitation
of the foregoing (unless otherwise provided in the relevant
Letter of Credit Documents), the Issuing Bank may accept
documents that appear on their face to be in order without
responsibility for further investigation, regardless of any
notice or information to the contrary.
(e) Forthwith upon its receipt of a notice referred to
in paragraph (c) of this Section 2.03, the Company shall
advise the Agent whether or not the Company intends to
borrow hereunder to finance its obligation to reimburse the
relevant Issuing Bank for the amount of the related demand
for payment and, if it does, submit a notice of such
borrowing as provided in Section 4.05 hereof. In the event
that the Company fails to so advise the Agent, or if the
Company fails to reimburse such Issuing Bank for a demand
for payment under a Letter of Credit by the date of such
payment, the Agent shall give each Bank prompt notice of the
amount of the demand for payment, specifying such Bank's
Commitment Percentage of the amount of the related demand
for payment.
(f) Each Bank (other than the Issuing Bank) shall pay
to the Agent for account of the Issuing Bank at the
Principal Office in Dollars and in immediately available
funds, the amount of such Bank's Commitment Percentage of
any payment under a Letter of Credit upon notice by the
Issuing Bank for such Letter of Credit (through the Agent)
to such Bank requesting such payment and specifying such
amount. Each such Bank's obligation to make such payments
to the Agent for account of the Issuing Bank under this
paragraph (f), and the Issuing Banks's right to receive the
same, shall be absolute and unconditional and shall not be
affected by any circumstance whatsoever, including, without
limiting the effect of the foregoing, (i) the failure of any
other Bank to make its payment under this paragraph (f), the
financial condition of the Company (or any other account
party), the existence of any Default or (ii) the termination
of the Letter of Credit Commitments. Each such payment to
the Issuing Bank shall be made without any offset,
abatement, withholding or reduction whatsoever.
(g) Upon the making of each payment by a Bank to the
Issuing Bank pursuant to paragraph (f) above in respect of
any Letter of Credit, such Bank shall, automatically and
without any further action on the part of the Agent, the
Issuing Bank or such Bank, acquire (i) a participation in an
amount equal to such payment in the Reimbursement Obligation
owing to the Issuing Bank by the Company hereunder and under
the Letter of Credit Documents relating to such Letter of
Credit and (ii) a participation in a percentage equal to
such Bank's Commitment Percentage in any interest or other
amounts payable by the Company hereunder and under such
Letter of Credit Documents in respect of such Reimbursement
Obligation. Upon receipt by the Issuing Bank from or for
account of the Company of any payment in respect of any
Reimbursement Obligation or any such interest or other
amount (including by way of setoff or application of
proceeds of any collateral security) the Issuing Bank shall
promptly pay to the Agent for account of each Bank entitled
thereto, such Bank's Commitment Percentage of such payment,
each such payment by the Issuing Bank to be made in the same
money and funds in which received by the Issuing Bank. In
the event any payment received by the Issuing Bank and so
paid to the Banks hereunder is rescinded or must otherwise
be returned by the Issuing Bank (including any interest
thereon which is required to be paid by the Issuing Bank),
each Bank shall, upon the request of the Issuing Bank
(through the Agent), repay to the Issuing Bank (through the
Agent) the amount of such payment paid to such Bank (and any
such required interest), with interest thereon at the rate
specified in paragraph (k) of this Section 2.03.
(h) The Company shall pay to the Agent for account of
the Issuing Bank in respect of each Letter of Credit an
issuance fee in an amount equal to 1.50% per annum of the
daily average undrawn face amount of such Letter of Credit
for the period from and including the date of issuance of
such Letter of Credit to but excluding the date such Letter
of Credit is drawn in full, expires or is terminated, such
fee to be non-refundable and to be paid in arrears
quarterly, on each Quarterly Date, and on the Commitment
Termination Date. The Issuing Bank authorizes and directs
the Agent to pay each Bank (other than the Issuing Bank),
promptly upon payment thereof by the Company, but only to
the extent actually received from the Company, an amount
equal to such Bank's Commitment Percentage of all such
issuance fees in respect of each Letter of Credit (including
any such issuance fee in respect of any period of any
renewal or extension thereof). In addition, the Company
shall pay to the Issuing Bank in respect of each Letter of
Credit all charges, costs and expenses, in the amounts
customarily charged by the Issuing Bank from time to time in
like circumstances (or as stated in the relevant Letter of
Credit Documents) with respect to the issuance of each
Letter of Credit and drawings, extensions and other
transactions relating thereto.
(i) Promptly following the end of each calendar month,
each Issuing Bank shall deliver (through the Agent) to each
Bank and the Company a notice describing the aggregate
amount of all Letters of Credit issued by such Issuing Bank
and outstanding at the end of such month. Upon the request
of any Bank from time to time, each Issuing Bank shall
deliver any other information reasonably requested by such
Bank with respect to each Letter of Credit issued by such
Issuing Bank and then outstanding.
(j) The issuance by any Issuing Bank of each Letter of
Credit shall, in addition to the conditions precedent set
forth in Section 6 hereof, be subject to the conditions
precedent that (i) such Letter of Credit shall be in such
form, contain such terms and support such transactions as
shall be reasonably satisfactory to the Issuing Bank
consistent with its then current practices and procedures
with respect to letters of credit of the same type and (ii)
the Company shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit
as the Issuing Bank shall have reasonably requested
consistent with its then current practices and procedures
with respect to letters of credit of the same type.
(k) To the extent that any Bank fails to pay any
amount required to be paid pursuant to paragraph (f) or (g)
of this Section 2.03 on the due date therefor, such Bank
shall pay interest to the relevant Issuing Bank (through the
Agent) on such amount from and including such due date to
but excluding the date such payment is made (i) during the
period from and including such due date to but excluding the
date three Business Days thereafter, at a rate per annum
equal to the Federal Funds Rate (as in effect from time to
time) and (ii) thereafter, at a rate per annum equal to the
Base Rate (as in effect from time to time) plus 2.00%.
The Company hereby indemnifies and holds harmless each of the
Banks, the Issuing Bank and the Agent (unless otherwise provided
in the relevant Letter of Credit Documents in the case of the
Issuing Bank) from and against any and all claims, damages,
losses, liabilities, costs or expenses which such Bank, the
Issuing Bank or the Agent may incur (or which may be claimed
against such Bank or the Agent by any Person whatsoever) by
reason of or in connection with the execution and delivery or
transfer of or payment or refusal to pay by the Issuing Bank
under any Letter of Credit; provided that the Company shall not
be required to indemnify any Bank or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, such claims, damages, losses,
liabilities, costs or expenses are caused by (x) the willful
misconduct or gross negligence of the Issuing Bank or (y) in the
case of the Issuing Bank, such Bank's failure to pay under any
Letter of Credit after the presentation to it of a request
strictly complying with the terms and conditions of such Letter
of Credit. Nothing in this Section 2.03 is intended to limit the
other obligations of the Company, any Bank or the Agent under
this Agreement.
2.04. Changes of Commitments; Mandatory Prepayments.
(a) The Commitments shall be automatically terminated
on the Commitment Termination Date.
(b) The Company shall have the right at any time or
from time to time (i) so long as no Facility A Loans, Facility B
Loans or Letter of Credit Liabilities are outstanding, to
terminate the respective Facility A Commitments, the Facility B
Commitments or the Letter of Credit Commitments, as the case may
be, and (ii) to reduce the aggregate unused amount of the
Facility A Commitments, the Facility B Commitments or the Letter
of Credit Commitments; provided that (x) the Company shall give
notice of each such termination or reduction as provided in
Section 4.05 hereof, and (y) each partial reduction shall be in
an aggregate amount at least equal to $1,000,000 and in multiples
of $1,000,000 in excess thereof.
(c) Without affecting Section 8.05 hereof in any way,
concurrently with the making of any Disposition by the Company or
any of its Subsidiaries, the Company shall prepay the principal
of the Loans hereunder, and the Commitments shall be reduced, in
an aggregate principal amount equal to 100% of the amount of the
net cash proceeds (net of expenses reasonably incurred in
connection therewith and taxes paid or payable in connection
therewith) actually received by the Company or such Subsidiary
from such Disposition (including net cash proceeds subsequently
received in connection with (i) such Disposition, or (ii) any
non-cash consideration received in connection with such
Disposition); provided, that, notwithstanding the foregoing, the
aggregate amount of the Facility B Commitments shall be reduced
to $65,000,000 (less the aggregate amount of any reductions in
the Facility B Commitments previously made pursuant to this
paragraph (c)) concurrently with the Disposition of substantially
all of the assets of the Games and Puzzles division of Western.
Any prepayments and reductions in the Commitments required under
this paragraph (c) shall be made (i) first with respect to
outstanding Facility B Loans and the Facility B Commitments, (ii)
second with respect to outstanding Facility A Loans and the
Facility A Commitments, and (iii) third with respect to
outstanding Letter of Credit Liabilities and the Letter of Credit
Commitments.
(d) Upon the prepayment by Western of any portion of
the outstanding principal of the Subsidiary Note, the Company
shall prepay the principal of the Facility A Loans outstanding
hereunder in an aggregate principal amount equal to the aggregate
principal amount prepaid in respect of the Subsidiary Note.
(e) Any of the Commitments once terminated or reduced
may not be reinstated.
2.05. Commitment Fees.
(a) The Company shall pay to the Agent for account of
each Bank a commitment fee on the daily average unused amount of
each of such Bank's Commitments, for the period from and
including the date of this Agreement to but not including the
earlier of the date such Commitments are terminated and the
Commitment Termination Date, at a rate per annum equal, for each
day during such period, to 0.50%. Accrued commitment fees shall
be payable in arrears on each Quarterly Date and on the earlier
of the date the Commitments are terminated and the Commitment
Termination Date.
(b) In addition to the commitment fees provided for in
paragraph (a) of this Section 2.05, the Company shall pay to the
Agent, for the account of the Banks, an additional one-time
commitment fee of $300,000 upon the aggregate outstanding
principal amount of Facility B Loans first exceeding
$100,000,000. The Agent shall pay to each Bank, promptly upon
payment thereof by the Company, an amount equal to such Bank's
Commitment Percentage of such additional commitment fee.
2.06. Lending Offices. The Loans made by each Bank
shall be made and maintained at such Bank's Lending Office;
provided, however, that a Bank may not change its Lending Office
if doing so would subject the Loans of such Bank to any of the
consequences contemplated by Section 5.01 hereof, unless such
Bank shall have waived, to the reasonable satisfaction of the
Company, such consequences.
2.07. Several Obligations; Remedies Independent. The
failure of any Bank to make any Loan to be made by it on the date
specified therefor shall not relieve any other Bank of its
obligation to make its Loan on such date, but neither any Bank
nor the Agent shall be responsible for the failure of any other
Bank to make a Loan to be made by such other Bank. The amounts
payable by the Company at any time hereunder and under the Notes
to each Bank shall be a separate and independent debt and each
Bank shall be entitled to protect and enforce its rights arising
out of this Agreement and the Notes in accordance with (and
subject to) their respective terms, and it shall not be necessary
for any other Bank or the Agent to consent to, or be joined as an
additional party in, any proceedings for such purposes.
2.08. Notes.
(a) The Facility A Loans made by each Bank shall be
evidenced by a single promissory note of the Company
substantially in the form of Exhibit A-1 hereto, dated the date
hereof, payable to such Bank in a principal amount equal to the
amount of its Facility A Commitment as originally in effect and
otherwise duly completed. The Facility B Loans made by each Bank
shall be evidenced by a single promissory note of the Company
substantially in the form of Exhibit A-2 hereto, dated the date
hereof, payable to such Bank in a principal amount equal to the
amount of its Facility B Commitment as originally in effect and
otherwise duly completed.
(b) The date, amount and interest rate of each
Facility A Loan or Facility B Loan made by each Bank to the
Company, and each payment made on account of the principal
thereof, shall be recorded by such Bank on its books and, prior
to any transfer of the respective Facility A Note or Facility B
Note, as the case may be, held by it, endorsed by such Bank on
the schedule attached to such respective Facility A Note or
Facility B Note; provided that the failure of such Bank to make
any such recordation or endorsement shall not affect the
obligations of the Company to make a payment when due of any
amount owing under such respective Facility A Note or Facility B
Note.
(c) No Bank shall be entitled to have its Facility A
Note or Facility B Note subdivided, by exchange for promissory
notes of lesser denominations or otherwise, except in connection
with a permitted assignment of all or any portion of such Bank's
Facility A Commitment, Facility A Loans and Facility A Note, or
such Bank's Facility B Commitment, Facility B Loans and Facility
B Note, as the case may be, pursuant to Section 11.06(b) hereof.
2.09. Prepayments of Loans. Subject to Section 4.04
hereof, the Company shall have the right to prepay Facility A
Loans or Facility B Loans, at any time or from time to time,
provided that: (i) the Company shall give the Agent notice of
each such prepayment as provided in Section 4.05 hereof, and (ii)
no Facility A Loans may be prepaid if any Facility B Loans are
then outstanding. The Company shall be required to prepay the
Loans as required under Section 2.04 hereof.
Section 3. Payments of Principal and Interest.
3.01. Repayment of Loans. The Company hereby promises
to pay to the Agent for the account of each Bank the entire
outstanding principal amount of such Bank's Loans, and each Loan
shall mature, on the Commitment Termination Date.
3.02. Interest. The Company hereby promises to pay to
the Agent for the account of each Bank interest on the unpaid
principal amount of each Loan made by such Bank for the period
from and including the date of such Loan to but excluding the
date such Loan shall be paid in full, at the following rates per
annum:
(a) in the case of a Facility A Loan, the Base Rate
(as in effect from time to time) and
(b) in the case of a Facility B Loan, the Base Rate
plus the Applicable Margin (each as in effect from time to
time).
Notwithstanding the foregoing, the Company hereby promises to pay
to the Agent for the account of each Bank interest at the
applicable Post-Default Rate on any principal of any Loan made by
such Bank, on any Reimbursement Obligation held by such Bank, and
on any other amount payable by the Company hereunder or under any
Note held by such Bank to or for the account of such Bank, which
shall not be paid in full when due (whether at stated maturity,
by acceleration or otherwise), for the period from and including
the due date thereof to but excluding the date the same is paid
in full. Accrued interest on each Loan shall be payable
(i) quarterly on the Quarterly Dates, and (ii) upon the payment
or prepayment of any principal thereof (but only on the principal
amount so paid or prepaid), except that interest payable at the
Post-Default Rate shall be payable from time to time on demand.
Promptly after the determination of any interest rate provided
for herein or any change therein, the Agent shall give notice
thereof to the Banks to which such interest is payable and to the
Company.
Section 4. Payments; Pro Rata Treatment; Computations;
Etc.
4.01. Payments.
(a) Except to the extent otherwise provided herein,
all payments of principal, interest, Reimbursement Obligations,
commitment fees and letter of credit issuance fees to be made by
the Company under this Agreement and the Notes shall be made in
Dollars, in immediately available funds, without deduction or
set-off, to the Agent at such account at the Principal Office as
may be designated by the Agent to the Company from time to time,
not later than 1:00 p.m. New York time on the date on which such
payment shall become due (each such payment made after such time
on such due date to be deemed to have been made on the next
succeeding Business Day).
(b) The Company shall, at the time of making each
payment under this Agreement or any Note, specify to the Agent
(which shall so notify the intended recipient(s) thereof) or the
Issuing Bank (as applicable) the Loans, Reimbursement Obligations
or other amounts payable by the Company hereunder to which such
payment is to be applied, provided that the Company may not
specify that any payment be applied to the Facility A Loans if
any Facility B Loans are then outstanding (and in the event that
it fails to so specify, or if an Event of Default has occurred
and is continuing, such Bank may apply the amount of such payment
received by it from the Agent in such manner as such Bank may
determine to be appropriate).
(c) Each payment received by the Agent under this
Agreement or any Note for account of any Bank shall be paid by
the Agent promptly to such Bank, in immediately available funds,
for the account of such Bank's Lending Office.
(d) If the due date of any payment under this
Agreement or any Note would otherwise fall on a day which is not
a Business Day, such date shall be extended to the next
succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension.
4.02. Pro Rata Treatment. Except to the extent
otherwise provided herein: (a) each borrowing from the Banks
under Section 2.01 hereof shall be made from the Banks, each
payment of commitment fee under Section 2.05 hereof shall be made
for the account of the Banks, and each termination or reduction
of the amount of the Commitments under Section 2.04 hereof shall
be applied to the respective Facility A Commitments, Facility B
Commitments or Letter of Credit Commitments of the Banks, as the
case may be, pro rata according to the amounts of their
respective Commitments of such Type; (b) the making of Facility A
Loans or Facility B Loans, as the case may be, shall be made pro
rata among the Banks according to the amounts of their respective
Facility A Commitments or Facility B Commitments, as applicable;
(c) each payment or prepayment of principal of Facility A Loans
or Facility B Loans by the Company shall be made for the account
of the Banks pro rata in accordance with the respective unpaid
principal amounts of the Facility A Loans or Facility B Loans, as
the case may be, held by them; and (d) each payment of interest
on Facility A Loans or Facility B Loans by the Company shall be
made for account of the Banks pro rata in accordance with the
amounts of interest on such Facility A Loans or Facility B Loans,
as the case may be, then due and payable to the respective Banks.
4.03. Computations. Letter of Credit issuance fees
shall be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day)
occurring in the period for which payable, and commitment fees
and interest on Loans (and any interest computed at the Post-
Default Rate by reference to the Base Rate) shall be computed on
the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable.
4.04. Minimum Amounts. Each borrowing and prepayment
of principal of Loans shall be in an amount at least equal to
$1,000,000 and in multiples of $1,000,000 in excess thereof
(borrowings or prepayments of Loans of different Types at the
same time hereunder to be deemed separate borrowings and
prepayments for purposes of the foregoing, one for each Type).
4.05. Certain Notices. Notices by the Company to the
Agent of terminations or reductions of the Commitments, and of
borrowings and optional prepayments of Loans, shall be
irrevocable and shall be effective only if received by the Agent
not later than 12:00 noon New York time on the number of Business
Days prior to the date of the relevant termination, reduction,
borrowing or prepayment specified below:
Number of
Business
Type of Notice Days Prior
-------------- ----------
Termination or reduction
of Commitments 1
Borrowings of Loans 1
Prepayment of Loans 1
Each such notice of termination or reduction shall specify the
amount and Type of the Commitments to be terminated or reduced.
Each such notice of borrowing or optional prepayment shall
specify the Loans to be borrowed or prepaid and the amount
(subject to Section 4.04 hereof) and Type (subject to Sections
2.01 and 2.09 hereof) of each Loan to be borrowed or prepaid and
the date of borrowing or optional prepayment (which shall be a
Business Day). The Agent shall promptly notify the Banks of the
contents of each such notice.
4.06. Non-Receipt of Funds by the Agent. Unless the
Agent shall have been notified by a Bank or the Company (the
"Payor") prior to the date on which the Payor is to make payment
to the Agent of (in the case of a Bank) the proceeds of a Loan to
be made by it, or a participation in a Letter of Credit drawing
to be acquired by it, hereunder or (in the case of the Company) a
payment to the Agent for the account of one or more of the Banks
hereunder (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended
recipient(s) on such date and, if the Payor has not in fact made
the Required Payment to the Agent, the recipient(s) of such
payment shall, on demand, repay to the Agent the amount so made
available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for
such day and, if such recipient(s) shall fail promptly to make
such payment, the Agent shall be entitled to recover such amount,
on demand, from the Payor, together with interest as aforesaid.
4.07. Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and
without limitation of) any right of set-off or banker's lien a
Bank may otherwise have, each Bank shall be entitled, at its
option, upon the occurrence and during the continuance of a
Default to offset balances held by it for account of the Company
at any of its offices, in Dollars or in any other currency,
against any principal of or interest on any of such Bank's Loans,
the Reimbursement Obligations, or any other amount payable to
such Bank hereunder, that is not paid when due (regardless of
whether such balances are then due to the Company), in which case
it shall promptly notify the Company and the Agent thereof,
provided that such Bank's failure to give such notice shall not
affect the validity thereof.
(b) If any Bank shall obtain from the Company payment
of any principal of or interest on any Loan or Letter of Credit
Liability owing to it or payment of any other amount under this
Agreement or any Note held by it through the exercise of any
right of set-off, banker's lien or similar right (other than from
the Agent as provided herein), and, as a result of such payment,
such Bank shall have received a greater percentage of the
principal of or interest on any Type of Loans or Letter of Credit
Liabilities or such other amounts then due hereunder by the
Company to such Bank than the percentage received by any other
Banks, it shall promptly purchase from such other Banks
participations in (or, if and to the extent specified by such
Bank, direct interests in) the Loans of such Type or Letter of
Credit Liabilities or such other amounts, respectively, owing to
such other Banks (or in interest due thereon, as the case may be)
in such amounts, and make such other adjustments from time to
time as shall be equitable, to the end that all the Banks shall
share the benefit of such excess payment (net of any expenses
which may be incurred by such Bank in obtaining or preserving
such excess payment) pro rata in accordance with the unpaid
principal of and/or interest on the Loans of such Type or Letter
of Credit Liabilities or such other amounts, respectively, owing
to each of the Banks. To such end all the Banks shall make
appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) The Company agrees that any Bank purchasing such a
participation (or direct interest) as provided in this Section
4.07 may exercise all rights of set-off, banker's lien or similar
rights with respect to such participation as fully as if such
Bank were a direct holder of Loans or other amounts (as the case
may be) owing to such Bank in the amount of such participation.
(d) Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of the
Company. If, under any applicable bankruptcy, insolvency or
other similar law, any Bank receives a secured claim in lieu of a
set-off to which this Section 4.07 applies, such Bank shall, to
the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Banks
entitled under this Section 4.07 to share in the benefits of any
recovery on such secured claim.
Section 5. Yield Protection, Etc.
