-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GjQ8w+v+5ZDh4jaGXMo0nzF/8YGWEnBX2XkfS10YxdQiXToo4/q3jLMYl1VfLSBk 6A7Jd04XQoQmBdkS1PJqSw== 0000950134-95-003008.txt : 19951120 0000950134-95-003008.hdr.sgml : 19951120 ACCESSION NUMBER: 0000950134-95-003008 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951116 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STUART ENTERTAINMENT INC CENTRAL INDEX KEY: 0000355142 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 840402207 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10737 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 3211 NEBRASKA AVENUE CITY: COUNCIL BLUFFS STATE: IA ZIP: 51501 BUSINESS PHONE: 7123231488 MAIL ADDRESS: STREET 1: 3211 NEBRASKA AVENUE CITY: COUNCIL BLUFFS STATE: IA ZIP: 51501 FORMER COMPANY: FORMER CONFORMED NAME: BINGO KING CO INC DATE OF NAME CHANGE: 19910725 10-Q 1 FORM 10-Q FOR 9/30/95 1 THIS DOCUMENT IS A COPY OF THE FORM 10-Q FILED ON NOVEMBER 15, 1995 PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended Commission File Number September 30, 1995 0-10737 Stuart Entertainment, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 84-0402207 - ------------------------ ---------------------- (State of incorporation) (I.R.S. Employer Identification Number) 3211 Nebraska Avenue, Council Bluffs, IA 51501 - --------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including Area Code: (712) 323-1488 ------------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of November 13, 1995 there were 6,694,715 shares of the Registrant's common stock, $.01 par value, outstanding. 2 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES INDEX Page No. -------- PART I. FINANCIAL INFORMATION: Item 1: Consolidated Statements of Operations for the Three And Nine Months Ended September 30, 1995 and 1994.... 3 Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994......................................... 4- 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1995 and 1994........... 6- 7 Notes to Consolidated Financial Statements................. 8-13 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 14-20 PART II. OTHER INFORMATION.................................. 21-22 Signatures................................................. 23 Exhibit Index.............................................. 24 3 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS STUART ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (Amounts In Thousands, Except Per Share Amounts) (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, -------------------- ----------------------- 1995 1994 1995 1994 ------- ------- ------- ------- NET SALES $27,031 $13,660 $83,916 $43,939 COST OF GOODS SOLD 17,825 9,856 57,142 31,485 ------- ------ ------- ------- GROSS MARGIN 9,206 3,804 26,774 12,454 OTHER EXPENSES AND INCOME: Selling, general and administrative expenses 6,752 2,946 20,101 9,202 Equity in (earnings) losses of joint ventures 29 282 (15) 644 Amortization of goodwill 211 15 630 46 Interest expense, net 1,050 224 3,365 659 United Kingdom charge (Note 6) 0 0 800 0 ------- ------- ------- ------- Other expenses and income - net 8,042 3,467 24,881 10,551 ------- ------- ------- ------- INCOME BEFORE INCOME TAXES 1,164 337 1,893 1,903 INCOME TAX PROVISION 645 126 1,657 697 ------- ------- ------- ------- NET EARNINGS $ 519 $ 211 $ 236 $ 1,206 ======= ======= ======= ======= EARNINGS PER SHARE $ 0.08 $ 0.06 $ 0.04 $ 0.34 ======= ======= ======= ======= WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 6,717 3,491 6,682 3,491 ======= ======= ======= =======
Note: No dividends were paid or declared during the nine months ended September 30, 1995 and September 30, 1994. See accompanying Notes to Consolidated Financial Statements. 3 4 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (Amounts In Thousands)
September 30, December 31, ASSETS 1995 1994 - ------ -------- -------- (UNAUDITED) CURRENT ASSETS: Cash $ 1,178 $ 2,116 Trade and notes receivables, less allowances for doubtful accounts of $1,998 and $1,797, respectively 19,392 15,762 Inventories (Note 3) 20,722 16,103 Refundable income taxes 0 225 Deferred income taxes 1,913 1,513 Prepaid expenses and other 760 388 -------- -------- Total Current Assets 43,965 36,107 PROPERTY, PLANT AND EQUIPMENT: Land and buildings 4,892 4,710 Equipment 29,254 24,520 -------- -------- Total 34,146 29,230 Less accumulated depreciation 12,317 9,387 -------- -------- Property, Plant And Equipment - Net 21,829 19,843 OTHER ASSETS: Goodwill, net of accumulated amortization of $1,024 and $426, respectively 29,815 28,958 Deferred financing costs, net of accumulated amortization of $280 and $16, respectively 1,617 1,613 Notes receivable, less allowance for doubtful accounts of $423 and $423, respectively 1,387 1,366 Other assets 1,362 938 -------- -------- Total Other Assets 34,181 32,875 -------- -------- TOTAL ASSETS $ 99,975 $ 88,825 ======== ========
See accompanying Notes to Consolidated Financial Statements. 4 5 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (Amounts In Thousands)
September 30, December 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 - ------------------------------------ -------- -------- (UNAUDITED) CURRENT LIABILITIES: Current portion of long-term debt (Note 5) $ 6,289 $ 6,482 Trade payables 12,767 10,456 Accrued liabilities and others 5,900 4,715 -------- -------- Total Current Liabilities 24,956 21,653 LONG-TERM DEBT (Note 5) Related party 5,000 5,000 Other 35,054 29,416 -------- -------- Total Long-Term Debt 40,054 34,416 DEFERRED INCOME TAXES 2,835 2,270 DEFERRED INCOME 391 333 -------- -------- TOTAL LIABILITIES 68,236 58,672 STOCKHOLDERS' EQUITY: Common stock 68 66 Additional paid-in capital 26,329 25,776 Retained earnings 4,975 4,739 Treasury stock (At cost) (189) (189) Cumulative translation adjustment, net of deferred taxes 556 (239) -------- -------- Total Stockholders' Equity 31,739 30,153 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 99,975 $ 88,825 ======== ========
See accompanying Notes to Consolidated Financial Statements. 5 6 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 30, 1994 (Amounts In Thousands) (UNAUDITED)
Nine Months Ended September 30, -------------------- 1995 1994 ------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 236 $ 1,206 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Payment on termination of Consulting Agreement (1,150) 0 United Kingdom charge 800 0 Depreciation and amortization 3,155 1,460 Provision for doubtful accounts 432 325 Equity in (earnings) losses of joint ventures (15) 644 Deferred income taxes (550) (422) Other noncash expenses - net 1,232 321 Change in operating working capital items, net (4,095) (1,571) ------- -------- Net cash provided by (used in) operating activities 45 1,963 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,815) (449) Payments received on notes receivable 711 739 Investment in joint ventures (128) (615) Costs of acquisition of LSA (324) (441) Investment in distributor (116) 0 Acquisition of Reliable (295) 0 ------- -------- Net cash used in investing activities (2,967) (766) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under Revolving Facility 6,169 0 Net borrowings on previous line of credit 0 528 Payments on Term Facility (2,261) 0 Payments on other long-term debt (2,189) (1,669) Payments on LSA Purchase Price Adjustment (929) 0 Proceeds from issuance of long-term debt 1,140 0 Cost of debt financing paid (200) 0 Proceeds from exercise of stock options 238 0 Costs on issuance of stock (17) 0 Proceeds from sale of stock 0 9 ------- -------- Net cash provided by (used in) financing activities 1,951 (1,132) Effect of currency exchange rate changes on cash of foreign subsidiaries 33 0 ------- -------- NET CHANGE IN CASH (938) 65 CASH AT BEGINNING OF PERIOD 2,116 512 ------- -------- CASH AT END OF PERIOD $ 1,178 $ 577 ======= ========
See accompanying Notes to Consolidated Financial Statements. 6 7 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND SEPTEMBER 30,1994 (Amounts In Thousands) (UNAUDITED)
Nine Months Ended September 30, --------------------- 1995 1994 -------- -------- CHANGE IN OPERATING WORKING CAPITAL ITEMS: Trade receivables $ (3,372) $ (1,244) Inventories (4,379) (1,565) Trade payables 1,523 360 Other, net 2,133 878 -------- -------- Total $ (4,095) $ (1,571) ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid $ (3,486) $ (741) Income taxes paid $ (1,440) $ (1,087) Income tax refunds received 63 412
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: During the first nine months of 1995 and 1994, the Company financed the acquisition of equipment totalling $106,000 and $416,000, respectively, through the assumption of obligations under capital leases. In connection with the Reliable Acquisition, the Company i) assumed Reliable's line of credit and term loan credit facility with a Michigan bank, which totalled $1,237,000, ii) assumed another note payable of $250,000, iii) issued a note payable to the shareholders' of Reliable for $780,000 and iv) issued 55,652 shares of the Company's common stock, which was valued at $320,000 or $5.75 per share. See accompanying Notes to Consolidated Financial Statements. 7 8 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION: The accompanying unaudited consolidated financial statements of Stuart Entertainment, Inc. and subsidiaries (collectively, the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for annual financial statements. In the opinion of the Company's management, the foregoing consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the results of the Company for the periods shown. Operating results for the three and nine months ended September 30, 1995 and 1994 are not necessarily indicative of the results that may be expected for the full year ending December 31, 1995. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 1994, filed with the Securities and Exchange Commission on the Company's Annual Report on Form 10-K. Certain reclassifications have been made to the 1994 financial statements to conform to those classifications used in 1995. 2. EARNINGS PER SHARE: The number of shares used in earnings per share calculations for the three month and nine month periods ended September 30, 1995 and 1994 are based on the weighted average number of shares of common stock outstanding and, if dilutive, common stock equivalents (stock options and warrants) of the Company using the treasury stock method. 8 9 3. INVENTORIES: Inventories consisted of the following:
September 30, December 31, 1995 1994 ----------- ----------- Raw Materials $ 5,636,000 $ 4,380,000 Work-In-Process 3,112,000 2,418,000 Finished Goods 11,974,000 9,305,000 ----------- ----------- Total $20,722,000 $16,103,000 =========== ===========
4. ACQUISITIONS AND FINANCING: On December 13, 1994, the Company completed the acquisition (the "LSA Acquisition") of Len Stuart & Associates Limited ("LSA") for a total purchase price of $36,786,000, which includes a subsequent purchase price adjustment of $1,642,000. LSA was the holding company for (i) Bingo Press & Specialty Limited, an Ontario, Canada corporation and a major manufacturer of bingo supplies and related products in Canada, which operates under the trade name Bazaar & Novelty ("Bazaar"), and (ii) Niagara Bazaar and Novelty Limited, an Ontario, Canada corporation and a retailer of bingo supplies and related products. The LSA Acquisition was financed through the sale of equity (the "Equity Financing") and amounts borrowed under the Company's new Credit Agreement (the "Credit Agreement") (See Note 5). In addition, effective January 1, 1995, the Company acquired (i) substantially all the assets and assumed substantially all of the existing liabilities (the "Net Assets") of The Reliable Corporation of America ("Reliable") and (ii) two presses owned by Reliable's shareholders (collectively, the "Reliable Acquisition") for a total purchase price of $1,300,000. 9 10 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) PRO FORMA INFORMATION: The following pro forma condensed consolidated statements of operations for the three-month and nine-month periods ended September 30, 1995 and 1994 give effect to the LSA Acquisition and the Reliable Acquisition, the Equity Financing and borrowings on the Credit Agreement as if such transactions had occurred as of January 1, 1994. The pro forma consolidated statements of operations do not purport to represent what the Company's results of operations would have been if such transactions had in fact occurred on such dates and should not be viewed as predictive of the Company's financial results of the future. Amounts are in thousands, except per share information.