5.01. Additional Costs.
(a) The Company shall pay directly to each Bank from
time to time on request such amounts as such Bank may reasonably
determine in good faith to be necessary to compensate such Bank
(or, without duplication, the bank holding company of which such
Bank is a subsidiary) for any costs hereinafter incurred which it
determines are attributable to the maintenance by such Bank (or
any Lending Office or such bank holding company), pursuant to any
law or regulation or any interpretation, directive or request
(whether or not having the force of law) of any court or
governmental or monetary authority (i) following any Regulatory
Change or (ii) implementing any risk-based capital guideline or
requirement (whether or not having the force of law and whether
or not the failure to comply therewith would be unlawful)
hereafter issued by any government or governmental or supervisory
authority implementing at the national level the Basle Accord
(including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A)
and the Final Risk-Based Capital Guidelines of the Office of the
Comptroller of the Currency (12 CFR Part 3, Appendix A)), of
capital in respect of its Commitments, Loans, Reimbursement
Obligations or participations in Letters of Credit (such
compensation to include, without limitation, an amount equal to
any reduction of the rate of return on assets or equity of such
Bank (or any Lending Office or such bank holding company) to a
level below that which such Bank (or any Lending Office or such
bank holding company) could have achieved but for such law,
regulation, interpretation, directive or request). For purposes
of this Section 5.01(a), "Basle Accord" shall mean the proposals
for risk-based capital framework described by the Basle Committee
on Banking Regulations and Supervisory Practices in its paper
entitled "International Convergence of Capital Measurement and
Capital Standards" dated July 1988, as amended, modified and
supplemented and in effect from time to time.
(b) Each Bank shall notify the Company of any event
occurring after the date of this Agreement that will entitle such
Bank to compensation under paragraph (a) of this Section 5.01 as
promptly as practicable, but in any event within 45 days, after
such Bank obtains actual knowledge thereof; provided, that (i) if
any Bank fails to give such notice within 45 days after it
obtains actual knowledge of such an event, such Bank shall, with
respect to compensation payable pursuant to this Section 5.01 in
respect of any costs resulting from such event, only be entitled
to payment under this Section 5.01 for costs incurred from and
after the date 45 days prior to the date that such Bank does give
such notice and (ii) each Bank will designate a different Lending
Office for the Loans of such Bank affected by such event if such
designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Bank,
be disadvantageous to such Bank. Each Bank will furnish to the
Company a certificate setting forth the basis and amount of each
request by such Bank for compensation under paragraph (a) of this
Section 5.01. Determinations and allocations by any Bank for
purposes of this Section 5.01 of the effect of capital maintained
pursuant to paragraph (a) of this Section 5.01 on its costs or
rate of return of maintaining Loans or its obligation to make
Loans, or on amounts receivable by it in respect of Loans, and of
the amounts required to compensate such Bank under this Section
5.01, shall be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
(c) If requested by the Company after such Bank has
notified the Company of any such event entitling it to
compensation under paragraph (a) of this Section 5.01, such Bank
shall promptly notify the Company when such event is no longer
applicable.
5.02. Additional Costs in Respect of Letters of
Credit. Without limiting the obligations of the Company under
Section 5.01 hereof (but without duplication), if as a result of
any Regulatory Change there shall be imposed, modified or deemed
applicable any tax (other than income or franchise taxes),
reserve, special deposit, capital adequacy or similar requirement
against or with respect to or measured by reference to Letters of
Credit issued or to be issued hereunder and the result shall be
to increase the cost to any Bank or Banks of issuing (or
purchasing participations in) or maintaining its obligation
hereunder to issue (or purchase participations in) any Letter of
Credit hereunder or reduce any amount receivable by any Bank
hereunder in respect of any Letter of Credit (which increases in
cost, or reduction in amount receivable, shall be the result of
such Bank's or Banks' reasonable allocation of the aggregate of
such increases or reductions resulting from such event), then,
upon demand by such Bank or Banks, the Company shall pay
immediately to such Bank or Banks, from time to time as specified
by such Bank or Banks, such additional amounts as shall be
sufficient to compensate such Bank or Banks for such increased
costs or reductions in amount. A statement as to such increased
costs or reductions in amount incurred by any such Bank or Banks,
submitted by such Bank or Banks to the Company shall be
conclusive in the absence of manifest error as to the amount
thereof. Each Bank shall notify the Company of any event
occurring after the date of this Agreement that will entitle such
Bank to compensation under this Section 5.02 as promptly as
practicable, but in any event within 45 days, after such Bank
obtains actual knowledge thereof; provided, that if any Bank
falls to give such notice within 45 days after it obtains actual
knowledge of such an event, such Bank shall, with respect to
compensation payable pursuant to this Section 5.02 in respect of
any costs resulting from such event, only be entitled to payment
under this Section 5.02 for costs incurred from and after the
date 45 days prior to the date that such Bank does give such
notice. If requested by the Company after such Bank has notified
the Company of any such event, such Bank shall promptly notify
the Company when such event is no longer applicable.
5.03. Option to Replace Banks. If any Bank shall
become an Affected Bank, then, provided there does not then exist
any Default:
(a) The Company may request one or more of the other
Banks to purchase all (but not part) of such Affected Bank's then
outstanding Loans, Reimbursement Obligations and participations
in outstanding Letters of Credit and to assume all (but not part)
of such Affected Bank's Commitments and obligations hereunder.
If one or more Banks shall so agree in writing (herein
collectively called the "Assenting Banks" and individually called
an "Assenting Bank") with respect to such Affected Bank, then (x)
the Facility A Commitments, Facility B Commitments and Letter of
Credit Commitments of each Assenting Bank and the obligations of
such Assenting Bank under this Agreement shall be increased by
its respective pro rata share of the Facility A Commitments,
Facility B Commitments and Letter of Credit Commitments, as the
case may be, of such Affected Bank under this Agreement and (y)
each Assenting Bank shall make Facility A Loans and/or Facility B
Loans to the Company pro rata in accordance with the amount of
such Affected Bank's Facility A Loans and/or Facility B Loans, as
the case may be, being purchased by such Assenting Bank in
principal amounts which, when aggregated with Facility A Loans
and/or Facility B Loans being made by other Assenting Banks, if
any, are equal to the outstanding principal amounts of all the
Facility A Loans and/or Facility B Loans of the Affected Bank, on
a date mutually acceptable to the Assenting Banks, such Affected
Bank and the Company. The proceeds of such Loans, together, if
necessary, with funds of the Company, shall be used to prepay the
Loans of such Affected Bank, together with all interest accrued
thereon (calculated on the basis set forth in a certificate
delivered by such Affected Bank) and all other amounts owing to
such Affected Bank hereunder, and, upon such assumption by the
Assenting Banks and prepayment by the Company, such Affected Bank
shall cease to be a "Bank" for purposes of this Agreement and
shall no longer have any obligations hereunder.
(b) So long as no Event of Default shall have occurred
and be continuing, the Company may designate a Replacement Bank
to assume the Commitments and the obligations of any such
Affected Bank hereunder and to purchase the outstanding Loans of
such Affected Bank and such Affected Bank's rights hereunder
without recourse upon, or warranty by, or expense to such
Affected Bank, for a purchase price equal to the outstanding
principal amount of the Loans of such Affected Bank plus all
interest accrued and unpaid thereon (calculated on the basis set
forth in a certificate delivered by such Affected Bank) and all
other amounts owing to such Affected Bank hereunder, and upon
such assumption and purchase by the Replacement Bank, such
Replacement Bank shall be deemed to be a "Bank" for purposes of
this Agreement and such Affected Bank shall cease to be a "Bank"
for purposes of this Agreement and shall no longer have any
obligations hereunder. The Company shall provide replacement
Notes to such Replacement Bank and to any Assenting Bank making
Loans pursuant to subsection (a) above to reflect the identity of
and/or the outstanding amount of the Loans of such Replacement
Bank or such Assenting Bank.
As used in this Section 5.03, "Affected Bank" shall
mean any Bank that (i) is subject to taxes or Additional Costs
described in Section 5.01 or 5.02 hereof and claims reimbursement
for such taxes or Additional Costs pursuant to Section 5.01 or
5.02 hereof or (ii) breaches in any material respect its
obligations to make Loans hereunder; and "Replacement Bank" shall
mean a lending institution designated by the Company pursuant to
this Section 5.03, which, at the time of such designation, is not
a Bank.
Section 6. Conditions Precedent.
6.01. Effectiveness. The effectiveness of this
Agreement is subject to the receipt by the Agent on the date of
the execution and delivery of this Agreement of the following
documents, each of which shall be satisfactory to the Agent in
form and substance and shall be dated or certified on or as of
the Closing Date, unless otherwise indicated or agreed to by the
Agent:
(a) Corporate Documents of the Company. The following
documents, each certified as indicated below:
(i) a copy of the charter, as amended, of the
Company certified by the Secretary of State of the State of
Delaware, and a certificate as to the good standing of and
charter documents filed by the Company from such Secretary
of State, dated as of a recent date;
(ii) a certificate of the Secretary of the
Company, dated the date hereof and certifying (A) that
attached thereto is a true and complete copy of the by-laws
of the Company as in effect on the date of such certificate,
(B) that attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors of the
Company authorizing the execution, delivery and performance
of this Agreement, the Notes, the Pledge Agreement, the
Subsidiary Security Agreement and the extensions of credit
hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C)
that the charter of the Company has not been amended since
the date of the certification thereof furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen
signature of each officer of the Company executing this
Agreement or any of the Notes and each other document to be
delivered by the Company from time to time in connection
herewith (and the Agent and each Bank may conclusively rely
on such certificate until it receives notice in writing from
the Secretary of the Company); and
(iii) a certificate of another officer of the
Company as to the incumbency and specimen signature of the
Secretary of the Company.
(b) Corporate Documents of Western. The following
documents, each certified as indicated below:
(i) a copy of the charter, as amended, of Western
certified by the Secretary of State of the State of
Delaware, and a certificate as to the good standing of and
charter documents filed by Western from such Secretary of
State, dated as of a recent date;
(ii) a certificate of the Secretary of Western,
dated the date hereof and certifying (A) that attached
thereto is a true and complete copy of the by-laws of
Western as in effect on the date of such certificate, (B)
that attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors of
Western authorizing the execution, delivery and performance
of the Subsidiary Note and the Subsidiary Security
Agreement, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C)
that the charter of Western has not been amended since the
date of the certification thereof furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen
signature of each officer of Western executing the
Subsidiary Note, the Subsidiary Security Agreement and each
other document to be delivered by Western from time to time
in connection therewith (and the Agent and each Bank may
conclusively rely on such certificate until it receives
notice in writing from the Secretary of Western); and
(iii) a certificate of another officer of Western
as to the incumbency and specimen signature of the Secretary
of Western.
(c) Officer's Certificate. A certificate of a senior
officer of the Company to the effect set forth in the first
sentence of Section 6.02 hereof.
(d) Opinion of Counsel to the Company. An opinion of
Morgan, Lewis & Bockius, counsel to the Company,
substantially in the form of Exhibit F hereto.
(e) Pledge Agreement. The Pledge Agreement, duly
executed by the Company.
(f) Subsidiary Note. The Subsidiary Note, duly
executed by Western, to be held by the Agent pursuant to the
Pledge Agreement.
(g) Subsidiary Security Agreement. Evidence that the
Subsidiary Security Agreement has been duly executed and
delivered by the Company and Western, and that all actions
reasonably necessary or appropriate to perfect the Liens on
Western's accounts receivables and inventory arising
thereunder has been taken.
(h) Amendment Fee. Payment of an amendment fee of
$468,750, for the pro-rata account of the Banks.
(i) Expenses. Payment of all reasonable out-of-pocket
costs and expenses incurred prior to the Closing Date which
the Company is required to pay pursuant to Section 11.03
hereof.
(j) Accrued Interest and Fees. Payment of all accrued
interest, fees and other amounts (other than the principal
of the Loans) outstanding under the Old Credit Agreement.
(k) Other Documents. Such other documents as the
Agent or any Bank or special New York counsel to the Banks
may reasonably request in connection with the execution and
delivery of this Agreement, the Notes and the other Loan
Documents required hereunder to be delivered on the Closing
Date and the extensions of credit hereunder.
The execution and delivery of this Credit Agreement by
the Agent shall constitute its acknowledgment that the documents
delivered pursuant to this Section 6.01 are satisfactory to the
Agent as to form and substance.
6.02. Additional Conditions. Each of the
effectiveness of this Agreement and the obligation of the Banks
to make any Loan or otherwise extend any credit to the Company
upon the occasion of each borrowing or other extension of credit
hereunder is subject to the further conditions precedent that,
both immediately prior to the making of such Loan or other
extension of credit and also after giving effect thereto: (i) no
Default shall have occurred and be continuing; (ii) the
representations and warranties made by the Company in Section 7
hereof shall be true and complete in all material respects on and
as of the date of the making of such Loan or other extension of
credit with the same force and effect as if made on and as of
such date (except to the extent that such representations and
warranties expressly relate to an earlier date); and (iii) with
respect to any borrowing of a Facility A Loan, the Company
represents and warrants that Western has requested a borrowing
under the Subsidiary Note equal to the amount to be borrowed with
respect to such Facility A Loan. Each notice of borrowing or
request for the issuance of a Letter of Credit by the Company
hereunder shall constitute a certification by the Company to the
effect set forth in the preceding sentence (both as of the date
of such notice or request and, unless the Company otherwise
notifies the Agent prior to the date of such borrowing or
issuance, as of the date of such borrowing or issuance).
Section 7. Representations and Warranties. The
Company represents and warrants to the Banks that:
7.01. Corporate Existence. Each of the Company and
its Subsidiaries: (a) is a corporation, partnership or other
entity duly organized and validly existing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate
or other power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its
assets and carry on its business as now being conducted; and (c)
is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification
necessary and where failure so to qualify would have a Material
Adverse Effect.
7.02. Financial Condition. The consolidated and
consolidating balance sheets of the Company and its Consolidated
Subsidiaries as at January 29, 1994 and the related consolidated
and consolidating statements of operations, retained earnings and
cash flow of the Company and its Consolidated Subsidiaries for
the fiscal year ended on said date, with the opinion thereon (in
the case of said consolidated balance sheet and consolidated
statements of operations, retained earnings and cash flow) of
Deloitte & Touche, heretofore furnished to each of the Banks, are
complete and correct and fairly present in all material respects
the consolidated financial condition of the Company and its
Consolidated Subsidiaries, and the unconsolidated financial
condition of the Company and of each of its Consolidated
Subsidiaries, as at said date and the consolidated and
unconsolidated results of their operations for the fiscal year
ended on said date, all in accordance with GAAP applied on a
consistent basis. Neither the Company nor any of its
Subsidiaries had on said dates any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments
or unrealized or anticipated losses from any unfavorable
commitments which in the aggregate is material to the financial
condition of the Company and its Subsidiaries taken as a whole
(determined on a consolidated basis), except as referred to or
reflected or provided for in said balance sheets as at said dates
(including the notes thereto). Since January 29, 1994, there has
been no material adverse change in the consolidated financial
condition, operations or business of the Company and its
Consolidated Subsidiaries taken as a whole from that set forth in
said financial statements as at said date.
7.03. Litigation. Except as disclosed in Schedule IV
hereto, there are no legal or arbitral proceedings, or any
proceedings by or before any governmental or regulatory authority
or agency, now pending or (to the Knowledge of the Company)
threatened against the Company or any of its Subsidiaries which,
if adversely determined, could reasonably be expected to have a
Material Adverse Effect.
7.04. No Breach. None of the execution and delivery
of this Agreement, the Notes, and the other Loan Documents or the
consummation of the transactions contemplated hereby and thereby
and compliance by the Company and Western with the terms and
provisions hereof and thereof will conflict with or result in a
breach of, or require any consent under, the charter or by-laws
of the Company or Western, or any applicable law or regulation,
or any applicable order, writ, injunction or decree of any court
or governmental authority or agency, or any material (determined
by reference to the Company and its Subsidiaries, taken as a
whole) agreement or instrument to which the Company or any of its
Significant Subsidiaries is a party or by which any of them is
bound or to which any of them is subject, or constitute a default
under any such agreement or instrument.
7.05. Action. Each of the Company and Western has all
necessary corporate power and authority to execute, deliver and
perform its obligations under this Agreement, the Notes and the
other Loan Documents; the execution, delivery and performance by
the Company and Western of this Agreement, the Notes and the
other Loan Documents have been duly authorized by all necessary
corporate action on their respective parts; and this Agreement
and each of the other Loan Documents has been duly and validly
executed and delivered by the Company and Western (to the extent
party thereto) and constitutes, and each of the Notes when
executed and delivered for value will constitute, the Company's
or Western's, as the case may be, legal, valid and binding
obligation, enforceable in accordance with its terms, except as
such enforceability may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and
(b) the application of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law).
7.06. Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any
governmental or regulatory authority or agency are necessary for
the execution, delivery or performance by the Company or Western
(to the extent party thereto) of this Agreement, the Notes or the
other Loan Documents or for the validity or enforceability
thereof.
7.07. Use of Loans. Neither the Company nor any of
its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or
carrying Margin Stock and no part of the proceeds of any
extension of credit hereunder will be used to buy or carry any
Margin Stock.
7.08. ERISA. The Company and the ERISA Affiliates
have fulfilled their respective obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan
and are in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or any Plan or Multiemployer
Plan (other than to make contributions to the Plans and to pay
premiums to the PBGC, in each case in the ordinary course of
business).
7.09. Taxes. United States Federal income tax returns
of the Company and its Subsidiaries have been examined and closed
through the fiscal year of the Company ended January 30, 1988.
The Company and its Consolidated Subsidiaries have filed all
United States Federal income tax returns and all other tax
returns which are required to be filed by them (other than such
tax returns the failure of which to file would not have a
Material Adverse Effect) and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the
Company or any of its Consolidated Subsidiaries, except such
taxes as are being contested in good faith by appropriate
proceedings and for which, in the reasonable opinion of the
Company, adequate reserves are maintained on the books of the
Company and its Subsidiaries. If the Company is a member of an
affiliated group of corporations filing consolidated returns for
United States Federal income tax purposes, it is the "common
parent" of such group.
7.10. Investment Company Act. The Company is not an
"investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended.
7.11. Public Utility Holding Company Act. The Company
is not a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
7.12. Credit Agreements. Schedule I hereto is a
complete and correct list, as of the date of this Agreement, of
each credit agreement, loan agreement, indenture, note purchase
agreement, guarantee or other arrangement providing for or
otherwise relating to any Indebtedness (or commitment therefor)
to, or Guarantee by, the Company or any of its Subsidiaries, the
aggregate principal or face amount of which equals or exceeds (or
may equal or exceed) $1,000,000 and the aggregate principal or
face amount outstanding or which may become outstanding under
each such arrangement is correctly described in said Schedule I.
7.13. Hazardous Materials. (a) The Company and each
of its Subsidiaries have obtained all permits, licenses and other
authorizations which the Company and each of its Subsidiaries are
required to have under all Environmental Laws, except to the
extent failure to have any such permit, license or authorization
would not have a Material Adverse Effect. The Company and each
of its Subsidiaries are in compliance with (i) the terms and
conditions of all such permits, licenses and authorizations, and
(ii) all Environmental Laws except to the extent the failure to
comply with (i) and/or (ii) would not have a Material Adverse
Effect.
(b) Neither the Company nor any off its
Subsidiaries has retained, assumed or otherwise become or
remained liable for, whether by contract, operation of law
or otherwise, any Environmental Claim with respect to any
former Subsidiary or division of the Company or any of its
Subsidiaries, which would have a Material Adverse Effect.
(c) No written notice, notification, demand, request
for information, citation, summons or order has been
received by the Company or any of its Subsidiaries nor does
the Company after diligent inquiry have Knowledge of any of
the same being issued, no complaint has been served on the
Company or any of its Subsidiaries nor does the Company
after diligent inquiry have Knowledge of any complaint being
filed, no penalty has been assessed against the Company or
any of its Subsidiaries, to the Knowledge of the Company
after diligent inquiry no investigation or review is pending
or threatened by any governmental entity, and neither the
Company nor any of its Subsidiaries has received any written
notice or has any Knowledge of any pending or threatened
investigation by any other entity with respect to any (i)
alleged failure by the Company or any of its Subsidiaries to
have any permit, license or authorization required in
connection with the conduct of the business of the Company
or any of its Subsidiaries or (ii) alleged Environmental Law
violation involving the generation, treatment, storage,
recycling, transportation, discharge, disposal or any
Release of any Hazardous Materials by the Company or any of
its Subsidiaries or at any of the properties owned or leased
by any of them, except to the extent that such failure or
violation would not have a Material Adverse Effect.
(d) Neither the Company nor any of its Subsidiaries
has generated, treated, stored, recycled, transported,
discharged, disposed of or Released any Hazardous Material
on any property now or previously owned or leased by the
Company or any of its Subsidiaries to an extent that it
would have a Material Adverse Effect; and
(i) no PCB is present at any property now owned
or leased by the Company or any of its Subsidiaries and
the Company has not received any written notice and
does not have any Knowledge of the presence of any PCB
at any property previously owned or leased by the
Company or any of its Subsidiaries to the extent that
any such presence would have a Material Adverse Effect;
(ii) no asbestos is present at any property
now owned or leased by the Company or any of its
Subsidiaries and the Company has not received any
written notice and does not have any Knowledge of the
presence of any asbestos at any property previously
owned or leased by the Company or any of its
Subsidiaries to the extent that any such presence would
have a Material Adverse Effect;
(iii) there are no underground storage tanks
for Hazardous Materials, active or abandoned, present
at any property now owned or leased by the Company or
any of its Subsidiaries and the Company has not
received any written notice and does not have any
Knowledge of the presence of any such tanks at any
property previously owned or leased by the Company or
any of its Subsidiaries to the extent that any such
presence would have a Material Adverse Effect;
(iv) no Hazardous Materials have been Released
at, on or under any property now owned or leased by the
Company or any of its Subsidiaries and the Company has
not received any written notice and does not have any
Knowledge of any Release of Hazardous Materials at any
property previously owned or leased by the Company or
any of its Subsidiaries to the extent that any such
Release would have a Material Adverse Effect.