Pro Forma Pro Forma Three Months Ended Nine Months Ended September 30, September 30, -------------------- ---------------------- 1995 1994 1995 1994 ------- ------ ------ ------ Net Sales: "Core Business" $26,354 $23,165 $81,126 $72,888 Video King 272 309 1,535 2,130 England 405 168 1,255 551 ------- ------- ------ ------- Total $27,031 $23,642 $83,916 $75,569 ======= ======= ======= ======= Net Earnings (Loss): "Core Business" $ 1,113 $ 473 $ 2,797 $ 2,274 Video King (189) (219) (486) (245) England (405) (249) (2,075) (510) ------- ------- ------- ------- Total $ 519 $ 5 $ 236 $ 1,519 ======= ======= ======= ======= Earnings per Share: "Core Business" $ 0.17 $ 0.07 $ 0.42 $ 0.34 Video King (0.03) (0.03) (0.07) (0.04) England (0.06) (0.04) (0.31) (0.08) ------- ------- ------- ------- Total $ 0.08 $ 0.00 $ 0.04 $ 0.22 ======= ======= ======= ======= Average Common and Common Equivalent Shares Outstanding 6,717 6,688 6,682 6,688 ======= ======= ====== ======= EBITDA "Core Business" $ 3,808 $ 2,483 $10,906 $ 8,722 Video King (224) (315) (556) (297) England (364) (217) (1,937) (468) -------- ------- ------- ------ Total $ 3,220 $ 1,951 $ 8,413 $ 7,957
10 11 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) "Core Business" includes the operations of Stuart Entertainment, Inc. (doing business as Bingo King), LSA and Reliable. "EBITDA" is defined as earnings before interest, taxes, depreciation and amortization. The pro forma results above do not include the following non-recurring charge that was included in the results of operations after the date of the LSA Acquisition: i) In accordance with the application of purchase accounting to the assets of LSA, the finished goods of Bazaar were recorded at sales value less costs to sell and a reasonable margin on the costs to sell. This resulted in the write-up of finished goods inventory of Bazaar which was included in costs of goods sold in 1994 and 1995 as the finished goods were sold during the periods. The amount charged to cost of goods sold in the nine months ended September 30, 1995 was $489,000 and the reduction of net income, net of taxes of $191,000, was $298,000. 5. LONG-TERM DEBT Long-term debt consisted of the following:
September 30, December 31, 1995 1994 ------------ ----------- Borrowings under Credit Agreement: Revolving Facility $19,203,000 $12,601,000 Term Facility 13,039,000 14,840,000 Subordinated note payable to Mr. Stuart 5,000,000 5,000,000 Other term loans and mortgages payable to banks 2,161,000 1,208,000 Obligations under capital leases 4,058,000 4,211,000 Notes payable to others 2,882,000 3,038,000 ----------- ----------- Total 46,343,000 40,898,000 Less current portion 6,289,000 6,482,000 ----------- ----------- Total long-term debt $40,054,000 $34,416,000 =========== ===========
11 12 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) CREDIT AGREEMENT: In connection with the LSA Acquisition, on December 13, 1994, the Company entered into the Credit Agreement with a national bank ("Bank") for a financing facility of $35,000,000, with a senior secured revolving line of credit of $20,000,000 (the "Revolving Facility") and a senior secured term loan facility of $15,000,000 (the "Term Facility"). On December 13, 1994, i) the Revolving Facility was separated into a U.S. Facility for $10,000,000 and a Canadian Revolving Facility for C$13,875,000 ($10,000,000) and ii) the Term Facility was separated into a U.S. Term Facility for $5,000,000 and a Canadian Term Facility for C$13,875,000 ($10,000,000). At September 30, 1995, loans outstanding on the U.S. Revolving Facility totalled $9,590,000 (Offshore and Base Rate Loans at a weighted average interest rate of 8.27%) and loans outstanding on the Canadian Revolving Facility totalled C$12,900,000($9,613,000) (an Offshore Loan at an interest rate of 8.85%). At September 30, 1995, loans outstanding on the U.S. Term Facility totalled $4,250,000 (an Offshore Loan at an interest rate of 8.24%) and loans outstanding on the Canadian Term Facility totalled C$11,794,000 ($8,789,000) (an Offshore Loan at an interest rate of 8.85%). The Credit Agreement contains various covenants, such as minimum net worth, fixed coverage ratio, leverage ratio and restrictions on additional borrowings, cash dividends and capital expenditures. On August 14, 1995 a Second Amendment to the Credit Agreement was signed. The Company was in compliance with the amended covenants as of September 30, 1995. 12 13 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued) FINANCING ASSUMED WITH THE RELIABLE ACQUISITION In connection with the Reliable Acquisition, the Company assumed (i) a line of credit and term loan credit facility with a Michigan bank which had been the primary bank for Reliable and (ii) a note payable from an equipment supplier (see Note 4). 6. UNITED KINGDOM CHARGE: The Company has signed a licensing and marketing agreement with Playprint Limited, headquartered in Dublin, Ireland. This relationship has permitted the Company to discontinue its manufacturing operation in the United Kingdom. Under the agreement, Playprint Limited will pay royalties to the Company for use of certain of the Company's trademark, technologies and equipment for the production of bingo paper and ink markers. The Company recorded a one-time pre-tax charge of $800,000 in the second quarter of 1995 related to the estimated costs to shutdown the manufacturing facility in the United Kingdom and consolidate its activities with Playprint Limited. 13 14 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS INTRODUCTION On December 13, 1994, the Company completed the acquisition (the "LSA Acquisition") of Len Stuart & Associates Limited ("LSA"). LSA was the holding company for (i) Bingo Press & Specialty Limited, an Ontario, Canada corporation and a major manufacturer of bingo supplies and related products in Canada, which operates under the trade name Bazaar & Novelty ("Bazaar"), and (ii) Niagara Bazaar and Novelty Limited, an Ontario, Canada corporation and a retailer of bingo supplies and related products. In addition, effective January 1, 1995, the Company acquired (i) substantially all the assets and assumed substantially all of the existing liabilities (the "Net Assets") of The Reliable Corporation of America ("Reliable") and (ii) two presses owned by Reliable's shareholders (collectively, the "Reliable Acquisition"). The results of operations of Bazaar and Reliable have been consolidated since the date of the LSA Acquisition and the Reliable Acquisition. Results for the current year include two one-time charges, including (i) a charge of $489,000 to cost of goods sold related to the application of purchase accounting to the finished goods of Bazaar that were sold in the first quarter of 1995 (see Note 4 to the Consolidated Financial Statements) and (ii) a charge of $800,000 related to the estimated costs to shutdown the manufacturing facility in the United Kingdom (see Note 6 to the Consolidated Financial Statements). The Company's subsidiary, Stuart Entertainment Limited ("Stuart Entertainment England"), has recorded losses in the current year in the amount of $405,000 and $2,075,000 for the three month and nine months ended September 30, 1995, respectively, including the $800,000 one-time charge described above. The manufacturing operations of this subsidiary have been discontinued in conjunction with a licensing and marketing agreement with Playprint Limited of Dublin, Ireland and no further losses are anticipated. On a pro forma basis (see Note 4 to the Consolidated Financial Statements), net earnings for the Company's "Core Business" for the nine months ended September 30, 1995 increased to $2,797,000 ($0.42 per share) from $2,274,000 ($0.34 per share) for the nine months ended September 30, 1994. 14 15 COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 NET SALES - Net sales in the third quarter of 1995 increased $13,371,000 (97.8%) to $27,031,000 in the third quarter of 1995 from $13,660,000 in the third quarter of 1994. The sales growth in the third quarter of 1995 was primarily attributable to the inclusion of sales from Bazaar, Reliable and Stuart Entertainment England, which collectively increased sales by $11,681,000 (87.4% of the total increase). Excluding the effect of sales from Bazaar, Reliable and Stuart Entertainment England, comparable sales for the third quarter increased $1,690,000 (12.4% increase over the third quarter of 1994). Sales of bingo paper increased $1,494,000 (21.3%), break-open tickets sales increased $118,000 (4.1%) and sales of ink products increased slightly. These increases were partially offset by slight decreases in sales of Video King, bingo electrical equipment and general merchandise. Bingo paper units increased 4.5% in the three-month period ended September 30, 1995 as compared to the three-month period ended September 30, 1994. Break-open ticket units decreased 6.2% and ink products experienced unit increases of 17.2% during these same periods. Overall sale price levels increased for bingo paper and break-open tickets while sale price levels for ink products decreased during the three-month period ended September 30, 1995 compared to the same period in 1994. Bingo paper sale price increased approximately 14.0%. This increase was the result of raw material price increases on newsprint paper. Break-open ticket prices increased 6.8% during the three month period ending September 30, 1995. Ink product prices decreased 6.4% due primarily to a shift in the mix of ink products sold to lower priced products. COST OF GOODS SOLD - Cost of goods sold, as a percentage of sales, decreased from 72.2% for the three months ended September 30, 1994 to 65.9% for the three months ended September 30, 1995. The decrease in the cost of goods sold percentage is due to i) a lower cost of goods sold percentage for Bazaar sales versus the historical percentage for the Company and ii) improvements in manufacturing efficiencies. These improvements were partially offset by increases in raw material, newsprint paper and general labor rates. During 1994 and the first nine months of 1995, the Company experienced significant increases in the price of paper products purchased for the manufacturing of bingo paper and for packaging. The Company initiated sales price increases on bingo paper during this period that approximated the amount of the increase in the paper products purchased. The Company anticipates further increases in the price of paper products purchased during 1995. Management expects to continue to increase the sales price on bingo paper during 1995 to largely offset these expected increases in costs, subject to market conditions at that time. Management does not believe, but has no assurances, that these increases in the sales price of bingo paper will place the Company at a competitive disadvantage. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and administrative ("SG&A") expenses increased $3,806,000 from $2,946,000 for the three months ended September 30, 1994 to $6,752,000 for the three months ended September 30, 1995. SG&A expenses, as a percent of sales, increased to 25.0% for the three months ended September 30, 1995 from 21.6% during the same period of 1994. The increase in SG&A expenses was due primarily to two 15 16 factors. First, approximately $2,935,000 of the increase was a result of the consolidation of Bazaar, Reliable and Stuart Entertainment England for the three-month period ended September 30, 1995. Second, excluding the effect of Bazaar, Reliable and Stuart Entertainment England, the Company experienced increases in (i) salaries and related costs, due to increases in number of employees and salary levels, (ii) business-related travel and (iii) marketing and sales promotion costs. EQUITY EARNINGS (LOSSES) IN JOINT VENTURES - Equity loss in joint ventures totalled $29,000 for the third quarter of 1995 compared with a loss of $282,000 for the same period in 1994. Under the joint venture agreement, the earnings or loss for Stuart Entertainment Mexico was allocated to the Company based on the percentage of total production that was sold to the Company. The Company recognized earnings or losses related to its investment in Stuart Entertainment Mexico as SG&A expense. The equity income for Stuart Entertainment England represented 50% of the net operating income of Stuart Entertainment England for the period April 1, 1994 through September 30, 1994. With the LSA Acquisition, Stuart Entertainment England and Stuart Entertainment Mexico became, in effect, wholly owned subsidiaries of the Company. INTEREST EXPENSE, NET - Interest expense (net of interest income) for the three month period ended September 30, 1995 totalled $1,050,000 compared with $224,000 in the same period in 1994. The increase of $826,000 was due to i) the consolidation of Bazaar, Stuart Entertainment England and Reliable which increased interest expense by $627,000, ii) higher interest rates experienced for the three months ended September 30, 1995 compared to the same period in 1994 and iii) significantly higher borrowing levels at September 30, 1995 compared to September 30, 1994, largely related to the LSA and Reliable acquisitions and higher working capital requirements. NET INCOME - Net income for the three month period ended September 30, 1995 was $519,000 ($.08 per share) compared with $211,000 ($.06 per share) for the same period of 1994. The increase in net income and earnings per share was largely due to consolidation of Bazaar and Reliable. INFLATION - Other than the increases in the cost of paper products described above, inflation did not have a material effect on the Company's operations for the three months and nine months ended September 30, 1995. 