(e) Except as set forth on Schedule II hereto, since
January 1, 1980 neither the Company nor any of its
Subsidiaries has transported or arranged for the
transportation of any Hazardous Material to any location
which is listed on the National Priorities List under
CERCLA, listed for possible inclusion on the National
Priorities List by the United States Environmental
Protection Agency in the Comprehensive Environmental
Response, Compensation and Liability Information System
("CERCLIS") or on any similar published state list. The
Company has not received any written notice and has no
Knowledge of any allegations that the Company or any of its
Subsidiaries is liable, in connection with the
transportation or arranging for transportation of Hazardous
Materials, for clean-up costs, remedial work, damages to
natural resources on or for personal injury claims,
including, but not limited to, claims under CERCLA, to the
extent such liability would have a Material Adverse Effect.
(f) The hazardous material annual generator reports
which the Company and each of its Subsidiaries were required
to file for calendar years 1991, 1992 and 1993 pursuant to
40 CFR Part 262.41 and 40 CFR Part 262.56 or any similar
state regulation are contained in Schedule II, except as
otherwise set forth therein.
(g) Except as set forth in Schedule II, no written
notification of a Release of a Hazardous Material in
violation of any Environmental Law or any permit, license or
authorization held or received by the Company or any of its
Subsidiaries has been filed or made by or on behalf of the
Company or any of its Subsidiaries.
(h) Except as set forth in Schedule II hereto, no
property now or, to the Knowledge of the Company, previously
owned or leased by the Company or any of its Subsidiaries is
listed on the National Priorities List under CERCLA, listed
for possible inclusion on the National Priorities List in
CERCLIS or on any similar published state list.
(i) No Liens which would have a Material Adverse
Effect have arisen under or pursuant to any Environmental
Laws on any of the property or properties owned or leased by
the Company or any of its Subsidiaries and neither the
Company nor any of its Subsidiaries has received any notice
or has any Knowledge of any government action which has been
taken or is in the process of being taken which could
subject any of such Properties to any such Lien.
(j) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses of which
records exist conducted by or on behalf of the Company or
any of its Subsidiaries and which are in the possession or
control of the Company or any of its Subsidiaries or any of
their consultants, attorneys, agents or representatives in
relation to any property or facility now or previously owned
or leased by the Company or any of its Subsidiaries which
have not been made available to the Banks, except for tests,
studies, reviews, and other analyses routinely taken to
comply or determine compliance with permits held by the
Company and its Subsidiaries.
7.14. Subsidiaries, Etc. Set forth in Schedule III
hereto is a complete and correct list, as of the date of this
Agreement, of all Subsidiaries of the Company (and the respective
jurisdiction of incorporation of each such Subsidiary). Except
as disclosed in said Schedule III, the Company owns, free and
clear of Liens, all outstanding shares of such Subsidiaries (and
each such Subsidiary owns, free and clear of Liens, all
outstanding shares of its Subsidiaries) and all such shares are
validly issued, fully paid and non-assessable.
7.15. No Offsets, Etc. As of the Closing Date, the
Company has Facility B Loans outstanding to the Banks hereunder
in the aggregate principal amount of $100,000,000. Such amount
is due and owing to the Banks and is not subject to any
counterclaim, offset or defense.
Section 8. Covenants of the Company. The Company
covenants and agrees with the Banks and the Agent that, so long
as any Commitment, Loan, or Letter of Credit Liability is
outstanding and until payment in full of all amounts payable by
the Company hereunder:
8.01. Financial Statements. The Company shall deliver
to the Agent, with sufficient copies for each of the Banks:
(a) as soon as available and in any event within 15
Business Days after the end of each fiscal month,
consolidated and consolidating statements of operations,
retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for such period and for the period
from the beginning of the respective fiscal year to the end
of such period, and the related consolidated and
consolidating balance sheets as at the end of such period,
setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the
corresponding period in the preceding fiscal year,
accompanied by a certificate of a senior financial officer
of the Company, which certificate shall state that said
financial statements fairly present in all material respects
the consolidated financial condition and results of
operations of the Company and its Consolidated Subsidiaries,
and the unconsolidated financial condition and results of
operations of the Company and of each of its Consolidated
Subsidiaries, in accordance with GAAP, as at the end of, and
for, such period (subject to normal year-end audit
adjustments);
(b) as soon as available and in any event within 45
days after the end of each of the first three quarterly
fiscal periods of each fiscal year of the Company,
consolidated and consolidating statements of operations,
retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for the period from the beginning
of the respective fiscal year to the end of such period, and
consolidated and consolidating statements of operations for
such quarterly fiscal period, and the related consolidated
and consolidating balance sheets as at the end of such
period, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the
corresponding period in the preceding fiscal year,
accompanied by a certificate of a senior financial officer
of the Company, which certificate shall state that said
financial statements fairly present in all material respects
the consolidated financial condition and results of
operations of the Company and its Consolidated Subsidiaries,
and the unconsolidated financial condition and results of
operations of the Company and of each of its Consolidated
Subsidiaries, in accordance with GAAP, as at the end of, and
for, such period (subject to normal year-end audit
adjustments);
(c) as soon as available and in any event within 105
days after the end of each fiscal year of the Company,
consolidated and consolidating statements of operations,
retained earnings and cash flow of the Company and its
Consolidated Subsidiaries for such year and the related
consolidated and consolidating balance sheets as at the end
of such year, setting forth in each case in comparative form
the corresponding consolidated and consolidating figures for
the preceding fiscal year, and accompanied (i) in the case
of said consolidated statements and balance sheet, by an
opinion thereon of Deloitte & Touche or other independent
certified public accountants of recognized national
standing, which opinion shall state that said consolidated
financial statements fairly present in all material respects
the consolidated financial condition and results of
operations of the Company and its Consolidated Subsidiaries
as at the end of, and for, such fiscal year in accordance
with GAAP, and (ii) in the case of said consolidating
statements and balance sheets, by a certificate of a senior
financial officer of the Company, which certificate shall
state that said consolidating financial statements fairly
present in all material respects (based upon the financial
condition of the Company and its Subsidiaries, taken as a
whole) the unconsolidated financial condition and results of
operations of the Company and of each of its Consolidated
Subsidiaries in accordance with GAAP, consistently applied,
as at the end of, and for, such fiscal year;
(d) promptly upon their becoming available, copies of
all registration statements and regular periodic reports, if
any, which the Company shall have filed with the Securities
and Exchange Commission (or any governmental agency
substituted therefor) or any national securities exchange;
(e) promptly upon the mailing thereof to the
shareholders of the Company generally, copies of all
financial statements, reports and proxy statements so
mailed;
(f) as soon as reasonably practicable, and in any
event within 30 days after the Company knows or has reason
to know that any of the events or conditions specified below
with respect to any Plan or Multiemployer Plan have occurred
or exist, a statement signed by a senior financial officer
of the Company setting forth details respecting such event
or condition and the action, if any, which the Company or
its ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed
with or given to PBGC by the Company or an ERISA Affiliate
with resect to such event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder,
with respect to a Plan, as to which PBGC has not by
regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the
occurrence of such event (provided that a failure to
meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA shall be a reportable
event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of
a notice of intent to terminate any Plan or the
termination of any Plan;
(iii) the institution by PBGC of proceedings
under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan,
or the receipt by the Company or any ERISA Affiliate of
a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal by the
Company or any ERISA Affiliate under Section 4201 or
4204 of ERISA from a Multiemployer Plan, or the receipt
by the Company or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under
Section 4041A of ERISA; and
(v) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against the Company
or any ERISA Affiliate to enforce Section 515 of ERISA,
which proceeding is not dismissed within 60 days;
(g) promptly upon its becoming available, any
management letter furnished to the Company by Deloitte &
Touche or other independent certified public accountants of
recognized national standing engaged by the Company;
(h) promptly upon their becoming available, copies of
all documents relating to the proposed Disposition of all or
substantially all of the assets of Western's Games and
Puzzles division, including without limitation, any contract
for the Disposition thereof;
(i) promptly after the Company knows that any Default
has occurred, a notice of such Default describing the same
in reasonable detail and, together with such notice or as
soon thereafter as possible, a description of the action
that the Company has taken and proposes to take with respect
thereto; and
(j) from time to time such other information regarding
the financial condition, operations or business of the
Company or any of its Subsidiaries (including, without
limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA) as
any Bank or the Agent may reasonably request.
The Company will furnish to the Agent, with sufficient copies for
each Bank, at the time it furnishes each set of financial
statements pursuant to paragraph (a), (b) or (c) above, a
certificate of a senior financial officer of the Company (i) to
the effect that no Default has occurred and is continuing (or, if
any Default has occurred and is continuing, describing the same
in reasonable detail and describing the action that the Company
has taken and proposes to take with respect thereto) and (ii)
setting forth in reasonable detail the computations necessary to
determine whether the Company is in compliance with Sections
8.07(d), 8.09, 8.10, 8.11, 8.12, 8.18, 8.19 and 8.20 hereof as of
the end of the respective fiscal month, quarterly fiscal period
or fiscal year.
8.02. Litigation. Promptly after the service of a
complaint or the Company otherwise obtains Knowledge thereof, the
Company will give to the Agent notice of any legal or arbitral
proceeding, and of any proceeding by or before any governmental
or regulatory authority or agency, to which the Company or any of
its Subsidiaries is a party, except any proceeding which, if
adversely determined, could not reasonably be expected to have a
Material Adverse Effect.
8.03. Existence, Access, Etc. The Company will, and
will cause each of its Subsidiaries to: preserve and maintain
its legal existence, and maintain all of its rights, privileges
and franchises, except for such rights, privileges and franchises
the termination of which would not result in a Material Adverse
Effect (provided that nothing in this Section 8.03 shall prohibit
any transaction expressly permitted under Section 8.05 hereof);
comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities
(including, without limitation, all Environmental Laws) if
failure to comply with such requirements would have a Material
Adverse Effect, except for such laws, rules, regulations or
orders which the Company is contesting in good faith by
appropriate proceedings, and for which, in the reasonable opinion
of the Company, adequate reserves are maintained on the books of
the Company and its Subsidiaries, unless contesting any such law,
rule or regulation would itself subject the Company or such
Subsidiary to or result in a Material Adverse Effect; pay and
discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its
property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment
of which is being contested in good faith and by appropriate
proceedings and against which adequate reserves (as reasonably
estimated by the Company) are being maintained in accordance with
GAAP; maintain all of its material properties used or useful in
its business in good working order and condition, ordinary wear
and tear excepted; and permit, and cause each of its Subsidiaries
to permit, at the Company's reasonable expense, representatives
of, or financial advisors or consultants to, the Banks or the
Agent, on reasonable prior notice and during normal business
hours, to examine, copy and make extracts from the books and
records of the Company and its Subsidiaries, to inspect the
properties of the Company and its Subsidiaries, and to discuss
the business and affairs of the Company and its Subsidiaries with
their executive officers and employees, all to the extent
reasonably requested by the Banks or the Agent or their
representatives, financial advisors or consultants (as the case
may be).
8.04. Insurance. The Company will, and will cause
each of its Subsidiaries to, keep insured by financially sound
and reputable insurers (determined as at the time such insurance
is obtained) all property of a character usually insured by
corporations engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts
customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations.
8.05. Prohibition of Fundamental Changes. The Company
will not, nor will it permit any of its Significant Subsidiaries
to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution). The Company will not, and will
not permit any of its Significant Subsidiaries to, convey, sell,
lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or a substantial part of its business
or property, whether now owned or hereafter acquired (including,
without limitation, receivables and leasehold interests, but
excluding (i) any inventory or other property sold or disposed of
in the ordinary course of business and on ordinary business terms
and (ii) obsolete or worn-out property, tools or equipment no
longer used or useful in its business). Notwithstanding the
foregoing provisions of this Section 8.05:
(a) any Subsidiary of the Company may be merged,
consolidated or amalgamated with or into: (i) the Company
if the Company shall be the continuing or surviving
corporation or (ii) any other such Subsidiary; provided that
if any such transaction shall be between a Subsidiary and a
Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall
be the continuing or surviving corporation;
(b) any such Significant Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its business
or property (upon voluntary liquidation, dissolution or
otherwise) to the Company or a Wholly-Owned Subsidiary of
the Company;
(c) the Company or any Subsidiary of the Company may
merge or consolidate with any other Person if (i) in the
case of a merger or consolidation of the Company, the
Company is the surviving corporation and, in any other case,
the surviving corporation is or becomes a Wholly-Owned
Subsidiary of the Company and (ii) after giving effect
thereto no Default would exist hereunder; and
(d) the Company may convey, sell, lease, transfer or
otherwise dispose of any business (whether maintained as a
Subsidiary or division) to which is attributable at the time
of such conveyance, sale, lease, transfer or other
disposition less than 10% of the consolidated assets of the
Company and its Consolidated Subsidiaries and to which is
attributable less than 10% of the consolidated earnings of
the Company and its Consolidated Subsidiaries, determined
before taking into account Interest Expense and income taxes
for the most recent twelve-month period.
8.06. Limitation on Liens. The Company will not, nor
will it permit any of its Subsidiaries to, create, incur, assume
or suffer to exist any Lien upon any of its property, whether now
owned or hereafter acquired, except:
(a) Liens imposed by any governmental authority for
taxes, assessments or charges not yet due or which are being
contested in good faith and by appropriate proceedings if
adequate reserves (in the reasonable estimation of the
Company) with respect thereto are maintained on the books of
the Company or any of its Subsidiaries, as the case may be,
in accordance with GAAP;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in
the ordinary course of business which are not overdue for a
period of more than 30 days or which are being contested in
good faith and by appropriate proceedings and Liens securing
judgments but only to the extent for an amount and for a
period not resulting in an Event of Default under Section
9(h) hereof;
(c) pledges or deposits under worker's compensation,
unemployment insurance and other similar social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary
course of business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business and encumbrances consisting of zoning restrictions,
easements, licenses, restrictions on the use of property or
minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in
any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of
the business of the Company or any of its Subsidiaries;
(f) Liens on property of any corporation which becomes
a Subsidiary of the Company after the date of this
Agreement, provided that such Liens and the Indebtedness
secured thereby are in existence at the time such
corporation becomes a Subsidiary of the Company and were not
created in anticipation thereof;
(g) Liens upon real and/or tangible personal property
acquired, constructed or improved after the date hereof (by
purchase, construction or otherwise) by the Company or any
of its Subsidiaries, each of which Liens either (A) existed
on such property before the time of its acquisition and was
not created in anticipation thereof, or (B) was created
solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund,
the cost (including the cost of construction or improvement)
of such property; provided that no such Lien shall extend to
or cover any property of the Company or such Subsidiary
other than the property so acquired and improvements
thereon; and provided, further, that the principal amount of
Indebtedness secured by any such Lien shall at no time
exceed the fair market value (as determined in good faith by
a senior financial officer of the Company) of such property
at the time it was acquired (by purchase, construction or
otherwise);
(h) Liens securing reimbursement obligations with
respect to commercial letters of credit or bankers'
acceptances incurred in the ordinary course of business,
provided that such Liens extend only to property acquired in
transactions supported by such letters of credit or in
transactions financed by such bankers' acceptances; and
(i) Liens upon property of any Subsidiary which secure
only Indebtedness of such Subsidiary owing to the Company or
any other Subsidiary of the Company;
(j) Liens existing on the date hereof and listed in
Schedule I hereto; and
(k) any extension, renewal or replacement (in whole or
in part) of the foregoing, provided, however, that the Liens
permitted hereunder shall not be spread to cover any
additional Indebtedness or property.
8.07. Indebtedness. The Company will not, and will
not permit any of its Subsidiaries to, create, incur or suffer to
exist any Indebtedness except:
(a) Indebtedness to the Banks hereunder;
(b) Indebtedness outstanding on the date hereof and
listed in Schedule I hereto;
(c) Indebtedness of Subsidiaries of the Company to the
Company or to other Subsidiaries of the Company;
(d) additional Indebtedness of Subsidiaries of the
Company in an aggregate amount at any time outstanding up to
but not exceeding 10% of the Company's Tangible Net Worth at
such time; and
(e) Indebtedness of the Company and its Subsidiaries
secured by Liens permitted under Section 8.06(f), Section
8.06(g) or Section 8.06(h).
8.08. Investments. The Company will not, and will not
permit any of its Subsidiaries to, make or permit to remain
outstanding any Investments except:
(a) demand deposit accounts with banks;
(b) Permitted Investments;
(c) Investments by the Company and its Subsidiaries in
capital stock, or Indebtedness, of Subsidiaries of the
Company (whether now owned or existing or hereafter
acquired) and advances by the Company and its Subsidiaries
to Subsidiaries of the Company in the ordinary course of
business;
(d) Interest Rate Protection Agreements which are
reasonably related to floating rate Indebtedness of the
Company or its Subsidiaries outstanding or anticipated to be
outstanding during the term of the respective Interest Rate
Protection Agreement;
(e) Investments outstanding on the date hereof;
(f) Investments acquired in bankruptcy, liquidation,
reorganization or similar proceedings in settlement of
claims of the Company or any of its Subsidiaries in such
proceedings;
(g) subject to Section 8.13, Investments in joint
ventures entered into in the ordinary course of the
Company's business and having an aggregate book value not
exceeding $20,000,000 at any time;
(h) Investments constituting forward purchases of
foreign exchange entered into in the ordinary course of the
Company's business and having a term not exceeding one year;
(i) Investments in Indebtedness of the Company,
provided that no Event of Default has occurred and is
continuing at the time of acquisition of any such
Investment; and
(j) other Investments in an aggregate amount not
exceeding $2,000,000 at any time.
8.09. Dividend Payments. The Company will not, and
will not permit any of its Subsidiaries to, declare or make any
Dividend Payment at any time; provided, however, that the Company
may at any time after the date hereof, declare and make Dividend
Payments in cash, subject to the satisfaction of each of the
following conditions:
(a) no Default shall have occurred and be continuing
at the time such Dividend Payment was declared; and
(b) at the time of the declaration of the Dividend
Payment the aggregate amount of Dividend Payments made
during the period commencing on August 1, 1992 through and
including the date of such Dividend Payment shall not exceed
an amount equal to 50% of consolidated net income of the
Company and its Consolidated Subsidiaries for the period
from August 1, 1992 through and including the last day of
the fiscal quarter most recently ended prior to the date of
such Dividend Payment (treated for these purposes as a
single accounting period).
8.10. Leverage Ratio. The Company shall not permit
the Leverage Ratio to exceed 2.50 to 1 as at the end of the third
fiscal quarter of any fiscal year of the Company, and shall not
permit the Leverage Ratio to exceed 2.00 to 1 as at the end of
any first, second or fourth fiscal quarter of any fiscal year of
the Company (being the fiscal quarters ending on or about the
last day of the months of April, July or January, respectively).
8.11. Tangible Net Worth. The Company will not permit
Tangible Net Worth at any time to be less than the sum of (i)
$150,000,000 plus (ii) an amount equal to (but not less than
zero) 50% of the Company's consolidated net income (determined in
accordance with GAAP) for the period from May 2, 1992 through the
end of the Company's fiscal quarter most recently ended (treated
for this purpose as a single accounting period).
8.12. Interest Coverage Ratio. The Company will not
permit the Interest Coverage Ratio for any period set forth below
to be less than the ratio set forth below opposite such period:
Period Ratio
------ -----
Two fiscal quarters ending January 29, 1994 0.30 to 1
Fiscal quarter ending July 30, 1994 0.25 to 1
Fiscal quarter ending October 29, 1994 3.00 to 1
Fiscal quarter ending January 28, 1995 3.00 to 1
Two fiscal quarters ending April 29, 1995 1.50 to 1
and each fiscal quarter thereafter
Notwithstanding the foregoing, in the event that Western sells
all or substantially all of the assets of its Games and Puzzles
division, the ratio set forth above for the fiscal quarter ending
July 30, 1994 shall be increased to 0.65 to 1.
8.13. Lines of Business. Neither the Company nor any
of its Subsidiaries shall engage to any substantial extent in any
line or lines of business activity other than those in which the
Company and its Subsidiaries are engaged on the date hereof and
extensions of such lines of business activity and other lines of
business activity reasonably related thereto.
8.14. Transactions with Affiliates. Except as
expressly permitted by this Agreement, the Company will not, nor
will it permit any of its Subsidiaries to, directly or
indirectly: (a) make any material (based upon the financial
condition of the Company and its Subsidiaries, taken as a whole)
Investment in an Affiliate; (b) transfer, sell, lease, assign or
otherwise dispose of any material (based upon the financial
condition of the Company and its Subsidiaries, taken as a whole)
property to an Affiliate; (c) merge into or consolidate with, or
purchase or acquire any material (based upon the financial
condition of the Company and its Subsidiaries, taken as a whole)
property from, an Affiliate; or (d) enter into any other material
(based upon the financial condition of the Company and its
Subsidiaries, taken as a whole) transaction directly or
indirectly with or for the benefit of an Affiliate (including,
without limitation, guarantees and assumptions of obligations of
an Affiliate); provided that the Company and its Subsidiaries may
enter into transactions (other than extensions of credit by the
Company or any of its Subsidiaries to an Affiliate) with an
Affiliate if the monetary or business consideration to the
Company arising therefrom would be comparable to, or more
favorable than, the monetary or business consideration which
would obtain in a comparable transaction with a Person not an
Affiliate.
8.15. Use of Proceeds. The Company will (and, in the
case of the Facility A Loans, shall cause Western to) use the
proceeds of the Loans hereunder solely for its general corporate
purposes, including to finance acquisitions (whether of capital
stock or of tangible and/or intangible assets) in privately
negotiated transactions or in transactions approved or
recommended by the board of directors (or comparable governing
body) of the acquired entity (but not for any other type of
acquisition); provided that neither the Agent nor any Bank shall
have any responsibility as to the use of any of such proceeds.
8.16. Limitation on Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any restriction or
encumbrance on the ability of any Subsidiary of the Company to
(i) pay dividends or make other distributions on such
Subsidiary's capital stock or any other interest or participation
in, or measured by, its profits, or pay any Indebtedness owed to
the Company or any of its Subsidiaries, (ii) make any loans or
advances to the Company or any of its Subsidiaries, (iii)
transfer any of its property or assets to the Company or any of
its Subsidiaries, or (iv) guarantee any Indebtedness of the
Company or any of its Subsidiaries; provided that this Section
8.16 shall not prohibit any restriction or encumbrance existing
under or by reason of (a) applicable law or (b) any agreement or
instrument governing Indebtedness of a Person acquired by the
Company or any Subsidiary of the Company existing at the time of
such acquisition (and not created in anticipation thereof), which
restriction or encumbrance is not applicable to any Person or
property or assets of any Person other than the Person so
acquired and/or its Subsidiaries.