16 17 COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 NET SALES - Net sales for the first nine months of 1995 increased $39,977,000 (91.0%) to $83,916,000 for the first nine months of 1995 from $43,939,000 in the first nine months of 1994. The sales growth for the first nine months of 1995 was primarily attributable to the inclusion of sales from Bazaar, Reliable and Stuart Entertainment England which collectively increased sales by $36,208,000 (90.5% of the total increase). Excluding the effect of sales from Bazaar, Reliable and Stuart Entertainment England, comparable sales for the first nine months of 1995 increased $3,769,000 (8.6% increase over the first nine months of 1994). Sales of bingo paper increased $3,764,000 (17.2%), break-open tickets sales increased $400,000 (4.6%) and sales of ink products increased $362,000 (7.2%). These increases were partially offset by decreases in sales of both Video King of $581,000 and electrical bingo equipment of $514,000. A modest decrease in the sales of general merchandise also occurred. Bingo paper units increased 5.2% in the nine month period ending September 30, 1995 as compared to the nine month period ended September 30, 1994. Break-open ticket units decreased 1.7% and ink products increased 12.4% during these same periods. Overall sale price levels increased for bingo paper and break-open tickets while sale price levels for ink products decreased slightly during the nine month period of 1995 compared to the same period in 1994. Bingo paper sale price increased approximately 10.7%. This increase was the result of raw material price increases on newsprint paper. Break-open ticket prices increased 5.9% during the nine month period of 1995. Ink product prices decreased 4.7% due primarily to a shift in the mix of ink products sold to lower priced products. COST OF GOODS SOLD - Cost of goods sold, as a percentage of sales, decreased from 71.7% for the nine months ended September 30, 1994 to 68.1% for the nine months ended September 30, 1995. The decrease in the cost of goods sold percentage is due to i) a lower cost of goods sold percentage for Bazaar sales versus the historical percentage for the Company and ii) improvements in manufacturing efficiencies. These improvements were partially offset by increases in raw material, newsprint paper and general labor rates. During 1994 and the first nine months of 1995, the Company experienced significant increases in the price of paper products purchased for the manufacturing of bingo paper and for packaging. The Company initiated sales price increases on bingo paper during this period that approximated the amount of the increase in the paper products purchased. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and administrative ("SG&A") expenses increased $10,899,000 from $9,202,000 for the nine months ended September 30, 1994 to $20,101,000 for the nine months ended September 30, 1995. SG&A expenses, as a percent of sales, increased to 24.0% for the nine months ended September 30, 1995 from 20.9% during the same 17 18 period of 1994. The increase in SG&A expenses was due primarily to two factors. First, approximately $8,530,000 of the increase was a result of the consolidation of Bazaar, Reliable and Stuart Entertainment England for the nine months ended September 30, 1995. Second, excluding the effect of Bazaar, Reliable and Stuart Entertainment England, the Company experienced increases in (i) salaries and related costs, due to increases in number of employees and salary levels,(ii) business-related travel (iii) marketing and sales promotion costs and (iv) approximately $700,000 in expenses largely related to the consolidation of Bazaar, Reliable and Stuart Entertainment England. SG&A cost reductions have been implemented through the consolidation of these companies which are anticipated to result in annualized improvement in excess of $1,000,000. EQUITY EARNINGS (LOSSES) IN JOINT VENTURES - Equity earnings in joint ventures totalled $15,000 for the first nine months of 1995 compared with a loss of $644,000 for the same period in 1994. Under the joint venture agreement, the earnings or loss for Stuart Entertainment Mexico was allocated to the Company based on the percentage of total production that was sold to the Company. The Company recognized earnings or losses related to its investment in Stuart Entertainment Mexico as SG&A expenses. The equity loss for Stuart Entertainment England represented 50% of the net operating loss of Stuart Entertainment England for the period January 1, 1994 through September 30, 1994. With the LSA Acquisition, Stuart Entertainment England and Stuart Entertainment Mexico became, in effect, wholly owned subsidiaries of the Company. INTEREST EXPENSE, NET - Interest expense (net of interest income) for the nine month period ended September 30, 1995 totalled $3,365,000 compared with $659,000 in the same period in 1994. The increase of $2,706,000 was due to i) the consolidation of Bazaar, Stuart Entertainment England and Reliable which increased interest expense by $2,100,000, ii) higher interest rates experienced for the nine months ended September 30, 1995 compared to the same period in 1994 and iii) significantly higher borrowing levels at September 30, 1995 compared to September 30, 1994, largely related to the LSA Acquisition and Reliable Acquisition and higher working capital requirements. NET INCOME - Net income for the nine month period ended September 30, 1995 was $236,000 ($.04 per share) compared with $1,206,000 ($.34 per share) for the same period of 1994. The decrease in net income and earnings per share was largely due to i) increased losses (including the $800,000 one-time charge described above) of Stuart Entertainment England of $2,075,000 ($.31 per share), and ii) the purchase accounting adjustment required for Bazaar's finished goods inventory of $298,000 ($.04 per share). LIQUIDITY AND CAPITAL RESOURCES The Company completed the LSA Acquisition during the fourth quarter of 1994. As a result of a subsequent purchase price adjustment (the "Purchase Price Adjustment"), the Company was obligated to pay Mr. Stuart an additional $1,642,000. The Company made payments to and on behalf of Mr. Stuart of $929,000 of the Purchase Price Adjustment in April, 1995, and the remaining 18 19 balance will accrue interest payable monthly at 2.25% over the prime rate shown in The Wall Street Journal beginning March 6, 1995. The Company's long-term debt at September 30, 1995, including the current portion thereof, totalled $46,343,000 compared to $40,898,000 at December 31, 1994 (see Note 5 to the Consolidated Financial Statements). Cash payments on long-term debt during the first nine months of 1995 totalled approximately $4,500,000 compared to $1,669,000 for the same period in 1994. Additions to long-term debt in 1995 were related to the Reliable Acquisition, new capital lease financing and additional borrowings under the Revolving Facility to finance normal operations. The Credit Agreement contains various covenants, such as minimum net worth, fixed coverage ratio, leverage ratio and restrictions on additional Waiver and borrowings, cash dividends and capital expenditures. On August 14, 1995, a Second Amendment to the Credit Agreement was signed. The Company was in compliance with the amended covenants as of September 30, 1995. On August 31, 1995, a Third Amendment to the Credit Agreement was signed which assigned 50% of the Revolving Commitment and Term Commitment under the Credit Agreement to a second national bank. In the Reliable Acquisition, the Company assumed a line of credit and term loan credit facility with a Michigan bank which had been the primary bank for Reliable (see Note 5 of the Notes to Consolidated Financial Statements). Capital expenditures during the first nine months of 1995 totalled $2,815,000. In October 1995, the Company completed a lease line of credit with its primary bank. The facility provides lease financing on capitalized equipment purchased through December 31, 1996. The maximum available under this facility is $5 million. Capital expenditures for fiscal 1995 are projected to be $3,600,000. The $2,075,000 in losses recorded by the Company's United Kingdom subsidiary in the current year, higher working capital requirements (see Change in Balance Sheet Accounts) and other one-time cash transactions not anticipated when the Credit Agreement was completed in December 1994 have resulted in the Company utilizing the maximum available under its revolving facility. The Company holds regular discussions with its banks and others regarding working capital needs to maintain its flexibility. The Company core business continues to be profitable with nine month net earnings of $2,797,000. The Company believes the large ongoing losses in the United Kingdom subsidiary will be eliminated beginning in the fourth quarter of 1995 (see Note 6) which they anticipate will improve the Company's cash flow position. In addition, the Company is continuing to work with its banks to provide additional financing alternatives in order to maintain its flexibility. The Company believes, but has no assurances, that it will be able to obtain additional financing to fund the Company's future financial requirements. 19 20 CHANGE IN BALANCE SHEET ACCOUNTS Total trade receivables increased $5,346,000 from $15,001,000 at December 31, 1994 to $20,347,000 at September 30, 1995. The increase is due primarily to the consolidation of Reliable ($1,340,000), normal seasonal fluctuations, price increases and overall sales increases. Total notes receivable (including current and long-term portions) increased $726,000 from a balance of $2,127,000 at December 31, 1994, to $2,853,000 at September 30, 1995. During the nine months ended September 30, 1995, trade receivables totaling $696,000 were converted to notes receivable from non-related parties. The conversions were made to assist customers in resolving cash flow deficiencies and to aid customers in accomplishing their long term growth plans. Inventories increased $4,619,000 from $16,103,000 at December 31, 1994, to $20,722,000 at September 30, 1995. The increase was due to (i) the consolidation of Reliable ($1,395,000), (ii) increased cost of paper products used to manufacture bingo paper and (iii) increased inventory quantities on hand. Trade payable and accrued liabilities increased a combined $3,496,000 from $15,171,000 at December 31, 1994 to $18,667,000 at September 30, 1995. The increase was due to (i) the consolidation of Reliable ($967,000), (ii) increased accounts payable from inventory levels related to increased cost of paper products purchased and (iii) price increases and overall sales increases. 20 21 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: a. Exhibits: Exhibit 10.1 Waiver and Second Amendment to Credit Agreement, dated as of August 14, 1995. Exhibit 10.2 Third Amendment to Credit Agreement, dated as of August 31, 1995. Exhibit 10.3 Assignment and Assumption Agreement dated August 31, 1995 between Stuart Entertainment, Inc., Bank of America Illinois, The Chase Manhattan Bank (National Association) and Bank of America National Trust and Savings Association. Exhibit 10.4 Assignment and Assumption Agreement dated August 31, 1995 between Bingo Press & Specialty Limited, Bank of America Canada, The Chase Manhattan Bank of Canada and Bank of America Canada, as agent. Exhibit 10.5 Revolving Note dated August 31, 1995 in the principal amount of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to The Chase Manhattan Bank (National Association). Exhibit 10.6 Term Note dated August 31, 1995 in the principal amount of U.S. $2,250,000 issued by Stuart Entertainment, Inc. to The Chase Manhattan Bank (National Association). Exhibit 10.7 Revolving Note dated August 31, 1995 in the principal amount of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to Bank of America Illinois. Exhibit 10.8 Term Note dated August 31, 1995 in the principal amount of U.S. $2,250,000 issued by Stuart Entertainment, Inc. to Bank of America Illinois. Exhibit 10.9 Revolving Note dated August 31, 1995 in the principal amount of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited to The Chase Manhattan Bank of Canada. Exhibit 10.10 Term Note dated August 31, 1995 in the principal amount of Cdn. $6,243,750 issued by Bingo Press & Specialty Limited to The Chase Manhattan Bank of Canada. Exhibit 10.11 Revolving Note dated August 31, 1995 in the principal amount of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited to Bank of America Canada. 