8.17. Clean-Down. The Company will not permit the
aggregate principal amount of Loans outstanding hereunder to
exceed (i) if the Disposition by Western of all or substantially
all of the assets of its Games and Puzzles division has not been
consummated, $115,000,000, or (ii) if such Disposition has been
consummated, $15,000,000, in each case for a period of thirty
consecutive days during the first fiscal quarter of each fiscal
year of the Company (beginning with the fiscal year commencing on
January 29, 1995) and after such thirty day period, if the
Company has not previously delivered the compliance certificate
required by Section 8.01 hereof in respect of the financial
statements for the last fiscal month of the preceding fiscal
year, until such compliance certificate has been delivered in
accordance with Section 8.01 hereof.
8.18. Cash Flow. The Company will not permit its Cash
Flow for any period set forth below to be less than the amount
set forth below opposite such period:
Period Cash Flow
------ ---------
Fiscal quarter ended 4/30/94 $(17,650,000)
One fiscal month ended 5/28/94 (1,645,000)
Two fiscal months ended 6/25/94 (1,189,000)
Three fiscal months ended 7/30/94 3,500,000
One fiscal month ended 8/27/94 4,047,000
Two fiscal months ended 9/24/94 10,007,000
Three fiscal months ended 10/29/94 23,900,000
One fiscal month ended 11/26/94 5,818,000
Two fiscal months ended 12/31/94 8,419,000
Three fiscal months ended 1/28/95 12,100,000
8.19. Loans Outstanding. From and after the Disposition
by Western of all or substantially all of the assets of its Games
and Puzzles division, the Company will not permit the aggregate
principal amount of Loans outstanding at any time during the period
commencing with the delivery by the Company to the Agent of a
compliance certificate for any fiscal month and ending with the
delivery by the Company to the Agent of a compliance certificate
for the next succeeding fiscal month to exceed the percentage set
forth below opposite such fiscal month of the total amount of
Inventory and Accounts Receivable (as each such term is defined
under GAAP) of the Company at the end of such fiscal month, as
certified by such compliance certificate:
Month Percentage
------ ----------
June, 1994 16.5%
July, 1994 16.5%
August, 1994 23.5%
September, 1994 24.0%
October, 1994 28.0%
November, 1994 29.0%
December, 1994 24.0%
January, 1995 6.5%
February, 1995 and 13.0%
thereafter
In addition, the Company shall comply with this Section
8.19 with effect from the end of the most recent fiscal month
ending prior to the Disposition of all or substantially all of the
assets of Western's Games and Puzzles division as provided above in
Section 8.19, such compliance to be determined on a pro forma basis
by subtracting $100,000,000 from the aggregate principal amount of
Loans outstanding and dividing the resulting amount by the total
amount of Inventory and Accounts Receivable of the Company at the
end of such fiscal month, and accordingly, the Company shall
furnish to the Agent, with sufficient copies for each Bank, on or
prior to the third Business Day following such Disposition, a
certificate of a senior financial officer of the Company setting
forth in reasonable detail the computations necessary to determine
compliance by the Company with this Section 8.19. The Company
shall not borrow any Loans under this Agreement during the period
commencing with such Disposition and ending with the delivery of
the compliance certificate described in the immediately preceding
sentence.
In the event that the Disposition of the Company's
Advertising Specialty division is consummated, the percentages set
forth in this Section 8.19 for each fiscal month ending thereafter
shall be reduced by the difference between the Company's projection
of "Loans Outstanding as a % of Accounts Receivable and
Inventories" for the relevant fiscal month and the respective
percentages obtained by dividing (i) the Company's projection of
"Loans Outstanding (Direct Borrowings)" for the relevant fiscal
month less up to $12,000,000 of the net cash proceeds of such
Disposition received by the Company or any of its Subsidiaries by
(ii) the sum of the Company's projections for "Accounts Receivable,
Net" and "Inventories, Net" for the relevant fiscal month. The
projections referred to in the preceding sentence are set forth in
Schedule V attached hereto.
Notwithstanding anything to the contrary in this Section
8.19, the Company shall be entitled to deliver to the Agent a
compliance certificate of a senior financial officer of the Company
setting forth the total amount of Inventory and Accounts Receivable
of the Company as of the date of such compliance certificate, and
thereupon the aggregate principal amount of Loans which the Company
may permit to be outstanding for purposes of this Section 8.19
during the period commencing with the delivery of such compliance
certificate and ending with the delivery of any subsequent
compliance certificate shall be the percentage set forth in this
Section 8.19 for the then current fiscal month of the total amount
of Inventory and Accounts Receivable reflected in such compliance
certificate.
8.20. Capital Expenditures. The Company shall not, and
shall not permit its Subsidiaries to, make Capital Expenditures
that, in the aggregate, exceed $27,500,000 during any fiscal year
of the Company.
8.21. Guarantee and Pledge. The Company shall use its
best efforts (i) to cause Western to issue a guarantee of all of
the Company's obligations to the Banks, the Agent and the Co-Agent
hereunder, in substantially the form set forth as Exhibit B to this
Credit Agreement and (ii) to pledge for the ratable benefit of the
Banks and the holders (the "Holders") of the Company's 7.65%
Debentures due 2002 (the "Debentures"), all of the issued and
outstanding capital stock of Western, in each case no later than
the earlier of (a) the thirtieth day after the Disposition of all
or substantially all of the assets of the Games and Puzzles
division of Western, and (b) September 30, 1994. The pledge of the
stock of Western shall be to a Person and upon terms reasonably
acceptable to the Agent, the Holders of not less than a majority in
aggregate principal amount of the outstanding Debentures (the
"Majority Holders") and the Trustee for the Debentures.
Section 9. Events of Default. If one or more of the
following events shall occur and be continuing:
(a) The Company shall default in the payment when due of
any interest on any Loan or any Reimbursement Obligation, any
fee or any other amount (other than principal of any Loan or
any Reimbursement Obligation) payable by it hereunder and such
default shall have continued unremedied for two or more
Business Days, or the Company shall default in the payment
when due of any principal of any Loan or any Reimbursement
Obligation (including any prepayment thereof required pursuant
to Section 2.04 hereof); or
(b) The Company or any of its Significant Subsidiaries
shall default in the payment when due (after giving effect to
any applicable grace period and any requirement for the giving
of notice) of any principal of or interest on any of its other
Indebtedness aggregating $5,000,000 or more; or any event
specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness shall occur if
the effect of such event is to cause, or to permit the holder
or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness
to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior
to its stated maturity; or
(c) Any representation, warranty or certification made
or deemed made herein (other than in Section 7.13 hereof) (or
in any modification or amendment hereto) or in any other Loan
Document by the Company or Western, or any certificate
furnished by the Company or Western to any Bank or the Agent
pursuant to the provisions hereof or thereof, shall prove to
have been false or misleading as of the time made or furnished
in any material adverse respect; or
(d) Any representation or warranty made or deemed made
in Section 7.13 hereof by the Company shall prove to have been
false or misleading as of the time made in any material
respect and the Agent (acting at the direction of the Majority
Banks) shall have given written notice thereof to the Company
and the Company shall have failed to cure such breach of
representation or warranty within 60 days after the giving of
such notice by causing such representation or warranty to
become true, by remedying the condition or event that is the
basis of such breach or by causing such event or condition no
longer to have a Material Adverse Effect or by taking such
other action which has the effect of curing such breach; or
(e) The Company shall default in the performance of any
of its obligations under any of Sections 8.05, 8.06, 8.07,
8.08, 8.09, 8.14 or 8.16 hereof; or the Company or Western
shall default in the performance of any of its other
obligations in this Agreement or any other Loan Document and
such default shall continue unremedied for a period of thirty
days after notice thereof to the Company by the Agent or any
Bank (through the Agent); or
(f) The Company or any of its Significant Subsidiaries
shall admit in writing its inability to, or be generally
unable to, pay its debts as such debts become due; or
(g) The Company or any of its Significant Subsidiaries
shall (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of
its creditors, (iii) commence a voluntary case under the
Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) file to controvert
in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case under
the Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced, without the
application or consent of the Company or any of its
Significant Subsidiaries, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment
of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Company or such
Significant Subsidiary or of all or any substantial part of
its assets, or (iii) similar relief in respect of the Company
or such Significant Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against the Company or
such Significant Subsidiary shall be entered in an involuntary
case under the Bankruptcy Code; or
(i) A final judgment or judgments for the payment of
money in excess of $5,000,000 in the aggregate (exclusive of
judgment amounts fully covered by insurance where the insurer
has admitted liability in respect of such judgment) or in
excess of $20,000,000 in the aggregate (regardless of
insurance coverage) shall be rendered by one or more courts,
administrative tribunals or other bodies having jurisdiction
against the Company and/or any of its Significant Subsidiaries
and the same shall not be discharged (or provision shall not
be made for such discharge), or a stay of execution thereof
shall not be procured, within 30 days from the date of entry
thereof and the Company or the relevant Significant Subsidiary
shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or
(j) Any Person (including any "person" as defined in
Section 13(d) of the Securities Exchange Act of 1934, as
amended), other than Richard A. Bernstein and/or any
affiliates of Mr. Bernstein, shall acquire direct or indirect
beneficial ownership of securities representing more than 50%
of the total number of votes which may be cast in the election
of directors of the Company by all stockholders entitled to
vote in such election;
(k) An event or condition specified in Section 8.01(e)
hereof shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions,
the Company or any ERISA Affiliate shall incur or in the
reasonable opinion of the Majority Banks shall be reasonably
likely to incur a liability to a Plan, a Multiemployer Plan or
the PBGC (or any combination of the foregoing) which would
constitute, in the reasonable determination of the Majority
Banks, a Material Adverse Effect; or
(l) The Company shall permit Western to prepay all or
any portion of the outstanding principal of the Subsidiary
Note while any Facility B Loans are then outstanding;
THEREUPON: (1) in the case of any such event (other than one
referred to in paragraph (g) or (h) of this Section 9) with respect
to the Company, the Agent may, and upon request of the Majority
Banks shall, notify the Company that an "Event of Default"
hereunder exists, and the Agent may and, upon request of the
Majority Banks, shall, by notice to the Company, terminate the
Commitments and/or declare the principal amount then outstanding
of, and the accrued interest on, the Loans, the Reimbursement
Obligations and all other amounts payable by the Company hereunder
and under the Notes (including, without limitation, any amounts
payable under Section 5.01 or 5.02 hereof) to be forthwith due and
payable, whereupon such amounts shall be immediately due and
payable without presentment, demand, protest or other formalities
of any kind, all of which are hereby expressly waived by the
Company; and (2) in the case of the occurrence of an Event of
Default referred to in paragraph (g) or (h) of this Section 9 with
respect to the Company, the Commitments shall automatically be
terminated and the principal amount then outstanding of, and the
accrued interest on, the Loans, the Reimbursement Obligations and
all other amounts payable by the Company hereunder and under the
Notes (including, without limitation, any amounts payable under
Section 5.01 or 5.02 hereof) shall automatically become immediately
due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived
by the Company.
In addition, the Company agrees, upon the occurrence and
during the continuance of any Event of Default if the Agent has
declared the principal amount then outstanding of, and accrued
interest on, the Loans, and all other amounts payable by the
Company hereunder and under the Notes to be due and payable, it
shall, if requested by the Agent or the Majority Banks through the
Agent (and, in the case of any Event of Default referred to in
paragraph (f), (g) or (h) of this Section 9 with respect to the
Company, forthwith, without any demand or the taking of any other
action by the Agent or such Banks) provide cash collateral for the
Letter of Credit Liabilities then outstanding by paying to the
Agent immediately available funds in an amount equal to the then
aggregate undrawn face amount of all Letters of Credit, which funds
shall be held by the Agent as collateral security for the prompt
payment in full when due of the Letter of Credit Liabilities, and
the Company hereby grants to the Agent for the benefit of the Banks
a security interest in any funds so paid.
Section 10. The Agent and Co-Agent.
10.01. Appointment, Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes the Agent and the Co-
Agent to act as its agents hereunder with such powers as are
specifically delegated to the Agent or the Co-Agent by the terms of
this Agreement or any other Loan Document, together with such other
powers as are reasonably incidental thereto. The Agent and the Co-
Agent (which terms as used in this sentence and in Section 10.05
and the first sentence of Section 10.06 hereof shall include
reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no
duties or responsibilities except those expressly set forth in this
Agreement, and shall not by reason of this Agreement be a trustee
for any Bank; (b) shall not be responsible to the Banks for any
recitals, statements, representations or warranties contained in
this Agreement, or in any other Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, any Note or any other Loan Document or for any
failure by the Company or any other Person to perform any of its
obligations hereunder or thereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings
hereunder; (d) shall not be responsible to any Bank for any action
taken or omitted to be taken by it hereunder or under any other
document or instrument referred to or provided for herein or in
connection herewith, except for its own gross negligence or willful
misconduct and (e) shall not be responsible to the Company or the
Banks for (i) determining whether or not any of the transactions
contemplated hereby qualifies as a highly leveraged transaction
("HLT") as defined by any bank regulatory authority, (ii) notifying
the Banks regarding the HLT status of any transaction contemplated
hereby or of any change in that status or (iii) the correctness of
any determination as to HLT status. Notwithstanding anything in
this Agreement to the contrary, the Co-Agent shall have no duties
or responsibilities hereunder other than as a Bank, and shall not
have any right to take any action hereunder other than as a Bank,
except that upon the resignation or removal of the Agent, the Co-
Agent shall, as provided in Section 10.08 hereof, succeed to the
office of Agent hereunder. The Agent may employ agents and
attorneys-in-fact and shall not be responsible to any Bank for the
negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith. The Agent and the Co-Agent may deem
and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a notice of the assignment or
transfer thereof shall have been filed with the Agent. The Agent
shall provide to each Bank copies of financial statements and other
information furnished to it as required hereby to the extent that
the Company is not obligated to deliver such information directly
to the Banks.
10.02. Reliance by Agent and Co-Agent. The Agent and
the Co-Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone,
telegram or cable) reasonably believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the
Agent or the Co-Agent, respectively. As to any matters not
expressly provided for by this Agreement, as between the Agent or
the Co-Agent (on the one hand) and the Banks (on the other hand),
the Agent and the Co-Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with
instructions given by the Majority Banks, and such instructions of
the Majority Banks and any action taken or failure to act pursuant
thereto shall be binding on all of the Banks.
10.03. Defaults. Neither the Agent nor the Co-Agent
shall be deemed to have knowledge or notice of the occurrence of a
Default (other than, in the case of the Agent, the non-payment of
principal of or interest on Loans, Reimbursement Obligations or of
commitment fees or Letter of Credit issuance fees) unless the Agent
or the Co-Agent, respectively, has received notice from a Bank or
the Company specifying such Default and stating that such notice is
a "Notice of Default". In the event that the Agent receives such a
notice of the occurrence of a Default, the Agent shall give prompt
notice thereof to the Banks and (if such notice was received from a
Bank) to the Company (and shall give each Bank prompt notice of
each such non-payment). The Agent shall (subject to Section 10.07
hereof) take such action (or refrain from taking such action) with
respect to such Default as shall be directed by the Majority Banks,
provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interest of the
Banks except to the extent that this Agreement expressly requires
that such action be taken, or not be taken, only with the consent
or upon the authorization of the Majority Banks or all of the
Banks.
10.04. Rights as a Bank. With respect to its Commitment
and the Loans made by it, each of the Agent and the Co-Agent in its
capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it
were not acting as the Agent or the Co-Agent (as the case may be),
and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include the Agent and/or the Co-Agent in its individual
capacity. Each of the Agent and the Co-Agent and their affiliates
may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally, engage in any kind of
banking, trust or other business with the Company (and any of its
Subsidiaries or Affiliates) as if it were not acting as the Agent
or the Co-Agent, as the case may be, and each of the Agent and the
Co-Agent and its affiliates may accept fees and other consideration
from the Company for services in connection with this Agreement or
otherwise without having to account for the same to the Banks.
10.05. Indemnification. The Banks agree to indemnify
the Agent and the Co-Agent (to the extent not reimbursed under
Section 11.03 hereof, but without affecting the obligations of the
Company under said Section 11.03) ratably in accordance with the
aggregate principal amount of the Loans and Reimbursement
Obligations held by the Banks (or, if no Loans or Reimbursement
Obligations are at the time outstanding, ratably in accordance with
their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent
or the Co-Agent (including by any Bank) arising out of or by reason
of any investigation or any way relating to or arising out of this
Agreement, any of the other Loan Documents or the transactions
contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Company is obligated to pay under
Section 11.03 hereof but excluding, unless an Event of Default has
occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties
hereunder) or the enforcement of any of the terms hereof or of any
Loan Document, provided that no Bank shall be liable for any of the
foregoing to the extent they arise from the gross negligence or
willful misconduct of the party to be indemnified.
10.06. Non-Reliance on Agent, Co-Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on
the Agent or the Co-Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made its
own credit analysis of the Company and its Subsidiaries and
decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or the Co-Agent
or any other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this
Agreement. Neither the Agent nor the Co-Agent shall be required to
keep itself informed as to the performance or observance by the
Company of this Agreement or any other document referred to or
provided for herein or to inspect the properties or books and
records of the Company or any of its Subsidiaries. Except for
notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder,
neither the Agent nor the Co-Agent shall have any duty or
responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business
of the Company or any of its Subsidiaries (or any of their
affiliates) which may come into the possession of the Agent or the
Co-Agent or any of their affiliates.
10.07. Failure to Act. Except for action expressly
required of the Agent hereunder, each of the Agent and the Co-Agent
shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall receive further assurances to its
satisfaction from the Banks of their indemnification obligations
under Section 10.05 hereof against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action.
10.08. Resignation or Removal of Agent or Co-Agent.
Subject to the appointment and acceptance of a successor Agent or
Co-Agent as provided below, either or both of the Agent or Co-Agent
may resign at any time by giving notice thereof to the Banks and
the Company, and either or both of the Agent or Co-Agent may be
removed at any time with or without cause by Banks holding more
than 50% of the aggregate unpaid principal amount of the
outstanding Loans and Letter of Credit Liabilities, or, if no Loans
or Letter of Credit Liabilities are outstanding, Banks having more
than 50% of the aggregate amount of the Commitments. Upon any such
resignation or removal of the Agent, the Co-Agent shall succeed to
the office of Agent hereunder unless the Majority Banks, with (so
long as no Event of Default shall have occurred and be continuing)
the consent of the Company (which consent shall not be unreasonably
withheld), shall have appointed a different successor Agent. Upon
any such resignation or removal of the Co-Agent, the Majority Banks
shall have the right to appoint a successor Co-Agent, with (so long
as no Event of Default shall have occurred and be continuing) the
consent of the Company (which consent shall not be unreasonably
withheld). If no successor Agent or Co-Agent (as the case may be)
shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Agent's or Co-Agent's
giving of notice of resignation or the Banks' removal of the
retiring Agent or Co-Agent, then the retiring Agent or Co-Agent
may, on behalf of the Banks, appoint a successor Agent or Co-Agent,
as the case may be (with the consent of the Company, which consent
shall not be unreasonably withheld), which shall be a bank having a
combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Agent or Co-Agent hereunder by a
successor, such successor shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
retiring Agent or Co-Agent, as the case may be, and the retiring
Agent or Co-Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's or Co-Agent's
resignation or removal hereunder, the provisions of this Section 10
shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent
or Co-Agent, and the retiring Agent or Co-Agent shall continue to
be responsible (to the extent set forth herein and only to such
extent) for any actions taken or omitted to be taken by it in its
capacity as Agent or Co-Agent while it was acting as Agent or Co-
Agent hereunder.
Section 11. Miscellaneous.
11.01. Waiver. No failure on the part of the Agent, the
Co-Agent or any Bank to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege
under this Agreement, any Note or any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement, any
Note or any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
11.02. Notices. All notices and other communications
provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement)
shall be given or made in writing (including, without limitation,
by telecopy) delivered to the intended recipient at the "Address
for Notices" specified below its name on the signature pages
hereof; or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except
as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by
telecopier or personally delivered (in either case during normal
business hours) or, in the ease of a mailed notice, upon receipt,
in each case given or addressed as aforesaid. A copy of any notice
to or from the Company shall be sent by mail or delivered
personally to the intended recipient not later than one Business
Day following the giving of such notice.
11.03. Expenses, Etc. The Company agrees to pay or
reimburse each of the Banks, the Agent and the Co-Agent for paying:
(a) all reasonable out-of-pocket costs and expenses of the Agent
and the Co-Agent (including, without limitation, the reasonable
fees and expenses of Weil, Gotshal & Manges, special New York
counsel to the Agent), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement, the Notes
and the other Loan Documents and the extension of credit hereunder
and (ii) any amendment, modification or waiver of any of the terms
of this Agreement, any of the Notes or any of the other Loan
Documents; (b) all reasonable out-of-pocket costs and expenses of
the Banks, the Agent and the Co-Agent (including reasonable
consultants' and counsels' fees) in connection with (i) any Event
of Default and any enforcement or collection proceedings resulting
therefrom; (ii) the enforcement of this Section 11.03; and (iii)
the retention of any consultant to advise the Agent and the Banks
regarding the business and affairs of the Company and its
Subsidiaries; and (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement, any Letter of
Credit or any of the Notes or any other Loan Document.