21 22 Exhibit 10.12 Term Note dated August 31, 1995 in the principal amount of U.S. $2,250,000 issued by Bingo Press & Specialty Limited to Bank of America Canada. Exhibit 11 Statement Regarding Computation of Per Share Earnings Exhibit 27 Financial Data Schedule b. Reports on Form 8-K: The Company did not file any reports on Form 8-K for the quarter ended September 30, 1995. 22 23 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. STUART ENTERTAINMENT, INC. Date: November 13, 1995 /s/ Timothy R. Stuart ---------------------------- Timothy R. Stuart President Date: November 13, 1995 /s/ Paul C. Tunink ---------------------------- Paul C. Tunink Vice President and Chief Financial Officer 23 24 EXHIBIT INDEX Exhibit Description - ------- ----------- Exhibit 10.1 Waiver and Second Amendment to Credit Agreement, dated as of August 14, 1995. Exhibit 10.2 Third Amendment to Credit Agreement, dated as of August 31, 1995. Exhibit 10.3 Assignment and Assumption Agreement dated August 31, 1995 between Stuart Entertainment, Inc., Bank of America Illinois, The Chase Manhattan Bank (National Association) and Bank of America National Trust and Savings Association. Exhibit 10.4 Assignment and Assumption Agreement dated August 31, 1995 between Bingo Press & Specialty Limited, Bank of America Canada, The Chase Manhattan Bank of Canada and Bank of America Canada, as agent. Exhibit 10.5 Revolving Note dated August 31, 1995 in the principal amount of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to The Chase Manhattan Bank (National Association). Exhibit 10.6 Term Note dated August 31, 1995 in the principal amount of U.S. $2,250,000 issued by Stuart Entertainment, Inc. to The Chase Manhattan Bank (National Association). Exhibit 10.7 Revolving Note dated August 31, 1995 in the principal amount of U.S. $5,000,000 issued by Stuart Entertainment, Inc. to Bank of America Illinois. Exhibit 10.8 Term Note dated August 31, 1995 in the principal amount of U.S. $2,250,000 issued by Stuart Entertainment, Inc. to Bank of America Illinois. Exhibit 10.9 Revolving Note dated August 31, 1995 in the principal amount of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited to The Chase Manhattan Bank of Canada. Exhibit 10.10 Term Note dated August 31, 1995 in the principal amount of Cdn. $6,243,750 issued by Bingo Press & Specialty Limited to The Chase Manhattan Bank of Canada. Exhibit 10.11 Revolving Note dated August 31, 1995 in the principal amount of Cdn. $6,937,500 issued by Bingo Press & Specialty Limited to Bank of America Canada. 25 Exhibit 10.12 Term Note dated August 31, 1995 in the principal amount of U.S. $2,250,000 issued by Bingo Press & Specialty Limited to Bank of America Canada. Exhibit 11 Statement Regarding Computation of Per Share Earnings Exhibit 27 Financial Data Schedule EX-10.1 2 AMENDED CREDIT AGREEMENT DATED 8/14/95 1 EXHIBIT 10.1 WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT This Waiver and Second Amendment to Credit Agreement, dated as of August 14, 1995 (the "Agreement") is among Stuart Entertainment, Inc., a Delaware corporation (the "U.S. Company"), Bingo Press & Specialty Limited (formerly known as 1089350 Ontario Inc.), an Ontario corporation (the "Canadian Company"), Bank of America National Trust and Savings Association, as U.S. Agent, Bank of America Illinois, as U.S. Lender, and Bank of America Canada, as Canadian Agent and Canadian Lender. W I T N E S S E T H: WHEREAS, the U.S. Company, the Canadian Company, the U.S. Agent, the U.S. Lender, the Canadian Agent and the Canadian Lender are parties to that certain Credit Agreement dated as of December 13, 1994 (as amended, the "Credit Agreement") and to certain other documents executed in connection with the Credit Agreement; WHEREAS, the U.S. Company and the Canadian Company have requested certain waivers and amendments and the U.S. Lender and Canadian Lender have agreed to such waivers and amendments as provided herein. NOW, THEREFORE, the parties hereto agree as follows: 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. 2. WAIVER. Subject to the conditions to effectiveness set forth in Section 4 below, the Lenders hereby waive any Event of Default arising under Section 8.01(c) solely as a result of (a) a breach of Section 7.14 of the Credit Agreement as of March 31, 1995 and (b) a breach of Section 7.17 of the Credit Agreement for the period ending on March 31, 1995. The foregoing waiver shall not constitute a waiver of any other Event of Default now or hereafter existing, including any Event of Default arising under Section 8.01(c) as a result of a (i) breach of Section 7.14 for any date after March 31, 1995 or (ii) a breach of Section 7.17 for any period ending after March 31, 1995. 3. AMENDMENT TO THE CREDIT AGREEMENT. Subject to the conditions to effectiveness set forth in Section 4 below: (a) A new defined term "Adjusted EBITDA Losses" is hereby added to Section 1.01 of the Credit Agreement immediately prior to the defined term "Adjusted Restructuring Costs" as follows: "Adjusted EBITDA Losses" means (i) losses of up to One Million Six Hundred Thousand U.S. Dollars (U.S. $1,600,000) incurred by the U.S. Company, on a consolidated basis, during fiscal year 1995 (and affecting fiscal year 1995 consolidated 2 earnings of the U.S. Company) as a result of the operations of the Companies in the United Kingdom and (ii) losses of up to Four Hundred Eighty-Nine Thousand U.S. Dollars (U.S. $489,000) incurred by the U.S. Company, on a consolidated basis, during fiscal year 1994 (and affecting fiscal year 1995 consolidated earnings of the U.S. Company) as a result of purchase accounting on the finished goods inventory of the Canadian Company at the date of the acquisition by the U.S. Company of the Canadian Company. (b) The pricing grid and the first sentence following the pricing grid in the definition of "Applicable Margin" set forth in Section 1.01 of the Credit Agreement are amended and restated in their entirety as follows:
Applicable Margin for Applicable Base Rate/ Applicable Applicable Applicable Margin for Canadian Margin for Margin for Margin for Leverage Offshore Base Rate BA Rate Letter of Non-Use Ratio Rate Loans Loans Loans Credit Fee Fee ----- ---------- ----- ----- ---------- --- Less than or 1.000% 0% 1.000% 1.000% .250% equal to 1.50:1.0 Greater than 1.500 .250 1.500 1.500 .250 1.50:1.0 but less than or equal to 2.00:1.0 Greater than 1.750 .500 1.750 1.750 .375 2.00:1.0 but less than or equal to 2.75:1.0 Greater than 2.000 .750 2.000 2.000 .375 2.75:1.0 but less than or equal to 3.25:1.0 Greater than 2.500 1.250 2.500 2.500 .500 3.25:1.0
The initial Applicable Margin for Offshore Rate Loans shall be 2.50%, the initial Applicable Margin for Base Rate Loans and Canadian Base Rate Loans shall be 1.25%, the initial Applicable Margin for BA Rate Loans shall be 2.50%, the initial Applicable Margin for the Letter of Credit fee shall be 2.50% and the initial Applicable Margin for the non- use fee 2 3 shall be 0.50%, and each initial Applicable Margin shall remain in effect until the delivery of a Compliance Certificate with respect to the fiscal year ending December 31, 1995. (c) The definition of "Fixed Charge Ratio" set forth in Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows: "Fixed Charge Ratio" means, for any period the ratio of (a) the difference of (i) EBITDA for such period, less (ii) the consolidated Capital Expenditures of the U.S. Company for such period; to (b) the sum of (i) Consolidated Net Interest Expense for such period, plus (ii) taxes paid in cash by the U.S. Company and its Subsidiaries during such period, plus (iii) scheduled principal payments of the consolidated Indebtedness of the U.S. Company during such period (including principal payments made to Stuart by the U.S. Company under the Stock Purchase Agreement); provided, that for any period ending in fiscal year 1995, Fixed Charge Ratio means, for any such period, the ratio of (a) the sum of (i) EBITDA for such period, plus, (ii) Adjusted EBITDA Losses for such period, less (iii) the consolidated Capital Expenditures of the U.S. Company for such period; to (b) the sum of (i) Consolidated Net Interest Expense for such period, plus (ii) taxes paid in cash by the U.S. Company and its Subsidiaries during such period, plus (iii) principal payments of the U.S. Company under the Term Note from U.S. Company to U.S. Lenders scheduled to be paid during such period, plus (iv) principal payments of the Canadian Company under the Term Note from the Canadian Company to Canadian Lenders scheduled to be paid during such period, plus (v) principal payments made to Stuart by the U.S. Company under the Stock Purchase Agreement; provided further, that for any period ending in fiscal year 1996, Fixed Charge Ratio means, for any such period, the ratio of (a) the difference of (i) EBITDA for such period, less (ii) the consolidated Capital Expenditures of the U.S. Company during such period; to (b) the sum of (i) Consolidated Net Interest Expense for such period, plus (ii) taxes paid in cash by the U.S. Company and its Subsidiaries during such period, plus (iii) principal payments of the U.S. Company under the Term Note from U.S. Company to U.S. Lenders scheduled to be paid during such period, plus (iv) principal payments of the Canadian Company under the Term Note from the Canadian Company to Canadian Lenders scheduled to be paid during such period, plus (v) fifty percent (50%) of scheduled principal payments of the consolidated Indebtedness of the U.S. Company during such period (excluding principal payments made to Stuart by the U.S. Company under the Stock Purchase Agreement and payments scheduled to be made under the Term Notes), plus (vi) principal payments made to Stuart by the U.S. Company under the Stock Purchase Agreement. (d) The definition of "Interest Coverage Ratio" set forth in Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows: 3 4 "Interest Coverage Ratio" means, for any period, the ratio of (a) EBITDA for such period; to (b) Consolidated Net Interest Expense for such period; provided, that for any period ending in fiscal year 1995, Interest Coverage Ratio means, for any such period, the ratio of (a) the sum of (i) EBITDA for such period, plus (ii) Adjusted EBITDA Losses for such period; to (b) Consolidated Net Interest Expense for such period. (e) The definition of "Leverage Ratio" set forth in Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows: "Leverage Ratio" means, for any 12-month period, the ratio of (a) total consolidated Indebtedness of the U.S. Company outstanding on the last day of such period (excluding the Indebtedness described in clause (c) of the definition of "Indebtedness," to the extent of the undrawn face amount of letters of credit, clause (g) of the definition of "Indebtedness," clause (h) of the definition of "Indebtedness," to the extent it applies to Indebtedness of another Person and clause (i) of the definition of "Indebtedness," to the extent it applies to Contingent Obligations permitted under Section 7.08(e) but only with respect to those obligations in connection with the leasing and similar arrangements described in Section 7.08(e) that are no more than 30 days past due); to (b) the EBITDA for such period; provided, that for the twelve month periods ending on June 30, 1995, September 30, 1995, and December 31, 1995, Leverage Ratio means the ratio of (a) total consolidated Indebtedness of the U.S. Company outstanding on the last day of such period (excluding the Indebtedness described in clause (c) of the definition of "Indebtedness," to the extent of the undrawn face amount of letters of credit, clause (g) of the definition of "Indebtedness," clause (h) of the definition of "Indebtedness," to the extent it applies to Indebtedness of another Person and clause (i) of the definition of "Indebtedness," to the extent it applies to Contingent Obligations permitted under Section 7.08(e) but only with respect to those obligations in connection with the leasing and similar arrangements described in Section 7.08(e) that are no more than 30 days past due); to (b) EBITDA plus Adjusted EBITDA Losses for the period from January 1, 1995 through the last day of such period, multiplied by the "Multiple" (as defined below). For purposes hereof, "Multiple" means, with respect to the Leverage Ratio for the period ending June 30, 1995, 2.0, with respect to the Leverage Ratio for the period ending September 30, 1995, 1.33, and with respect to the Leverage Ratio for the period ending December 31, 1995, 1.0. (f) Clause (c) of Section 7.11 of the Credit Agreement is amended and restated in its entirety as follows: "(c) Capital Leases; provided, that the aggregate principal amount of consolidated Capital Lease Obligations of the U.S. Company and its Subsidiaries outstanding shall not exceed (i) Ten Million U.S. Dollars (U.S. $10,000,000) at 4 5 any time during the fiscal years ending December 31, 1995 and December 31, 1996 and (ii) Twelve Million U.S. Dollars (U.S. $12,000,000) during any fiscal year of U.S. Company ending after December 31, 1996." (g) Section 7.13 of the Credit Agreement is amended and restated in its entirety as follows: "7.13 CAPITAL EXPENDITURES. The U.S. Company and its consolidated Subsidiaries shall not make Capital Expenditures during any period set forth below, or commit to make Capital Expenditures during any such period, in an amount exceeding the amount set forth below with respect to such period; provided, that to the extent that the amount set forth below for any period exceeds the Capital Expenditures of the U.S. Company and its consolidated Subsidiaries for such period, the U.S. Company and its consolidated Subsidiaries may make, or commit to make, Capital Expenditures in the following period set forth below in an amount equal to the sum of the amount set forth below for such following period and the lesser of (A) the amount of such excess and (B) Two Million U.S. Dollars (U.S. $2,000,000):