The Company hereby agrees to indemnify the Agent, the Co-
Agent and each Bank and their respective directors, officers,
employees and agents for, and hold each of them harmless against,
any and all losses, liabilities, claims, damages or expenses
incurred by any of them arising out of or by reason of any
litigation, or any investigation in contemplation of litigation, or
any other proceedings (including any threatened investigation or
litigation or other proceedings, but excluding litigation involving
only the Banks, the Co-Agent and the Agent) relating to the
extensions of credit hereunder or any actual or proposed use by the
Company or any of its Subsidiaries of the proceeds of any of the
extensions of credit hereunder or any transaction contemplated
hereby or by any other Loan Document, including, without
limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
Whenever the Company is obligated to indemnify the Agent,
the Co-Agent, any Bank or any Issuing Bank hereunder, the Company
shall not be obligated to so indemnify the Agent, the Co-Agent or
any Bank or any Issuing Bank in respect of any settlement of any
litigation or threatened litigation unless the Company shall have
consented to such settlement. In addition, in each such instance
the Company shall have the right, at its sole option and expense,
to conduct and control, through counsel of its choice, and to
defend against, negotiate, settle or otherwise deal with any claim,
investigation, action, suit or proceeding for which it is obligated
to provide indemnification hereunder; provided, however, that no
settlement of any such action, investigation, suit or proceeding
shall be made without the prior written consent of the party or
parties being indemnified if such settlement does not release the
party or parties being indemnified from all liabilities or
obligations with respect to any such claim, investigation, action,
suit or proceeding; and provided, further, that if the defendants
in such action, investigation, suit or proceeding include both the
Company and any of the Banks, the Agent or the Co-Agent, and any
Bank, the Agent or the Co-Agent shall have reasonably concluded
that there may be legal defenses available to it that are different
from or additional to those available to the Company and that the
Company is unable or unwilling to properly assert, such Bank, the
Agent or the Co-Agent (as the case may be) shall be entitled to
separate counsel (at the expense of the Company) to assert such
defenses.
11.04. Amendments, Etc. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be
amended or modified only by an instrument in writing signed by the
Company, the Agent and the Majority Banks, or by the Company and
the Agent acting with the consent of the Majority Banks, and any
provision of this Agreement may be waived by the Majority Banks and
the Company or by the Agent acting with the consent of the Majority
Banks and the Company; provided that no amendment, modification or
waiver shall, unless by an instrument signed by all of the Banks or
by the Agent acting with the consent of all of the Banks: (i)
increase or extend the term, or extend the time or waive any
requirement for the reduction or termination, of the Commitments,
(ii) extend the date fixed for the payment of principal of or
interest on any Loan, any Reimbursement Obligation or any fee
hereunder, (iii) reduce the amount of any such payment of
principal, (iv) reduce the rate at which interest is payable
thereon or any commitment fee or Letter of Credit issuance fee is
payable hereunder, (v) alter the terms of Section 4.02 or 4.07(b)
hereof or of this Section 11.04, (vi) amend the definition of the
term "Majority Banks" or (vii) waive any of the conditions
precedent set forth in Section 6 hereof; and provided, further,
that any amendment of Section 10 hereof shall require the consent
of the Agent.
11.05. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
11.06. Assignments and Participations.
(a) The Company may not assign its rights or obligations
hereunder or under the Notes or any other Loan Document
without the prior consent of all of the Banks and the Agent.
(b) Each Bank may, with the consent of the Company
(which consent shall not be unreasonably withheld), assign any
of its Loans, its Notes, its Commitments, and its Letter of
Credit Interests (but only with the consent of, in the case of
an outstanding Commitment, the Agent and, in the case of a
Letter of Credit Interest, each Issuing Bank); provided that,
(i) no such consent by the Company or the Agent shall be
required in the case of any assignment to another Bank; (ii)
any such partial assignment shall be in an amount at least
equal to $10,000,000; and (iii) each such assignment by a Bank
of its Loans, Notes, Commitments, or Letter of Credit
Interests shall be made in such manner so that the same
portion of each Type of its Loans, Notes, Commitments, and
Letter of Credit Interests is assigned to the respective
assignee. Upon execution and delivery by the assignee to the
Company, the Agent, and the Issuing Bank of an instrument in
writing pursuant to which such assignee agrees to become a
"Bank" hereunder (if not already a Bank) having the
Commitments, Loans, and, if applicable, Letter of Credit
Interests specified in such instrument, and upon consent
thereto by the Company, the Agent, and the Issuing Banks to
the extent required above, the assignee shall have, to the
extent of such assignment (unless otherwise provided in such
assignment with the consent of the Company, the Agent, and
each Issuing Bank), the obligations, rights and benefits of a
Bank hereunder holding the Commitments, Loans, and, if
applicable, Letter of Credit Interests (or portions thereof)
assigned to it (in addition to the Commitments, Loans, and
Letter of Credit Interests, if any, theretofore held by such
assignee) and the assigning Bank shall, to the extent of such
assignment, be released from the Commitments (or portions
thereof) so assigned. Upon each such assignment the assigning
Bank shall pay the Agent an assignment fee of $2,000.
(c) A Bank may sell or agree to sell, to one or more
financial institutions organized under the laws of the United
States or any state thereof or, with the consent of the
Company which will not be unreasonably withheld, under the
laws of any other country or political subdivision thereof, a
participation in all or any part of any Loans or Letter of
Credit Interests held by it, or in its Commitments, in which
event each purchaser of a participation (a "Participant")
shall not, except as otherwise provided in Section 4.07(c)
hereof, have any rights or benefits under this Agreement, any
Notes or any other Loan Document (the Participant's rights
against such Bank in respect of such participation to be those
set forth in the agreements executed by such Bank in favor of
the Participant). All amounts payable by the Company to any
Bank under Section 5 hereof in respect of Loans, Letter of
Credit Interests held by it, and its Commitments, shall be
determined as if such Bank had not sold or agreed to sell any
participations in such Loans, Letter of Credit Interests and
Commitments, and as if such Bank were funding each of such
Loans, Letter of Credit Interests and Commitments in the same
way that it is funding the portion of such Loans, Letter of
Credit Interests and Commitments in which no participations
have been sold. In no event shall a Bank that sells a
participation agree with the Participant to take or refrain
from taking any action hereunder except that such Bank may
agree with the Participant that it will not, without the
consent of the Participant, agree to (i) increase or extend
the term, or extend the time or waive any requirement for the
reduction or termination, of any of such Bank's Commitments,
(ii) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans, Reimbursement
Obligations or any portion of any commitment fee or Letter of
Credit issuance fee hereunder payable to the Participant,
(iii) reduce the amount of any such payment of principal, or
(iv) reduce the rate at which interest is payable thereon, or
any commitment fee or Letter of Credit issuance fee hereunder
payable to the Participant, to a level below the rate at which
the Participant is entitled to receive such interest or fee.
(d) Anything in this Section 11.06 to the contrary
notwithstanding, any Bank may assign and pledge all or any
portion of its Loans and its Notes to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board
of Governors of the Federal Reserve System and any Operating
Circular issued by such Federal Reserve Bank, and such Loans
and Notes shall be fully transferrable as provided therein.
No such assignment shall release the assigning Bank from its
obligations hereunder.
(e) Each Bank may furnish any information concerning the
Company or any of its Subsidiaries in the possession of such
Bank from time to time to assignees and participants
(including prospective assignees and participants), subject,
however, to the provisions of Section 11.12 hereof.
11.07. Survival. The obligations of the Company under
Sections 5.01, 5.02, and 11.03 hereof and the obligations of the
Banks under Section 10.05 hereof shall survive the repayment of the
Loans and Reimbursement Obligations and the termination of the
Commitments. In addition, each representation and warranty made,
or deemed to be made by a notice of any extension of credit
(whether by means of a Loan or a Letter of Credit), herein or
pursuant hereto shall survive the making of such representation and
warranty, and no Bank shall be deemed to have waived, by reason of
making any extension of credit hereunder (whether by means of a
Loan or a Letter of Credit), any Default which may arise by reason
of such representation or warranty proving to have been false or
misleading, notwithstanding that such Bank, the Agent or the Co-
Agent may have had notice or knowledge or reason to believe that
such representation or warranty was false or misleading at the time
such extension of credit was made.
11.08. Captions. The table of contents, captions and
section headings appearing herein are included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
11.09. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original, and
all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
11.10. Governing Law; Submission to Jurisdiction. This
Agreement and the Notes shall be governed by, and construed in
accordance with, the law of the State of New York. Each of the
Company, the Agent, the Co-Agent and the Banks hereby submits to
the nonexclusive jurisdiction of the United States District Court
for the Southern District of New York and of any New York state
court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement, any other
Loan Document or the transactions contemplated hereby or thereby.
Each of the Company, the Agent, the Co-Agent and the Banks
irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought
in an inconvenient forum.
11.11. Waiver of Jury Trial. EACH OF THE COMPANY, THE
AGENT, THE CO-AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.12. Confidentiality. Each of the Banks, the Agent
and the Co-Agent agrees (on behalf of itself and each of its
affiliates, directors, officers, employees and representatives) to
use reasonable precautions to keep confidential any non-public
information supplied to it by or on behalf of the Company pursuant
to this Agreement which is identified by the Company as being
confidential at the time the same is delivered to the Banks, the
Agent or the Co-Agent, provided that nothing herein shall limit the
disclosure of any such information (i) to the extent required by
applicable statute, rule or regulation or by judicial process, (ii)
to counsel for any of the Banks, the Agent or the Co-Agent
(provided that such counsel agrees, for the benefit of the Company,
to be bound by the terms of this Section 11.12), (iii) to bank
examiners, auditors or accountants, (iv) to the Agent, the Co-Agent
or any other Bank, (v) in connection with any litigation relating
to this Agreement or any other Loan Document to which any one or
more of the Banks is a party or (vi) to any assignee or participant
(or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) first
executes and delivers to the respective Bank a Confidentiality
Agreement in substantially the form of Exhibit G hereto prior to
the delivery of any such non-public information; and provided that
in no event shall any Bank, the Agent or the Co-Agent be obligated
or required to return any materials furnished by the Company; and
provided, further, that (A) unless specifically prohibited by
applicable law or court order, each Bank shall, prior to disclosure
thereof pursuant to clause (i) or (v) above, use reasonable efforts
to notify the Company of any request for disclosure of any such
non-public information (other than any such request in connection
with an examination of the financial condition of such Bank by, or
any other regulatory matter involving, such governmental agency)
sufficiently in advance of such intended disclosure to enable the
Company to seek a protective order and (B) such disclosure (except
pursuant to any such request in connection with an examination of
the financial condition of such Bank by, or any other regulatory
matter involving, such governmental agency) shall be limited to
that information which counsel for the Bank, the Agent or the Co-
Agent, as applicable, advises that the Bank, the Agent or the Co-
Agent is legally required to disclose.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
WESTERN PUBLISHING GROUP, INC.
By:
--------------------------------------------
Title:
Address for Notices:
Western Publishing Group, Inc.
444 Madison Avenue
New York, New York 10022
Telecopier No.: 212-888-5025
Telephone No.: 212-688-4500
Attention: Mr. Steven M. Grossman
Executive Vice President &
Chief Financial Officer
With a copy to:
Morgan Lewis & Bockius
101 Park Avenue
New York, New York 10178
Telephone No.: 212-309-6000
Telecopier No.: 212-309-6273
Attention: Mitchell N. Baron, Esq.
<PAGE>
Facility A
Commitment FLEET BANK
$ 3,000,000
Facility B By:--------------------------
Commitment Title:
$23,000,000
Lending Office:
Letter of Credit Fleet Bank
Commitment 56 East 42nd Street
$ 2,000,000 New York, New York 10017
Address for Notices:
Fleet Bank
56 East 42nd Street
New York, New York 10017
Telephone No.: 212-907-5118
Telecopier No.: 212-907-5614
Attention: Mr. Peter C. Hall
Vice President
<PAGE>
Facility A
Commitment THE BANK OF NEW YORK
$ 1,875,000
By:------------------------------------
Facility B Title:
Commitment Lending Office:
$14,375,000 The Bank of New York
One Wall Street
New York, New York 10286
Letter of Credit
Commitment
$ 1,250,000 Address for Notices:
The Bank of New York
One Wall Street
New York, New York 10286
Telephone No.: 212-635-7214
Telecopier No.: 212-635-1480
Attention: Mr. Richard Hebner
Vice President
<PAGE>
Facility A
Commitment CREDIT LYONNAIS
$ 1,500,000
By:----------------------------
Facility B Title:
Commitment
$11,500,000 By:----------------------------
Title:
Letter of Credit Lending Office:
Commitment
$ 1,000,000
Credit Lyonnais, New York Branch
1301 Avenue of the Americas
New York, New York 10019
Address for Notices:
Credit Lyonnais, New York Branch
1301 Avenue of the Americas
New York, New York 10019
Telephone No.: 212-261-7343
Telecopier No.: 212-459-3179
Attention: Ms. Silvana Burdick
Vice President
<PAGE>
Facility A
Commitment THE DAIWA BANK, LTD.
$ 1,500,000
By:------------------------------
Facility B Title:
Commitment
$11,500,000 Lending Office:
The Daiwa Bank, Ltd.
Letter of Credit 233 S. Wacker Drive
Commitment Suite 5400
$ 1,000,000 Chicago, Illinois 60606
Address for Notices:
The Daiwa Bank, Ltd.
450 Lexington Avenue
Suite 1700
New York, NY 10017
Telephone No.: 212-808-2338
Telecopier No.: 212-818-0865
Attention: Mr. James H. Broadley
Vice President
<PAGE>
Facility A
Commitment MELLON BANK, N.A.
$ 1,500,000
By:---------------------------------
Facility B Title:
Commitment
$11,500,000 Lending Office:
Letter of Credit Mellon Bank, N.A.
Commitment One Mellon Bank Center, #4835
$ 1,000,000 Pittsburgh, Pennsylvania 15258
Address for Notices:
Mellon Bank, N.A.
One Mellon Bank Center, #4835
Pittsburgh, Pennsylvania 15258
Telephone No.: 412-234-1055
Telecopier No.: 412-234-0286
Attention: Ms. Brigitte R. Bouchat
Vice President
<PAGE>
Facility A
Commitment NATIONAL WESTMINSTER BANK USA
$ 1,500,000
By:-----------------------------------
Facility B Title:
Commitment
$11,500,000
Lending Office:
Letter of Credit National Westminster Bank USA
Commitment 592 Fifth Avenue
$ 1,000,000 New York, New York 10036
Address for Notices:
National Westminster Bank USA
592 Fifth Avenue
New York, New York 10036
Telephone No.: 212-602-2557
Telecopier No.: 212-602-2080
Attention: Mr. Philip Sorace
Vice President
<PAGE>
Facility A
Commitment STANDARD CHARTERED BANK
$ 1,500,000
By:-------------------------------
Facility B Title:
Commitment
$11,500,000 Lending Office:
Standard Chartered Bank,
Letter of Credit New York Branch
Commitment 160 Water Street
$ 1,000,000 New York, New York 10022
Address for Notices:
Standard Chartered Bank,
New York Branch
160 Water Street
New York, New York 10022
Telephone No.: 212-612-0242
Telecopier No.: 212-612-0225
Attention: Mr. Brian Talor
Assist. Vice President
<PAGE>
Facility A
Commitment NORWEST BANK MINNESOTA, NATIONAL
$1,125,000 ASSOCIATION
By:----------------------------------
Title:
Facility B
Commitment Lending Office:
$8,625,000
Norwest Bank Minnesota, N.A.
Letter of Credit Sixth and Marquette Streets
Commitment Minneapolis, Minnesota
$750,000
Address for Notices:
Norwest Bank
Corporate Banking Offices
Suite 1200
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53233
Telephone No.: 414-224-3793
Telecopier No. 414-224-3795
Attention: Ms. Irene Hogan
Vice President
<PAGE>
Facility A
Commitment THE FIRST NATIONAL BANK OF
BOSTON
$ 1,500,000
By:-----------------------------------
Title:
Facility B
Commitment Lending Office:
$11,500,000
The First National Bank of
Boston
Letter of Credit 100 Federal Street
Commitment Boston, Massachusetts 02110
$ 1,000,000
Address for Notices:
The First National Bank of
Boston
100 Federal Street
Boston, Massachusetts 02110
Telephone No.: 617-434-1809
Telecopier No.: 617-434-1508
Attention: Mr. William Kelly
Vice President
<PAGE>
FLEET BANK,
as Agent
By ___________________
Title:
Address for Notices to
Fleet as Agent:
56 East 42nd Street
New York, New York 10017
Attention: Mr. Peter C. Hall
Telecopier No.: 212-907-5614
Telephone No.: 212-907-5118
THE BANK OF NEW YORK,
as Co-Agent
By ____________________
Title:
Address for Notices to
Co-Agent:
One Wall Street
New York, New York 10286
Telecopier No.: 212-635-1480
Telephone No.: 212-635-7214
Attention: Mr. Richard Hebner
<PAGE>
[Form of Facility A Note]
PROMISSORY NOTE
(Facility A)
$______________ May 31, 1994
New York, New York
FOR VALUE RECEIVED, WESTERN PUBLISHING GROUP, INC., a
Delaware corporation (the "Company"), hereby promises to pay to
_________________ (the "Bank"), for account of its respective
Lending Office provided for by the Credit Agreement referred to
below, at the principal office of Fleet Bank at 56 East 42nd
Street, New York, New York 10017, the principal sum of
_______________ Dollars (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Facility A Loans made by
the Bank to the Company under the Credit Agreement), in lawful
money of the United States of America and in immediately
available funds, on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each such Facility A Loan, at such
office, in like money and funds, for the period commencing on the
date of such Facility A Loan until such Facility A Loan shall be
paid in full, at the rates per annum and on the dates provided in
the Credit Agreement.
The date and amount of each Facility A Loan made by the Bank
to the Company, and each payment made on account of the principal
thereof, shall be recorded by the Bank on its books and, prior to
any transfer of this Facility A Note, endorsed by the Bank on the
schedule attached hereto or any continuation thereof.
This Facility A Note is one of the Facility A Notes referred
to in the Amended and Restated Credit Agreement (as amended,
modified and supplemented and in effect from time to time, the
"Credit Agreement") dated as of May 31, 1994, between the
Company, the banks named therein and Fleet Bank, as Agent, and
evidences Facility A Loans made by the Bank thereunder.
Capitalized terms used in this Facility A Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Facility A Note upon the occurrence of certain
events and for prepayments of Facility A Loans upon the terms and
conditions specified therein.
This Facility A Note is entitled to the benefits of certain
guarantees and is secured as provided in the Loan Documents (as
defined in the Credit Agreement).
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by the Company.
Except as permitted by Section 11.06(b) of the Credit
Agreement, this Facility A Note may not be assigned by the Bank
to any other Person.
This Facility A Note shall be governed by, and construed in
accordance with, the law of the State of New York.
WESTERN PUBLISHING GROUP, INC.
By------------------------------------
Title:
<PAGE>
SCHEDULE OF FACILITY A LOANS
This Facility A Note evidences Facility A Loans made under
the within-described Credit Agreement to the Company, on the
dates and in the principal amounts set forth below, subject to
the payments and prepayments of principal set forth below:
Principal Amount Unpaid
Amount Paid or Principal Notation
Date Made of Loan Prepaid Amount Made by
- - --------- --------- ------- --------- -------
<PAGE>
EXHIBIT A-2
[Form of Facility B Note]
PROMISSORY NOTE
(Facility B)
$______________ May 31, 1994
New York, New York
FOR VALUE RECEIVED, WESTERN PUBLISHING GROUP, INC., a
Delaware corporation (the "Company"), hereby promises to pay to
_________________ (the "Bank"), for account of its respective
Lending Office provided for by the Credit Agreement referred to
below, at the principal office of Fleet Bank at 56 East 42nd
Street, New York, New York 10017, the principal sum of
_______________ Dollars (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Facility B Loans made by
the Bank to the Company under the Credit Agreement), in lawful
money of the United States of America and in immediately
available funds, on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each such Facility B Loan, at such
office, in like money and funds, for the period commencing on the
date of such Facility B Loan until such Facility B Loan shall be
paid in full, at the rates per annum and on the dates provided in
the Credit Agreement.
The date and amount of each Facility B Loan made by the Bank
to the Company, and each payment made on account of the principal
thereof, shall be recorded by the Bank on its books and, prior to
any transfer of this Facility B Note, endorsed by the Bank on the
schedule attached hereto or any continuation thereof.
This Facility B Note is one of the Facility B Notes referred
to in the Amended and Restated Credit Agreement (as amended,
modified and supplemented and in effect from time to time, the
"Credit Agreement") dated as of May 31, 1994, between the
Company, the banks named therein and Fleet Bank, as Agent, and
evidences Facility B Loans made by the Bank thereunder.
Capitalized terms used in this Facility B Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Facility B Note upon the occurrence of certain
events and for prepayments of Facility B Loans upon the terms and
conditions specified therein.
This Facility B Note is entitled to the benefits of certain
guarantees and is secured as and to the extent provided in the
Loan Documents (as defined in the Credit Agreement).
Demand, presentment, protest and notice of nonpayment and
protest are hereby waived by the Company.
Except as permitted by Section 11.06(b) of the Credit
Agreement, this Facility B Note may not be assigned by the Bank
to any other Person.
This Facility B Note shall be governed by, and construed in
accordance with, the law of the State of New York.
WESTERN PUBLISHING GROUP, INC.
By---------------------------------
Title:
<PAGE>
SCHEDULE OF FACILITY B LOANS
This Facility B Note evidences Facility B Loans made under
the within-described Credit Agreement to the Company, on the
dates and in the principal amounts set forth below, subject to
the payments and prepayments of principal set forth below:
Principal Amount Unpaid
Amount Paid or Principal Notation
Date Made of Loan Prepaid Amount Made by
- - --------- ------- ------- ------- --------
<PAGE>
EXHIBIT B
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT dated as of _____ __, 199_ made by
WESTERN PUBLISHING COMPANY, INC., a corporation duly organized
and validly existing under the laws of Delaware (the
"Guarantor").
Western Publishing Group, Inc., a Delaware corporation
(the "Company"), certain banks and Fleet Bank, as agent for said
banks (in such capacity, together with its successors in such
capacity, the "Agent") and The Bank of New York, as co-agent for
the Banks (the "Co-Agent") are parties to an Amended and Restated
Credit Agreement dated as of May 31, 1994 (as amended and in
effect from time to time, the "Credit Agreement"), which
provides, subject to the terms and conditions thereof, for
extensions of credit (by making of loans and issuing letters of
credit) to be made by said banks to the Company in an aggregate
principal or face amount not exceeding $140,000,000.
Accordingly, the parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Credit
Agreement are used herein as defined therein.
Section 2. The Guarantee.
2.01 The Guarantee. The Guarantor hereby guarantees
to each Bank and the Agent and their respective successors and
assigns (to the extent permitted by the Credit Agreement) the
prompt payment in full as and when due (whether at stated
maturity, by acceleration or otherwise) of the principal of and
interest on the Loans made by the Banks to, and the Note(s) held
by each Bank of, the Company and all other amounts from time to
time owing to the Banks or the Agent by the Company under the
Credit Agreement and under the Notes and all Reimbursement
Obligations, and interest thereon, in each case strictly in
accordance with the terms thereof. The obligations of the
Company guaranteed pursuant to the immediately preceding sentence
are hereinafter collectively called the "Guaranteed Obligations".
The Guarantor hereby further agrees that if the Company shall
fail to pay in full when due (whether at stated maturity, by
acceleration or otherwise) any of the Guaranteed Obligations, the
Guarantor will promptly pay the same, upon demand by the Agent,
and that in the case of an extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such
extension or renewal.
2.02 Obligations Unconditional. The obligations of
the Guarantor under Section 2.01 hereof are absolute and
unconditional irrespective of the value, genuineness, validity,
regularity or enforceability of the Credit Agreement, the Notes
or any other agreement or instrument evidencing any of the
Guaranteed Obligations, or any substitution, release or exchange
of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable
law, irrespective of any other circumstance whatsoever which
might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, it being the intent of this
Section 2.02 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all
circumstances. Without limiting the generality of the foregoing,
it is agreed that the occurrence of any one or more of the
following shall not affect the liability of the Guarantor
hereunder:
(i) at any time or from time to time, without
notice to the Guarantor, the time for any performance of or
compliance with any of the Guaranteed Obligations shall be
extended, or such performance or compliance shall be waived;
(ii) the maturity of any of the Guaranteed
Obligations shall be accelerated, or any of the Guaranteed
Obligations shall be modified, supplemented or amended in
any respect, or any right under the Credit Agreement or the
Notes or any other agreement or instrument referred to
herein or therein shall be waived or any other guarantee of
any of the Guaranteed Obligations or any security therefor
shall be released or exchanged in whole or in part or
otherwise dealt with; or
(iii) any lien or security interest granted to, or
in favor of, the Agent or any Bank or Banks as security for
any of the Guaranteed Obligations shall fail to be
perfected.
The Guarantor hereby expressly waives diligence, presentment,
demand of payment, protest and all notices whatsoever, and any
requirement that the Agent or any Bank exhaust any right, power
or remedy or proceed against the Company under the Credit
Agreement or the Notes or any other agreement or instrument
referred to herein or therein, or against any other Person under
any other guarantee of, or security for, any of the Guaranteed
Obligations.
2.03 Reinstatement. The obligations of the Guarantor
under this Section 2 shall be automatically reinstated if and to
the extent that for any reason any payment by or on behalf of the
Company in respect of the Guaranteed Obligations is rescinded or
must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise.
2.04 Subrogation. The Guarantor hereby agrees that
until the payment and satisfaction in full of all Guaranteed
Obligations and the expiration or termination of the Commitments
and all Letter of Credit Liabilities of the Banks under the
Credit Agreement it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantee in
Section 2.01 hereof, whether by subrogation or otherwise, against
the Company or any other guarantor of any of the Guaranteed
Obligations or any security for any of the Guaranteed
Obligations.
2.05 Remedies. The Guarantor agrees that, as between
the Guarantor and the holders of the Guaranteed Obligations, the
obligations of the Company under the Credit Agreement and the
Notes may be declared to be forthwith due and payable as provided
in Section 9 of the Credit Agreement (and shall be deemed to have
become automatically due and payable in the circumstances
expressly provided for in said Section 9), for purposes of
Section 2.01 hereof notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from
becoming automatically due and payable) as against the Company
and that, in the event of such declaration (or such obligations
being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Company) shall
forthwith become due and payable by the Guarantor for purposes of
said Section 2.01.
2.06 Continuing Guarantee. The guarantee in this
Section 2 is a continuing guarantee, and shall apply to all
Guaranteed Obligations whenever arising.
Section 3. Representations and Warranties. The
Guarantor represents and warrants to the Banks and the Agent
that:
3.01 Corporate Existence. Each of the Guarantor and
its Subsidiaries: (a) is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation;
(b) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do
business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where
failure so to qualify would have a material adverse effect on the
consolidated financial condition, operations or business taken as
a whole of the Guarantor and its Consolidated Subsidiaries.
3.02 No Breach. None of the execution and delivery of
this Agreement, the consummation of the transactions herein
contemplated or compliance with the terms and provisions hereof
will conflict with or result in a breach of, or require any
consent under, the charter or by-laws of the Guarantor, or any
applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any
material agreement or instrument to which the Guarantor or any of
its Subsidiaries is a party or by which any of them is bound or
to which any of them is subject, or constitute a default under
any such agreement or instrument.
3.03 Corporate Action. The Guarantor has all
necessary corporate power and authority to execute, deliver and
perform its obligations under this Agreement; the execution,
delivery and performance by the Guarantor of this Agreement have
been duly authorized by all necessary corporate action on its
part; and this Agreement has been duly and validly executed and
delivered by the Guarantor and constitutes its legal, valid and
binding obligation, enforceable in accordance with its terms,
except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and
(b) the application of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law).
3.04 Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any
governmental or regulatory authority or agency are necessary for
the execution, delivery or performance by the Guarantor of this
Agreement or for the validity or enforceability hereof.
Section 4. Miscellaneous.
4.01 No Waiver. No failure on the part of the Agent
or any of its agents to exercise, and no course of dealing with
respect to, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise by the Agent or any of its agents of
any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
4.02 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New
York.
4.03 Waivers, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly
executed by the Guarantor and the Agent (with the consent of the
Banks as specified in the Credit Agreement). Any such amendment
or waiver shall be binding upon each holder of any of the
Guaranteed Obligations and the Guarantor.
4.04 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the respective
successors and assigns of the Guarantor and the holders of the
Guaranteed Obligations (to the extent permitted by the Credit
Agreement).
4.05 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall
constitute one and the same instrument.
4.06 Severability. If any provision hereof is invalid
and unenforceable in any jurisdiction, then, to the fullest
extent permitted by law, (i) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the
parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.
IN WITNESS WHEREOF, the Guarantor has caused this
Agreement to be duly executed as of the day and year first above
written.
WESTERN PUBLISHING COMPANY, INC.
By----------------------------------
Title:
<PAGE>
FORM OF PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of June 7, 1994, made
by Western Publishing Group, Inc., a Delaware corporation
(the "Company"), to Fleet Bank, as agent for the financial
institutions party to the Credit Agreement referred to below
(in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company has entered into an Amended
and Restated Credit Agreement , dated as of May 31, 1994,
with the financial institutions party thereto (the "Banks"),
the Agent and the Bank of New York, as Co-Agent (said Agree-
ment, as it may be amended or otherwise modified from time
to time, being the "Credit Agreement" and capitalized terms
not defined herein but defined therein being used herein as
therein defined); and
WHEREAS, the Company is the legal and beneficial
owner of the Indebtedness described in Schedule I hereto and
issued by the obligor named therein (the "Pledged Debt");
and
WHEREAS, it is a condition precedent under the
Credit Agreement to its effectiveness and to the making of
the Loans and the issuance of Letters of Credit that the
Company shall have made the pledge contemplated by this
Agreement;
NOW, THEREFORE, in consideration of the premises
and to induce the Banks to make the Loans and to issue
Letters of Credit, the Company hereby agrees with the Agent
on behalf and for the ratable benefit of the Banks as
follows:
SECTION 1. Pledge. The Company hereby pledges to
the Agent on behalf and for the ratable benefit of the
Banks, and grants to the Agent on behalf and for the ratable
benefit of the Banks a security interest in, the following
(the "Pledged Collateral"):
(i) all of the Pledged Debt; and
(ii) all notes or other instruments evidencing
the Indebtedness referred to in clause (i) above; and
(iii) all cash, interest, instruments and other
property or proceeds, from time to time received, receivable
or otherwise distributed in respect of or in exchange for any
or all of the foregoing.
SECTION 2. Security for Obligations. This Agreement
secures and the Pledged Collateral is security for the
full and prompt payment when due (whether at stated matur-
ity, by acceleration or otherwise) of, and the performance
of, the Company's obligations with respect to the Facility A
Loans, whether now or hereafter existing and whether for
principal, interest, fees, expenses or otherwise (the
"Obligations").
SECTION 3. Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on
behalf of the Agent pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Agent.
The Agent shall have the right, at any time in its discre-
tion and without notice to the Company, to transfer to or to
register in its name or in the name of any of its nominees
any or all of the Pledged Collateral. In addition, the
Agent shall have the right at any time to exchange certifi-
cates or instruments representing or evidencing any of the
Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 4. Representations and Warranties. The
Company makes the following representations:
(a) The Pledged Debt has been duly authorized,
authenticated or issued and delivered, and is the legal,
valid and binding obligation of the issuers thereof, and is
not in default.
(b) The Company is the legal and beneficial owner
of the Pledged Collateral free and clear of any Lien, except
for the Lien created by this Agreement.
(c) The pledge of the Pledged Debt pursuant to
this Agreement creates a valid and perfected first priority
security interest in the Pledged Collateral, in favor of the
Agent on behalf and for the ratable benefit of the Banks
securing the payment of all of the Obligations.
(d) No consent, authorization, approval, or other
action by, and no notice to or filing with, any Governmental
Authority is required either (i) for the pledge by the
Company of the Pledged Collateral pursuant to this Agreement
or for the due execution, delivery or performance of this
Agreement by the Company, or (ii) for the exercise by the
Agent of the rights provided for in this Agreement or of the
remedies in respect of the Pledged Collateral pursuant to
this Agreement, except as may be required in connection with
the disposition of the Pledged Collateral by laws affecting
the offering and sale of securities generally.
SECTION 5. Further Assurances, Etc. (a) The
Company agrees that at any time and from time to time, at
the reasonable cost and expense of the Company, the Company
will promptly execute and deliver all further instruments
and documents, and take all further action, that may be
necessary or desirable, as the Agent may reasonably request,
in order to perfect and protect the Lien granted or
purported to be granted hereby or to enable the Agent to
exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral.
(b) The Company agrees to defend the title to the
Pledged Collateral and the Lien thereon of the Agent against
the claim of any other Person and to maintain and preserve
such Lien until indefeasible payment in full of all of the
Obligations.
SECTION 6. Interest; Etc.
(a) As long as no Default or Event of Default
shall have occurred and be continuing:
(i) The Company shall be entitled to receive
and retain any and all interest paid in respect of
the Pledged Collateral, other than any and all
(A) interest paid or payable other than
in cash in respect of, and instruments and
other property received, receivable or
otherwise distributed in respect of, or in
exchange for, any Pledged Collateral, and
(B) cash paid, payable or otherwise
distributed in payment of the principal of,
in redemption of, or in exchange for, any
Pledged Collateral,
all of which shall be forthwith delivered to the Agent to hold
as Pledged Collateral and shall, if received by the Company,
be received in trust for the benefit of the Agent, be
segregated from the other property or funds of the Company,
and be forthwith delivered to the Agent as Pledged Collateral
in the same form as so received (with any necessary indorsement).
(ii) The Agent shall execute and deliver (or
cause to be executed and delivered) to the Company
all such instruments as the Company may reasonably
request for the purpose of enabling the Company to
receive the interest payments which it is
authorized to receive and retain pursuant to
paragraph (i) above.
(b) Upon the occurrence and during the continu-
ance of a Default or an Event of Default:
(i) All rights of the Company to receive the
interest payments which it would otherwise be
authorized to receive and retain pursuant to
Section 6(a)(i) above shall cease, and all such
rights shall thereupon become vested in the Agent
who shall thereupon have the sole right to receive
and hold as Pledged Collateral such interest
payments.
(ii) All interest payments which are received
by the Company contrary to the provisions of
paragraph (i) of this Section 6(b) shall be
received in trust for the benefit of the Agent,
shall be segregated from other funds of the
Company and shall be forthwith paid over to the
Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
(iii) The Company shall, if necessary to
permit the Agent to receive all distributions
which it may be entitled to receive under Section
6(b)(i) above, execute and deliver to the Agent,
from time to time and upon written notice of the
Agent, appropriate instruments as the Agent may
reasonably request. The foregoing shall not in
any way limit the Agent's power and authority
granted pursuant to Section 8 hereof.
SECTION 7. Transfers and Other Liens. The
Company agrees that it will not (i) sell or otherwise
dispose of, or grant any option or warrant with respect to,
any of the Pledged Collateral, or (ii) create or permit to
exist any Lien upon or with respect to any of the Pledged
Collateral, except for the Lien created pursuant to this
Agreement.
SECTION 8. Agent Appointed Attorney-in-Fact. The
Company hereby irrevocably constitutes and appoints the
Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead
of the Company and in the name of the Company or in its own
name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute and deliver
any and all documents and instruments which the Agent may
deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation, to receive,
indorse and collect all instruments made payable to the
Company representing any interest payment or other
distribution or payment in respect of the Pledged Collateral
or any part thereof and to give full discharge for the same.
The Agent agrees that, except upon the occurrence and during
the continuance of any Event of Default, it will forbear
from exercising the power of attorney or any rights granted
to the Agent pursuant to this Section 8. The Company hereby
ratifies, to the extent permitted by law, all that any said
attorney shall lawfully do or cause to be done by virtue
hereof. This power, being coupled with an interest, is
irrevocable until the Obligations are paid in full.
SECTION 9. Agent May Perform. If the Company
fails to perform any agreement contained herein, the Agent
may itself perform, or cause performance of, such agreement,
and the expenses of the Agent incurred in connection there-
with shall be payable by the Company under Section 12 hereof
and constitute Obligations secured hereby.
SECTION 10. Reasonable Care. The Agent shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially
equal to that which the Agent accords its own property, it
being understood that neither the Agent nor any Bank shall
have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral,
whether or not the Agent or any Bank has or is deemed to
have knowledge of any such matter, or (ii) taking any
necessary steps to preserve rights against any Person with
respect to any Pledged Collateral.
SECTION 11. Remedies upon Default. If any Event
of Default shall have occurred and be continuing:
(a) The Agent may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the
rights and remedies of a secured party after default under
the Uniform Commercial Code (the "Code") in effect in the
State of New York at that time, and the Agent may also,
without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or
at any office of the Agent or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the
Agent may deem commercially reasonable. The Company agrees
that, to the extent notice of sale shall be required by law,
at least ten days' notice to the Company of the time and
place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification.
The Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given.
The Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed there-
for, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Com-
pany hereby waives any claims against the Agent arising by
reason of the fact that the price at which any Pledged Col-
lateral may have been sold at such a private sale was less
than the price which might have been obtained at a public
sale, even if the Agent accepts the first offer received and
does not offer such Pledged Collateral to more than one
offeree.
(b) The Company recognizes that the Agent may be
compelled, with respect to any sale of all or any part of
the Pledged Collateral, to limit purchasers to those who
will agree, among other things, to acquire such securities
for their own account, for investment, and not with a view
to the distribution or resale thereof. The Company
acknowledges and agrees that any such sale may result in
prices and other terms less favorable to the seller than if
such sale were a public sale without such restrictions and,
notwithstanding such circumstances, agrees that any such
sale shall be deemed to have been made in a commercially
reasonable manner. The Agent shall be under no obligation
to delay the sale of any of the Pledged Collateral for the
period of time necessary to permit the Company to register
such securities for public sale under the Securities Act of
1933, as amended (the "Act"), or under applicable state
securities laws, even if the Company would agree to do so.
(c) If the Agent determines to exercise its right
to sell any or all of the Pledged Collateral, upon written
request, the Company shall, from time to time, furnish to
the Agent all such information as the Agent may request in
order to determine the number of instruments included in the
Pledged Collateral which may be sold by the Agent as exempt
transactions under the Act and rules of the Securities and
Exchange Commission thereunder, as the same are from time to
time in effect.
(d) Any cash held by the Agent as Pledged Col-
lateral and all cash proceeds received by the Agent in re-
spect of any sale of, collection from, or other realization
upon all or any part of the Pledged Collateral shall be
applied by the Agent:
First, to the payment of the costs and expenses of
such sale, including, without limitation, reasonable ex-
penses of the Agent and its agents including the reasonable
fees and expenses of its counsel, and all expenses,
liabilities and advances made or incurred by the Agent in
connection therewith or pursuant to Section 9 hereof;
Next, to the Banks, pro rata, for the payment in
full of the Obligations; and
Finally, after payment in full of all of the
Obligations, to the payment to the Company, or its
successors or assigns, or to whomsoever may be lawfully
entitled to receive the same as a court of competent
jurisdiction may direct.
SECTION 12. Expenses. The Company will upon
demand pay to the Agent the amount of any and all reasonable
expenses, including, without limitation, the reasonable fees
and expenses of the Agent's counsel and of any experts and
agents, which the Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody or pres-
ervation of, sale of, collection from, or other realization
upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights and remedies hereunder of
the Agent and the Banks, or (iv) the failure by the Company
to perform or observe any of the provisions hereof.
SECTION 13. Security Interest Absolute. All
rights of the Agent and security interests hereunder, and
all obligations of the Company hereunder, shall be absolute
and unconditional irrespective of:
(i) any lack of validity or enforceability
of any provision of the Credit Agreement, the
Facility A Notes or any other Loan Document or any
other agreement or instrument relating thereto;
(ii) any change in the time, manner or place
of payment of, or in any other term of, or any
increase in the amount of, all or any of the
Obligations, or any other amendment or waiver of
any term of, or any consent to any departure from
any requirement of, the Credit Agreement, the
Facility A Notes or any other Loan Document;
(iii) any exchange, release or non-perfection
of any Lien on any other collateral, or any
release or amendment or waiver of any term of any
guaranty of, or consent to departure from any
requirement of any guaranty of, all or any of the
Obligations; or
(iv) any other circumstance which might
otherwise constitute a defense available to, or a
discharge of, the Company or a pledgor.
SECTION 14. Amendments, Etc. No amendment or
waiver of any provision of this Agreement nor consent to any
departure by the Company herefrom shall in any event be
effective unless the same shall be in writing, approved by
the Majority Banks and signed by the Agent, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 15. Addresses for Notices. All notices
and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopy or cable
communication) and mailed, telegraphed, telexed, telecopied,
cabled or delivered by hand, if to the Company, the Agent or
any Bank, addressed to the Company, the Agent or such Bank,
as the case may be, at its address specified in the Credit
Agreement, or, as to each party, at such other address as
shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of
this Section. All such notices and other communications
shall, when mailed, telegraphed, telexed, telecopied, cabled
or delivered, be effective when deposited in the mails,
delivered to the telegraph company, confirmed by telex
answerback, telecopied with confirmation of receipt, de-
livered to the cable company or delivered by hand to the
addressee or its agent, respectively.
SECTION 16. Continuing Security Interest; Trans-
fer of Facility A Notes or Obligations. This Pledge
Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and
effect until indefeasible payment in full of the
Obligations, (ii) be binding upon the Company, its
successors and assigns, and (iii) inure, together with the
rights and remedies of the Agent hereunder, to the benefit
of and be enforceable by the Banks and their respective
successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), any Bank may
assign or otherwise transfer any Facility A Note held by it
or Obligation owing to it to any other Person, and such
other Person shall thereupon become vested with all the
rights in respect thereof granted to such Bank herein or
otherwise with respect to such of the Facility A Notes or
Obligations so transferred or assigned, subject, however, to
compliance with the provisions of Section 11.06 of the
Credit Agreement in respect of assignments. Upon the
payment in full (after the Commitment Termination Date) of
the Obligations, the Company shall be entitled to the
return, upon its request and at its expense, of such of the
Pledged Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof.
SECTION 17. Governing Law; Severability; Terms.
This Agreement shall be governed by, and be construed and
interpreted in accordance with, the law of the State of New
York. Wherever 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 applicable
law, such provision shall be ineffective only to the extent
of such prohibition or invalidity and without invalidating
the remaining provisions of this Agreement. Unless other-
wise defined herein or in the Credit Agreement, terms de-
fined in Article 9 of the Uniform Commercial Code as in
effect in the State of New York are used herein as therein
defined.
SECTION 18. Waiver of Jury Trial. The Company
waives any right it may have to a trial by jury in respect
of any litigation based on, or arising out of, under or in
connection with, this Agreement or any other loan document,
or any course of conduct, course of dealing, verbal or
written statement or other action of any loan party or any
secured party.
SECTION 19. Section Titles. The Section titles
contained in this Agreement are and shall be without sub-
stantive meaning or content of any kind whatsoever and are
not part of this Agreement.
SECTION 20. Appointment as Representative. The
Company hereby irrevocably appoints and constitutes the
Agent its sole Representative under the Subsidiary Security
Agreement for as long as the pledge arising hereunder shall
be continuing, with sole right, power and authority to
exercise the rights and remedies of the Company under the
Subsidiary Security Agreement, and the Company shall not
have any right, power or authority to exercise any of such
rights or remedies independently during such period;
provided, however, that any proceeds realized by the Agent
in its capacity as such Representative as a result of the
exercise of such rights and remedies shall be applied as
provided in Section 8 of the Subsidiary Security Agreement.
The Company shall execute and deliver (or cause to be
executed and delivered) to the Agent all such instruments as
the Agent may reasonably request to exercise such rights and
remedies as such Representative.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
Agreement to be duly executed and delivered by its duly
authorized officer on the date first above written.
WESTERN PUBLISHING GROUP, INC.
By:------------------------------------
Title:
Accepted and Acknowledged:
FLEET BANK, as Agent
By:-------------------------------
Title:
<PAGE>
SCHEDULE I TO PLEDGE AGREEMENT
Attached to and forming a part of that certain Pledge
Agreement, dated as of June 7, 1994, by Western Publishing
Group, Inc. to Fleet Bank, as Agent.