Period Amount ------ ------ From January 1, 1995 through December 31, 1995 U.S. $4,500,000 For the fiscal year ending December 31, 1996 and for each fiscal year thereafter U.S. $5,000,000
(h) Section 7.14 of the Credit Agreement is amended and restated in its entirety as follows: "7.14 NET WORTH. Net Worth at any time during any period set forth below shall not be less than the applicable minimum amount set forth below opposite such period:
Minimum Net Period Worth ------ ----- From January 1, 1995 through December 30, 1996 U.S. $30,000,000 From December 31, 1996 through December 30, 1997 U.S. $33,000,000 From December 31, 1997 through December 30, 1998 U.S. $37,000,000 From December 31, 1998 through December 30, 1999 U.S. $40,000,000 From December 31, 1999 and at all times thereafter U.S. $45,000,000
(i) Section 7.15 of the Credit Agreement is amended and restated in its entirety as follows: 5 6 "7.15 LEVERAGE RATIO. The Leverage Ratio, as determined for any 12-month period ending on a date set forth below, shall not exceed the ratio set forth below opposite such date:
Maximum Leverage Period Ratio ------ ----- June 30, 1995, September 30, 1995, December 31, 1995 and March 31, 1996 3.75 June 30, 1996 and September 30, 1996 3.50 December 31, 1996, March 31, 1997, June 30, 1997 and September 31, 1997 3.25 December 31, 1997, March 31, 1998, June 30, 1998 and September 30, 1998 3.00 December 31, 1998 and the last day of each fiscal quarter thereafter 2.75"
(j) Section 7.16 of the Credit Agreement is amended and restated as follows: "7.16 FIXED CHARGE RATIO. The Fixed Charge Ratio for any period set forth below shall not be less than the ratio set forth below opposite such period:
Minimum Fixed Date Charge Coverage ---- ---------------- For the periods beginning on January 1, 1995 and ending on March 31, 1995, June 30, 1995 and September 30, 1995 1.00 For the twelve-month periods ending on December 31, 1995 and on the last day of each fiscal quarter thereafter until and including September 30, 1998 1.00 For the twelve-month periods ending on December 31, 1998, March 31, 1999, June 30, 1999 and September 30, 1999 1.10 For the twelve-month periods ending on December 31, 1999 and on the last day of each fiscal quarter thereafter 1.15"
6 7 (k) Section 7.17 of the Credit Agreement is amended and restated in its entirety as follows: "7.17 INTEREST COVERAGE RATIO. The Interest Coverage Ratio for any period set forth below shall not be less than the ratio set forth below opposite such period:
Minimum Interest Date Coverage ---- -------- For the periods beginning on January 1, 1995 and ending on June 30, 1995 and September 30, 1995 2.25 For the twelve-month periods ending on December 31, 1995, March 31, 1996, June 30, 1996 and September 30, 1996 2.50 For the twelve-month periods ending on December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997 2.75 For the twelve-month periods ending on December 31, 1997, March 31, 1998, June 30, 1998 and September 30, 1998 3.25 For the twelve-month periods ending on December 31, 1998 and on the last day of each fiscal quarter thereafter 3.50"
(l) A new Section 7.23 is hereby added to the Credit Agreement as follows: "7.23 MINIMUM EBITDA. EBITDA for any period set forth below shall not be less than the amount set forth below opposite such period:
Date Minimum ---- EBITDA ------ For the twelve-month period ending on December 31, 1995, March 31, 1996, June 30, 1996 and September 30, 1996 U.S. $11,000,000 For the twelve-month periods ending on December 31, 1996, March 31, 1997, June 30, 1997 and September 30, 1997 U.S. $13,000,000
7 8
Minimum Date EBITDA ---- ------ For the twelve-month periods ending on December 31, 1997, March 31, 1998, June 30, 1998 and September 30, 1998 U.S. $14,000,000 For the twelve-month periods ending on December 31, 1998, March 31, 1999, June 30, 1999 and September 30, 1999 U.S. $15,000,00 For the twelve-month periods ending on December 31, 1999 and on the last day of each fiscal quarter thereafter U.S. $16,000,000"
(m) A new Section 7.24 is hereby added to the Credit Agreement as follows: "7.24 LIMITATION ON PURCHASE PRICE ADJUSTMENT PAYMENT UNDER STOCK PURCHASE AGREEMENT. Such Company shall not, and shall not suffer or permit any of its Subsidiaries to, make the purchase price adjustment payment set forth in Section 3.4 of the Stock Purchase Agreement (which payment, as of August 14, 1995, is in the maximum principal amount of U.S. $711,000) unless prior to giving effect to such payment (i) the Leverage Ratio set forth in the most recent Compliance Certificate is less than 2.50 and (ii) the Aggregate Revolving Commitment exceeds the aggregate amount of Revolving Loans plus the aggregate face amount of all undrawn Letters of Credit (with the amount of all Revolving Loans to the Canadian Company and Letters of Credit issued for the account of the Canadian Company expressed in U.S. Dollars at the Current Exchange Rate) by at least Five Million U.S. Dollars (U.S. $5,000,000). 4. AMENDMENT FEE; CONDITIONS TO EFFECTIVENESS. The Companies shall pay to U.S. Agent, for the sole account of BAI, an amendment fee of U.S. $200,000 (which fee shall be fully earned as of the date hereof), U.S. $50,000 of which shall be payable on the date hereof and U.S. $150,000 of which shall be payable on or before October 2, 1995. The waivers and amendments described herein shall be effective retroactively as of June 30, 1995, upon (i) payment by the Companies to U.S. Agent, for the sole account of BAI, of the U.S. $50,000 portion of the amendment fee of U.S. $200,000, and (ii) delivery of this fully executed Agreement to each Agent. 5. OTHER AGREEMENTS. The Companies agree to reimburse Chase Manhattan Bank, N.A. and its Affiliates for all reasonable attorneys' fees up to U.S. $7,500 incurred by them in connection with reviewing the Loan Documents and obtaining an assignment of an interest in the Loans. The Companies agree that the failure to pay any portion of the amendment fee described in Section 4 above when due shall constitute an Event of Default. 8 9 6. NO WAIVER OF PAST DEFAULTS. Nothing contained herein shall be deemed to constitute a waiver of any Event of Default that may heretofore or hereafter occur or have occurred and be continuing, or to modify any provision of the Credit Agreement except as expressly provided herein. 7. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter into this Agreement, each Company represents and warrants to Lenders that the execution, delivery and performance by such Company of this Agreement are within its corporate powers, have been duly authorized by all necessary corporate action (including, without limitation, shareholder approval), have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to such Company, the Organization Documents of such Company, or any order, judgment or decree of any court or other agency of government or any Contractual Obligation binding upon such Company; and the Credit Agreement as amended as of the date hereof is the legal, valid and binding obligation of such Company enforceable against such Company in accordance with its terms. 8. MISCELLANEOUS. (a) Captions. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. (b) Governing Law. This Agreement shall be a contract made under and governed by the laws of the State of Illinois, without regard to conflict of laws principles. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. (c) Counterparts. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. (d) Successors and Assigns. This Agreement shall be binding upon the Companies, Agents and Lenders and their respective successors and assigns, and shall inure to the sole benefit of the Companies, Agents and Lenders and the successors and assigns of the Companies, Agents and Lenders. (e) References. Any reference to the Credit Agreement contained in any notice, request, certificate, or other document executed concurrently with or after the execution and delivery of this Agreement shall be deemed to include this Agreement unless the context shall otherwise require. 9 10 (f) Continued Effectiveness. Notwithstanding anything contained herein, the terms of this Agreement are not intended to and do not serve to effect a novation as to the Credit Agreement. The parties hereby expressly do not intend to extinguish the Credit Agreement. Instead, it is the express intention of the parties hereto to reaffirm the indebtedness created under the Credit Agreement and secured by the Collateral. The Credit Agreement is amended hereby and each of the Loan Documents remain in full force and effect. (g) Costs, Expenses and Taxes. Each Company affirms and acknowledges that Section 10.04 of the Credit Agreement applies to this Agreement and the transactions and agreements and documents contemplated hereunder. 10 11 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. STUART ENTERTAINMENT, INC. By ------------------------------------ Title: --------------------------------- BINGO PRESS & SPECIALTY LIMITED By ------------------------------------ Title: --------------------------------- BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as U.S. Agent By ----------------------------------- Title: -------------------------------- BANK OF AMERICA ILLINOIS, as U.S. Lender By ----------------------------------- Title: -------------------------------- BANK OF AMERICA CANADA, as Canadian Agent By ----------------------------------- Title: -------------------------------- BANK OF AMERICA CANADA, as Canadian Lender By ----------------------------------- Title: -------------------------------- 11 EX-10.2 3 AMENDED CREDIT AGREEMENT DATED 8/31/95 1 EXHIBIT 10.2 THIRD AMENDMENT TO CREDIT AGREEMENT This Third Amendment to Credit Agreement, dated as of August 31, 1995 (the "Agreement") is among Stuart Entertainment, Inc., a Delaware corporation (the "U.S. Company"), Bingo Press & Specialty Limited (formerly known as 1089350 Ontario Inc.), an Ontario corporation (the "Canadian Company"), Bank of America National Trust and Savings Association, as U.S. Agent, Bank of America Illinois, as a U.S. Lender, The Chase Manhattan Bank (National Association), as a U.S. Lender, Bank of America Canada, as Canadian Agent and a Canadian Lender, and The Chase Manhattan Bank of Canada, as a Canadian Lender. W I T N E S S E T H: WHEREAS, the U.S. Company, the Canadian Company, the U.S. Agent, the U.S. Lenders, the Canadian Agent and the Canadian Lenders are parties to that certain Credit Agreement dated as of December 13, 1994 (as amended, the "Credit Agreement") and to certain other documents executed in connection with the Credit Agreement; WHEREAS, in connection with the assignment by BAI to The Chase Manhattan Bank (National Association) ("U.S. Chase") of 50% of its Revolving Commitment and Term Commitment and the assignment by BofA (Canada) to The Chase Manhattan Bank of Canada ("Canadian Chase") of 50% of its Revolving Commitment and Term Commitment, the Companies, the Agents and the Lenders have agreed to the amendments as provided herein. NOW, THEREFORE, the parties hereto agree as follows: 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. 2. AMENDMENT TO THE CREDIT AGREEMENT. The definition of "Commitment Percentage" set forth in Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows: "Commitment Percentage" means, (i) as to any U.S. Lender, the percentage equivalent of the sum of such Lender's Revolving Commitment and Term Commitment to the U.S. Company, divided by the aggregate amount of Revolving Commitments and Term Commitments to the U.S. Company, and (ii) with respect to any Canadian Lender, the percentage equivalent of the sum of such Lender's Revolving Commitment and Term Commitment to the Canadian Company (with the Commitments of a Canadian Lender expressed is U.S. Dollars at the Closing Date Exchange Rate), divided by the aggregate amount of Revolving Commitments and Term Commitments to the Canadian Company (with the aggregate amount of such Commitments expressed in U.S. Dollars at the Closing Date Exchange Rate). 2 3. CO-AGENTS. The Companies, the Agents and the Lenders agree that each of U.S. Chase and Canadian Chase are appointed as "co-agents" under the Credit Agreement. Neither U.S. Chase nor Canadian Chase, as a co-agent, shall have any right, power, obligation, liability, responsibility or duty under the Credit Agreement or any other Loan Document other than those applicable to all Lenders. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified as co-agents in taking or not taking action under the Credit Agreement. 4. NO WAIVER OF PAST DEFAULTS. Nothing contained herein shall be deemed to constitute a waiver of any Event of Default that may heretofore or hereafter occur or have occurred and be continuing, or to modify any provision of the Credit Agreement except as expressly provided herein. 5. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter into this Agreement, each Company represents and warrants to Lenders that the execution, delivery and performance by such Company of this Agreement are within its corporate powers, have been duly authorized by all necessary corporate action (including, without limitation, shareholder approval), have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law applicable to such Company, the Organization Documents of such Company, or any order, judgment or decree of any court or other agency of government or any Contractual Obligation binding upon such Company; and the Credit Agreement as amended as of the date hereof is the legal, valid and binding obligation of such Company enforceable against such Company in accordance with its terms. 6. MISCELLANEOUS. (a) Captions. Section captions used in this Agreement are for convenience only, and shall not affect the construction of this Agreement. (b) Governing Law. This Agreement shall be a contract made under and governed by the laws of the State of Illinois, without regard to conflict of laws principles. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. (c) Counterparts. This Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. (d) Successors and Assigns. This Agreement shall be binding upon the Companies, Agents and Lenders and their respective successors and assigns, and shall 2 3 inure to the sole benefit of the Companies, Agents and Lenders and the successors and assigns of the Companies, Agents and Lenders. (e) References. Any reference to the Credit Agreement contained in any notice, request, certificate, or other document executed concurrently with or after the execution and delivery of this Agreement shall be deemed to include this Agreement unless the context shall otherwise require. (f) Continued Effectiveness. Notwithstanding anything contained herein, the terms of this Agreement are not intended to and do not serve to effect a novation as to the Credit Agreement. The parties hereby expressly do not intend to extinguish the Credit Agreement. Instead, it is the express intention of the parties hereto to reaffirm the indebtedness created under the Credit Agreement and secured by the Collateral. The Credit Agreement is amended hereby and each of the Loan Documents remain in full force and effect. (g) Costs, Expenses and Taxes. Each Company affirms and acknowledges that Section 10.04 of the Credit Agreement applies to this Agreement and the transactions and agreements and documents contemplated hereunder. 3 4 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. STUART ENTERTAINMENT, INC. BINGO PRESS & SPECIALTY LIMITED By By ---------------------------- ---------------------------------------- Title: Title: ------------------------- ------------------------------------- BANK OF AMERICA NATIONAL BANK OF AMERICA CANADA, as Canadian Agent TRUST AND SAVINGS ASSOCIATION, as U.S. Agent By By ---------------------------- ---------------------------------------- Title: Title: ------------------------- ------------------------------------- BANK OF AMERICA ILLINOIS, as a BANK OF AMERICA CANADA, as Canadian U.S. Lender Lender By By ---------------------------- ---------------------------------------- Title: Title: ------------------------- ------------------------------------- THE CHASE MANHATTAN BANK THE CHASE MANHATTAN BANK OF (NATIONAL ASSOCIATION), as a CANADA, as a Canadian Lender U.S. Lender By By ---------------------------- ---------------------------------------- Title: Title: ------------------------- ------------------------------------- 4 EX-10.3 4 ASSIGNMENT & ASSUMPTION DATED 8/31/95 1 EXHIBIT 10.3 ASSIGNMENT AND ASSUMPTION AGREEMENT Date: August 31, 1995 To: Stuart Entertainment, Inc. 3211 Nebraska Avenue Council Bluffs, Iowa 51501 Attn: President and Bank of America National Trust and Savings Associations, as Agent 1455 Market Street, 12th Floor San Francisco, California 94103 Attn: Agency Management Services #5596 Re: Assignment under the Credit Agreement referred to below Ladies and Gentlemen: We refer to Section 10.08 of the Credit Agreement, dated as of December 13, 1994 (as amended or otherwise modified, the "Credit Agreement"), among Stuart Entertainment, Inc., a Delaware corporation (the "U.S. Company"), 1089350 Ontario Inc. (n/k/a/ Bingo Press & Specialty Limited), an Ontario corporation (the "Canadian Company"), the various financial lending institutions from time to time parties thereto, Bank of America Canada, as agent as provided therein (the "Canadian Agent"), and Bank of America National Trust and Savings Association, as agent as provided therein (the "U.S. Agent"). Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement. Bank of America Illinois (the "Assignor") hereby assigns and delegates to The Chase Manhattan Bank (National Association) (the "Assignee") an interest of 50% of all of the rights and obligations of Assignor under the Credit Agreement and the other Loan Documents in respect of Assignor's Revolving Commitment, Term Commitment, outstanding Revolving Loans, outstanding Letters of Credit and outstanding Term Loans to the U.S. Company (such interest in such rights and obligations are hereinafter referred to as the "Assigned Interest"), and Assignee hereby accepts such assignment and delegation. After giving effect to such assignment and delegation, each of the Assignee's and Assignor's Revolving Commitment and Term Commitment (which is the outstanding principal balance of its Term Loans) to the U.S. Company for the purposes of the Credit Agreement will be as set forth above the signatures hereof. 2 The Assignor hereby instructs the U.S. Agent to make all payments from the Effective Date (as defined below) hereof in respect of the Assigned Interest directly to the Assignee; provided, that Assignee shall not be entitled to any portion of the Upfront Fee set forth in Section 2.10(a) of the Credit Agreement or the Administrative Fee set forth in Section 2.10(c) of the Credit Agreement. The Assignor and the Assignee agree that all interest and fees accrued up to, but not including, the Effective Date of the assignment and delegation being made hereby are the property of the Assignor, and not the Assignee. The Assignee agrees that, upon receipt of any such interest or fees, the Assignee will promptly remit the same to the Assignor. The Assignor represents and warrants to the Assignee that (a) the Assignor is the legal and beneficial owner of the Assigned Interest and the Assigned Interest is free and clear of any adverse claim, (b) the Assignor has committed to make the Revolving Loans in an aggregate principal amount not to exceed U.S. $10,000,000 of which U.S. $__________ is outstanding as of August 28, 1995 and has made a Term Loan in an aggregate principal amount of U.S. $5,000,000, of which U.S. $4,500,000 is currently outstanding, (c) the Assignor has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Assumption Agreement and to fulfill its obligations under, and to consummate the transactions contemplated by, this Assignment and Assumption Agreement, and no governmental authorizations or consents or other authorizations or consents are required in connection therewith, (d) this Assignment and Assumption Agreement constitutes the legal, valid and binding obligation of the Assignor enforceable against the Assignor in accordance with its terms, (e) the making and performance by the Assignor of this Assignment and Assumption Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Assumption Agreement do not and will not violate any law or regulation of the jurisdiction of its organization or any other law or regulation applicable to it and (f) the Assignor has neither given nor received written notice of the occurrence of a Default or an Event of Default, except as described in the Waiver and First Amendment to Credit Agreement dated as of April 14, 1995, and the Waiver and Second Amendment to Credit Agreement dated as of August 14, 1995. The Assignee hereby confirms that it has received a copy of the Credit Agreement and the exhibits related thereto, together with copies of the documents which were required to be delivered under the Credit Agreement as a condition to the making of the Loans thereunder. The Assignee acknowledges and agrees that it (i) has made and will continue to make such inquiries and has taken and will take such care on its own behalf as would have been the case had its Commitment been granted and its Loans been made directly by such Assignee to the U.S. Company without the intervention of the Applicable Agent of such Company, the Assignor or any other Lender and (ii) has made and will continue to make, independently and without reliance upon the Agents, the Assignor or any other Lender and based on such documents and information as it has deemed appropriate, its own credit analysis and decisions relating to the Credit Agreement. The Assignee further acknowledges and agrees that neither the Agents nor the Assignor has made any representations or warranties about the creditworthiness of the Companies or any other party to the Credit Agreement or any other Loan Document or with 2 3 respect to the legality, validity, sufficiency or enforceability of the Credit Agreement or any other Loan Document or the value of any security therefor. This Assignment shall be made without recourse to the Assignor. The Assignee represents and warrants to the U.S. Agent that, as of the date hereof, the U.S. Company will not be obligated to pay any greater amount under Section 3.01 of the Credit Agreement than the U.S. Company is obligated to pay to the Assignor under such Sections. Except as otherwise provided in the Credit Agreement, effective as of the date of acceptance hereof by the Agent: (a) the Assignee (i) shall be deemed automatically to have become a party to the Credit Agreement and have all the rights and obligations of a "Lender" under the Credit Agreement as if it were an original signatory thereto to the extent specified in the second paragraph hereof; and (ii) agrees to be bound by the terms and conditions set forth in the Credit Agreement as if it were an original signatory thereto; and (b) the Assignor shall be released from its obligations under the Credit Agreement to the extent specified in the second paragraph hereof. The payment of the processing fee referred to in clause (a)(i)(C) of Section 10.08 of the Credit Agreement is hereby waived by the U.S. Agent. The Assignee hereby advises each of you of the following administrative details with respect to the assigned Loans and Commitment(s): (A) Address for Notices: The Chase Manhattan Bank (National Association) 999 Broad Street Bridgeport, Connecticut 06604 Attention: A. Neil Sweeny Telephone: (203) 368-5010 Facsimile: (203) 382-6573 (B) Payment Instructions: The Chase Manhattan Bank (National Association) New York, New York ABA No. 021000021 Account No. 900-9-00019 For further credit to: Commercial OPS #520 For the Account of Stuart Entertainment, Inc. 3 4 (C) Effective Date of Assignment: August 31, 1995 The Assignee has delivered, if appropriate, to the U.S. Agent and such Company's Applicable Agent the forms and certificates referred to in Section 3.01(f) of the Credit Agreement. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. This Assignment and Assumption Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. Please evidence your consent to and acceptance of the proposed assignment and delegation set forth herein by signing and returning counterparts hereof to the Assignor and the Assignee. Assignee's Revolving Commitment = U.S. $5,000,000 Assignee's Term Commitment (the outstanding principal balance of its Term Loans) = U.S. $2,250,000 Assignor's Revolving Commitment = U.S. $5,000,000 Assignor's Term Commitment (the outstanding principal balance of its Term Loans] = U.S. $2,250,000 BANK OF AMERICA ILLINOIS By ---------------------------------------- Title: ---------------------------------------- THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) By ---------------------------------------- Title: ---------------------------------------- 4 5 ACCEPTED AND CONSENTED TO this ____ day of August 1995 BANK OF AMERICA NATIONAL TRUST AND SAVINGS BANK ASSOCIATION, as Agent By ---------------------------------------- Title: ------------------------------------ CONSENTED TO this day of August 1995 ---- STUART ENTERTAINMENT, INC. By ---------------------------------------- Title: ------------------------------------ 5 EX-10.4 5 ASSIGNMENT & ASSUMPTION DATED 8/31/95 1 EXHIBIT 10.4 ASSIGNMENT AND ASSUMPTION AGREEMENT Date: August 31, 1995 To: Bingo Press & Specialty Limited 301 Louth Street St. Catharines, Ontario and Bank of America Canada, as Agent Four King Street West Toronto, Ontario M5H 1B6 Re: Assignment under the Credit Agreement referred to below Ladies and Gentlemen: We refer to Section 10.08 of the Credit Agreement, dated as of December 13, 1994 (as amended or otherwise modified, the "Credit Agreement"), among Stuart Entertainment, Inc., a Delaware corporation (the "U.S. Company"), 1089350 Ontario Inc. (n/k/a Bingo Press & Specialty Limited), an Ontario corporation (the "Canadian Company"), the various financial lending institutions from time to time parties thereto, Bank of America Canada, as agent as provided therein (the "Canadian Agent"), and Bank of America National Trust and Savings Association, as agent as provided therein (the "U.S. Agent"). Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement. Bank of America Canada (the "Assignor") hereby assigns and delegates to The Chase Manhattan Bank of Canada (the "Assignee") an interest of 50% of all of the rights and obligations of Assignor under the Credit Agreement and the other Loan Documents in respect of Assignor's Revolving Commitment, Term Commitment, outstanding Revolving Loans, outstanding Letters of Credit and outstanding Term Loans to the Canadian Company (such interest in such rights and obligations are hereinafter referred to as the "Assigned Interest"), and Assignee hereby accepts such assignment and delegation. After giving effect to such assignment and delegation, each of Assignee's and Assignor's Revolving Commitment and Term Commitment (which is the outstanding principal balance of its Term Loans) to the Canadian Company for the purposes of the Credit Agreement will be as set forth above the signatures thereof. The Assignor hereby instructs the Canadian Agent to make all payments from the Effective Date (as defined below) hereof in respect of the Assigned Interest directly to the 2 Assignee; provided, that Assignee shall not be entitled to any portion of the Upfront Fee set forth in Section 2.10(a) of the Credit Agreement or the Administrative Fee set forth in Section 2.10(c) of the Credit Agreement. The Assignor and the Assignee agree that all interest and fees accrued up to, but not including, the Effective Date of the assignment and delegation being made hereby are the property of the Assignor, and not the Assignee. The Assignee agrees that, upon receipt of any such interest or fees, the Assignee will promptly remit the same to the Assignor. The Assignor represents and warrants to the Assignee that (a) the Assignor is the legal and beneficial owner of the Assigned Interest and the Assigned Interest is free and clear of any adverse claim, (b) the Assignor has committed to make the Revolving Loans in an aggregate principal amount not to exceed Cdn. $13,875,000 of which Cdn. $__________ is outstanding as of August 28, 1995 and has made a Term Loan in an aggregate principal amount of Cdn. $13,875,000 of which Cdn. $12,487,500 is currently outstanding, (c) the Assignor has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Assumption Agreement and to fulfill its obligations under, and to consummate the transactions contemplated by, this Assignment and Assumption Agreement, and no governmental authorizations or consents or other authorizations or consents are required in connection therewith, (d) this Assignment and Assumption Agreement constitutes the legal, valid and binding obligation of the Assignor enforceable against the Assignor in accordance with its terms, (e) the making and performance by the Assignor of this Assignment and Assumption Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Assumption Agreement do not and will not violate any law or regulation of the jurisdiction of its organization or any other law or regulation applicable to it and (f) the Assignor has neither given nor received written notice of the occurrence of a Default or an Event of Default, except as described in the Waiver and First Amendment to Credit Agreement dated as of April 14, 1995, and the Waiver and Second Amendment to Credit Agreement dated as of August 14, 1995. The Assignee hereby confirms that it has received a copy of the Credit Agreement and the exhibits related thereto, together with copies of the documents which were required to be delivered under the Credit Agreement as a condition to the making of the Loans thereunder. The Assignee acknowledges and agrees that it (i) has made and will continue to make such inquiries and has taken and will take such care on its own behalf as would have been the case had its Commitment been granted and its Loans been made directly by such Assignee to the Canadian Company without the intervention of the Applicable Agent of such Company, the Assignor or any other Lender and (ii) has made and will continue to make, independently and without reliance upon the Agents, the Assignor or any other Lender and based on such documents and information as it has deemed appropriate, its own credit analysis and decisions relating to the Credit Agreement. The Assignee further acknowledges and agrees that neither the Agents nor the Assignor has made any representations or warranties about the creditworthiness of the Companies or any other party to the Credit Agreement or any other Loan Document or with respect to the legality, validity, sufficiency or enforceability of the Credit 2 3 Agreement or any other Loan Document or the value of any security therefor. This Assignment shall be made without recourse to the Assignor. The Assignee represents and warrants to the Canadian Agent that, as of the date hereof, the Canadian Company will not be obligated to pay any greater amount under Section 3.01 of the Credit Agreement than the Canadian Company is obligated to pay to the Assignor under such Sections. Except as otherwise provided in the Credit Agreement, effective as of the date of acceptance hereof by the Agent: (a) the Assignee (i) shall be deemed automatically to have become a party to the Credit Agreement and have all the rights and obligations of a "Lender" under the Credit Agreement as if it were an original signatory thereto to the extent specified in the second paragraph hereof; and (ii) agrees to be bound by the terms and conditions set forth in the Credit Agreement as if it were an original signatory thereto; and (b) the Assignor shall be released from its obligations under the Credit Agreement to the extent specified in the second paragraph hereof. The payment of the processing fee referred to in clause (a)(i)(C) of Section 10.08 of the Credit Agreement is hereby waived by the Canadian Agent. The Assignee hereby advises each of you of the following administrative details with respect to the assigned Loans and Commitment(s): (A) Address for Notices: The Chase Manhattan Bank of Canada 150 King Street West Toronto, Ontario M5H 1J9 Attention: Timothy Wilson Telephone: (416) 585-3367 Facsimile: (416) 585-3370 with a copy to: The Chase Manhattan Bank (National Association) 999 Broad Street Bridgeport, Connecticut 06604 Attention: A. Neil Sweeny Telephone: (203) 368-5010 Facsimile: (203) 382-6573 3 4 (B) Payment Instructions: Royal Bank of Canada Main Branch, Toronto Correspondent Banking Division Transit No. 07172 F/A: The Chase Manhattan Bank of Canada Account No. 219-247-4 (C) Effective Date of Assignment: August 31, 1995 The Assignee has delivered, if appropriate, to the Canadian Agent and such Company's Applicable Agent the forms and certificates referred to in Section 3.01(f) of the Credit Agreement. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS. This Assignment and Assumption Agreement may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same agreement. Please evidence your consent to and acceptance of the proposed assignment and delegation set forth herein by signing and returning counterparts hereof to the Assignor and the Assignee. Assignee's Revolving Commitment = Cdn. $6,937,500 Assignee's Term Commitment (the outstanding principal balance of its Term Loans) = Cdn. $6,243,750 Assignor's Revolving Commitment = Cdn. $6,937,500 Assignor's Term Commitment (the outstanding principal balance of its Term Loans) = Cdn. $6,243,750 BANK OF AMERICA CANADA By ------------------------------------ Title: --------------------------------- 4 5 THE CHASE MANHATTAN BANK OF CANADA By ----------------------------------- Title: -------------------------------- ACCEPTED AND CONSENTED this ____ day of August 1995 BANK OF AMERICA CANADA, as Agent By ------------------------------- Title: ---------------------------- CONSENTED TO this ____ day of August 1995 BINGO PRESS & SPECIALTY LIMITED (f/k/a 108935 Ontario Inc.) By ------------------------------- Title: ---------------------------- 5 EX-10.5 6 REVOLVING NOTE DATED 8/31/95 1 EXHIBIT 10.5 REVOLVING NOTE U.S. $5,000,000 August 31, 1995 FOR VALUE RECEIVED, the undersigned, Stuart Entertainment, Inc., a Delaware corporation (the "Borrower"), promises to pay to the order of The Chase Manhattan Bank (National Association) (the "Lender") on December 13, 1999 the principal sum of Five Million Dollars (U.S. $5,000,000) or, if different, the aggregate unpaid principal amount of all Revolving Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, 1089350 Ontario Inc. (n/k/a Bingo Press & Specialty Limited), the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the U.S. Agent pursuant to the Credit Agreement. This Note, together with that certain Revolving Note of even date herewith (the "BAI Revolving Note") in the principal amount of U.S. $5,000,000 issued by Borrower to Bank of America Illinois ("BAI"), replaces in its entirety that certain Revolving Note dated December 13, 1994 (the "Original Revolving Note") in the principal amount of U.S. $10,000,000 issued by Borrower to BAI. This Note and the BAI Revolving Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Term Note. This Note is one of the Revolving Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. STUART ENTERTAINMENT, INC. By ------------------------------------ Title: -------------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable Offshore Amount of Outstanding Base Offshore Rate Notation Amount of Principal Principal Rate Rate Interest Made Date Term Loan Payment Balance Loan Loan Period By - ---- --------- ------- ------- ---- ---- ------ --
3 EX-10.6 7 TERM NOTE DATED 8/31/95 FOR $2,250,000 1 EXHIBIT 10.6 TERM NOTE U.S. $2,250,000 August 31, 1995 FOR VALUE RECEIVED, the undersigned, STUART ENTERTAINMENT, INC., a Delaware corporation (the "Borrower"), promises to pay to the order of The Chase Manhattan Bank (National Association) (the "Lender") the principal sum of Two Million Two Hundred Fifty Thousand Dollars (U.S. $2,250,000) or, if different, the aggregate unpaid principal amount of all Term Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, 1089350 Ontario Inc. (n/k/a Bingo Press & Specialty Limited), the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The principal amount of this Note shall be payable in installments as set forth in the Credit Agreement, with a final installment (in the amount necessary to pay in full this Note) due and payable on December 13, 1999. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the U.S. Agent pursuant to the Credit Agreement. This Note, together with that certain Term Note of even date herewith (the "BAI Term Note") in the principal amount of U.S. $2,250,000 issued by Borrower to Bank of America Illinois ("BAI"), replaces in its entirety that certain Term Note dated December 13, 1994 (the "Original Term Note") in the principal amount of U.S. $5,000,000 (the outstanding principal balance of which on the date hereof is U.S. $4,500,000) issued by Borrower to BAI. This Note and the BAI Term Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Term Note. This Note is one of the Term Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. STUART ENTERTAINMENT, INC. By ------------------------------------- Title: --------------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable BA Amount of Outstanding BA Base Rate Notation Amount of Principal Principal Rate Rate Interest Made Date Term Loan Payment Balance Loan Loan Period By - ---- --------- --------- ----------- ---- ---- ------------- --------