Original
Description Final Principal
Debt Issuer of Debt Maturity Amount
---------- ----------- -------- -----------
Western Publishing Secured May 31, 1995 Up to
Company, Inc. Revolving $15,000,000
Demand Note
<PAGE>
WESTERN PUBLISHING COMPANY, INC.
SECURED REVOLVING DEMAND NOTE
-----------------------------
$15,000,000.00 New York, New York
June 7, 1994
FOR VALUE RECEIVED, the undersigned, WESTERN
PUBLISHING COMPANY, INC. a Delaware corporation ("Issuer"),
hereby promises to pay to the order of WESTERN PUBLISHING
GROUP, INC., a Delaware corporation, or its assigns
("Holder"), the principal sum of FIFTEEN MILLION DOLLARS
($15,000,000.00), or such lesser principal amount as may be
outstanding hereunder, on the earlier of (a) May 31, 1995
and (b) demand therefor by Holder, but only if, as long as
this Note is pledged to the Agent (as hereinafter defined),
such demand is accompanied by the written consent thereto of
the Agent.
Section 1. Definitions. Unless otherwise defined
herein, capitalized terms shall have the respective meanings
assigned to such terms in the Amended and Restated Credit
Agreement dated as of May 31, 1994 (as amended, modified and
supplemented and in effect from time to time, the "Credit
Agreement"), between the Holder, the banks named therein and
Fleet Bank, as agent for such banks (the "Agent").
Section 2. Advances. Holder shall, for Issuer's
use and upon the request of Issuer therefor, make available
to Issuer advances in an aggregate amount outstanding which
shall not at any time exceed $15,000,000, consisting solely
of proceeds of Facility A Loans made to Holder pursuant to
the Credit Agreement. Issuer may borrow, repay and reborrow
under this Section 2.
Section 3. Interest. (a) Issuer promises to pay
interest on the unpaid principal amount hereof from the date
hereof until such principal amount is paid in full, at the
annual interest rate equal to the Base Rate. Any change in
the Base Rate shall be effective on the Business Day on
which such change became effective.
(b) Interest under this Note shall be computed
daily on the basis of a 365 or 366 day year, as the case may
be, and the actual days elapsed. Interest shall be payable
in lawful money of the United States of America quarterly in
arrears on each Quarterly Date, together with all reasonable
out-of-pocket costs, expenses and attorneys' fees actually
and reasonably incurred in connection with (i) any action to
collect this Note or to foreclose any security interest
granted to the Holder pursuant to the Subsidiary Security
Agreement, (ii) any other document securing this Note or in
protecting or sustaining the security interest granted to
the Holder pursuant to the Subsidiary Security Agreement,
and (iii) any other agreement or in any litigation or
controversy arising from or connected with the Subsidiary
Security Agreement, any other agreement relating thereto or
this Note.
Section 4. Events of Default. If (i) Issuer
fails to pay the principal hereof to Holder when due
(whether at maturity, upon demand in accordance with the
provisions hereof, upon acceleration or otherwise; (ii) an
involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction
seeking (A) relief in respect of Issuer or of a substantial
part of Issuer's property, under any federal, state or
foreign bankruptcy, insolvency, receivership or similar law,
(B) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for Issuer, or
for a substantial part of Issuer's property, or (C) the
winding-up or liquidation of Issuer, and such proceeding or
petition shall continue undismissed for thirty (30) days, or
an order or decree approving or ordering any of the
foregoing shall be entered; (iii) Issuer shall file a
petition or answer or consent seeking relief under any
applicable federal, state or foreign bankruptcy, insolvency,
receivership or similar law, or Issuer shall consent to the
institution of proceedings thereunder or to the filing of
any such petition or to the appointment or taking possession
of a receiver, liquidator, conservator, assignee, trustee,
custodian, sequestrator (or other similar official) of
Issuer or of any substantial part of Issuer's property, or
Issuer shall become unable, admit in writing its inability
or fail generally to pay its debts as such debts become due,
or take action in furtherance of any such action; (iv)
Issuer merges or consolidates with any other entity and is
not the surviving entity, or sells, leases, transfers or
otherwise disposes of all or substantially all of its
property or assets; (v) the Agent has notified the Issuer
and the Holder in writing that any Event of Default under
the Credit Agreement has occurred and is continuing (each
occurrence described in clause (i), (ii), (iii), (iv) or (v)
above being hereinafter referred to as an "Event of
Default"); then, in each case, this Note, all interest
hereon and all other amounts payable under this Note shall
be forthwith due and payable, without presentation, demand,
protest or further notice of any kind, all of which are
hereby expressly waived by Issuer.
Section 5. No Waiver. No failure on the part of
Holder to exercise, and no delay in exercising, any of its
rights hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the
exercise of any other right.
Section 6. Amendments, Etc. No amendment or
waiver of any provision of this Note, nor consent to any
departure by Issuer herefrom, shall in any event be
effective unless the same shall be in writing and signed by
the Holder and, if this Note is then pledged to the Agent,
consented to in writing by the Agent, and then such waiver
or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 7. Addresses for Notices. All demands,
notices and other communications provided for hereunder
shall be in writing and shall either be delivered in person
with receipt acknowledged or sent by registered or certified
mail, return receipt requested, postage prepaid, or by
telecopy and confirmed by telecopy answerback addressed as
follows:
(a) if to Holder, at:
Western Publishing Group, Inc.
444 Madison Avenue
New York, New York 10022
Attention: Mr. Steven M. Grossman
Telecopy Number: (212) 888-5025
with a copy to:
Fleet Bank
56 East 42nd Street
New York, New York 10017
Attention: Mr. Peter C. Hall
Telecopy Number: (212) 907-5614
(b) if to Issuer, at
Western Publishing Company, Inc.
444 Madison Avenue
New York, New York 10022
Attention: Mr. Steven M. Grossman
Telecopy Number: (212) 888-5025
with a copy to:
Fleet Bank
56 East 42nd Street
New York, New York 10017
Attention: Mr. Peter C. Hall
Telecopy Number: (212) 907-5614
or at such other address as may be substituted by notice
given as herein provided.
Section 8. Payments. (a) Issuer will make
payments of principal and interest, in accordance with this
Note, (i) by certified check payable to the order of the
Holder of this Note duly mailed or delivered to Holder at
its address specified in Section 7, or at such other address
as Holder may designate in writing, or (ii) if requested by
Holder, by wire transfer to Holder's (or its nominee's)
account at any bank or trust company in the United States of
America, notwithstanding any contrary provision herein with
respect to the place of payment. All such payments shall be
made in federal or other immediately available funds.
(b) Issuer agrees that upon the occurrence and
during the continuance of an Event of Default, after
judgment or on and after maturity, the indebtedness of this
Note shall bear interest at an annual interest rate of two
percent (2.0%) above the Base Rate.
Section 9. Security. As collateral security for
the payment when due of all obligations of Issuer hereunder,
Holder is entitled to the benefits of the Subsidiary
Security Agreement.
Section 10. Waiver by Issuer. Presentment,
protest and notice of nonpayment and protest are hereby
waived by Issuer.
Section 11. Third Party Beneficiary. For as long
as this Note is pledged to the Agent, the provisions
referring to the Agent set forth in this Note are intended
to inure to the benefit of the Agent, and the Agent shall be
entitled to enforce the same against the Issuer and the
Holder.
Section 12. Governing Law. This Note shall be
governed by, and construed in accordance with, the laws of
the State of New York.
IN WITNESS WHEREOF, the Issuer has caused this
Note to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above
written.
WESTERN PUBLISHING COMPANY, INC.
By:----------------------------
Name:
Title:
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT, dated June 3, 1994, made by
WESTERN PUBLISHING COMPANY, INC., a Delaware corporation
(the "Grantor") in favor of WESTERN PUBLISHING GROUP, INC.,
a Delaware corporation, its successors and assigns (the
"Secured Party").
W I T N E S S E T H :
WHEREAS, the Grantor has issued to the Secured
Party that certain Secured Revolving Demand Note dated June
3, 1994 (the "Note"), which evidences advances by the
Secured Party of the proceeds of certain Facility A Loans
borrowed by the Secured Party under that certain Amended and
Restated Credit Agreement dated as of June 3, 1994 (as
amended, modified and supplemented and from time to time in
effect, the "Credit Agreement") between the Secured Party,
the banks named therein (the "Banks"), Fleet Bank, as Agent
(the "Agent"), and The Bank of New York, as Co-Agent; and
WHEREAS, the Credit Agreement and the Note
contemplate that the Grantor and the Secured Party shall
have entered into this Agreement, and the Grantor and the
Secured Party desire to do so;
NOW, THEREFORE, in consideration of the premises
and in order to induce the Secured Party to make advances
under the Note and the Banks to make Facility A Loans under
the Credit Agreement, the Grantor hereby agrees with the
Secured Party as follows:
1. Defined Terms. Capitalized terms used in this
Agreement without definition have the respective meanings
assigned to such terms in the Credit Agreement. In
addition, as used in this Agreement, the following terms
have the meanings specified below (such meanings being
equally applicable to both the singular and plural forms of
the terms defined):
"Account" means any "account," as such term
is defined in Section 9-106 of the UCC, now owned
or hereafter acquired by the Grantor and, in any
event, includes, without limitation, (i) all
accounts receivable, book debts and other forms of
obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or
Instruments) now owned or hereafter received or
acquired by or belonging or owing to the Grantor
(including, without limitation, under any trade
name, style or division thereof) whether arising
out of goods sold or services rendered by the
Grantor or from any other transaction, whether or
not the same involves the sale of goods or
services by the Grantor (including, without
limitation, any such obligation which might be
characterized as an account or contract right
under the UCC), (ii) all of Grantor's rights in,
to and under all purchase orders or receipts now
owned or hereafter acquired by it for goods or
services, and all of Grantor's rights to any goods
represented by any of the foregoing (including,
without limitation, unpaid seller's rights of
rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or
repossessed goods), (iii) all moneys due or to
become due to the Grantor under all contracts for
the sale of goods or the performance of services
or both by the Grantor (whether or not yet earned
by performance on the part of the Grantor or in
connection with any other transaction), now in
existence or hereafter occurring, including,
without limitation, the right to receive the pro-
ceeds of said purchase orders and contracts, and
(iv) all collateral security and guarantees of any
kind given by any Person with respect to any of
the foregoing.
"Account Debtor" means any "account debtor,"
as such term is defined in Section 9-105(1)(a) of
the UCC.
"Chattel Paper" means any "chattel paper," as
such term is defined in Section 9-105(1)(b) of the
UCC, now owned or hereafter acquired by the
Grantor.
"Collateral" has the meaning assigned to such
term in Section 2 of this Agreement.
"Contracts" means all contracts, undertakings
or other agreements (other than Chattel Paper,
Documents or Instruments) with respect to an
Account or Inventory, in or under which the
Grantor may now or hereafter have any right, title
or interest, including, without limitation, any
agreement relating to the terms of payment or the
terms of performance of an Account.
"Documents" means any "document," as such
term is defined in Section 9-105(1)(f) of the UCC,
now owned or hereafter acquired by the Grantor.
"Event of Default" has the meaning assigned
to such term in the Note.
"Instrument" means any "instrument," as such
term is defined in Section 9-105(1)(i) of the UCC,
now owned or hereafter acquired by the Grantor,
other than instruments that constitute, or are a
part of a group of writings that constitute,
Chattel Paper.
"Inventory" means any "inventory," as such
term is defined in Section 9-109(4) of the UCC,
now owned or hereafter acquired by the Grantor,
and wherever located, and, in any event, includes
without limitation, all inventory, merchandise,
goods and other personal property now owned or
hereafter acquired by the Grantor which are held
for sale or lease or are furnished or are to be
furnished under a contract of service or which
constitute raw materials, work in process or
materials used or consumed or to be used or
consumed in the Grantor's business, or the
processing, packaging, delivery or shipping of the
same, and all finished goods.
"Proceeds" means "proceeds," as such term is
defined in Section 9-306(1) of the UCC, and, in
any event, shall include, without limitation, (i)
any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to the Grantor from
time to time with respect to any of the
Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Grantor
from time to time in connection with any
requisition, confiscation, condemnation, seizure
or forfeiture of all or any part of the Collateral
by any Governmental Authority (or any Person
acting under color of Governmental Authority), and
(iii) any and all other amounts from time to time
paid or payable under or in connection with any of
the Collateral.
"UCC" means the Uniform Commercial Code as
the same may, from time to time, be in effect in
the State of New York; provided, however, in the
event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or
priority of the Secured Party's security interest
in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment,
perfection or priority and for purposes of
definitions related to such provisions.
2. Grant of Security Interest.
(a) As collateral security for the full and
prompt payment when due (whether at stated maturity, by
acceleration or otherwise) of, and the performance of,
all principal, interest and other obligations of the
Grantor under the Note (the "Obligations") and to
induce the Banks to make the Facility A Loans pursuant
to the Credit Agreement and the Secured Party to make
advances under the Note, the Grantor hereby assigns,
conveys, mortgages, pledges, hypothecates and transfers
to the Secured Party, and hereby grants to the Secured
Party, a security interest in all of the Grantor's
right, title and interest in, to and under the
following (all of which being hereinafter collectively
called the "Collateral"):
(i) all Accounts;
(ii) all Contracts and any and all claims of
the Grantor for damages arising out of or for
breach of or a default under any Contract and the
right of the Grantor to perform or to compel
performance under any Contract and to exercise all
remedies thereunder;
(iii) all Inventory; and
(iv) to the extent not otherwise included, all
Proceeds of each of the foregoing and all
accessions to, substitutions and replacements for,
and profits and products of, each of the
foregoing.
3. Rights of the Secured Party; Limitations on
Secured Party's Obligations.
(a) It is expressly agreed by the Grantor that,
anything herein to the contrary notwithstanding, the
Grantor shall remain liable under each of the Contracts
to observe and perform all the conditions and obli-
gations to be observed and performed by it thereunder
and the Grantor shall perform all of its duties and
obligations thereunder, all in accordance with and
pursuant to the terms and provisions of each such
Contract. The Secured Party shall not have any
obligation or liability under any Contract by reason of
or arising out of this Agreement or the granting of a
security interest in any Contract to the Secured Party
or the receipt by the Secured Party of any payment
relating to any Contract pursuant hereto, nor shall the
Secured Party be required or obligated in any manner to
perform or fulfill any of the obligations of the
Grantor under or pursuant to any Contract, or to make
any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any
Contract, or to present or file any claim, or to take
any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.
(b) The Secured Party authorizes the Grantor, or
any representative designated in writing by the Grantor
(each, a "Representative"), to collect its Accounts,
provided that such collection is performed in a prudent
and businesslike manner, and the Secured Party or its
Representative may, upon the occurrence and during the
continuance of any Event of Default and without notice,
limit or terminate said authority at any time for the
duration of the continuance of any Event of Default.
If required by the Secured Party or its Representative
at any time during the continuance of any Event of
Default, any Proceeds, when first collected by the
Grantor, received in payment of any such Account or in
payment for any of its Inventory or on account of any
of its Contracts, shall be promptly deposited by the
Grantor in precisely the form received (with all
necessary endorsements) in a special bank account
maintained by the Secured Party or its Representative
and subject to withdrawal only by the Secured Party or
its Representative, as hereinafter provided, and until
so turned over shall be deemed to be held in trust by
the Grantor for and as the Secured Party's property and
shall not be commingled with the Grantor's other funds
or properties. Such Proceeds, when deposited, shall
continue to be collateral security for all of the
Obligations and shall not constitute payment thereof
until applied as hereinafter provided. If an Event of
Default has occurred and is continuing, upon demand by
the Secured Party or its Representative, the Grantor
shall deliver to the Secured Party or its
Representative all original and other documents
evidencing, and relating to, the sale and delivery of
such Inventory or the performance of labor or service
which created such Accounts, including, without limi-
tation, all original orders, invoices and shipping
receipts.
(c) The Secured Party or its Representative may
at any time, upon the occurrence and during the
continuance of any Event of Default, after first
notifying the Grantor of its intention to do so, notify
Account Debtors of the Grantor, and parties to
Contracts of the Grantor, that the Accounts and the
right, title and interest of the Grantor in and under
such Contracts have been assigned to the Secured Party
and that payments shall be made directly to the Secured
Party or its Representative. Upon the request of the
Secured Party or its Representative, the Grantor will
so notify such Account Debtors and parties to such
Contracts. Upon the occurrence and during the
continuance of an Event of Default, the Secured Party
or its Representative may in its own name or in the
name of others communicate with such Account Debtors
and parties to such Contracts to verify with such
Persons to the Secured Party's or its Representative's
satisfaction the existence, amount and terms of any
such Accounts and Contracts.
(d) Upon reasonable prior notice to the Grantor
(unless an Event of Default has occurred and is
continuing, in which case no notice is necessary), the
Secured Party or its Representative shall have the
right to perform reconciliations of the Accounts, test
trial balances of the Accounts, make test verifications
(confirmations) of the Secured Party's or its
Representative's selection of Accounts and physical
verifications of the Inventory in any manner and
through any medium that it reasonably considers advis-
able, and the Grantor agrees to furnish all such
reasonable assistance and information as the Secured
Party or its Representative reasonably may require in
connection therewith. The Grantor, at its own
reasonable cost and expense, upon request by the
Secured Party or its Representative (which may be made
not more than once during any fiscal year in the
absence of an Event of Default), will cause Deloitte &
Touche, or other certified independent public
accountants selected by the Grantor and reasonably
satisfactory to the Secured Party or its
Representative, to prepare and deliver to the Secured
Party and its Representative, at any time and from time
to time promptly upon the Secured Party's request, the
following reports as of any fiscal month-end: (i) a
reconciliation of its Accounts, (ii) an aging of its
Accounts, (iii) trial balances of its Accounts, and
(iv) a test verification (confirmation) of the Secured
Party's or its Representative's selection of Accounts,
in each case as the Secured Party or its Representative
reasonably may request. The Grantor at its expense
will cause Deloitte & Touche, or other certified
independent public accountants selected by the Grantor
and reasonably satisfactory to the Secured Party or its
Representative, to prepare and deliver to the Secured
Party and its Representative the results of the annual
cycle count of its Inventory made or observed by such
accountants.
4. Representations and Warranties. The Grantor
hereby represents and warrants to the Secured Party, the
Agent and the Banks as follows:
(a) The Grantor is the sole owner of each item of
the Collateral in which it purports to grant a security
interest hereunder, having good title thereto, free and
clear of any and all Liens, except for the security
interest granted pursuant to this Agreement and other
Permitted Liens. No material amounts payable under or
in connection with any of its Accounts or Contracts are
evidenced by Instruments which have not been delivered
to the Secured Party or its Representative.
(b) No effective security agreement, financing
statement, equivalent security or lien instrument or
continuation statement covering all or any part of the
Collateral is on file or of record in any public
office, except such as may have been filed by the
Grantor in favor of the Secured Party pursuant to this
Agreement or such as relate to other Permitted Liens.
(c) Appropriate financing statements having been
filed in the jurisdictions listed on Schedule I hereto,
this Agreement is effective to create a valid and
continuing first priority Lien on the Collateral, prior
to all other Liens except Permitted Liens. All action
necessary or desirable to protect and perfect such
security interest in each item of the Collateral has
been duly taken.
(d) The Grantor's principal place of business and
the place where its records concerning the Collateral
are kept and the location of its Inventory are set
forth on Schedule II hereto.
(e) The amount represented by the Grantor to the
Secured Party or its Representative from time to time
as owing by each Account Debtor or by all Account
Debtors in respect of the Accounts of the Grantor will
at such time be, to the best of Grantor's knowledge,
the correct amount actually and unconditionally owing
by such Account Debtors thereunder.
5. Covenants. The Grantor covenants and agrees
with the Secured Party and the Agent, on behalf of the
Banks, that from and after the date of this Agreement and
until the Obligations are fully satisfied:
(a) Further Documentation; Pledge of Instruments.
At any time and from time to time, upon the written
request of the Secured Party or its Representative, and
at the sole expense of the Grantor, the Grantor will
promptly and duly execute and deliver any and all such
further instruments and documents and take such further
action as the Secured Party or its Representative may
reasonably deem desirable to obtain the full benefits
of this Agreement and of the rights and powers herein
granted, including, without limitation, using all
commercially reasonable efforts to secure all consents
and approvals necessary or appropriate for the
assignment to the Secured Party of any Contract held by
the Grantor or in which the Grantor has any rights not
heretofore assigned, the filing of any financing or
continuation statements under the UCC with respect to
the Liens and security interests granted hereby, and
transferring Collateral to the Secured Party's or its
Representative's possession (if a security interest in
such Collateral can be perfected by possession). The
Grantor also hereby authorizes the Secured Party or its
Representative to file any such financing or continua-
tion statement without the signature of the Grantor to
the extent permitted by applicable law. If any of the
Collateral shall be or become evidenced by any
Instrument, the Grantor agrees to pledge such
Instrument to the Secured Party and shall duly endorse
such Instrument in a manner reasonably satisfactory to
the Secured Party or its Representative and deliver the
same to the Secured Party or its Representative.
(b) Maintenance of Records. The Grantor will
keep and maintain at its own cost and expense satisfac-
tory and complete records of the Collateral, including,
without limitation, a record of all payments received
and all credits granted with respect to the Collateral
and all other dealings with the Collateral. The
Grantor will mark its books and records pertaining to
the Collateral to evidence this Agreement and the Lien
and security interests granted hereby. For the Secured
Party's further security, the Grantor agrees that the
Secured Party shall have a special property interest in
all of the Grantor's books and records pertaining to
the Collateral and, upon the occurrence and during the
continuance of any Event of Default, the Grantor shall
deliver and turn over any reasonable portion of such
books and records to the Secured Party or to its
Representative at any time on demand of the Secured
Party or its Representative.
(c) Indemnification. In any suit, proceeding or
action brought by the Secured Party relating to any
Account, Contract or Instrument for any sum owing
thereunder, or to enforce any provision of any Account,
Contract or Instrument, the Grantor will save,
indemnify and keep the Secured Party and its
Representative harmless from and against all expense,
loss or damage suffered by reason of any defense, set-
off, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a
breach by the Grantor of any obligation thereunder or
arising out of any other agreement, Indebtedness or
liability at any time owing to, or in favor of, such
obligor or its successors from the Grantor, and all
such obligations of the Grantor shall be and remain
enforceable against and only against the Grantor and
shall not be enforceable against the Secured Party or
its Representative.
(d) Compliance with Laws, Etc. The Grantor will
comply, in all material respects, with all acts, rules,
regulations, orders, decrees and directions of any
Governmental Authority, applicable to the Collateral or
any part thereof or to the operation of the Grantor's
business; provided, however, that the Grantor may
contest any act, regulation, order, decree or direction
in any reasonable manner which shall not, in the sole
opinion of the Secured Party or its Representative,
adversely affect the Secured Party's rights hereunder
or adversely affect the first priority of its Lien on
and security interest in the Collateral.
(e) Payment of Obligations. The Grantor will pay
promptly when due all taxes, assessments and govern-
mental charges or levies imposed upon the Collateral or
in respect of its income or profits therefrom and all
claims of any kind (including, without limitation,
claims for labor, materials and supplies), except that
no such amount need be paid if (i) such non-payment
does not involve any danger of the sale, forfeiture or
loss of any of the Collateral or any interest therein,
and (ii) such amount is adequately reserved against in
accordance with and to the extent required by GAAP.
(f) Compliance with Terms of Accounts, Etc. In
all material respects, the Grantor will comply with and
perform with all obligations, covenants, conditions and
agreements with respect to any Account, Contract and
all other agreements relating to the Collateral to
which it is a party or by which it is bound.
(g) Limitation on Liens on Collateral. The
Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other
action as is necessary to remove, any Lien on the Col-
lateral except Permitted Liens, and will defend the
right, title and interest of the Secured Party in and
to any of the Grantor's rights under the Contracts and
Instruments and to the Inventory and in and to the
Proceeds thereof against the claims and demands of all
Persons whomsoever.
(h) Limitations on Modifications of Accounts.
Upon the occurrence and during the continuance of any
Default or Event of Default, the Grantor will not,
without the Secured Party's or its Representative's
prior written consent, grant any extension of the time
of payment of any of the Accounts or Instruments, or
compromise, compound or settle the same for less than
the full amount thereof, or release, wholly or partly,
any Person liable for the payment thereof, or allow any
credit or discount whatsoever thereon.
(i) Maintenance of Insurance. The Grantor will
maintain, with financially sound and reputable
companies, insurance policies (i) insuring its
Inventory against loss by fire, explosion, theft and
such other casualties as are usually insured against by
companies engaged in the same or similar businesses and
(ii) insuring the Grantor and the Secured Party against
liability for personal injury and property damage
relating to such Inventory, such policies to be in
such amounts and against at least such risks as are
usually insured against in the same general area by
companies engaged in the same or a similar business
and, no later than thirty days after the date hereof,
shall name the Secured Party as an additional insured
with a lender loss payable clause in favor of the
Secured Party. The Grantor shall, if so requested by
the Secured Party or its Representative, deliver to the
Secured Party or its Representative as often as the
Secured Party or its Representative may reasonably
request, a report of a reputable insurance broker
satisfactory to the Secured Party or its Representative
with respect to the insurance on its Inventory. All
insurance with respect to the Inventory, no later than
thirty days after the date hereof, shall (i) contain a
clause which provides that the Secured Party's interest
under the policy will not be invalidated by any act or
omission of, or any breach of warranty by, the insured,
or by any change in the title, ownership or possession
of the insured property, or by the use of the property
for purposes more hazardous than is permitted in the
policy, and (ii) provide that no cancellation,
reduction in amount or change in coverage thereof shall
be effective until at least ten days after receipt by
the Secured Party and its Representative of written
notice thereof.
(j) Limitations on Disposition. The Grantor will
not sell, lease, transfer or otherwise dispose of any
of the Collateral, or attempt or contract to do so,
except as permitted by the Credit Agreement.
(k) Further Identification of Collateral. The
Grantor will, if so requested by the Secured Party or
its Representative, furnish to the Secured Party or its
Representative, as often as the Secured Party or its
Representative reasonably requests, statements and
schedules further identifying and describing the
Collateral and such other reports in connection with
the Collateral as the Secured Party or its
Representative may reasonably request, all in
reasonable detail.
(l) Notices. The Grantor will advise the Secured
Party and any Representative promptly, in reasonable
detail, (i) of any material Lien or claim made or
asserted against any of the Collateral, (ii) of any
material change in the composition of the Collateral,
and (iii) of the occurrence of any other event which
would have a material adverse effect on the aggregate
value of the Collateral or on the security interests
created hereunder.
(m) Right of Inspection. Upon reasonable notice
to the Grantor (unless an Event of Default has occurred
and is continuing, in which case no notice is
necessary), the Secured Party and its Representative
shall at all times have full and free access during
normal business hours to all the books and records and
correspondence of the Grantor, and the Secured Party or
its Representative may examine the same, take extracts
therefrom and make photocopies thereof, and the Grantor
agrees to render to the Secured Party or its
Representative, at the Grantor's cost and expense, such
clerical and other assistance as may be reasonably
requested with regard thereto. Upon reasonable notice
to the Grantor (unless an Event of Default has occurred
and is continuing, in which case no notice is
necessary), the Secured Party and its Representative
shall also have the right to enter into and upon any
premises where any of the Inventory is located for the
purpose of inspecting the same, observing its use or
otherwise protecting its interests therein.
(n) Continuous Perfection. The Grantor will not
change its name, identity or corporate structure in any
manner which might make any financing or continuation
statement filed in connection herewith seriously
misleading within the meaning of Section 9-402(7) of
the UCC (or any other then applicable provision of the
UCC) unless the Grantor shall have given the Secured
Party and its Representative at least 30 days' prior
written notice thereof and shall have taken all action
(or made arrangements to take such action substantially
simultaneously with such change if it is impossible to
take such action in advance) necessary or reasonably
requested by the Secured Party or its Representative to
amend such financing statement or continuation state-
ment so that it is not seriously misleading. The
Grantor will not change its principal place of business
or remove its records or change the location of its
Inventory, each as set forth on Schedule II hereto,
unless it has taken such action as is necessary to
cause the security interest of the Secured Party in the
Collateral to continue to be perfected.
6. The Secured Party's Appointment as
Attorney-in-Fact. (a) The Grantor hereby irrevocably
constitutes and appoints the Secured Party and any officer
or agent thereof, including its Representative, with full
power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority
in the place and stead of the Grantor and in the name of the
Grantor or in its own name, from time to time in the Secured
Party's or its Representative's discretion, for the purpose
of carrying out the terms of this Agreement, to take any and
all appropriate action and to execute and deliver any and
all documents and instruments which the Secured Party or its
Representative may deem necessary or desirable to accomplish
the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives the Secured Party
and its Representative the power and right, on behalf of the
Grantor, without notice to or assent by the Grantor to do
the following:
(i) to ask, demand, collect, receive and
give acquittances and receipts for any and all
moneys due and to become due under any Collateral
and, in the name of the Grantor or in its own name
or otherwise, to take possession of and endorse
and collect any checks, drafts, notes, acceptances
or other Instruments for the payment of moneys due
under any Collateral and to file any claim or to
take any other action or proceeding in any court
of law or equity or otherwise deemed appropriate
by the Secured Party or its Representative for the
purpose of collecting any and all such moneys due
under any Collateral whenever payable and to file
any claim or to take any other action or
proceeding in any court of law or equity or
otherwise deemed appropriate by the Secured Party
or its Representative for the purpose of
collecting any and all such moneys due under any
Collateral whenever payable;
(ii) to pay or discharge taxes, Liens,
security interests or other encumbrances levied or
placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by
the terms of this Agreement and to pay all or any
part of the premiums therefor and the costs
thereof; and
(iii) (A) to direct any party liable for any
payment under any of the Collateral to make
payment of any and all moneys due, and to become
due thereunder, directly to the Secured Party or
its Representative or as the Secured Party or its
Representative shall direct; (B) to receive
payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at
any time, in respect of or arising out of
any Collateral; (C) to sign and indorse any
invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and
notices in connection with Accounts and other
Documents constituting or relating to the
Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity
in any court of competent jurisdiction to collect
the Collateral or any part thereof and to enforce
any other right in respect of any Collateral; (E)
to defend any suit, action or proceeding brought
against the Grantor with respect to any
Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described above
and, in connection therewith, to give such
discharges or releases as the Secured Party or its
Representative may deem appropriate; and (G)
generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as
though the Secured Party or its Representative
were the absolute owner thereof for all purposes,
and to do, at the Secured Party's or its
Representative's option and the Grantor's expense,
at any time, or from time to time, all acts and
things which the Secured Party or its
Representative reasonably deems necessary
to protect, preserve or realize upon the
Collateral and the Secured Party's Lien therein,
in order to effect the intent of this Agreement,
all as fully and effectively as the Grantor might
do.
(b) The Secured Party and its Representative each
agrees that, except upon the occurrence and during the
continuance of any Event of Default, it will forbear
from exercising the power of attorney or any rights
granted to the Secured Party pursuant to this Section
6. The Grantor hereby ratifies, to the extent
permitted by law, all that any said attorney shall
lawfully do or cause to be done by virtue hereof. The
power of attorney granted pursuant to this Section 6,
being coupled with an interest, shall be irrevocable
until the Obligations are indefeasibly paid in full.
(c) The powers conferred on the Secured Party and
its Representative hereunder are solely to protect the
Secured Party's interests in the Collateral and shall
not impose any duty upon it to exercise any such
powers. The Secured Party or its Representative shall
be accountable only for amounts that it actually
receives as a result of the exercise of such powers and
neither the Secured Party, its Representative nor any
of their respective officers, directors, employees or
agents shall be responsible to the Grantor for any act
or failure to act, except for their respective own
gross negligence or willful misconduct.
(d) The Grantor also authorizes the Secured Party
or its Representative, at any time and from time to
time upon the occurrence and during the continuance of
an Event of Default, (i) to communicate in its own name
with any party to any Contract with regard to the
assignment of the right, title and interest of the
Grantor in and under the Contracts hereunder and other
matters relating thereto and (ii) to execute, in
connection with the sale provided for in Section 8
hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to
the Collateral.
7. Performance by the Secured Party of the
Grantor's Obligations. If the Grantor fails to perform or
comply with any of its agreements contained herein and the
Secured Party or its Representative, as provided for by the
terms of this Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such
agreement, the reasonable expenses of the Secured Party or
its Representative incurred in connection with such
performance or compliance, together with interest thereon at
the highest rate then in effect in respect of the Note,
shall be payable by the Grantor to the Secured Party or its
Representative on demand and shall constitute Obligations
secured hereby.
8. Remedies, Rights Upon an Event of Default.
(a) If any Event of Default shall occur and be
continuing, the Secured Party or its Representative may
exercise in addition to all other rights and remedies
granted to it in this Agreement and in any other
instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of
a secured party under the UCC. Without limiting the
generality of the foregoing, the Grantor expressly
agrees that in any such event the Secured Party or its
Representative, without demand of performance or other
demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or
private sale) to or upon the Grantor or any other
Person (all and each of which demands, advertisements
and/or notices are hereby expressly waived to the
maximum extent permitted by the UCC and other
applicable law), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign,
give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any
exchange or broker's board or any of the Secured
Party's or its Representative's offices or elsewhere at
such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit
risk. The Secured Party or its Representative shall
have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of
said Collateral so sold, free of any right or equity of
redemption, which equity of redemption the Grantor
hereby releases. The Grantor further agrees, at the
Secured Party's or its Representative's request, to
assemble the Collateral and make it available to the
Secured Party or its Representative at places which the
Secured Party or its Representative shall reasonably
select, whether at the Grantor's premises or elsewhere.
The Secured Party shall apply the net proceeds of any
such collection, recovery receipt, appropriation,
realization or sale, as provided in Section 8(d)
hereof, the Grantor remaining liable for any deficiency
remaining unpaid after such application, and only after
so paying over such net proceeds and after the payment
by the Secured Party of any other amount required by
any provision of law, including Section 9-504(1)(c) of
the UCC, need the Secured Party account for the
surplus, if any, to the Grantor. To the maximum extent
permitted by applicable law, the Grantor waives all
claims, damages, and demands against the Secured Party
or its Representative arising out of the repossession,
retention or sale of the Collateral. The Grantor
agrees that the Secured Party or its Representative
need not give more that ten days' notice of the time
and place of any public sale or of the time after which
a private sale may take place and that such notice is
reasonable notification of such matters. The Grantor
shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are
insufficient to pay all amounts to which the Secured
Party is entitled, the Grantor also being liable for
the reasonable fees and expenses of any attorneys
employed by the Secured Party or its Representative to
collect such deficiency.
(b) The Grantor also agrees to pay all reasonable
costs of the Secured Party and its Representative,
including, without limitation, reasonable attorneys'
fees, incurred in connection with the enforcement of
any of its rights and remedies hereunder.
(c) The Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted
by applicable law) of any kind in connection with this
Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other
realization upon all or any part of the Collateral
shall be distributed by the Secured Party in the
following order of priorities:
First, to the payment of the costs and expenses of
such sale, including, without limitation, all expenses
of the Secured Party, its Representative and its agents
including the fees and expenses of its counsel, and all
expenses, liabilities and advances made or incurred
by the Secured Party or its Representative in
connection therewith or pursuant to Section 7 hereof;
Next, to the Secured Party (or, for as long as the
Note is pledged to the Agent, to the Agent), in either
case for the payment in full of the Obligations; and
Finally, after payment in full of all the
Obligations, to the payment of the Grantor, or its
successors or assigns, or to whomsoever may be lawfully
entitled to receive the same as a court of competent
jurisdiction may direct.
9. Limitation on the Secured Party's Duty in
Respect of Collateral. Neither the Secured Party nor its
Representative shall have any duty as to any Collateral in
its possession or control or in the possession or control of
any agent or nominee of either of them or any income thereon
or as to the preservation of rights against prior parties or
any other rights pertaining thereto, except that the Secured
Party or its Representative shall use reasonable care with
respect to the Collateral in its possession or under its
control. Upon request of the Grantor, the Secured Party or
its Representative shall account for any moneys received by
it in respect of any foreclosure on or disposition of the
Collateral.
10. Notices. All notices and other communica-
tions provided for hereunder shall be in writing (including
telegraphic, telex, telecopy, or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or
delivered by hand, if to the Grantor, addressed to it at the
address of the Grantor specified in the Note, and if to the
Secured Party, addressed to it at the address of the Secured
Party specified in the Note, in each case, if the Note is
then pledged to the Agent, with a copy to the Agent,
addressed to it at the address of the Agent specified in the
Note or, as to each party, at such other address as shall be
designated by such party in a written notice to each other
party complying as to delivery with the terms of this
Section. All such notices and other communications shall,
when mailed, telegraphed, telexed, telecopied, cabled or
delivered, be effective when deposited in the mails,
delivered to the telegraph company, confirmed by telex
answerback, telecopied with confirmation or receipt,
delivered to the cable company, or delivered by hand to the
addressee or its agent, respectively.
11. Amendments, Etc. No amendment or waiver of
any provision of this Agreement nor consent to any departure
by the Grantor therefrom shall in any event be effective
unless the same shall be in writing, approved by the Agent,
(if the Note is then pledged to the Agent) and signed by the
Secured Party, and then any such waiver or consent shall
only be effective in the specific instance and for the
specific purpose for which given.
12. No Waiver; Remedies. (a) No failure on the
part of the Secured Party, its Representative or the Agent
to exercise, and no delay in exercising any right hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative, may be
exercised singly or concurrently, and are not exclusive of
any remedies provided by law or the Note.
(b) Failure by the Secured Party, its
Representative or the Agent at any time or times hereafter
to require strict performance by the Grantor of any of the
provisions, warranties, terms or conditions contained in
this Agreement shall not waive, affect or diminish any right
of any of the Secured Party, its Representative or the Agent
at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been
modified or waived by any course of conduct or knowledge of
the Secured Party, its Representative, the Agent, or any
agent, officer or employee of the Secured Party, its
Representative or the Agent.
13. Successors and Assigns. This Agreement and
all obligations of the Grantor hereunder shall be binding
upon the Grantor and its successors and assigns, and shall,
together with the rights and remedies of the Secured Party
hereunder, be binding upon the Secured Party and its
successors and assigns and inure to the benefit of the
Secured Party and, while the Note is pledged to the Agent,
the Secured Party's Representative, the Agent, the Banks,
and their respective successors and assigns.
14. Governing Law. This Agreement shall be
governed by, and be construed and interpreted in accordance
with, the law of the State of New York. Wherever 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 applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the
remaining provisions of this Agreement.
15. Waiver of Jury Trial. The Grantor waives any
right it may have to trial by jury in any action or
proceeding to enforce or defend any rights or remedies
hereunder, under the Note or under any other document
relating to any of the foregoing.
16. Further Indemnification. The Grantor agrees
to pay, and to save the Secured Party and its Representative
harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all excise,
sales or other similar taxes which may be payable or
determined to be payable with respect to any of the Colla-
teral or in connection with any of the transactions contem-
plated by this Agreement.
17. Section Titles. The Section titles contained
in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part
of this Agreement.
18. Rights of the Representative. Notwithstanding
anything to the contrary in this Agreement, for as long as
the Note is pledged to the Agent, the Grantor and the
Secured Party acknowledge and agree that the Agent shall be
the sole Representative of the Secured Party hereunder, with
sole right, power and authority to exercise the rights and
remedies of the Secured Party under this Agreement, and that
during such period the Secured Party shall not have any
right, power or authority to exercise any of such rights or
remedies independently during such period; provided,
however, that any proceeds realized by the Representative as
a result of the exercise of such rights and remedies shall
be applied as provided in Section 8 hereof. The Secured
Party shall execute and deliver (or caused to be executed
and delivered) to the Agent all such instruments as the
Agent may reasonably request to exercise such rights and
remedies as such Representative.
<PAGE>
IN WITNESS WHEREOF, The Grantor and the Secured
Party have caused this Agreement to be executed and
delivered by its duly authorized officer on the date first
above written.
WESTERN PUBLISHING COMPANY, INC.
By:----------------------------------
Title:
WESTERN PUBLISHING GROUP, INC.
By:----------------------------------
Title:
Accepted and acknowledged by:
FLEET BANK, as Agent and Representative
By:-----------------------------------
Title:
<PAGE>
[Form of Confidentiality Agreement]
[Date]
CONFIDENTIALITY AGREEMENT
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Amended and Restated Credit Agreement dated as of
May 31, 1994 between Western Publishing Group,
Inc.,
the banks party thereto, and Fleet Bank, as Agent.
Dear ______________:
As a Bank party to the above-referenced Amended and
Restated Credit Agreement (the "Credit Agreement"), we have agreed
with Western Publishing Group, Inc. (the "Company") pursuant to
Section 11.12 of the Credit Agreement to use reasonable
precautions to keep confidential, except as otherwise provided
therein, all non-public information identified by the Company as
being confidential at the time the same is delivered to us
pursuant to the Credit Agreement.
As provided in said Section 11.12, we are permitted to
provide you, as a prospective [holder of a participation in the
Loans (as defined in the Credit Agreement)] [assignee Bank], with
certain of such non-public information subject to the execution
and delivery by you, prior to receiving such non-public
information, of a Confidentiality Agreement in this form. Such
information will not be made available to you until your execution
and return to us of this Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you
agree (on behalf of yourself and each of your affiliates,
directors, officers, employees and representatives) for the
benefit of the Company who is an intended beneficiary of this
Agreement that (A) such information will not be used by you except
in connection with the proposed [participation] [assignment]
mentioned above and (B) you shall use reasonable precautions to
keep such information confidential, provided that nothing herein
shall limit the disclosure of any such information (i) to the
extent required by applicable statute, rule, regulation or
judicial process, (ii) to your counsel or to counsel for any of
the Banks or the Agent (provided such counsel agrees, for the
benefit of the Company to be bound by the terms hereof), (iii) to
bank examiners, auditors or accountants, (iv) to the Agent or any
other Bank, (v) in connection with any litigation to which you or
any one or more of the Banks is a party; and provided that in no
event shall you be obligated to return any materials furnished to
you pursuant to this Confidentiality Agreement; and provided,
further, that, (A) unless specifically prohibited by applicable
law or court order, you shall, prior to disclosure thereof
pursuant to clause (i) or (v) above, use reasonable efforts to
notify the Company of any request for disclosure of any such non-
public information (other than any such request in connection with
an examination of your financial condition by, or any other
regulatory matter involving, such governmental agency)
sufficiently in advance of such intended disclosure to enable the
Company to seek a protective order and (B) that such disclosure
(except pursuant to any such request in connection with an
examination of your financial condition by, or any other
regulatory matter involving, such governmental agency) shall be
limited to that information which your counsel or counsel for any
of the Banks or the Agent, as applicable, advises that you, the
Bank or the Agent is legally required to disclose.
Would you please indicate your agreement to the
foregoing by signing at the place provided below the enclosed copy
of this Confidentiality Agreement.
Very truly yours,
[Insert Name of Bank]
By:-----------------------
Title:
The foregoing is agreed to
as of the date of this letter.
[Insert name of prospective
participant or assignee]
By:-------------------------
Title:
<PAGE>
EXHIBIT 15
Western Publishing Group, Inc.
New York, New York
We have reviewed, in accordance with standards established by the
American Institute of Certified Public Accountants, the unaudited
interim financial information of Western Publishing Group, Inc. and
subsidiaries for the periods ended April 30, 1994 and May 1, 1993, as
indicated in our report dated June 13, 1994; because we did not perform
an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended April 30, 1994,
is incorporated by reference in the following Registration Statements:
Form S-3:
File No. 33-36582
File No. 33-43214
Form S-8:
File No. 33-18430
File No. 33-18692
File No. 33-18693
File No. 33-28019
We also are aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act of 1933, is not considered a part of the
Registration Statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
Deloitte & Touche
Milwaukee, Wisconsin
June 13, 1994