3 EX-10.7 8 REVOLVING NOTE DATED 8/31/95 FOR $5,000,000 1 EXHIBIT 10.7 REVOLVING NOTE U.S. $5,000,000 August 31, 1995 FOR VALUE RECEIVED, the undersigned, Stuart Entertainment, Inc., a Delaware corporation (the "Borrower"), promises to pay to the order of Bank of America Illinois (the "Lender") on December 13, 1999 the principal sum of Five Million Dollars (U.S. $5,000,000) or, if different, the aggregate unpaid principal amount of all Revolving Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, 1089350 Ontario Inc. (n/k/a Bingo Press & Specialty Limited), the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the U.S. Agent pursuant to the Credit Agreement. This Note, together with that certain Revolving Note of even date herewith (the "Chase Revolving Note") in the principal amount of U.S. $5,000,000 issued by Borrower to The Chase Manhattan Bank (National Association), replaces in its entirety that certain Revolving Note dated December 13, 1994 (the "Original Revolving Note") in the principal amount of U.S. $10,000,000 issued by Borrower to Lender. This Note and the Chase Revolving Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Term Note. This Note is one of the Revolving Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. STUART ENTERTAINMENT, INC. By ------------------------------ Title: -------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable BA Amount of Outstanding BA Base Rate Amount of Principal Principal Rate Rate Interest Notation Date Term Loan Payment Balance Loan Loan Period Made - ---- --------- ------- ------- ---- ---- ------ ----
3 EX-10.8 9 TERM NOTE DATED 8/31/95 FOR $2,250,000 U.S. 1 EXHIBIT 10.8 TERM NOTE U.S. $2,250,000 August 31, 1995 FOR VALUE RECEIVED, the undersigned, STUART ENTERTAINMENT, INC., a Delaware corporation (the "Borrower"), promises to pay to the order of Bank of America Illinois (the "Lender") the principal sum of Two Million Two Hundred Fifty Thousand Dollars (U.S. $2,250,000) or, if different, the aggregate unpaid principal amount of all Term Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, 1089350 Ontario Inc. (n/k/a Bingo Press & Specialty Limited), the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The principal amount of this Note shall be payable in installments as set forth in the Credit Agreement, with a final installment (in the amount necessary to pay in full this Note) due and payable on December 13, 1999. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the U.S. Agent pursuant to the Credit Agreement. This Note, together with that certain Term Note of even date herewith (the "Chase Term Note") in the principal amount of U.S. $2,250,000 issued by Borrower to The Chase Manhattan Bank (National Association), replaces in its entirety that certain Term Note dated December 13, 1994 (the "Original Term Note") in the principal amount of U.S. $5,000,000 (the outstanding principal balance of which on the date hereof is U.S. $4,500,000) issued by Borrower to Lender. This Note and the Chase Term Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Term Note. This Note is one of the Term Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. STUART ENTERTAINMENT, INC. By ------------------------------ Title: -------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable BA Amount of Outstanding BA Base Rate Amount of Principal Principal Rate Rate Interest Notation Date Term Loan Payment Balance Loan Loan Period Made - ---- --------- ------- ------- ---- ---- ------ ----
3 EX-10.9 10 REVOLVING NOTE DATED 8/31/95 FOR $6,937,500 CDN. 1 EXHIBIT 10.9 REVOLVING NOTE Cdn. $6,937,500 August 31, 1995 FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited (f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises to pay to the order of The Chase Manhattan Bank of Canada (the "Lender") on December 13, 1999 the principal sum of Six Million Nine Hundred Thirty Seven Thousand Five Hundred Canadian Dollars (Cdn. $6,937,500) or, if different, the aggregate unpaid principal amount of all Revolving Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Stuart Entertainment, Inc., the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of Canada in same day or immediately available funds to the account designated by the Canadian Agent pursuant to the Credit Agreement. This Note, together with that certain Revolving Note of even date herewith (the "BAC Revolving Note") in the principal amount of Cdn. $6,937,500 issued by Borrower to Bank of America Canada ("BAC"), replaces in its entirety that certain Revolving Note dated December 13, 1994 (the "Original Revolving Note") in the principal amount of Cdn. $13,875,000 issued by Borrower to BAC. This Note and the BAC Revolving Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Revolving Note. This Note is one of the Revolving Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. BINGO PRESS & SPECIALTY LIMITED By ------------------------------------ Title: -------------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable BA Amount of Outstanding BA Base Rate Amount of Principal Principal Rate Rate Interest Notation Date Term Loan Payment Balance Loan Loan Period Made - ---- --------- ------- ------- ---- ---- ------ ----
3 EX-10.10 11 TERM NOTE DATED 8/31/95 FOR $6,243,750 CDN. 1 EXHIBIT 10.10 TERM NOTE Cdn. $6,243,750 August 31, 1995 FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited (f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises to pay to the order of The Chase Manhattan Bank of Canada (the "Lender") the principal sum of Six Million Two Hundred Forty-Three Thousand Seven Hundred Fifty Canadian Dollars (Cdn. $6,243,750) or, if different, the aggregate unpaid principal amount of all Term Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Stuart Entertainment, Inc., the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The principal amount of this Note shall be payable in installments as set forth in the Credit Agreement, with a final installment (in the amount necessary to pay in full this Note) due and payable on December 13, 1999. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of Canada in same day or immediately available funds to the account designated by the Canadian Agent pursuant to the Credit Agreement. This Note, together with that certain Term Note of even date herewith (the "BAC Term Note") in the principal amount of Cdn. $6,243,750 issued by Borrower to Bank of America Canada ("BAC"), replaces in its entirety that certain Term Note dated December 13, 1994 (the "Original Term Note") in the principal amount of Cdn. $13,875,000 (the outstanding principal balance of which on the date hereof is Cdn. $12,487,500) issued by Borrower to BAC. This Note and the BAC Term Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Term Note. This Note is one of the Term Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. BINGO PRESS & SPECIALTY LIMITED By ------------------------------ Title: --------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable BA Amount of Outstanding BA Base Rate Amount of Principal Principal Rate Rate Interest Notation Date Term Loan Payment Balance Loan Loan Period Made - ---- --------- ------- ------- ---- ---- ------ ----
3 EX-10.11 12 REVOLVING NOTE DATED 8/31/95 FOR $6,937,500 CDN. 1 EXHIBIT 10.11 REVOLVING NOTE Cdn. $6,937,500 August 31, 1995 FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited (f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises to pay to the order of Bank of America Canada (the "Lender") on December 13, 1999 the principal sum of Six Million Nine Hundred Thirty-Seven Thousand Five Hundred Canadian Dollars (Cdn. $6,937,500) or, if different, the aggregate unpaid principal amount of all Revolving Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Stuart Entertainment, Inc., the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of Canada in same day or immediately available funds to the account designated by the Canadian Agent pursuant to the Credit Agreement. This Note, together with that certain Revolving Note of even date herewith (the "Chase Revolving Note") in the principal amount of Cdn. $6,937,500 issued by Borrower to The Chase Manhattan Bank of Canada, replaces in its entirety that certain Revolving Note dated December 13, 1994 (the "Original Revolving Note") in the principal amount of Cdn. $13,875,000 issued by Borrower to Lender. This Note and the Chase Revolving Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Revolving Note. This Note is one of the Revolving Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. BINGO PRESS & SPECIALTY LIMITED By ------------------------------- Title: --------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable BA Amount of Outstanding BA Base Rate Amount of Principal Principal Rate Rate Interest Notation Date Term Loan Payment Balance Loan Loan Period Made - ---- --------- ------- ------- ---- ---- ------ ----
3 EX-10.12 13 TERM NOTE DATED 8/31/95 FOR $2,250,000 U.S. 1 EXHIBIT 10.12 TERM NOTE Cdn. $6,243,750 August 31, 1995 FOR VALUE RECEIVED, the undersigned, Bingo Press & Specialty Limited (f/k/a 1089350 Ontario Inc.), an Ontario corporation (the "Borrower"), promises to pay to the order of Bank of America Canada (the "Lender") the principal sum of Six Million Two Hundred Forty-Three Thousand Seven Hundred Fifty Canadian Dollars (Cdn. $6,243,750) or, if different, the aggregate unpaid principal amount of all Term Loans made by the Lender pursuant to that certain Credit Agreement, dated as of December 13, 1994 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Stuart Entertainment, Inc., the various financial institutions (including the Lender) as are, or may from time to time become, parties thereto, Bank of America National Trust and Savings Association, as agent as provided therein, and Bank of America Canada, as agent as provided therein, regardless of whether such principal amount is shown on the schedule attached hereto (or any continuation thereof). The principal amount of this Note shall be payable in installments as set forth in the Credit Agreement, with a final installment (in the amount necessary to pay in full this Note) due and payable on December 13, 1999. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity and/or judgment, until paid, at the rates per annum and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of Canada in same day or immediately available funds to the account designated by the Canadian Agent pursuant to the Credit Agreement. This Note, together with that certain Term Note of even date herewith (the "Chase Term Note") in the principal amount of Cdn. $6,243,750 issued by Borrower to The Chase Manhattan Bank of Canada, replaces in its entirety that certain Term Note dated December 13, 1994 (the "Original Term Notes") in the principal amount of Cdn. $13,875,000 (the outstanding principal balance of which on the date hereof is Cdn. $12,487,500) issued by Borrower to Lender. This Note and the Chase Term Note do not constitute a repayment or novation of the Indebtedness of Borrower under the Original Term Note. This Note is one of the Term Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Indebtedness evidenced by this Note and on which such Indebtedness may be declared to be immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. 2 ALL PARTIES HERETO, WHETHER AS MAKERS, ENDORSERS, OR OTHERWISE, SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR. THIS NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. BINGO PRESS & SPECIALTY LIMITED By ------------------------------------ Title: -------------------------------- 2 3
Grid Portion of Principal Balance Maintained ------------------ Applicable BA Amount of Outstanding BA Base Rate Amount of Principal Principal Rate Rate Interest Notation Date Term Loan Payment Balance Loan Loan Period Made - ---- --------- ------- ------- ---- ---- ------ ----
3 EX-11 14 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT NO. 11 STUART ENTERTAINMENT, INC. AND SUBSIDIARIES STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (Amounts In Thousands, Except Per Share Amounts) (UNAUDITED)
Three Months Ended Nine Months Ended September 30, September 30, -------------------- ----------------------- 1995 1994 1995 1994 ------- ------- ------- ------- Shares of common stock outstanding at beginning of period (1) 6,695 3,405 6,539 3,405 Weighted-average shares issued during the period 0 2 95 1 Weighted-average shares assumed issued under stock option plans and exercise of warrants during the period (assuming the treasury stock method) 22 84 48 85 ------- ------- ------- ------ Average common and common equivalent shares outstanding 6,717 3,491 6,682 3,491 ======= ======== ======= ====== Net earnings $ 519 $ 211 $ 236 $1,206 ======= ======= ======= ====== Earnings per share $ 0.08 $ 0.06 $ 0.04 $ 0.34 ======= ======= ======= ======
(1) This represents total outstanding shares of common stock less treasury shares. See Note 2 of Notes to Consolidated Financial Statements. See Notes to Consolidated Financial Statements in Part I. EX-27 15 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF OPERATIONS AND CASHFLOWS FOR THE NINE MONTHS ENDED SEPT. 30, 1995 AND THE CONSOLIDATED BALANCE SHEET AS OF SEPT. 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPANY'S QUARTERLY REPORT ON FROM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1,178 0 21,433 2,041 20,722 43,965 34,146 12,317 99,975 24,956 40,054 68 0 0 31,671 99,975 83,916 83,916 57,142 21,084 0 432 3,365 1,893 1,657 236 0 0 0 236 .04 .04
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